Sharing Economy: Go vertical!

TL;DR

Verticals are emerging as the winners in the sharing economy, with platforms focusing on specific verticals rather than horizontal plays.

Transcript

in a lot of the earlier categories of the web particularly social and you know e-com early days of e-commerce and a lot of these others you really saw the big winners were the horizontal plays and then like everyone would try to go vertical and it was like those companies never would do well I mean like you know I don't even really consider you guy... Read More

Key Insights

• 🥳 In the early days of the web, horizontal plays were successful as they built strong infrastructures to support multiple businesses.
• 🖐️ Building a platform is difficult and requires excellence, and competition can be challenging for horizontal plays.
• 🚦 Verticals are now breaking out in the sharing economy because they can focus on specific areas and make design choices tailored to their vertical.
• 👻 Focusing on one specific area allows companies to be highly specialized and excel in that particular field.
• 🚦 Successful companies in the sharing economy, like eBay and Amazon, either started as verticals or eventually focused on vertical plays after establishing themselves as platforms.

Questions & Answers

Q: Why were horizontal plays the big winners in the early days of the web?

Horizontal plays were successful because they were able to build strong infrastructures that supported various businesses on top of their platform. However, building a platform is difficult and takes time, excellence, and the ability to fend off competition.

Q: Why are verticals now breaking out in the sharing economy?

Verticals are doing better because they can focus on one specific area, allowing them to be highly specialized and make design and app choices that cater specifically to their vertical. This specialization gives them an advantage over horizontal plays that have to cater to multiple areas.

Q: What is the $64 question in the sharing economy?

The $64 question is whether companies should focus on one specific thing and grow other areas from there, or if they can do multiple things well enough to be successful. It is a question that investors often ask in deciding the strategy for a company.

Q: How did eBay and Amazon approach the vertical vs. horizontal play?

eBay initially aimed to be a platform that enabled various businesses, while Amazon started with just selling books. Both companies eventually became successful platforms, but their early focus on either being a vertical or horizontal play allowed them to dominate in their chosen areas.

Summary & Key Takeaways

• In the early days of the web, horizontal plays were the big winners, but verticals are now breaking out in the sharing economy.

• Horizontal businesses need to have strength at an infrastructural level, while verticals can focus on a specific area and excel in it.

• Platforms that focus on specific verticals, such as peer-to-peer ridesharing, have the advantage of being highly specialized and can make design choices specific to their vertical.