The presentation walks you through Giorgio Giuliani's journey to Product Management in the world of tech, talks about how to market your skills and how to get into the industry. It also touches on balancing knowledge and personal experience with what's best for a wider user group.

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How to Understand a Product
Marketplace by Funding Circle PM

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8. TONIGHT’S SPEAKER
Giorgio Giuliani

9. Agenda
- What is a marketplace?
- Why are marketplace successful?
- Chicken & Egg problem
- Liquidity
- Network effects
- Marketplace in the token economy

10. What is a marketplace?
“Network where money/transactions flow between two or more sides with distinct group
of users on each side.”
A two-sided marketplace is a system that serves two clearly different sets of users and
solves two different problems.
Some examples:

11. Structure of a 2 sided-marketplace?
Each user-base considers the other set of users as part of the product/service.

12. Why are marketplace successful?
Modularized supply Users
Platform/
Marketplace
Suppliers Distributors Consumers
AGGREGATION THEORY: competition is not based anymore on exclusive supplier relations.
Suppliers can now be aggregated at scale, leaving consumers/users as a top-notch priority. The
competitive advantage today is built on the user: those who win the user, win the market.
Pre-Internet Internet
Credits: Ben Thompson - Stratechery

13. Liquidity
Liquidity:
“state of a marketplace where each user can easily satisfy his need”
“State where there are enough producers and consumers on the marketplace and there is
an high expectation of transactions taking place”
Critical mass:
“a state where there is enough volume of supply and demand, for transactions to start
sparking.”
Credits: Sangeet Paul Choudary - Platformed

14. Chicken-and-egg problem
How can you create demand for your platform when there is no supply, or vice versa?
Uber with no riders is not interesting for drivers - and Uber with no drivers is not
interesting for riders.
Where do you start first?

15. Bootstrapping
Bootstrapping or getting to liquidity is not easy. It is really, really complicated. It requires
vision, fast execution and a clear understanding of the problem you are solving.
In many of the cases, you have to be able to hack one side - easily satisfy one of the two
problems you are solving - so that you can free up resources to focus on the other side of
the platform.
In general, you need to focus on a small achievements where you can focus all your
resources and win. Initially, thinking big is dangerous.
This is what makes a Marketplace startup successful.
In one word: FOCUS

16. Getting to liquidity - tricks
- Hacking one side
- Offer incentives/rewards on one side (referral programs, free trials,
etc...)
- Automate the onboarding on one side (Google - crawled the web, fully
mapped one side)
- Start on a small geography (Uber - rolled out city by city)
- Focus on an unserved niche (SoFI - HighEarnersNotRichYet)
- Piggyback other platforms/networks/community(Paypal - built on eBay network)
- Trojan approach - Focus on one specific tool that solve a problem on one side
(OpenTable - booking management tool for restaurants)
- ….many more

17. Network effects
“A network effect occurs when a product or a service becomes more valuable to its users
as more people use it”
Network effect ≠ Virality. Network effect delivers more value as user-base grows. Viral
growth is a phenomenon related to the speed of adoption.
Credits: Anu Hariharan - A16Z, Prof. W. Brian Arthur
Network effect is crucial for many reasons:
- Facilitate growth
- Build defensible business - create barriers to exit (for users) and to entry (for
competitors)
- Help create winner-take-all networks → everything tends to be absorbed by the
winner

18. Network effects - virtuous cycle
Supply Demand
1. Better UX
2. More users
3. More suppliers - pretty easy as
supply is commoditized
4. More users - more suppliers will
send the price down and bring more
users
This cycle is based on price, but it can be based on other levers - depending on the product/domain of application

19. Funding Circle case study
1. Borrower: better UX
investors: opportunity -
attractive returns 2. First borrowers
come in3. More investors
join because they
can achieve
attractive returns
> more funds
4. More investors > faster times >
better UX > more borrowers
Funding Circle is the leading small business platform in the UK, US, Germany and the
Netherlands. By cutting out the middleman and linking supply with demand, investors can lend
directly to creditworthy small businesses which in turns helps the economy to grow. Since 2010,
investors have lent £5bn to 50,000 businesses worldwide.
Investors Borrowers

20. Freestak case study
1. Brand: better UX
Influencers: more
opportunities 2. First brands come in
3. Brands =
campaigns =
opportunities > More
influencers joins
4. More influencers > Better
campaigns > More brands
Platform to connect Brands with Content Creators and Sports Influencers in the Adventure,
Outdoors and Endurance Sports sectors.
Influencers
Brands

21. Marketplace in the token economy
Blockchain protocols have the property to easily standardize and organize an enormous number of
players on one solution of a problem.
Ex. Bitcoin mining - miners can be considered an example of super standardized supply.
Commoditized/
Modularized supply
Users
Platform/
Marketplace
Internet:
Decentralized supply Users
Protocol
Decentralized Internet:

22. Network effects in the token world
Credits: Mike Karnjanaprakorn
DEVELOPERS
Bring
SERVICE
Brings
USERS
Bring
PRICE
Brings
INVESTORS
Brings
VALUE (PRICE)
Brings
DEVELOPERS
...
$$
Service
Any real benefit
for users?
Investor appetite for
tokens is pretty strong

23. Utility in the token world
Credits: Chris Dixon - A16Z

24. Wrap-up
If you want to start/work in a marketplace
- Always remember you are solving 2 problems for 2
users
- Start small and be super focused
- Use network effect to grow
- And don’t underestimate protocols

25. MARKETPLACES
- https://www.youtube.com/watch?v=n57UaE08h7A
- https://medium.com/@jgolden/four-questions-every-marketplace-startup-should-be-able-to-answer-
defb0590e049
- https://stratechery.com/2015/aggregation-theory/
LIQUIDITY
- https://news.greylock.com/paving-the-way-to-marketplace-liquidity-76c8e7854cad
- https://andrewchen.co/how-to-build-a-billion-dollar-digital-marketplace-examples-from-uber-ebay-craigslist-
and-more/
- https://pando.com/2012/11/20/liquidity-hacking-how-to-build-a-two-sided-marketplace/
- https://blog.elichait.com/2018/04/09/how-the-100-largest-marketplaces-solve-the-chicken-and-egg-
problem/
- http://firstround.com/review/How-Modern-Marketplaces-Like-Uber-Airbnb-Build-Trust-to-Hit-Liquidity
NETWORK EFFECTS
- https://medium.com/@nfx/the-network-effects-manual-13-different-network-effects-and-counting-
a3e07b23017d
- https://a16z.com/2016/03/07/all-about-network-effects/
- https://a16z.com/2016/03/08/data-network-effects/
- http://tuvalu.santafe.edu/~wbarthur/Papers/Arthur_EJ_1989.pdf
- https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef
- https://medium.freecodecamp.org/token-network-effects-a-new-business-model-for-a-decentralized-web-
6cde8b4e862
Resources

26. Thank you!
Q&A
https://www.linkedin.com/in/giorgiogiuliani/
@giuliani_gio

27. www.productschool.com
How to Understand a Product
Marketplace by Funding Circle PM

28. www.productschool.com
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