Infrastructure for Marketplaces: The Shovels and Picks of the End-to-End Marketplace Gold Rush!

Infrastructure for Marketplaces: The Shovels and Picks of the End-to-End Marketplace Gold Rush!

Building marketplaces is really hard. The hardest nut to crack is building liquidity: having a critical mass of buyers and sellers. One of the main reasons marketplaces fail is that they don’t live up to the expectations of their buyers, and consequently, of their sellers. Buyers typically not only expect the type of quality of service to be comparable to that of an Amazonor Zappos, but also, they are unaware that the service in a marketplace is provided by a third party rather than by the company itself.

Given these high expectations, marketplaces work hard to improve the quality of their suppliers. Many marketplaces have regular training seasons to do so. Airbnb teaches its hosts how to treat their guests upon arrival, how to promote their home on their website, and how to optimize prices depending on the season, etc. Skillshare trains their teachers how to manage student expectations, how to choose the right venue and select the right schedule for the class, etc. Marketplaces make their suppliers do a lot of work!

People tend to mimic each other. If there are a few sub-par sellers who write lousy descriptions and take low quality photos, then often the supply quality of the marketplace as a whole starts declining as other suppliers think it’s ok to do the same (which is less work than doing a good job). Airbnb realized hosts were really bad at taking high quality photographs of their homes, so they hired professional photographers to raise the bar. Although any user can request to use the photography service for free, even hosts who take pictures by themselves improved their quality significantly by mimicking the work of the pros. It’s crucial to provide guidance to sellers in a marketplace. Airbnb competes against and hotel experiences; as such they need to provide a superb experience for renters pre-booking and during their stay.

Building an infrastructure around marketplaces is crucial since it enables new markets to arise.OpenTable and Mindbody created the marketplace at the same time as they created its infrastructure. OpenTable could not operate their marketplace efficiently if restaurants did not have a proper reservation management system, so they created one alongside with the marketplace itself. These are concrete examples in which the infrastructure the marketplace needed was very specific, and hence, one company could take care of it. However, most of the marketplaces need infrastructure for several functions and cannot build everything themselves.

Sellers have multiple needs that are hard to fulfill at the beginning. A seller in a marketplace likeeBay or Etsy needs to get reviews, determine pricing, ship their products, take pictures, manage their inventory etc. What would happen if somebody else (and, by somebody else, I mean technology) replaces all those needs? There’s a new wave of companies trying to fulfill all these needs to help marketplaces reach a liquidity inflection point faster.Shippo helps sellers handle shipping labels automatically and get the best shipping prices. Boostable helps sellers handle online marketing to boost their sales. Stitch Labs helps sellers deal with inventory management across platforms. Real Trends helps marketplaces communicate with buyers through their CRM.FotoFuze helps sellers take white-background photos with their phones. All these companies provide the right infrastructure for open transactional marketplaces and strengthen their position as the quality of the supply-side improves dramatically. They sometimes make them look like next generation end-to-end marketplaces. For instance, AirEnvy andSuperhost take 100% of the hassle away from hosts on Airbnb.

There is a huge gold rush towards end-to-end service augmentedmarketplaces like Uber,HandybookUrbanCompass and Beepi. These marketplaces do most of the work for buyers and sellers. They make up for the lack of training and inefficiencies suppliers have. These new marketplaces have raised billions of dollars over the past few years and already served hundreds of thousands of users. The rise of end-to-end marketplaces calls for a completely different type of infrastructure, which is targeted separately to the marketplace itself and to the service providers. The needs Uber, HomeJoyFlycleaners or Sprig have are completely different than the ones needed by open marketplaces.

Many of the new end-to-end marketplaces are built around the on-demand economy and work with contractors on the supply side. Marketplaces needs now include a completely different spectrum of services. They need things such as background checks for their drivers ( or an optimized routing system (Trak by Addy) among many others. The new relationship between contractors and marketplaces also creates a myriad of opportunities and the need of proper infrastructure. Companies like Zen99 are already selling insurance to contractors and helping them with their 1099 forms. Others like Breeze help potential contractors to rent a car and get started in Uber or Lyft automatically. How do drivers optimize which marketplaces to use based on timing and demand? Is there a better way to provide insurance to cars that work on multiple marketplaces? What type of logistic services will self-driving cars bring? We will see more infrastructure companies targeted both to the marketplaces themselves as well as to the service providers. There’s a new economy surging and there’s a clear need for proper infrastructure.

Today it is clear infrastructure is still at its infancy for both open and end-to-end marketplaces. What makes this category very promising to me is that during the gold rush, there were those who became rich by selling shovels and picks instead of looking for gold. We are living exciting times for marketplace enthusiasts like me. I look forward to seeing the development and the unfolding of how this new class of infrastructure plays out.

On Resolutions

“Motivation is what gets you started. Habit is what keeps you going.” - Jim Rohn

Every January 1st we get a new blank book. We celebrate saying goodbye to a year that is now part of our past and welcome with hope a new coming year. New Years Eve is a special moment we all remember that gives us closure for our recent experiences. January 1st is the biggest “Monday” of the year in which we promise ourselves, “Starting tomorrow, things will be different”.

When I look back at my life, I like to divide it into small chapters. The start of a new year marks the difference between the old you and the new, hopefully, better you. Such dichotomy often comes with a handful of resolutions we want to accomplish to achieve that better version of ourselves we all yearn.

Setting a list of resolutions is certainly a great thing to do. Nonetheless, resolutions as we know them have a major problem, they simply don’t work. There’s a reason why gyms are full in January but are under-capacity in September. Resolutions in my perspective have two main problems. To begin with, people rarely set up rewards for achieving their objectives and thus lose motivation soon. Secondly, and most importantly, many resolutions are one time goals that are usually not sustainable over time.

Creating habits is better than setting one time goals as habits increase our chances of success as we perform them repeatedly. Moreover, creating healthy and sustainable habits is the only path to building a better you in the long term. Setting goals makes you feel unfulfilled until you fully achieve such goal, whereas creating habits gives you fulfillment as long as you are doing them.

2014 is the first time I’m writing down my resolutions, which I’ve decided to make public to put an extra pressure on myself. 

My 2014 resolutions:

-Learn to Code

I want to become a decent full-stack developer able to build simple apps whenever I want to and also be proficient enough to read code and fully understand the architecture of an app. I will start using Codeacademy for the basics and then pass to other platforms. I will initially start with two one-hour weekly sessions of Javascript.

-Get a six pack for the first time

I’m usually not perceived as the epitome of sportsmanship by my friends and family. However it is high time I finally get really fit and satisfied with my fitness. I’m not a big fan of going to the gym or running. I get bored really easily. The solution is doing things fast! I will do the Scientific 7-Minute Workout at least 5 times per week in additional to recreational tennis and football.

-Read a new book every 2 weeks

I have a tendency to read 5 books at the same time and realized it just doesn’t work. I am unable to fully grasp all the insights of every book at the same time, and I rarely finish all books. In order to sustainably read a new book every two weeks I will have to make a bunch of adjustments. I will only read only read one book at a time and don’t stop until I finish it. If I don’t like the book, I will stop reading it and don’t pick it up ever again. I also just bought a Kindle Paperwhite. I’ve been reading from my iPad or iPhone, and it just doesn’t work. I can’t read under the sun and my eyes hurt after a few hours. No more excuses. I will also try to read faster.

-Be fully spontaneous once a month

As much as I love my work and what I do, I don’t like being dragged into a repeating routine. Once a month, I will set an alarm to remind me to do something spontaneously crazy and unconventional. I will set a minimum budget of $100

-Explore the world

I’ve been lucky enough to visit 121 cities and 35 countries by age 24. I think that exploring the world is one of the most precious treasures someone can have. I want to keep my pace of visiting new cities and countries. Although it is harder (and expensive) to have traveling as a habit, I want to set a minimum of 3 cities per year. 

-Keep in touch with loved ones

I have lived in 6 countries and have many friends spread all over the world as well as my family. It is really hard to keep in touch with many of them and do it as often as I would like. I am setting 1 hour every two weeks to write emails and send messages to people I value enough to keep in touch. 

-Truly helping others achieve a better life

Although I can’t make a full time commitment to strive for somebody else’s life, I realized that I can dedicate  time to others and make a big impact even if my help was not the main reason of their success. I also realized that the most effective way of doing so is by helping one person at a time. I can proudly say I think I’ve had a big impact in the lives of two individuals during 2013 and feel great about it. Whether it is helping them to get their dream job, fix their current relationships or get into college, a constant marginal effort from you can make a big difference. I’ve found myself helping others by chance and still didn’t figure out how to get myself into these situations in a systematic way. Nonetheless, I want to radically impact the lives of 4 people in 2014. An in the meantime, I can keep lending money via Kiva

-Becoming a better investor and entrepreneur

I’ve already built the habit of thinking long term and working really hard to achieve my goals as an entrepreneur and investor. Each year I surprise myself with new achievements and adventures. I’ll keep up doing what I love and see what awaits for me on 2014!

How will I reward myself? I will evaluate my progress on a monthly basis and reward myself with things I truly like doing like a fancy dinner, going to the movies with my girlfriend, watching football/tennis for hour or sleeping for +10 hours. 

A big toast for a great 2014!

Be Obsessive with Details

"Every man’s life ends the same way. It is only the details of how he lived and how he died that distinguish one man from another." - Ernest Hemingway 

A few months ago, I started working with Fabrice Grinda and Jose Marin, seasoned investors and remarkable serial entrepreneurs. I moved to a small town called Cabarete located on the north side of Dominican Republic to be able to work hand-in-hand with Fabrice. 

Only a few days after I had arrived, I got an email from Fabrice saying “Details, details”. I had made a silly mistake scheduling a call with an entrepreneur. Although it wasn’t something of great importance I really got frustrated with myself. I wanted my performance to be flawless and off the charts. I went to bed still thinking about the email, “Details, details”. It was such a succinct but incisive message.  

After probably over-thinking about the concept of details for the past few weeks, I can say they matter a lot and have a huge impact on your life. It’s not that I was never aware of details before, I just wasn’t constantly self-aware of the big impact they had not only in the long term, but also in real time. 

Now, let’s get geeky and use an online marketing analogy. Google Adwords is most of the times the obvious channel through which a startup can acquire customers and drive traffic. If you sell socks online, you pay Google to show your ad every time someone types the keyword ‘socks’. The problem arises when multiple marketers want to advertise over the same keyword. How does Google determine your position? There are several variables including quality score, relevance and CTR, but let’s assume they are equal among bidders for the sake of simplicity. We are left with one variable which is the bidding per keyword itself. Humans innately like round numbers and will most likely choose $1.00 or $2.00 as our bid.   

Now, what happens if you bid $1.01 or $2.01? If everything else is “ceteris paribus”, your ad places first. From the image below you can see your ad will have more than 100% more conversion than the second one. One cent, one small detail made all the difference.


Whether you have a startup or a small coffee shop, remember the devil is in the details. Be thoughtful about details and they will make a huge difference. Zappos and Warby Parker, two of the most lauded companies for customer service don’t do things that much different from the rest. Their obsession about details in customer service is what gives customers that “Wow!” experience and turns them into fans.    

Details make the difference between a lousy first impression and a lasting one. If you are doing business with a Chinese business person, use both hands to hand in your business card.

Details make the difference between a passionate intimate relationship and a mediocre one. Don’t wait for a ‘special’ occasion to give a gift. Buy her (or him) a rose today just because! 

Details will make a big enough difference to make you succeed or fail in every aspect you can think of in life. Be mindful of details and they will pay off. 

Authentic vulnerability

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―Mahatma Gandhi

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The Art of Decision-Making

As an economist, I use the term opportunity cost often. This simple, yet powerful concept is probably what I appreciate the most from economics and find it useful dozens of times per day.

It doesn’t matter who you want to become or what is your objective in life, you will have to face many tough decisions and it is crucial to know how to handle these decisions. Making good decisions is probably one of the most important aspects in life. After all, you are the results of your past decisions.

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Living a purposeful life in Beta

"You only live once, but if you do it right, once is enough." - Mae West

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My first post ever

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