The Unbundling of LinkedIn and the Rise of Vertical Labor Marketplaces: How Figma's Approach to Collaboration Sets It Apart

The Unbundling of LinkedIn and the Rise of Vertical Labor Marketplaces: How Figma's Approach to Collaboration Sets It Apart

In recent years, there has been talk about LinkedIn being the new Craigslist. Just as Craigslist was eventually unbundled and disrupted by more specialized marketplaces, the same fate may be in store for LinkedIn. While LinkedIn has been a valuable platform for professionals to connect and showcase their work history, it falls short when it comes to certain job categories, such as blue-collar workers. This has created an opportunity for the rise of vertical labor marketplaces, which cater to specific industries and provide a more tailored experience for both job seekers and employers.

One of the key advantages of vertical labor marketplaces is the high repeat usage on the supply side. Workers in these marketplaces often come back frequently to find new job opportunities, creating a steady stream of users. The more verticalized the marketplace, the better, as it allows for a more focused and specialized experience. To defend against disintermediation, it is crucial for these marketplaces to provide a strong value proposition to both job seekers and employers. This can be achieved by offering value-add tools or services that enhance the overall experience.

Uber is a prime example of a successful vertical labor marketplace. Riders are willing to ride with different drivers each time because their trust lies with the marketplace, not with a specific driver. This highlights the importance of building trust and loyalty between the demand and supply sides of the marketplace. Additionally, many vertical labor marketplaces have a data moat that creates defensibility. Reviews and feedback about workers on the supply side provide valuable information and make it easier for workers to secure future jobs, creating stickiness for the marketplace.

Shifting gears, let's now turn our attention to Figma, a design tool that has gained significant traction in the industry. What sets Figma apart is its browser-first approach, which allows users to not only store their designs in the cloud but also edit them in the cloud. This means that Figma users are always working on the same design, fostering collaboration and eliminating version control issues. In contrast, other design tools like Dropbox require users to work on standalone apps on their desktop, which can lead to inconsistencies and difficulties when collaborating.

Figma's understanding and usage of new technologies like WebGL, Operational Transforms, and CRDTs have made their browser-first approach performant and efficient. This technological advantage has helped them attract designers who appreciate the seamless collaboration capabilities offered by Figma. By focusing on team libraries and creating a tool that is purpose-built for designing vector-based digital products, Figma has not only catered to designers but also opened up the design process to non-designers.

Collaboration has become increasingly important as it has become easier and more accessible. Figma recognized this and positioned itself as a tool for teams to design, rather than just for individual designers. This shift in focus from individual features to collaboration has been instrumental in Figma's success. The cross-side network effect between designers and non-designers has been a driving force behind their growth.

One of the unique aspects of Figma is its alignment between product and core distribution loops. Their product is built around collaboration, and this alignment has allowed them to compound their success. Additionally, Figma's plugin ecosystem has further enhanced their product by allowing users to access collective progress. However, the true potential of Figma lies in its ability to become a platform. If they can make this transition, they have the potential to push progress in design as a discipline.

In conclusion, both LinkedIn and Figma have experienced shifts in their respective industries. LinkedIn is facing the rise of vertical labor marketplaces that cater to specific job categories, while Figma has positioned itself as a collaboration tool for teams. To navigate these changes, there are actionable advice that can be applied:

1. Identify a vertical with frequent repeat usage: For startups looking to enter the labor marketplace space, focusing on a vertical that has high repeat usage on the supply side can lead to rapid growth. By providing value and addressing the specific needs of that vertical, startups can establish a dominant position.

2. Build trust and loyalty: Disintermediation can be a challenge in labor marketplaces, especially when there is a high degree of trust between job seekers and employers. By fostering trust and loyalty through features like reviews and feedback, startups can create a strong foundation for growth.

3. Prioritize collaboration: As collaboration becomes easier and more important, tools that prioritize collaboration will have a competitive edge. By understanding how people collaborate and aligning their product with those needs, startups can attract a broader user base and drive compounding success.

Both LinkedIn and Figma have demonstrated the importance of adapting to changing market dynamics and meeting the evolving needs of their users. By understanding the rise of vertical labor marketplaces and the growing demand for collaboration, startups can position themselves for success in these rapidly changing industries.