I have written a lot about Opendoor over the past few years because it is one of the most promising “proptech” startups in operation today and I am obviously very interested in the impact of tech on the real estate industry.
I also have a fascination with online marketplaces. From the Greek agora to today’s mobile apps, the exchange of goods and services is a fundamental human activity. Uber, Alibaba, Instacart, Airbnb, Amazon, and Kickstarter are all marketplaces. I think sometimes people forget that.
Andrew Chen, who is a general partner with the venture firm Andreessen Horowitz, recently published an essay on the future of online marketplaces, where he argued that what’s next is a reinvention of the $10 trillion service economy.
Andrew posits that the internet has brought about 4 eras of marketplaces. They are:
I have written a lot about Opendoor over the past few years because it is one of the most promising “proptech” startups in operation today and I am obviously very interested in the impact of tech on the real estate industry.
I also have a fascination with online marketplaces. From the Greek agora to today’s mobile apps, the exchange of goods and services is a fundamental human activity. Uber, Alibaba, Instacart, Airbnb, Amazon, and Kickstarter are all marketplaces. I think sometimes people forget that.
Andrew Chen, who is a general partner with the venture firm Andreessen Horowitz, recently published an essay on the future of online marketplaces, where he argued that what’s next is a reinvention of the $10 trillion service economy.
Andrew posits that the internet has brought about 4 eras of marketplaces. They are:
The Listings Era (1990s)
The Unbundled Craigslist Era (2000s)
The “Uber for X” Era (2009-)
The Managed Marketplace Era (Mid-2010s)
The listing era birthed marketplaces that were essentially online versions of the things that already existed offline. Craigslist, for example, simply took the classified section and put it on the internet.
Over time, these online marketplaces began to focus on specific verticals (the unbundling of Craiglist) and they started to introduce services and features that were native to the internet and later to mobile. Uber obviously only works when everyone has a smartphone.
Today we are living in the era of what Andrew calls the managed marketplace. Opendoor – to get back to the first paragraph of this post – is a managed marketplace. Instead of just connecting homeowners with buyers, they take on specific steps of the value chain. They buy and fix up the homes themselves.
So what’s next?
Supposedly it is regulated services (2018-?). As of 2015, it was estimated that about 26% of employed people in the US carried some sort of license. These are healthcare practitioners, architects, engineers, real estate agents, financial advisors, trades people, and so on.
And the argument is that a lot of how we regulate services today is a result of us creating them before the internet. We needed licenses and certifications to signal to us who was qualified and who was not. But now we have technology to help us do that, which is why this could be the next great era of online marketplaces.
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.
The Unbundled Craigslist Era (2000s)
The “Uber for X” Era (2009-)
The Managed Marketplace Era (Mid-2010s)
The listing era birthed marketplaces that were essentially online versions of the things that already existed offline. Craigslist, for example, simply took the classified section and put it on the internet.
Over time, these online marketplaces began to focus on specific verticals (the unbundling of Craiglist) and they started to introduce services and features that were native to the internet and later to mobile. Uber obviously only works when everyone has a smartphone.
Today we are living in the era of what Andrew calls the managed marketplace. Opendoor – to get back to the first paragraph of this post – is a managed marketplace. Instead of just connecting homeowners with buyers, they take on specific steps of the value chain. They buy and fix up the homes themselves.
So what’s next?
Supposedly it is regulated services (2018-?). As of 2015, it was estimated that about 26% of employed people in the US carried some sort of license. These are healthcare practitioners, architects, engineers, real estate agents, financial advisors, trades people, and so on.
And the argument is that a lot of how we regulate services today is a result of us creating them before the internet. We needed licenses and certifications to signal to us who was qualified and who was not. But now we have technology to help us do that, which is why this could be the next great era of online marketplaces.
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.
If you’d like to download the guide to marketplaces in PDF, click here. It’s a great read and I’m glad that Boris and Angela took the time to assemble. Thank you :)
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.
If you’d like to download the guide to marketplaces in PDF, click here. It’s a great read and I’m glad that Boris and Angela took the time to assemble. Thank you :)
