How even the best marketplace startups get paralyzed

Over the past 15 years, I’ve seen a pernicious disease infect a number of marketplace startups. I call it Marketplace Paralysis. The root cause of the disease is quite innocent and seemingly harmless. Smart people with good intentions fall victim to it all the time. It starts when a platform has sufficient scale — such that there is a good amount of data on things like performance, quality rankings, purchase rates, and fill ratios. What a platform implements as a result of that data, and how it’s received by their user base, is what can lead to marketplace paralysis.

In this post, I will detail what Marketplace Paralysis is and what startups can do to avoid it. Before I get into the nitty-gritty, here’s a snapshot of the lessons you’ll learn by reading this post:

  1. Segment and focus on high-value users
  2. Remember the silent majority
  3. Modify company goals to include quality components
  4. Empower small, autonomous teams

The easiest way to explain Marketplace Paralysis is with a hypothetical example. So allow me to introduce you to Labor Marketplace X (LMX).

Equipped with the aforementioned data, the well-intentioned product managers at LMX will think about policies or features to try and improve a KPI, like fill ratio or job success rate. They might craft a policy that would separate users into two tiers.

Tier 1 gets a shiny gold star next to their name, along with extra pay, bonuses, and preferred job access. Tier 2 gets standard pay and standard job access. They’ve done their homework and feel this will benefit the marketplace.

So, they build the feature. They launch it and make an announcement to their users. And then… a revolt!

When someone great is gone: How to address grief in the workplace with empathy

Birthday cakes, gift cards, free lunches, snacks, movie tickets, and other perks are generously bestowed on employees to celebrate life’s happy moments. This is an improvement from the industrial approach to management, but can we go deeper for our work-family members?

Life’s darker moments hold the greatest opportunity to exemplify a genuine and caring 21st-century workplace culture. One which fosters empathy and camaraderie. Employee turnover is highest when employees take leave, claim FMLA, or use PTO. According to Global Studies, 79% of employees report their reason for quitting was simply due to feeling unnoticed (lack of appreciation).

Appreciation for your employees is best demonstrated as an act of kindness in moments that really matter, like the loss of a family member. Acknowledging that someone great is gone, instead of ignoring the uncomfortable aspects of grief, is a valuable way to embed empathy into your workplace culture.

Recently, while working with a mid-sized (500+ employees) tech company, I asked what they were doing to support employees during the negative life moments. The HR Director replied, “um, nothing really”.

Once realizing how crappy that sounded, another executive countered her by saying he sent an employee a t-shirt and card after a miscarriage. I later learned that the employee he was referring to had been with the company for over 5 years, so it’s safe to assume that she had a couple of company swag t-shirts in her collection prior to getting one as a get well gift.

Even in the largest and most notable companies, where a variety of employee amenities and benefits are offered, the concept and practice of empathy is often neglected. Perhaps you haven’t come across such extreme examples of indifference in your workplace, but you may have participated in signing a generic condolences card or chipping in for some flowers.

Fellow raises $6.5M to help make managers better at leading teams and people

Managing people is perhaps the most challenging thing most people will have to learn in the course of their professional lives – especially because there’s no one ‘right’ way to do it. But Ottawa-based startup Fellow is hoping to ease the learning curve for new managers, and improve and reinforce the habits of experienced ones with their new people management platform software.

Fellow has raised $6.5 million in seed funding, from investors including Inovia Capital, Felicia Ventures, Garage Capital and a number of angels. The funding announcement comes alongside the announcement of their first customers, including Shopify (disclosure: I worked at Shopify when Fellow was implemented and was an early tester of this product, which is why I can can actually speak to how it works for users).

The Fellow platform is essentially a way to help team leads interact with their reports, and vice versa. It’s a feedback tool that you can use to collect insight on your team from across the company; it includes meeting supplemental suggestions and templates for one-on-ones, and even provides helpful suggestions like recommending you have a one-on-one when you haven’t in a while; and it all lives in the cloud, with integrations for other key workplace software like Slack that help it integrate with your existing flow.

Fellow co-founder and CEO Aydin Mirzaee and his co-founding team have previous experience building companies: They founded Fluidware, a survey software company, in 2008 and then sold it to SurveyMonkey in 2014. In growing the team to over 100 people, Mirzaee says they realized where there were gaps, both in his leadership team’s knowledge and in available solutions on the market.

“Starting the last company, we were in our early 20s, and like the way that we used to learn different practices was by using software, like if you use the Salesforce, and you know nothing about sales, you’ll learn some things about sales,” Mirzaee told me in an interview. “If you don’t know about marketing, use Marketo, and you’ll learn some things about marketing. And you know, from our perspective, as soon as we started actually having some traction and customers and then hired some people, we just got thrown into it. So it was ‘Okay, now, I guess we’re managers.’ And then eventually we became managers of managers.”

Fellow Team Photo 2019

Mirzaee and his team then wondered why a tool like Salesforce or Marketo didn’t exist for management. “Why is it that when you get promoted to become a manager, there isn’t an equivalent tool to help you with that?” he said.

Concept in hand, Fellow set out to build its software, and what it came up with is a smartly designed, user-friendly platform that is accessible to anyone regardless of technical expertise or experience with management practice and training. I can attest to this first-hand, since I was a first-time manager using Fellow to lead a team during my time at Shopify – part of the beta testing process that helped develop the product into something that’s ready for broader release. I was not alone in my relative lack of management knowledge, Mirzaee said, and that’s part of why they saw a clear need for this product.

“The more we did research, the more we figured out that obviously, managers are really important,” he explained. “70% of customer engagements are due to managers, for instance. And when people leave companies, they tend to leave the manager, not the company. The more we dug into it the more it was clear that there truly was this management problem –  management crisis almost, and that nobody really had built a great tool for managers and their teams like.”

Fellow’s tool is flexible enough to work with specific management methodologies like setting SMART goals or OKRs for team members, and managers can use pre-set templates or build their own for things like setting meeting talking points, or gathering feedback from the colleagues of their reports.

Right now, Fellow is live with a number of clients including Shoify, Vidyard, Tulip, North and more, and it’s adding new clients who sign up on a case-by-case basis, but increasing the pace at which it onboard new customers. Mirzaee explained that it hopes to open sign ups entirely later this year.

HoneyBook, a client management platform for creative businesses, raises $28M Series C led by Citi Ventures

HoneyBook co-founders Oz and Naama Alon

HoneyBook, a customer-relationship management platform aimed at small businesses in creative fields, announced today it has raised a $28 million Series C led by Citi Ventures. All of its existing investors, including Norwest Venture Partners, Aleph, Vintage Investment Partners and Hillsven Capital, also returned for the round. Citi is a strategic partner for HoneyBook and this will enable it to offer new financial products to freelancers, its co-founder and CEO Oz Alon told TechCrunch.

This brings HoneyBook’s total raised so far to $72 million. It is using the funds to grow its teams in San Francisco and Tel Aviv and build new features for its user base, including small companies, people who work by themselves (“solopreneurs”) and freelancers. Like other CRMs, HoneyBook helps them develop relationships with potential new clients, manage projects, send invoices and accept payments, but with tools scaled for their business’ needs.

Alon told TechCrunch in an email that one segment HoneyBook is focused on is millennials (he cites a survey that found 49 percent of people under 40 plan to start their own business). HoneyBook currently claims tens of thousands of customers and has passed $1 billion in business booked using its software, along with 75,000 members in Rising Tide, the company’s online community for creative entrepreneurs.

Other management software platforms competing for the attention of entrepreneurs and freelancers include Tave, Dubsado and 17hats. One of the main ways HoneyBook differentiates is by enabling its users to accept online payments without integrating with a third-party service. Thanks to this, its users “transact more than 80 percent of their business online, significantly more than any other payments platform serving this audience, Alon said. It’s partnership with Citi will also allow the company to develop more unique services for its target customers, he added.

In a prepared statement, Citi Ventures’ Israel director and venture investing lead Omit Shinar said “We are in the midst of a period of extensive changes in societal structures and economic models. The fintech ecosystem is producing more and more breakthrough innovations that serve the needs of modern consumers, and we believe, as a pioneer in its space, HoneyBook can become a market leader in the U.S.”

Wizeline expands its outsourced IT services business into southeast Asia

 Wizeline, a provider of outsourced programming services, is expanding its global footprint with agreements to partner with a slew of development shops across Southeast Asia. Founded in 2014, the company’s vision is to provide programming jobs for developers in emerging markets to unlock the local talent pool and expose a new generation and geographies to the startup world. Read More

Apple has acquired Workflow, a powerful automation tool for iPad and iPhone

 Apple has finalized a deal to acquire Workflow today — a tool that lets you hook together apps and functions within apps in strings of commands to automate tasks. We’ve been tracking this one for a while but were able to confirm just now that the ink on the deal is drying as we speak. I haven’t been able to get financial details for the deal, but if I come up with them… Read More

You Want Disruption? Can You Handle it?

johnny cashI’m on a panel tomorrow at the Mobile Future Forward event in Seattle. The panel discussion is on disruption, which we met on Friday to discuss over a quick conference call.

I actually don’t think a lot about disruption, which is not to say I don’t look for it. I just try to avoid being disrupted because you never realize the extent to which it’s happening until it’s already happened. The corollary to that is you really can’t plan on making it happen either.

This is why I don’t think about disruption. The great case studies for disruption in our business are all a result of executing really well against an idea that was well conceived and not impaired by compromise. Disruption happens when you don’t have anything to lose, and in every case disruption is the result of bringing together extraordinary people unified by a sense of purpose. Put another way, disruption is not a strategy, it is a consequence.

Encumbent players in any market NEVER disrupt the market they are in. They have too much to lose by leading the way to a new normal and insist on compromise as a core value. You have all seen this happen a million times, new products that threaten the status quo are nipped and tucked in ways that take everything potentially special away from them. There is a civility in these efforts that precludes them from breaking out… they may be successful but they won’t be disruptive. Transformation is not disruption.

You want disruption in your business? Hire the right fucking people! Search out combative, difficult, and argumentative people who care in a very personal way about the vision and purpose of the effort. Teams are messy because people themselves are messy, don’t risk a mediocre outcome by hiring people who excuse mediocrity and have toned down their passion in order to fit in. Hire people who won’t compromise.

Not compromising is not the same as not changing your answer. Wendy Lea once gave me an unintended compliment that I cherish to this day when she said “you are so damn stubborn… (and after awkward moment of silence) but I’ve seen you change your mind on big things.” Of course, if you get new information that supports a better direction than you originally pursued, change your mind. There are no prizes for who is the purest and most dogmatic, therefore changing your position in support of the common purpose is not only practical, it’s being smart.

Here’s what I’m looking for in the people I want to hire:

  1. They take things personally: Success and failure isn’t a clinical, sterile outcome. It involves emotions and sense of caring that goes beyond a job.
  2. Relentlessly curious: Want to infuse new thinking and approaches in any effort? Seek out knowledge in the unlikely of places, talk to people who have already done it, and don’t be afraid to share the random.
  3. Direct and confrontational: Don’t mix words, say what you think and don’t waste anyone’s time by waiting. If something is borked, call it out! If something is working, shout it out and do more of it.
  4. Laugh at themselves: Humor is a powerful antitode for tension, even more so when it is directed at yourself. This ain’t bean ball and even though it’s a tough, high stakes business that asks a lot of people, we can still have fun doing it.
  5. All the usual stuff: Smart, experienced, hungry… yeah, all that, but the inescapable fact is that there are a lot fo smart, experienced, and hungry people. These three attibutes by themselves are no indicator of future success.

 

You Want Disruption? Can You Handle it?

johnny cashI’m on a panel tomorrow at the Mobile Future Forward event in Seattle. The panel discussion is on disruption, which we met on Friday to discuss over a quick conference call.

I actually don’t think a lot about disruption, which is not to say I don’t look for it. I just try to avoid being disrupted because you never realize the extent to which it’s happening until it’s already happened. The corollary to that is you really can’t plan on making it happen either.

This is why I don’t think about disruption. The great case studies for disruption in our business are all a result of executing really well against an idea that was well conceived and not impaired by compromise. Disruption happens when you don’t have anything to lose, and in every case disruption is the result of bringing together extraordinary people unified by a sense of purpose. Put another way, disruption is not a strategy, it is a consequence.

Encumbent players in any market NEVER disrupt the market they are in. They have too much to lose by leading the way to a new normal and insist on compromise as a core value. You have all seen this happen a million times, new products that threaten the status quo are nipped and tucked in ways that take everything potentially special away from them. There is a civility in these efforts that precludes them from breaking out… they may be successful but they won’t be disruptive. Transformation is not disruption.

You want disruption in your business? Hire the right fucking people! Search out combative, difficult, and argumentative people who care in a very personal way about the vision and purpose of the effort. Teams are messy because people themselves are messy, don’t risk a mediocre outcome by hiring people who excuse mediocrity and have toned down their passion in order to fit in. Hire people who won’t compromise.

Not compromising is not the same as not changing your answer. Wendy Lea once gave me an unintended compliment that I cherish to this day when she said “you are so damn stubborn… (and after awkward moment of silence) but I’ve seen you change your mind on big things.” Of course, if you get new information that supports a better direction than you originally pursued, change your mind. There are no prizes for who is the purest and most dogmatic, therefore changing your position in support of the common purpose is not only practical, it’s being smart.

Here’s what I’m looking for in the people I want to hire:

  1. They take things personally: Success and failure isn’t a clinical, sterile outcome. It involves emotions and sense of caring that goes beyond a job.
  2. Relentlessly curious: Want to infuse new thinking and approaches in any effort? Seek out knowledge in the unlikely of places, talk to people who have already done it, and don’t be afraid to share the random.
  3. Direct and confrontational: Don’t mix words, say what you think and don’t waste anyone’s time by waiting. If something is borked, call it out! If something is working, shout it out and do more of it.
  4. Laugh at themselves: Humor is a powerful antitode for tension, even more so when it is directed at yourself. This ain’t bean ball and even though it’s a tough, high stakes business that asks a lot of people, we can still have fun doing it.
  5. All the usual stuff: Smart, experienced, hungry… yeah, all that, but the inescapable fact is that there are a lot fo smart, experienced, and hungry people. These three attibutes by themselves are no indicator of future success.

 

You Want Disruption? Can You Handle it?

johnny cashI’m on a panel tomorrow at the Mobile Future Forward event in Seattle. The panel discussion is on disruption, which we met on Friday to discuss over a quick conference call.

I actually don’t think a lot about disruption, which is not to say I don’t look for it. I just try to avoid being disrupted because you never realize the extent to which it’s happening until it’s already happened. The corollary to that is you really can’t plan on making it happen either.

This is why I don’t think about disruption. The great case studies for disruption in our business are all a result of executing really well against an idea that was well conceived and not impaired by compromise. Disruption happens when you don’t have anything to lose, and in every case disruption is the result of bringing together extraordinary people unified by a sense of purpose. Put another way, disruption is not a strategy, it is a consequence.

Encumbent players in any market NEVER disrupt the market they are in. They have too much to lose by leading the way to a new normal and insist on compromise as a core value. You have all seen this happen a million times, new products that threaten the status quo are nipped and tucked in ways that take everything potentially special away from them. There is a civility in these efforts that precludes them from breaking out… they may be successful but they won’t be disruptive. Transformation is not disruption.

You want disruption in your business? Hire the right fucking people! Search out combative, difficult, and argumentative people who care in a very personal way about the vision and purpose of the effort. Teams are messy because people themselves are messy, don’t risk a mediocre outcome by hiring people who excuse mediocrity and have toned down their passion in order to fit in. Hire people who won’t compromise.

Not compromising is not the same as not changing your answer. Wendy Lea once gave me an unintended compliment that I cherish to this day when she said “you are so damn stubborn… (and after awkward moment of silence) but I’ve seen you change your mind on big things.” Of course, if you get new information that supports a better direction than you originally pursued, change your mind. There are no prizes for who is the purest and most dogmatic, therefore changing your position in support of the common purpose is not only practical, it’s being smart.

Here’s what I’m looking for in the people I want to hire:

  1. They take things personally: Success and failure isn’t a clinical, sterile outcome. It involves emotions and sense of caring that goes beyond a job.
  2. Relentlessly curious: Want to infuse new thinking and approaches in any effort? Seek out knowledge in the unlikely of places, talk to people who have already done it, and don’t be afraid to share the random.
  3. Direct and confrontational: Don’t mix words, say what you think and don’t waste anyone’s time by waiting. If something is borked, call it out! If something is working, shout it out and do more of it.
  4. Laugh at themselves: Humor is a powerful antitode for tension, even more so when it is directed at yourself. This ain’t bean ball and even though it’s a tough, high stakes business that asks a lot of people, we can still have fun doing it.
  5. All the usual stuff: Smart, experienced, hungry… yeah, all that, but the inescapable fact is that there are a lot fo smart, experienced, and hungry people. These three attibutes by themselves are no indicator of future success.