Written by James Currier, Managing Partner, NFX (@JamesCurrier)
Full Article can be viewed here: https://www.nfx.com/post/10-years-about-market-networks/
Most people didn’t notice when a 35-person company in San Francisco called HoneyBook announced a $22 million Series B in March 2015.
What was unusual about the deal is that nearly all the best-known Silicon Valley VCs competed for it. That’s because HoneyBook is a prime example of an important new category of digital company that combines the best elements of networks like Facebook with marketplaces like Airbnb — what we call a market network.
Market networks will produce a new class of unicorn companies and impact how millions of service professionals will work and earn their living.
What Is A Market Network?
Marketplaces provide transactions among multiple buyers and multiple sellers — like Poshmark, eBay, Uber, Patreon, and LendingClub.
Networks provide profiles that project a person’s identity and then lets them communicate in a 360-degree pattern with other people in the network. Think Facebook, Twitter, Goodreads, and LinkedIn.
What’s unique about market networks is that they:
- 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 build long-term relationships
Market networks are also unique from a monetization standpoint. They combine the strong network effects defensibility and scalability of direct networks like LinkedIn or Facebook together with the lucrative revenue models of SaaS or marketplace businesses.
An example will help: let’s go back to HoneyBook, a market network for the events industry.
An event planner builds a profile on HoneyBook.com. That profile serves as his professional home on the Web. He uses the HoneyBook SaaS workflow to send self-branded proposals to clients and sign contracts digitally.
He then connects the other professionals he works with like florists and photographers to that project. They also get profiles on HoneyBook and everyone can team up to service a client, send each other proposals, sign contracts and get paid by everyone else….
Full Article can be viewed here: https://www.nfx.com/post/10-years-about-market-networks/