Key Growth Lessons: 1. Building a linear business to seed the supply-side of a marketplace can solve the chicken or the egg problem most marketplaces face. The fundamental challenge of building a marketplace is solving the chicken or the egg conundrum of which comes first. We all know supply is key, but how do you build it if you don't have demand? Building both at the same time is hard! Omni took a creative approach to solving this problem by building and monetizing their "storage as a service" business first, hitting critical mass, and then layering on the marketplace, seeded with supply from day one. 2. Layering a marketplace on top of an existing business supercharges linear growth and creates a moat around a commodity business. Not only does a linear business seed marketplace growth, but marketplace growth in turn feeds the foundational business. It's a self-reinforcing cycle that once spinning is hard to disrupt. As Omni generates marketplace demand, they are finding that storage customers store more stuff. This supercharges growth.
Marketplaces are notoriously hard to start, but amazing if they work. In his six years at Airbnb, Jonathan Golden watched it scale over 100X on every metric: listings, users, revenue, employees, and, yes, sometimes complexity. He joined at an inflection point in the business, when the product was shifting from niche to early adopter, from a marketplace for air mattresses to a truly viable accommodation alternative. As the company boomed, they lived through many more inflection points, even existential challenges. But that creative, “we’ll get through this no matter what” attitude always got us through. This post summarizes the five biggest inflection points Jonathan witnessed, and the lessons learned from each.
<p>The 'Network Effect' is a phenomenon whereby a good or service becomes more valuable when more people use it. When a network effect is present, the value of a product or service is dependent on the number of others using it. Over time, positive network effects can create a bandwagon effect as the network becomes more valuable and more people join, in a positive feedback loop. This section will highlight techniques to achieve the critical mass required to achieve this effect and stories about companies that have successfully done it.</p>
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