Online marketplaces are really fascinating because they are perhaps broader in scope than you might initially think. For example, Uber is a marketplace. There’s a supply-side (drivers with cars) and a demand-side (people needing rides). Uber connects these two groups together and acts as a kind of digital middle person. Uber does not own any of the cars.
This is an incredibly power business model and it can and is being applied in many different ways. Here are the top internet marketplaces (via the handbook):
I have been interested in this space for years because I have been very curious as to why we haven’t seen more innovation when it comes to online real estate marketplaces. Yes, there are platforms like Zillow.com. But Zillow has not done to real estate what Uber is doing to urban mobility.
My thinking is that it comes down to supply-side aggregation. Online marketplaces in general are hard to get started, which is why investors love them. They have defensibility. But real estate, in particular, is even harder to jumpstart compared to the incumbent models because of what I see as constraints on the supply-side.
That’s why I am so excited about what BuzzBuzzHome.com is doing on the new construction side of the business. They are aggregating supply.