TechCrunch today featured an evolving business model in its article titled From Social Networks To Market Networks | TechCrunch. The model is quite compelling and addresses the argumentation around the validity of online business models.
First, to the definition of a market network.
“Marketplaces” provide transactions among multiple buyers and multiple sellers — like eBay, Etsy, Uber and LendingClub.
“Networks” provide profiles that project a person’s identity, then lets them communicate in a 360-degree pattern with other people in the network. Think Facebook, Twitter and LinkedIn.
- Market networks, combine the main elements of both networks and marketplaces:
- Use SaaS workflow software to focus action around longer-term projects, not just a quick transaction
- Promote the service provider as a differentiated individual, helping to build long-term relationships
Couple of points that I found noteworthy are:
Market Networks add value
A market network often starts by enhancing a network of professionals that exists offline. Many of them have been transacting with each other for years using fax, checks, overnight packages and phone calls.
By moving these connections and transactions into software, a market network makes it significantly easier for professionals to operate their businesses and clients to get better service.
The target nature of the market place businesses also makes the value proposition very compelling.
- Market networks target more complex services. They are not simple services that can be measured objectively i.e. they aren't cab services, data entry jobs, etc.
- People matter.The individuals who come together to deliver the product or service matters!
- Collaboration happens around a project. The SaaS at the center of market networks focuses the action on a project that can take days or years to complete.
- Market networks help build long-term relationships. Market networks bring a career’s worth of professional connections online and make them more useful.
- Referrals flow freely. Referrals are gold, for both the client and the service professional. The market network software is designed to make referrals simple and more frequent.
- Market networks increase transaction velocity and satisfaction. By putting the network of professionals and clients into software, the market network increases transaction velocity for everyone. It increases the close rate on proposals and expedites payment. The software also increases customer satisfaction scores, reduces miscommunication and makes the work pleasing and beautiful. Never underestimate pleasing and beautiful.
You can imagine a market network for every industry where professionals are not interchangeable: law, travel, real estate, media production, architecture, investment banking, personal finance, construction, management consulting and more. Each market network will have different attributes that make it work in each vertical, but the principles will remain the same.
Over time, nearly all independent professionals and their clients will conduct business through the market network of their industry. We’re just seeing the beginning of it now.
Market networks will have a massive positive impact on how millions of people work and live, and how hundreds of millions of people buy better services.