From Drones to GM, Announcing Batch 21

They are here. Two weeks ago Batch 21 (B21) kicked off at 500 Startups in Mountain View. Thirty-one young companies will now spend the next four months hacking out of the flagship location nestled in the center of Silicon Valley where 500 Startups was launched six years ago (AARRR!).

Since the original Batch 1, the 500 Seed Program has accelerated over 600 companies between the San Francisco and Mountain View programs (shout out to our LatAm program in Mexico City currently on Batch 007).

As usual, B21 represents a wide array of technologies ranging between Conversational Commerce, Big Data, drones, VR, transportation, digital health and FinTech. There will also be a focus track in B2B Sales and an automotive track hosted with General Motors.

Forty-three percent of B21 are international companies representing 8 countries with founders from the UK, Argentina, Canada, Israel, Italy, Hong Kong, Portugal, Spain, Taiwan and Turkey. Another 23% of the batch are female founders and 12% are black or Latinx founders.

The core of the 500 program continues to be focused on growth and fundraising with the return of the notorious Marketing Hell Week followed by weekly enterprise sales talks and intensive customer acquisition coaching.

“It’s week two, and we are already feeling the speed at which 500 operates,” says Ryan Stobie, CEO and founder of Adventure Bucket List who’s from Vancouver. “I’ve seen other accelerators and the growth expertise here is unmatched.”

Welcome B21. It is time.

Check out the entire roster of B21 below or on TechCrunch.

You can also apply for Batch 22 here.

 

Read more

The Build Up to Batch 20 Demo Day

It’s two weeks out from Batch 20’s demo day and the energy is building in the 500 Startups San Francisco office, also known as 500 Del Norte.

Startup team members are flying in from around the world to join their founders in the office in preparation for the flower-power themed extravaganza that is a 500 Demo Day (yes, the theme is ‘Summer of Love’).

Thirty-six percent of Batch 20 hail from countries outside of the US, including Thailand, Hong Kong, Latvia, Estonia, Brazil, Britain, Australia, Russia, Ukraine, Nigeria, India, Canada and France. We also had our first team from Belarus in Batch 20, FriendlyData, a natural language interface for databases, who recently topped the 2017 charts on ProductHunt.

(You can see the growing number of B20 companies hunted on ProductHunt here, as well as a full list of all 44 companies on TechCrunch.)

The move to the US has proved fruitful for other international teams as well. Russian startup VisaBot has quickly reacted to the current immigration environment and is helping hundreds of US immigrants access services via their chatbot and previously Latvia-based Funderful opened their San Francisco office while signing UC Berkeley and Rhodes Scholars as clients since their move to the Bay Area in January for the 500 Seed Program.

With the addition of the full teams, the office is packed, hot and buzzing. Pitches are heard whisping through the air almost 24/7. Founders crowd around war room tables in meeting rooms named after the 15 of the most populous cities in the world.

Furniture is pulled left and right in an ever changing landscape. White boards turn into art pieces of partially erased mysteries. It’s the true beauty of the world’s most active accelerator in full bloom.

Pitch prep continues into the night more often than naught. Drinks are poured to cool off from the sweat equity spent. VC office hours are sprinkled throughout every day now. Post-it notes line the doors with names like Accel, A16Z, Bessemer, and FundersClub.

Fireside chats continue weekly from the likes of Silicon Valley’s best: Jason Lemkin, Andrew Chen, Scott Farquhar, co-founder of Atlassian, and Ken Lin, the founder of CreditKarma, one of 500’s unicorns. There’s a constant need to be on the top of your game. Founders become well versed in disguising their few hours of sleep in energetic sentences.

But it’s all worth it in the end. After four months of growth, preparation, practice, Marketing Hell Week, investors, experts, Sales Hell (no one said this was easy), office hours, batch self-made videos, and more late nights than one can count, everything coalesces in the grandeur of a 500 demo day. An event that never stays the same.

From flash mobs to rap battles to a fireside chat with Mattermark founder Danielle Morrill while Dave wore a unicorn wig to Demoween, there will always be surprises in store for the audience of 450+ investors.

So, we hope to see you there. The next generation of tech companies is waiting for you.

Apply to attend 500 Startups Batch 20 Demo Day here.

Batch 20 triples down on FinTech and Digital Health, Takes on Uncle Sam with GovTech

500 Startups’ 20th program (B20) in Silicon Valley starts at time that will be remembered across the world. Only three days after a new (and highly controversial) United States government administration has taken power and Silicon Valley is preparing for a Trumpocalypse.

Seeing this regulatory disruption as an opportunity for private sector tech companies, B20 includes GovTech (13.6% of B20), FinTech (27%) and Digital Health (15.9%).

In total, there are 44 companies in the four-month program that will run from January to May. Popular technology trends — including SaaS, marketplaces, AI/bots, big data, analytics, devops and hardware — also remain prevalent in the seed program formally known as an accelerator but continually geared towards scaling companies with early traction.

In total, 36% of the B20 are international representing 10 countries. Canada comes in first in terms of founder representation. Israel is a close second. Founders in B20 also hail from Thailand, Hong Kong, Latvia, Estonia, Brazil, United Kingdom, Nigeria, and France.

B20 is also a diverse set and has 20.5% of companies with at least one woman founder, 11.4% of companies in with at least one black founder, and 13.6% of companies with at least one latinX founder.

Programming continues to be focused on growth, fundraising and storytelling in B20 with a few specialty events, including the notorious Marketing Hell Week, the second B2B sales summit, and a new two-day, intensive fundraising boot camp.

For specific companies in the batch, General Motors is also getting involved and offering exclusive mentorship and access to the automotive industry.

Here’s the full list of companies published in TechCrunch.

Applications for the next program (B21 in Mountain View) are being accepted here.

picture1Pictured above: our SF Seed Program Team

Announcing Batch 18 — Bring on the Bits, Bots and Bods!

We’re proud to announce our 18th cohort of accelerator companies (appropriately called B18) residing in the 500 Startups San Francisco office for the next four months.

The batch has a few themes and includes 46 companies total. There is an 11 company FinTech track (five in insurance) led by Sheel Mohnot who runs the 500 FinTech fund and 8 company Digital Health track led by Rebecca Woodcock.

There are also themes in industrial applications, Tristan Pollock’s experiential lifestyles track (think about companies like Outsite that let you live and work from anywhere), and MOAR bots, including bot analytics company Statsbot, Track for freelance taxes, AI homeowner financial dashboard Homebot, and SimplifiMed for monitoring high risk patients.

500 Startups continues to remain one of the most diverse organizations and accelerators in Silicon Valley and our founders in this batch show it:

  • 19% of companies have a female founder
  • 22% of companies have a black or latino founder
  • 28% are international founders from 11 different countries

We are also excited to welcome our first native Hawaiian founder with Paubox, second investments from New Zealand and Nigeria in Melodics and SureBids, respectively.

Read on to learn more about each company in B18, or visit the Techcrunch announcement here. Note, that only 45 companies are listed below because two are still in super secret stealth mode.

Meet these companies and see them pitch at our next Demo Day. Investors, corporate strategics or reporters that are interested can go here for more information.

If you’d like to be a part of the 500 Family, applications for Batch 19 in Mountain View are open now.

***

Andromium

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Andromium’s Superbook is a plug-and-play device that turns your smartphone into a complete laptop for $99.  Once connected to a Superbook, a user can enjoy the same high quality computing experience on their smartphones no matter where they go.

 

Auctio

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Auctio is a referral management & tracking software that helps B2B companies generate more revenue from referrals. Their platform allows companies to launch and optimize referral and cross-selling programs.

 

Avicennas

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Avicennas is a trusted marketplace that provides a platform for people to find internationally accredited healthcare providers around the world for their medical treatment. Avicennas helps individuals access affordable healthcare with no compromise on quality or service.  

 

BeaconsInSpace

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BeaconsInSpace allows users to better monetize their app and generate location analytics using a global beacon network. With their beacon marketplace and a few lines of code, one can instantly acquire a scalable infrastructure of beacons in their home city and across the globe. BeaconsInSpace handles all of the hardware deployments and upkeep while their infrastructure APIs make it easier for one to build their product at scale.

 

BIGcontrols

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BIGcontrols utilizes an enterprise SaaS platform to help corporations save millions of dollars by automating the tracking, reporting, and compliance management for their government incentives.

 

BrightPolicy Inc

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BrightPolicy has created homeowners insurance for digital natives. It is the only way to buy homeowners insurance in minutes on your phone without talking to somebody. BrightPolicy uses the internet to automatically gather all necessary data before asking the user for confirmation, saving them time and hassle.

 

Croissant

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Croissant is a magic pass for coworking, offering a passport membership to the best workspaces in New York, Boston, and D.C.

 

Datatron Technologies Inc

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Powered by a team of experienced software engineers, Datatron‘s real-time big data AI engine is complete with proprietary software that allows for enterprises to optimize real-time business decisions.

 

DigitalOutposts

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DigitalOutposts hosts select groups of remote working professional and graduate students in distinctive coworking destinations. The service provides workspace, accommodation, logistics help, and activities, so customers can get their work done while they meet new people and find new adventures.

 

Fan Stream, Inc.

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Fan Stream offers a new type of sports radio as it connects fans together in live audio conversations to discuss their favorite teams. Optimized for live game action, Fan Stream puts audio communication at the core of the sports community.

 

Fragmentic

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Fragmentic is an AI constructor for building SaaS and e-commerce services from pre-designed elements, aimed at customer conversion funnel optimization.

 

Get Lighthouse, Inc

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Get Lighthouse believes that people leave managers, not companies. That is why they want to give managers a platform to help prevent the pain caused by losing good employees, and feel the joy of a high performing team. Lighthouse helps bring great management to every team and company.

 

HeavyConnect, Inc.

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HeavyConnect is a collaboration platform for enterprise farming that simplifies farming operations, allowing teams to work more efficiently. HeavyConnect simplifies data into a clear and easy to understand actionable format. The platform not only helps with time management, but also saves farmers money.

 

Homebot, Inc.

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Homebot is an AI powered financial dashboard and planner for Homeowners. It helps homeowners build wealth by optimizing debt, home improvement, and rental potential.

 

Indio

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Indio brings traditional commercial insurance brokers into the digital age. Indio’s workflow management platform platform provides brokers with a centralized location to get quotes from carriers and a beautiful client facing interface to retrieve application information. The focus of Indio’s platform is to reduce the operational overhead that brokers deal with on a day to day basis getting information from the client to the carrier — allowing brokers to focus on consulting and risk management.

 

 Infraspeak

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Infraspeak is the dawn of a new age in facility management, allowing customers to enhance control and efficiency, cutting costs and reducing bureaucracy by up to 70%.

 

INZMO

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Inzmo allows for customers to get hassle-free insurance on their mobile phone. The app enables people to purchase everyday insurance products in just a few seconds.

 

Leapcure, Inc

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Leapcure is the fastest and most effective patient engagement platform for accelerating clinical research participation. It assists with the recruitment, engagement and retention of clinical trial patients.

 

Level Family Therapy

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Level is a platform that provides treatment tools and access to behavioral health professionals. It is a virtual mental health clinic connecting behavioral health professional with individuals in need of expert assistance.

 

Melodics Limited

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Melodics is an entirely new way to learn to play musical instruments.

 

Nonnatech Inc.

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Nonnatech is an innovative digital health platform that uses its patented remote patient monitoring platform to reduce avoidable emergency room visits and hospitalizations through the early detection of physiologic changes.

 

OK Play

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OK Play makes for quantifiably better teams via predictive performance analytics. The feedback generated by the platform improves team performance by offering powerful insights based on a particular team’s specific style and personality. OK Play coaches teams by clarifying goals showing performance metrics.

 

OneKloud Inc.

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OneKloud is a cloud control platform that enables control policies along with time and dollar quotas per user, team and project for truly enforcing and optimizing cloud services budgets.

 

OnFarm Systems Inc.

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OnFarm seamlessly integrates any farm device or cloud data to power solutions that increase farmer profitability and sustainability utilizing analytics and API solutions from disparate agriculture data sources.

 

OrderCircle

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OrderCircle simplifies the wholesale ordering process. Wholesale customers can now place orders directly online– no more phone orders, faxes, or emailed forms. The platform also helps companies manage customers as well as make the reordering process easy.

 

Outsite

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Outsite aims to disrupt the coliving/coworking market by focusing on beautiful places for location flexible individuals and company retreats. Outsite is a collection of unique work+play accommodations that cater to the growing community of entrepreneurs, business travelers and digital nomads who are looking for alternatives to uninspired hotels and conference halls.

 

Paubox, Inc.

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Paubox offers its customers the easiest way to send and receive secure, HIPAA compliant email. Using email encryption, encrypted forms, branded storage, and email API, Paubox allows users to easily ensure that they are HIPAA compliant.

 

Pillsy Inc.

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Pillsy makes it easier for people to manage their pills and vitamins with their smart pill container and mobile app. PillsyCap automatically tracks when you take your pills and it reminds you when you forget a dose. Pillsy also enables secure sharing so family and loved ones can help each other stay healthy.

 

 Printify

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Printify offers a print on demand marketplace & mediation platform connecting on demand producers and e-commerce merchants. Users can generate and sell 500+ designs on Shopify.

 

ROHO

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ROHO is a platform for on-demand religious content and experiences. Digitizing sermons allows individuals to feel spiritual and motivated no matter where they are.

 

Silvernest

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Silvernest’s highly scaleable, innovative online solution pairs aging homeowners (50+) with compatible roommates and provides tools for long-term home sharing. Silvernest focuses on boomers and empty nesters who have space to share.

 

SimplifiMed, Inc.

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SimplifiMed is an enterprise population health management for value-based care. Medication management impacts 17 out of 33 criterion to calculate ACO bonus. Unfortunately, all the physicians in an ACO don’t use the same EHR, making it impossible to manage medications. SimplifiMed helps ACOs keep patients healthy while allowing physicians to continue using EHR of their choice.

 

Squadle, Inc.

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Squadle offers a platform that automates operations workflow for the $4.5 trillion multi-unit retail industry. Squadle gives its customers a better way to collect and act upon all of their operations and compliance data.

 

STATSBOT, INC.

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Statsbot is an intelligent interface for business apps.

 

StreamLoan, Inc.

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StreamLoan provides a mobile first, SaaS collaboration and workflow platform, simplifying residential home purchases.  Now the journey is as rewarding as the destination for home ownership. The platform is simple, secure and efficient.

 

Surebids

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Surebids is a retail voucher platform for gifting, loyalty, remittances and credit in Africa. Surebids offers gift cards to the biggest and best stores in Nigeria.

 

Tackl, Co.

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Tackl is reinventing university recruiting through connecting aspiring talent with the right companies for exciting opportunities. It offers a university talent inventory powered by smart-matching.

 

Track

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Track automates bookkeeping and taxes for freelancers, saving its customers money without the hassle. Track offloads all the heavy accounting so you can stay focused on the work that pays.

 

Treat

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Treat is an app for all things pet care. Treat offers full service pet care, transparent pricing, same-day booking and more all in the comfort of your own home.

 

Trym

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Trym insurance works to fit all your small business needs.

 

Up All Night

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Up All Night is your very own nightlife concierge that gets you into the best events. Through its subscription model, users get 4 tickets to the hottest events plus exclusive discount tickets for $25 a month.

 

Usetrace

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Usetrace is a web app that uses cloud computing to automatically test your site the way your customers would actually use it. Usetrace does not require coding or constant updating. The testing system is long lasting as it adapts with the changes that come as you edit and redesign your site.

 

VisionX Solutions

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VisionX is a global insurance distribution system, like Amadeus for the travel industry.

 

Voxeet

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Voxeet offers APIs for 3D surround sound voice and video communication. Voxeet lets you rapidly integrate its award-winning TrueVoice audio technology and convenient messaging and collaboration capabilities directly into your website or mobile app.

 

WhereFor, Inc.

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WhereFor is the first search engine to determine where you can travel for what you want to spend, allowing users to take the best vacation possible.  Simply enter your total budget, see where you can go, what flight to take, and where to stay all for whatever amount you can afford.

See the coverage in Techcrunch here

The Hunt: How Startups WIN on Product Hunt

Product Hunt (PH) has become the de facto source for new and upcoming technology products.

Product Hunt win with Arka

If you get featured on the homepage, the next 24 hours could be glorious:

  • Thousands of site hits, a boost in customers
  • MOAR revenue
  • Massive brand awareness among target audience

Or, it could be an utter failure. You might get low conversion rates to your site, ghosted from the PH featured page and buried under your competitors.

You choose.

How to WIN at Product Hunt

I’ve helped companies like Indemand and Arka gain over 1,000 upvotes in less than 24 hours, which — with high conversion from PH to landing page — led to hundreds of new customers and thousands of revenue dollars in just a few days.

Don’t worry, it’s a repeatable process. Here’s the step-by-step recipe for how to gain traffic and conversions from Product Hunt.

#1 Gather the important information

Ok, this sounds boring, but if you want someone to post you on PH, the person should be relevant to you and you should build that relationship before making the ask.

I post about things that get me excited, as well as for 500 Startups and AngelPad companies because I’m a part of those communities.

Here’s the info you should gather and customize to fit PH.

  • The date to post
  • Category (Tech/Games/Books/Podcasts)
  • Product name
  • Website
  • Catchy tagline (40 characters or less)
  • Blurb on why I think the product is awesome (I’ll write this as the hunter, but helpful thoughts are encouraged)
  • Special offers for the cat-loving PH community (optional)
  • Links to 1-2 recent articles (optional)
  • Platforms and tags (ex: web, developer tool, transportation)
  • Media (one for icon, one for header)
    • I highly recommended you customize your images for PH. Here’s an example from Arka:

custom image product hunt arka

  • Status (available now vs pre-launch)
  • Twitter handles of founders (to be added as PH Makers and tweeted out — Twitter promotion is 🔑 )

The above fields are from the PH hunt form and the PH product page itself. The ‘Hunt a Product’ form does change from time to time, but here’s what it looks like today.

Screen Shot 2016-07-11 at 11.39.40 AM

#2 Use the power of social network effects

Find a strong PH influencer to post you and follow that person (in this case, me).

tristan pollock product hunt influencer

Then have your team and friends follow the hunter as well. This amplifies your post reach because all followers are notified when a product is hunted, and if they upvote/share, their followers are notified with a PH alert. And on and on.

Extra points if you have a strong collection built around your business and can get the collection creator to add you. I like to post about 500 Startups, ViceTech (experiences), Frontier Tech, Digital Nomads, and Music (and creativity) in my collections.

Collections can be picked up and promoted by PH at any time. An example is my Comedy collection that was featured on the PH email newsletter. This can give your PH post longevity, in addition to the norm of using upvotes to rank highly for specific keywords.
Screen Shot 2016-07-11 at 11.45.16 AM

#3 Post at midnight, because timing is everything

This is key.

Hunting a product at midnight gives you a full 24 hours on the front page.

You also get another 24 hours on the Yesterday page that sits right below the Today featured feed on the home page. 95% of upvotes occur in the first 24 hours.

To make sure I’m in sync with the Maker when hunting the product, I ask them to:

  1. Send me an calendar invite for 11:30pm-12:30am for the day we are hunting with all hunting information included
  1. Comment on the post immediately after it is live. Here you should mention that you are the founder and here to answer questions (the more PH community engagement the better)
  1. Share with your personal and business networks. Usually if you are the top post by 9AM PST (aim for 100-150 upvotes) then you are in good shape for the rest of the day. Here’s a sample message you can send out:

Hi Friend – help us squish it on Product Hunt this morning!

To upvote [MY PRODUCT] follow these instructions:

1/ Go to the producthunt.com homepage.

2/ Find [MY PRODUCT] and upvote (note: if you are in a shared office space with others upvoting, use a different IP address by using your mobile device with Wifi turned off and you’ll get a more powerful upvote).

3/ Add a comment about why you love us, or a question about the product (the more engagement we have the more visibility we get).

4/ Share to your own networks via Twitter/Facebook/text/email (get creative with email lists, friends, family, accelerators, etc).

Much love,

YOU

#4 Focus on engagement and conversion will come

image

Arka saw a spike to their landing page that peaked 24 hours in, and lasted four days total with about 10% of traffic remaining over the next two weeks. Over 120 new customers paid for their product.

arka conversions

Indemand saw an even larger increase in traffic and customers, including:

  • Users. An increase of 7,000 unique visitors with their user base growing by 25% just through Product Hunt. About 15% of the total uniques churned.
  • Revenue. Over $150k worth of custom deals came through Product Hunt, plus an increase of MRR by $5k. This happened over the first 5 days after the hunt.

I attribute their success to these factors in order of importance:

  1. Product Hunt community. At the end of the day, the most successful products on PH fit the community, which is still majority tech oriented, and come from Hunters/Makers who participate in the community, write thoughtful comments, and have been engaging on the platform over a longer period of time. The Indemand founders fit this mold and so did their product.
  1. Hustle hard. The Arka and Indemand teams did everything possible to bring awareness to their hunt from alerting their accelerator batch network to downloading their LinkedIn contacts to handing out candy on the street. They were determined, creative and very, very persistent.
  1. Hunter-Maker collaboration. If it isn’t clear already, I spend too much time on PH. As their Hunter, I worked closely with Arka and Indemand to improve their content, share it to additional communities I have access to (e.g. accelerators, personal networks), and, of course, have competitive fun in the process.
  1. Timing. Post between 12am-2am. No excuses. Indemand pulled an all-nighter to monitor questions, comments, and fuel the hunt.

#5 A note on external factors

There are always things you can’t control.

For example, if a new product by Google is hunted the same day as your product it will draw attention away from you. Or the fact that less people are engaged on PH from Friday to Monday, so you probably want to avoid those days. Some of these factors you can plan for. Others you can’t, but if you follow the above steps, you should be able to gain healthy initial exposure, but always make sure to be respectful of the Product Hunt community rules by reading their FAQs.

Lastly, if you haven’t used PH often, it’s best to get involved, comment, ask questions, upvote products you like, and talk with other Hunters before hunting your own product. Give before you receive. It’s called cat power. 😻

product-hunt

Tristan is a Venture Partner at 500 Startups, follow him on Twitter here.

Silk Road was the fastest growing online marketplace ever — here’s why

First, what is Silk Road?

THIS:

silk road site

NOT THIS:

silk road map

Silk Road, the anonymous, dark web, Tor protected, drug marketplace lived for over 2 years online. Eventually the founder, Ross Ulbricht, was caught and arrested. Silk Road 2.0 emerged. After the FBI shut the 2.0 site down, there was a 3.0.

Now there are around 50 separately affiliated marketplaces that sell drugs online, including Agora, Amazon Dark, and Silk Road 3.0.

Over $1.2 billion dollars (9.5 million bitcoins) was transacted on Silk Road 1.0 in a little less than two years.*

On average, they took a 10% fee on every transaction, so the business made over $120 million in that same time, plus the increase in value of Bitcoin. Those are numbers that most marketplace businesses (or any business in general) wish they had.

Silk Road no doubt had a secret sauce, and it’s a strategy any startup can use.

Trust Made Silk Road Successful

BEFORE:

drug-dealer

AFTER:

silk road reviews

Silk Road works for the same reason Airbnb (accommodations), Uber (ride sharing), or Getaround (car sharing) work… trust and efficiency.

Marketplaces make previously outdated industries relevant again by turning important human psychological factors and ways to conduct business into a platform. Think about the tenets of reciprocity (ratings and reviews), consistency (standard, repeatable process), and scarcity (improved supply and demand dynamics). These were solved with the marketplace.

Thus, Silk Road brought the drug trade into the 21st century.

No longer did a Silk Road user have to deal with shady drug dealers, fake drugs, or drugs that included other chemicals or substances that they didn’t know were there. Silk Road eliminated the need to deal with shady distributors, the fear of buying fake drugs, and ensured that there were not other unknown chemicals or substances acting as a filler in the drugs.

If a dealer on Silk Road sold bad or fake drugs, they were removed from the platform. The highest quality products and users were brought to the top. Scams from any user were dealt with swiftly.

Everyone respected the community in a traditionally gang or cartel related industry. Before you might have been supporting a cartel in Mexico with your drug purchase. Now you were buying direct from another user.** Just like Lyft made the taxi industry safe, fun and friendly again, so did Silk Road for the drug industry.

Never before has an industry needed more transparency and community. The fact that a large segment of drug use is unregulated means people are taken advantage of, or don’t know how to be safe. Combine Silk Road with its forums and Erowid, a drug education resource, and you’ve turned an industry on its head.

Silk Road Grew Faster Than Etsy and Ebay

When Silk Road 2.0 launched eight months after 1.0 was shut down by the FBI, over 13,600 listings of drugs were live on the site.

Silk Road 1.0 reached $1.2B in revenue in less than 2 years before it was eventually shut down.

Screen Shot 2015-10-27 at 7.03.12 AM

Note: Scenario assumes strong growth initially, strongest growth after one year, and a slow down close to shutdown.

Even a site that was buried on the deep web found ways to grow an incredible rates. Some may argue as fast, or faster, as some of the most well known marketplace companies, including eBay, Airbnb, and Uber.

Silk Road did this in a few ways:

1/ Forums. They went to where their customers were: forums, sites, and other online communities that we discussing drug use and dark web sites. Forums also bring about trust, social proof, and familiarity to a previously hard to access/understand industry.

2/ PR. Less than 5 months after the conception of Silk Road, Gawker broke the story, thus funneling thousands of potential customers into the dark web site. This added additional social proof as well as heightened trust as a reputable source covered the site and provided details on how to securely access it.

3/ Word of Mouth. There is no other solution that’s better than Silk Road out there. It was a high risk, high reward venture. This drove virality into the marketplace. Demand was extremely strong in this marketplace, but so was supply, and the lack of other solutions (scarcity) led to users working really well together, very fair pricing, and reciprocal relationships.

4/ Community. Silk Road and the drug community have strong bonds. It’s underground, so people want to take care of each other as there’s no regulation. Take the rave and EDM scene and the use of Ecstasy or Molly. Often at these shows or festivals the ‘community members’ take care of each other, educate, and festivals have now even begun to do their own free testing of drugs to check quality. Airbnb and Lyft are also examples of how strong marketplace communities can build a strong business and brand while empowering their customers.

In conclusion, Silk Road did powerful things for its industry. It made it safer, friendlier, more efficient and trustworthy.

That said, the major issue is obvious: most drugs are illegal (with the exception of pharmaceuticals, cannabis in less than 50% of the U.S., and new synthetics that haven’t been scheduled).

Without getting into the education versus enforcement debate, the value that Silk Road provided as a startup marketplace for the drug industry was unrivaled across all industries.

In many ways, Silk Road is a startup smoke test (no pun intended) showing how technology is continually increasing the speed of societal changes at a greater scale. It shows there’s a major need for faster change, but antiquated thinking and government policies are holding back cultural movements.

Modern society has never seen levels of openness and acceptance of personal decisions this high (again, this isn’t a pun), and it’s only going to continue on the back of a cannabis industry that isn’t slowing down.

*The exact value of all Silk Road revenues varies due to the high fluctuation of Bitcoin prices.

**Being an unregulated industry, it is near impossible to trace the exact origins of where every user acquired their drugs.

ABOUT TRISTAN POLLOCK

Tristan Pollock is an Entrepreneur in Residence and Venture Partner at 500 Startups. He was named Forbes 30 Under 30 in 2015, for co-founding Storefront, a marketplace for retail space. His previous company SocialEarth, a media platform for social impact, was acquired by 3BL Media. A Minnesotan living in San Francisco, Tristan frequents the experiential side of life. Connect with him at tristan@500.co.

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Periscope vs. Meerkat

I started using Meerkat right as buzz started to build up in early March. For those still unfamiliar, Meerkat is the live streaming app that allows you to view anyone live streaming you follow on Twitter. That’s right, anyone in the world. Within a few weeks, it had nearly 100,000 downloads and raised $14M in capital. Then, I went to SXSW and the buzz was not only the sound of a bee, but also the color of one.

Meerkat fan

As a non-celebrity — not even in the tech world — my largest stream maxed out at 50 viewers during the PSFK Retail Innovation salon, where I kept a two-hour Meerkat going while I spoke alongside executives from major retail companies like Home Depot.

I also serendipitously participated with Product Hunt’s Erik Torenberg’s Meerkat flash mob at SXSW that aimed to top the most popular stream and make it to one thousand subscribers (they almost did it), although I was disappointed to find there was no dancing.

At the end of SXSW Interactive, I felt like there was an over-hype of the platform. It had great branding, true, but it seemed to be mainly the tech crowd participating — basically as homogeneous as the city of San Francisco.

Back in San Francisco, Twitter had already bought Periscope, another live streaming app that is nearly identical to Meerkat but has much better reach to the Twitter user base, and re-launched the service. I instantly found the rush of hundreds of viewers was much more attainable than on Meerkat, plus you captured people from all over the world.

The increased mainstream usage on Periscope did lead to more trolls, but shortly before April Fools’ Day, it started to lead to more comedy as well (just like Twitter’s last purchase, Vine).

zuckerberg-scoped-screenshotI HAD to get involved in the Fools’ Day fun, so I started a series called, #Scoped (a few days before April 1 in order to remain under the radar).

In use: ‘You got scoped!’ My X for Y was Funny or Die for Live Streaming. It was a parody on how link baity titles on Periscope could easily draw in 200-300 viewers in less than 30 seconds.

Some titles of my #scoped streams, included:

> Riding in a Ferrari

> Mark Zuckerberg Breakdancing

> Running from the Police

> House of Cards Season 4 Sneak Preview

If I added enough visual context that seemed real it would throw off the viewers (and add some smiles to their day once they realized it was fake).

Then I’d shout ‘You got scoped!’ and have a little laugh with my viewers.

While it was a fun enough joke, #scoped also showed  that Periscope easily drives more adoption than Meerkat if you know how to market your streams.

Marketing them correctly is easy. Here are the three Ts you should always follow:

periscope interface1 – Titling. It starts with titles. It’s your subject line. If you don’t make it short (ideally one line, or less than 30 characters) and punchy, no one will click through.

2 – Twitter. Make sure your Twitter bird icon is highlighted. Sharing to Twitter is especially important if you add a hashtag or @name in the title that will draw additional eyeballs.

3 – Titillating. Once you get your first 20-30 viewers on a stream it’s a critical time. You need to be showing something interesting. It’s video, so that means there needs to be movement, audio, and a unique portal into a world you don’t see everyday.

This isn’t the real power of live streaming though. Imagine if you had live streaming apps on Twitter during the Arab Revolution or streaming police encounters like Ferguson. Then it’s even more powerful.

So without further ado. Here’s a breakdown of Periscope versus Meerkat.

Meerkat

1 – a prairie dog.

2 – a mobile app that allows you to live stream.

Periscope

1 – an underwater lens that allows you to see above the water, generally used with submarines, or by small children.

2 – a mobile app (owned by Twitter) that allows you to live stream.

Meerkat Periscope
App Store Ranking (USA: Social Networking) 164 24
Funding Raised $14M, Greylock, YouTube founder Chad Hurley, actor/singer/songwriter Jared Leto, Sound Ventures, Vayner/RSE, Comcast Ventures, Sherpa, Slow Ventures, Soma Capital, Universal Music Group, Raine Ventures, Broadway Video Ventures, WME, CAA Ventures, and UTA. Previous investors Aleph and Entree Capital are in this round, as well. Acquired by Twitter.
# of Countries >100 Rank for Social Networking 11 92
Common Use Case Tech, Business, Events Interviews, Personal Lives
Twitter Authentication Required Required
Privacy Public, Private Public, Limited
Average Adoption Time for 5-10 Viewers (Avg Est) 30 seconds to 2 minutes 15-30 seconds
Top User @Madonna
511k followers
Fahad @f3k
27k followers, 8M hearts
# of Languages 1 25
# of Ratings (iOS) 442 942
# of Users (Est: 100*Ratings) 358,000 836,000
All-Time Rating Average 3.5 3.7
Featured on iTunes 445 517
International Factor Low to Medium High
Android? Viewing Only No

*This is based on data I’ve found from third parties and personal experiences. Accurate as of 4/23/15.

Click to Expand
Click to Expand

You could also look at site traffic as a gauge for user awareness, and potentially click throughs from streams posted as tweets.

periscope meerkat topsy data on tweets

If you look at this as a win-lose situation, I believe Periscope will win. Twitter gives them access to a vast amount of more users, and even though Meerkat had early brand success and had early celebrity adoption more celebrities, streamers, and viewers are moving over to Periscope at a rapid click.

Below shows the number of streams tracked on Twitter for Meerkat. Periscope launched on March 26.

Week Number Of Hits
28 Feb – 28th Feb 1
01 Mar – 07th Mar 354
08 Mar – 14th Mar 3217
15 Mar – 21st Mar 30698
22 Mar – 28th Mar 65014
29 Mar – 04th Apr 5880

At the end of the day, it will come down to how many people log on to watch your streams. 

My last Periscope stream had 233 viewers. My last Meerkat? Zero.

about the author

Tristan Pollock is an Entrepreneur-in-Residence at 500 Startups and the co-founder of Storefront, the online marketplace that connects makers with retail space. Previously, he co-founded SocialEarth, the Huffington Post of social entrepreneurship. A Minnesota native from a family of makers, Tristan now lives and creates in San Francisco, California.

He’s on periscope as @writerpollock 

references

Silicon Valley Etiquette

I get a lot of emails (563 per day to be exact). I also get a lot of asks for intros. A lot of intros.

I don’t throw these numbers out to show how cool I am. The reality is that a lot of people — probably a lot of the people you’re trying to reach right now — get a lot more emails than I do.

When I started mentoring companies at 500 Startups in my E.I.R. role, I started reflecting on everything I’ve learned as a Minnesotan who relocated to San Francisco a little over two years ago.

In the North of the United States (yes, it’s ‘the North,’ not the Midwest) we are known for being ‘Minnesota Nice,’ so I took my principles of being a respectful, caring Northerner and massaged my approach as I integrated into the tech scene on the West Coast.

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There are very subtle things tech founders and people should both know and do. I learned them by experience after moving here from Minnesota — my motto is “move fast, break things.” My hope is that by sharing some of these mundane but incredibly important notes on communication, I can give founders and tech people that have relocated from other parts of the US or world a head start and the opportunity to break fewer things (i.e. relationships) in their first few months or years in San Francisco and Silicon Valley.

EMAIL

1. @yourdomain.com

This sounds obvious, but always send from your company domain (e.g. @thestorefront.com) — Google Apps, use it!

2. Email signature

Have a catchy email signature. BONUS: Add a tracked link and record how many site visits your footer brings. EXTRA BONUS: Consider adding a promo code and tracking that. There’s value to capture in your email signature, so play around and see what you can come up with.

Example:

Tristan Pollock

Co-Founder, Storefront — find short-term retail space.

Learn more: thestorefront.com

3. #ABC – Always Be Closing

Every email, conversation, or message of any kind is an opportunity to sell your company — subtle or not. Give people a link back to your company in both your signature and email address every single time.

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4. Geographic abbreviations

A quick point on geographic abbreviations:

SF = San Francisco

MV = Mountain View

PA = Palo Alto

Sand Hill Road = Investor Central

INTROS

5. BCC and thank your connection

Always BCC and thank the intro person after accepting the email.

Example: ‘Thanks Tristan > bcc.’ at the top of the email body.

6. Response time

Respond quickly (24 hours or less). The faster the better. It shows you are on top of your game, and that you care.

7. Personal, not pushy

Don’t ask for intros in an initial email to a founder; ask after the second or third conversation. Really get to know other founders and investors and understand their unique personality (SF is the place to be for unique personalities).

Special-Peoples-Club.gif

Overall, relationships rule, and talking to someone in person is always the most memorable.

8. The 15-minute call

I often suggest a quick 15-minute call to talk about X, Y, Z specific points in order to not waste someone’s time that doesn’t know me yet.

9. Follow-ups

If you took an intro, let the intro-maker know how it went. I always appreciate a follow-up, thank you, and to know it actually helped to make the intro.

Brent Locks, the founder of Pict, once broke down the components of a good, forwardable investor intro email for me:

> Quick one-liner saying what’s up to me.

> Who you want an intro to. What you guys are doing. How/why what you’re doing means you must meet X investor (i.e. how you guys would benefit). It’s why you must meet them and why they must meet you. It’s a two way street. It’s a partnership. It’s not only why you would benefit (you’re gonna get money, duh!).

> Traction (talk it up). “As you know, we’re killing it, we’re crushing it, etc.” Using the words “killing it” or “crushing it” will almost certainly land your email in the trash. Do NOT use those words. Traction should be quantifiable.

> Add your Angel.co link.

> Attach an overview deck or one-pager. Many legit investors won’t do a meeting without seeing something in advance.*

> Make sure to be genuine. While this is the template, these emails aren’t mad libs.

*For me, Brent’s last point is debatable, I think you should have a pitch deck and shorter email-ready deck or one-pager ready, but there also should be some reciprocity or interest on the investors part before divulging company numbers.

Dave McClure also adds:

I always like three bullets of milestones, as well as a link to the company’s AngelList profile, both in footer and body of the email.

– MRR / ARR is $X.

– Growth is Y% average over the past 3-6 months.

– Raised $Z from notable investors A, B, C.

Here’s an example (with names and numbers changed) from Varun Khona of HeadOut — my mentee in Batch 11 of the 500 Startups accelerator.

SUBJECT LINE:

Intro to [Investor] at [Fund Name]

BODY:

Hey Tristan,

I would like to get in touch with [Investor Name] from [Fund Name]. They have a very strong portfolio of on-demand mobile services such as Lyft, Uber and Washio and would be a great strategic fit with Headout.

Below is a quick blurb you can forward.

Headout is a mobile marketplace for spontaneous travelers to discover & book local activities on-demand for the next 24 hours. Think of it as the HotelTonight for tours & experiences.

Traction:

– $XM sales run-rate in 6 months

– Growing X% month-over-month

– Average transaction size is $X

We are raising our seed round and would love to talk.

You can download the app here: https://www.headout.com/app — or visit our AngelList Profile.

Thanks,

Varun

I call this a ‘forwardable intro’ email and, if I’m excited about the product, founder, and industry, as I am with Varun and HeadOut, I would forward this email to the respective investor and tell them why I’m excited.

In closing, these tips are obviously only a snapshot of how Silicon Valley (and San Francisco) communicate, but keeping these points in mind when talking with founders, investors, journalists, and others in the tech scene is incredibly important to growing your network and being respected.

Overall, #ABT, too: ALWAYS BE THOUGHTFUL. It’s hugely respected by founders and investors.

Till next time, stay nice and KEEP HUSTLING.

Do_2dfc03_1560093.gif

ABOUT TRISTAN

Tristan is an Entrepreneur in Residence at 500 Startups, the world’s most active investor, and empowering the most creative people in the world as co-founder of Storefront, the online marketplace that connects makers with physical retail space. Called ‘Airbnb for Retail’ by The New York Times, Storefront has helped open over 1,000 stores to date.

His last startup, SocialEarth, the Huffington Post for social entrepreneurship, hosts over 200 contributors in 25 countries. SocialEarth was acquired by 3BL Media in 2012.

Tristan has also been named to the Forbes 30 Under 30 list in 2015, and led national marketing campaigns at Best Buy, including crafting the most read email of all time reaching over 23 million customers.

A Minnesota native from a family of makers, Tristan now lives and creates in San Francisco, California.

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14 Marketplace Mistakes That Are Killing Your Startup

One week ago, I hosted my fifth Marketplace Dinner. This particular one took place at the DogVacay headquarters in Santa Monica.

Marketplace Dinners are a series of happy hour-esque meetups that bring together founders and leaders at startup companies growing, you guessed it, marketplaces.

So far, we’ve gathered over 250 founders and leaders (averaging about 50 founders per event), including entrepreneurs and executors from Airbnb, Odesk, eBay, Lyft, Uber, Thumbtack, and many more.

Each event is three hours of eating, drinking, and telling tales of what it took to build a marketplace.

Why the need for Marketplace Dinners? Two reasons:

1. Startup founders are incredibly collaborative and thoughtful.

As a Minnesota kid moving to San Francisco, I felt welcomed by the tech community here. I wanted to make sure that continued.

I personally can’t even count how many times I’ve picked up the phone and called, texted, or emailed other founders for their perspective or a coffee. Ninety-nine percent of the time I get a friendly response.

2. Marketplaces are rewarding, but hard.

When you are serving two customers, there is a lot to think about, especially when you need those two customers to work together. Thus, many mistakes are made along the way.

Although some mistakes are inevitable and are a natural part of rapid learning and iteration, a lot of common (and costly) marketplace mistakes can — and should be — prevented. We’ll go over those today.

To start, two simple marketplace definitions from Merriam-Webster to give us a history lesson.

First

: an open square or place in a town where markets or public sales are held.

Secondary

: a sphere in which intangible values compete for acceptance.*

*To bring the business definition up to 2015 terminology, assume sphere means platform; compete includes a buyer and seller (demand and supply); and intangible values can be tangible goods as well.

Okay, we definitely need an updated definition.

To rewrite it, I would define a modern-day marketplace business — think sharing economy — as follows:

Marketplacea platform that facilitates the exchange of a product or service, enabling those looking to provide that product/service (usually called sellers) to connect with those seeking that product/service (usually called buyers).

Now let’s dive into the most frequently made mistakes that occur when building a marketplace (in no particular order), and hear directly from leaders at Airbnb, Odesk, Etsy, and other leading marketplace companies.

Marketplace Mistake #1 – Poor Risk Management

When an Airbnb apartment was trashed, it caused a media storm. Airbnb spent countless hours responding to the press and supporting their customers, but when Hurricane Sandy drowned a large part of Manhattan, Airbnb was prepared and lent a hand by reducing prices and opening up homes to those that were displaced.

121107091749-airbnb-sandy-monster.jpg

On the other hand, Uber has made this mistake time and time again. Whether it isincreasing surge pricing and defending it during a hostage situation in Syndey, Australia, or not running background checks on drivers in India, Uber has given the public a perception that the trust and safety of its customers is in the back seat, figuratively not literally.

Marketplace Mistake #2 – Smart Risk Management Without Self-Promotion

Atish Davda, co-founder and CEO of EquityZen, tells a tale of how important this was for his customers:

“Let me start with a quote from Tolstoy: ‘All happy families are alike; each unhappy family is unhappy in its own way.’ Marketplaces are obviously similar in that what constitutes a mistake in each one is different.

For a fin-tech marketplace like EquityZen, trust is crucial. From the get go, our core offering (sellers sell equity to buyers using our transaction structure), has protections built in for investors so their money is protected. It took us a while before we realized we were not communicating this to buyers up-front. We were doing all the work, but not asking for any of the glory.

One day several months go, I sat down with a fellow 500 Startups founder and he put it as simply as if it were a dented car:

‘You’re wondering why people aren’t willing to send thousands of dollars to a no-name website like yours. I would give you $25,000 of my money right now if you just told me my money is protected. You’re not Fidelity. But, if you are protecting their money like Fidelity does, then tell them about it.’

Now, we bring up those marketplace protections early in the dialog and our conversions have grown precipitously.”

Marketplace Mistake #3 – Serving No Purpose

Is your marketplace solving a real problem? Jonathan Golden, co-founder of StartX and product lead at Airbnb, says, “My only two cents are to not think that every market is the same. Meaning, ‘Uber for X’ or ‘Airbnb for X’ may not work. Each market dynamic is unique and different.” Enough said.

Marketplace Mistake #4 – Not Building a Movement

Many say the time of ‘stealth’ marketplaces is nearing an end. You need to capture brand equity for your company early on and stake your place in your operating industry.

The food delivery space is one example. Even though food delivery is an extremely busy industry right now, companies like Sprig in San Francisco and Lish in Seattle are changing the dynamic by building socially conscious and design-forward brands.

It helps them differentiate and break through the noise.

Marketplace Mistake #5 – Not Regulating Your Community

From rampant Etsy forum trolls to the more recent promo code opportunists, you mustset out a prominent vision and brand for your company and community. You’ll need to moderate and curate a lot, especially early on in the life of your company.

For example, by better curating the retail spaces available on Storefront to have high foot traffic, we were able to drastically increase the likelihood a brand, artist, or designer renting the space would meet their goals for the retail store or event. Goals usually included exposure, sales, market testing, or customer acquisition. Thus, they needpeople to walk through the front door, or else they wouldn’t come back to Storefront. By carefully monitoring the supply side we increase repeat renting on demand side to 65% over only six months.

Marketplace Mistake #6 – Over Regulating Your Community

Here’s a lesson from Shelby Clark, founder of RelayRides, and the P2P advocacy organization Peers, “In the early days, we tried to control too much of the experience in order to provide a high-quality experience,” Shelby explains.

“What we found was that the community was better able to do this at scale than we were, and the more we relinquished control to the community, the better the experience, the more engaged the community, and the faster we could scale.”

Shelby gives two examples of over-regulation:

1. “Early on we did all of the customer service. We soon put the renter directly in touch with the owner in the event of an issue, which reduced work for us and improved resolution time.”

2. “In the early days we installed Zipcar-type technology in every car to allow for mobile access instead of meeting to exchange keys. We were worried about the friction introduced by the key exchange. People figured it out just fine, but it changed the model to longer-term reservations (not worth it to meet up for a $5 rental), which led to better economics for everyone. Also, by having people meet to exchange keys, it strengthened the connection between owner and renter, and the renters treated the cars better and led to less damage.”

Marketplace Mistake #7 – Choosing a Really Bad Name

tumblr_lz8ozff24x1rovmado1_400.gif

Jen O’Neal, founder of Tripping.com, tells a couple stories about company and community names:

“Having spent my entire career building marketplaces, I can think of a bunch of great stories.

Though it would be fun to talk about how StubHub’s original name was LiquidSeats (which was bad for a bunch of reasons), this is the first story that came to mind:

When we first launched Tripping.com in Germany, we initially called our users ‘Trippers,’ which unfortunately translates to ‘gonorrhea’ in German! Nicht so gut. When building a global business, it’s good to check for translation issues.”

Airbnb also has run into this problem in Europe, as the term ‘bed and breakfast’ is not always easily understood.

Marketplace Mistake #8 – Focusing Too Broadly

TaskRabbit and Zaarly got taken over by HomeJoy and Handy before realizing their cleaning and home services were the most purchased services on their respective platforms.

Richard Werbe, founder of StudyPool, a marketplace for student questions, also found this out the hard way:

“A mistake we have made was trying to sell too many types of verticals. We had 30 different verticals at one point. It was hard to manage and we ended up being only okay at each vertical. Then we cut it down to one vertical – academia. That’s when we started to see traction.”

Overall, make sure your current vertical market is large and growing. Then dominate it.

Marketplace Mistake #9 – Pulling Out the Chair on Supply

Social networking within a marketplace has become commonplace. Whether that comes in the form of Airbnb’s groups platform, which allows hosts to chat with one another, or Couchsurfing’s forums where hosts and guests can talk openly about meetups, social connections play an important role in marketplaces.

For those who have managed large online communities, it’s no surprise that the dynamic of an online community changes with its size.

Lyft.jpg

Early on at Lyft, they launched private Facebook groups, which enabled drivers in a city to connect with on another. Drivers benefited from being able to tap into the insights of other drivers, and Lyft benefited by being able to receive real-time feedback from the community.

However, as Lyft’s community scaled, the personal connections between drivers became more and more difficult to form. A room of ten thousand people simply cannot form connection in the same way a room of hundreds can.

Lyft ultimately switched up the structure of their groups to make them more relevant to drivers and smaller. This brought back that personalized feel that drivers experienced early on. If your marketplace relies heavily on community, keep in mind how it will change as you scale.

Marketplace Mistake #10 – Over Optimizing on Price

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Gary Swart, the past CEO of Odesk (before the merger with Elance) and now venture partner at Polaris, lived this first-hand.

He explains, “One of our big lessons learned was around price. We were charging 30% and we labored over the decision to modify (read:lower) our fees. We ultimately did and that move turned out to be really great for our growth and overall success.”

This experiences is chronicled here by Bill Gurley of Benchmark.

Marketplace Mistake #11 – Quantity vs Quality

Gary Swart also found focusing on either quantity or quality to be utterly important:

“In the early days of oDesk we hand-curated both buyers and sellers in our marketplace and as a result, the conversion rates were very high and the quality of outcomes was fantastic.

The issue with this approach was that it was not scalable. We were limited by acquisition of both clients and freelancers and decided to go to low touch to scale faster. The result was that it forced us to build a product experience that was good enough to scale in a no touch way.

However with this scalability, we sacrificed quality which ultimately hurt us in the long run.”

Marketplace Mistake #12 – Preventing Disintermediation Instead of Adding Value

Every marketplace deals with disintermediation and their customers going around the platform.

It’s a common issue, but a small amount of disintermediation doesn’t always matter. It’s important to know your customers and the value you are giving to them through your marketplace. If you know how your top 2-4 value props rank, then you know what matters to your customers.

Is there a rule of thumb for when your level of disintermediation signals a value prop red flag?

1. Start by looking at each stage of your marketplace funnel and focus on where user activity drops off to address this.

2. From there, you can compare where users are disintermediating against your value props (or demonstrating other issues with activation) and make sure your value is clearly explained and actually rings true for users.

3. Finally, combine user testimonials with tracking data to formulate hypotheses that you can test and iterate on.

At Storefront, we mainly focused on the transactional side of our marketplace (thus why we are called ‘Airbnb for Retail’), which was the second step for a demand side customer, but more recently we saw that the first step — finding short-term retail space — was even more important. That led to new discoveries and new features being offered that made retail space even more accessible on the platform.

Marketplace Mistake #13 – Over Catering to Supply Customers

Jason Davis, founder of Radico, and past director of search and data at Etsy, learned this:

“Etsy’s search box was introduced in 2005 just a few months after launch. The implementation was quite basic: a simple database statement that pulled back results ordered by recency. It worked well enough at the time.

 

(An Etsy snapshot from the Wayback Machine).

Yet as time passed, sellers started to realize that their newer items were getting more heavily promoted at the top of search, while stale items were falling deep into the results. Sellers also started to realize that for the listing price of $.20, they could “relist” their items, hence bumping up the timestamp in the database, effectively promoted their items back to the top.

By 2009, relisting could definitely be called “a thing” and represented a sizeable chunk of Etsy’s revenue ($.20 at a time). Yet at the same time, the marketplace had over 5 million items and search quality–and the buyer experience–suffered.

Etsy eventually solved this problem but won’t go into details here. It was a huge project for the entire company.

The lesson learned here is the balance between the marketplace, buyers, and sellers.

Sellers are the most vocal and act in their own best interest which isn’t necessarily aligned with the overall marketplace experience.

Buyers are silent judges of your success: treat them well and they’ll spend money, otherwise they’ll just silently disappear.

And of course, the marketplace needs to generate revenue via sustainable offerings to make ends meet as a business.”

Mistake #14 – Thinking Marketplaces are Easy Exits

At the end of the day, marketplaces are exciting, empowering, and hard businesses to grow.

Marketplaces take much longer to reach product-market fit, liquidity, scale, and are often a 5-10 year venture before you’ve nailed it. LoopNet exited in eight years. Etsy was founded in 2005 and is just now looking to IPO in 2015, 10 years later. Airbnb is nowvalued at $13 billion, but it took seven years.

Remember to build your marketplace with a passion and vision that’s big, lofty, and adds a positive impact to the people and world surrounding it.

Want to know more about marketplace events? Check out Tristan’s events here or or join the 500 DISTRO Newsletter for more strategies on growing your startup.

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ABOUT TRISTAN

Tristan is an Entrepreneur in Residence at 500 Startups, the world’s most active investor, and empowering the most creative people in the world as co-founder of Storefront, the online marketplace that connects makers with physical retail space. Called ‘Airbnb for Retail’ by The New York Times, Storefront has helped open over 1,000 stores to date.

His last startup, SocialEarth, the Huffington Post for social entrepreneurship, hosts over 200 contributors in 25 countries. SocialEarth was acquired by 3BL Media in 2012.

Tristan has also been named to the Forbes 30 Under 30 list in 2015, and led national marketing campaigns at Best Buy, including crafting the most read email of all time reaching over 23 million customers.

A Minnesota native from a family of makers, Tristan now lives and creates in San Francisco, California. Keep up with Tristan’s events here.

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