Aswath Krishnan

Some purchases happen once in a consumer's lifetime or a decade - booking a wedding venue, purchasing a house, buying an engagement ring, buying a mattress, hiring a lawyer for a law suit, finding a job, making funeral arrangements etc.  These episodic transactions are challenging for consumers because they don't have enough knowledge of the market to select the right vendor, pick the right product or service, negotiate reasonable prices, assess quality of the services, or pursue remedies if things don't right. When I was looking for decorators and catering for my wedding, I was pretty lost - is $5000 a reasonable price for flower decorations? Should I order 2 trays or 4 trays of dessert? Would it make my experience better with a wedding coordinator?

Marketplaces - like Uber, Amazon, Youtube, Thumbtack - connect demand and supply. They are brokers that make deals happen. Once established and scaled with positive unit economics, marketplaces can be lucrative and high-margin businesses. Here are some key steps for starting and scaling marketplaces:  1. Curate the parties  Define the purpose of the marketplace. Attract the parties that constitute supply and demand. For e.g., Airbnb needs to recruit and retain home renters and travelers. One main challenge is to get past the cold-start, chicken-and-egg problem. Even after you solve the that initially, you have to constantly maintain the balance between demand and supply. Users don't stick to marketplaces that only work some of the time.  2. Connect the parties