When is a Marketplace No Longer a Marketplace? People Who Have “Too Many Interests” Are More Likely To Be Successful According To Research.

When is a Marketplace No Longer a Marketplace? People Who Have “Too Many Interests” Are More Likely To Be Successful According To Research.

In the world of online marketplaces, there is a growing trend towards what is known as a managed or full-stack marketplace. This term refers to a marketplace that goes beyond simply connecting buyers and sellers and instead takes a more active role in the execution of transactions. One example of this transition can be seen in the food delivery space.

The first wave of food delivery marketplaces, such as Just Eat, Grubhub, and Takeaway.com, simply connected restaurants to consumers. However, challengers like Deliveroo, DoorDash, and Uber Eats were able to displace them by offering a superior experience. These new players not only connected demand and supply but also took ownership of last-mile delivery. This allowed for more predictable delivery times and real-time tracking for consumers.

This shift towards a managed model can be seen in other marketplaces as well. Some marketplaces, like Vestiaire Collective, a second-hand luxury fashion marketplace, offer additional services to enhance interactions between buyers and sellers. For example, sellers ship their products to Vestiaire Collective for authentication before it is shipped to the buyer. This extra step helps establish trust with buyers and makes the fulfillment process easier for sellers.

In regulated services, such as childcare marketplaces, additional involvement is necessary to ensure the safety and quality of service providers. Marketplaces like Bubble, Kalendit, Koru Kids, and Trusted need to conduct background checks and verify the qualifications of service providers before accepting them into their marketplace. While these true managed marketplaces enhance the network effects between buyers and sellers, they often have lower gross margins due to the higher cost of providing these additional services.

However, there is a point where a marketplace becomes so involved in the transaction that it loses its network effects and is no longer truly a marketplace. These are known as Marketplaces in Name Only (MINOs). An example of this is Opendoor, a platform for buying and selling homes. Instead of listing properties on the platform, sellers sell their homes directly to Opendoor after an assessment. In this case, Opendoor takes on the role of the supply side itself, removing the interaction between buyers and sellers. Without this interaction, network effects no longer exist, and the defining feature of a marketplace is lost.

The consequences of losing network effects are significant. Capital requirements increase dramatically for MINOs compared to true marketplaces. True marketplaces can leverage supply to attract demand organically, reducing customer acquisition costs over time. MINOs, on the other hand, need significant capital to acquire a sufficient level of inventory in one geography. This makes them more capital hungry, with weaker moats and more expensive growth strategies compared to true marketplaces.

Now, let's shift gears and explore the idea that people who have "too many interests" are more likely to be successful, according to research. Many of the most impactful individuals in history, such as Elon Musk, Steve Jobs, and Leonardo Da Vinci, were generalists who had a wide range of interests and competencies.

Research has shown that developing multiple interests and competencies can lead to greater creative impact. The ability to make atypical combinations of skills and personality traits can result in unique ideas that resonate with large audiences. Academic studies have found a correlation between the number of interests someone develops and their creative output.

Not only does being a generalist allow for atypical combinations of skills, but it also enables the individual to solve more complex problems. Researcher Brian Uzzi found that the most impactful scientific papers often come from teams with atypical combinations of backgrounds. By combining different perspectives and knowledge from various fields, individuals can come up with breakthrough ideas and solutions.

Furthermore, being a polymath or generalist is easier than ever before. With access to vast amounts of information and online learning resources, it is easier and faster to become competent in a new skill. Isaac Newton famously said, "If I have seen further, it is by standing on the shoulders of giants." By building on the knowledge and skills of others, individuals can pioneer new fields and industries.

Being a polymath also future-proofs your career in an environment of accelerating change. With technology advancing rapidly, individuals will need to adapt and acquire new skills throughout their careers. By being a polymath, you can easily combine your existing skill sets in new ways and stay ahead of the curve.

So, how can you leverage these insights in your own life? Here are three actionable pieces of advice:

1. Embrace your diverse interests and develop multiple skills. Instead of focusing solely on one specific area, explore different fields and find connections between them. By broadening your knowledge base, you can come up with unique ideas and solutions.

2. Seek out opportunities to collaborate with individuals from different backgrounds. By working with people who have different skills and perspectives, you can create atypical combinations that lead to breakthroughs. Embrace diversity and leverage it as a source of innovation.

3. Continuously learn and adapt. In a rapidly changing world, it is essential to stay curious and open to new knowledge and skills. Embrace lifelong learning and be willing to pivot and explore new areas of interest. This will keep you adaptable and prepared for the challenges and opportunities that come your way.

In conclusion, the concept of a managed marketplace is evolving, with some marketplaces taking a more active role in the transaction process. While true managed marketplaces enhance the network effects between buyers and sellers, there is a point where a marketplace becomes too involved and loses its defining feature. On the other hand, individuals who have diverse interests and competencies are more likely to be successful and make an impact. By embracing a polymath mindset, you can combine different skills and perspectives to solve complex problems and stand out in the global economy. So, embrace your diverse interests, collaborate with others, and continuously learn to thrive in a rapidly changing world.