The Legacy of FreeMarkets: Accenture's Gain and Ariba's Loss, and Why We Created the Yelp Elite Squad

The Legacy of FreeMarkets: Accenture's Gain and Ariba's Loss, and Why We Created the Yelp Elite Squad

In the world of business, some companies rise to success while others fall short. Two examples of this are the stories of FreeMarkets and Yelp. FreeMarkets, once positioned as a B2B/Internet play for Wall Street, experienced initial success but ultimately failed to transform their services into a sustainable enterprise software or SaaS business model. On the other hand, Yelp's journey began with the challenge of building a foundation of real and authentic reviews without paying the reviewers. Let's delve into these stories and find the common points that connect them.

FreeMarkets, originally known as "FreeMarkets Online," gained traction by optimizing the offline sourcing process and introducing competitive reverse auctions online. The company's success was fueled by real demand in the market for sourcing services and a well-established sales and account management footprint. However, their failure to transition into a sustainable software or SaaS business model allowed Ariba to swoop in and acquire them for a relatively low price. Ariba not only gained a shared-services center in Pittsburgh but also benefited from the expertise of FreeMarkets' customer-facing executives.

Similarly, Yelp faced the challenge of building a platform of genuine reviews and opinions without compensating the reviewers. They realized that in order to create a strong Yelp community, they needed to establish a shared sense of identity among their early supporters and fans. This led to the creation of the Yelp Elite Squad, a group of influential individuals in San Francisco who were passionate about sharing their opinions on local businesses. By hosting parties at unique venues and fostering real-life interactions among Yelpers, Yelp was able to bring humanity to their platform and establish a sense of belonging and purpose.

Both FreeMarkets and Yelp recognized the importance of creating a community around their respective businesses. FreeMarkets' success was driven by the demand for sourcing services, while Yelp's foundation was built on the power of genuine reviews. In both cases, the companies understood that people needed to believe in and feel connected to their platforms in order to contribute and participate. Whether it was through optimized sourcing processes or real-life interactions, these companies leveraged the power of community to drive their growth.

So, what can we learn from these stories? Here are three actionable pieces of advice:

1. Adaptability is key: FreeMarkets' failure to transform their services into a sustainable business model highlights the importance of adaptability. Businesses need to be willing to evolve and adjust their strategies in response to market demands and technological advancements.

2. Build a strong community: Yelp's success can be attributed to the strong sense of community they fostered among their users. By creating opportunities for real-life interactions and emphasizing a sense of belonging, businesses can generate a loyal and engaged user base.

3. Focus on authenticity: Both FreeMarkets and Yelp prioritized authenticity in their respective industries. FreeMarkets optimized the offline sourcing process, while Yelp emphasized genuine reviews from everyday people. By focusing on authenticity, businesses can build trust and credibility among their target audience.

In conclusion, the stories of FreeMarkets and Yelp offer valuable insights into the importance of adaptability, community-building, and authenticity in business. While FreeMarkets faltered in their transition to a sustainable business model, Yelp successfully created a platform driven by genuine reviews and a strong sense of community. By incorporating these lessons into their own strategies, businesses can increase their chances of long-term success.