This document provides a 10-point checklist for evaluating digital marketplaces based on an essay by Bill Gurley. The checklist examines whether a marketplace (1) makes a behavior dramatically easier, (2) produces more value than current markets, (3) utilizes new technology, (4) consolidates a fragmented market, (5) makes it easy for suppliers to sign up, (6) serves a large market, (7) can bring in new customers, (8) serves a frequent need, (9) controls the transaction, and (10) leverages a network effect. Examples like Alibaba, AirBnB, and YouTube are provided to illustrate each point. The document aims to help evaluate marketplace opportunities by

1. MAKING A
MARKETPLACE
A CHECKLIST FOR ONLINE DISRUPTION
inspired by @bgurley
by @nireyal and @sanguit

2. On November 13, 2012, Bill Gurley, a partner at Benchmark Capital, posted a remarkable essay
on his blog. In it, he described the, “10 factors to consider when evaluating digital
marketplaces.” Given the tremendous value marketplaces create and how hard they are to get
right, we found this essay to be a goldmine of insight. We wanted to digest Bill’s post into a more
memorable format.
The result is this brief checklist we hope will help take some of the luck out of evaluating
marketplace businesses. As Bill wrote, “It is unlikely that you will find a marketplace
opportunity that would score ten out of ten with respect to this list.” But according to Bill, the
odds of success improve the more of these characteristics the business exhibits.
- Nir and Sangeet
Read Bill Gurley’s original post here: http://goo.gl/xoAUw

3. 1. Does your marketplace
make a behavior dramatically
easier and more efficient?

4. Alibaba
Made transactions between US importers and
Chinese manufacturers dramatically easier than the
previous methods of finding suppliers.

5. 2. Does your marketplace
produce more value than
current markets?

6. AirBnB
Allows anyone to run their own hotel. Room
owners profit from renting out unused rooms
while guests benefits from lower prices.

7. 3. Does your marketplace
utilize a new technology to
create efficiencies?

8. OpenTable
Leveraged adoption of high-speed internet access by
both restaurants and consumers to create a web-
based reservation platform.

9. 4. Does your marketplace
consolidate a fragmented
market?

10. Kickstarter
Connects entrepreneurs with financial backers who
want to see projects succeed. Both sides of the market
are fragmented with no dominant players.

11. 5. Does your marketplace
make it easy for suppliers to
sign-up?

12. Etsy
Makes it very simple to sell handcrafted goods in
minutes.

13. 6. Does your marketplace
serve a large market?

14. eBay
Serves a very large market of online buyers and
sellers for just about anything.

15. 7. Can your marketplace
bring in unserved customers and
expand the market?

16. oDesk
Expanded the market for software outsourcing by
making it simple enough for anyone to use.
Photo Credit: racheocity

17. 8. Does your marketplace
serve a frequent need?

18. GrubHub
Serves a frequent need for many office workers,
ordering daily food delivery.

19. 9. Does your marketplace
control the transaction?

20. Uber
Is at the center of the payment flow when it
coordinates a ride between a driver and rider.

21. 10. Does your marketplace
leverage a network effect?

22. YouTube
Is more valuable with each new video published to
the site. The more videos posted, the more important
the site becomes to viewers.

23. For other essays on
Marketplaces and Platforms,
http://platformed.info

24. For more on creating
user habits,
http://nirandfar.com

25. Good luck
We wish you success making your marketplace.
// @nireyal blogging at: nirandfar.com
// @sanguit blogging at: platformed.info