
Ask HN: Anyone has experience building a marketplace startup? - tixocloud
I&#x27;m trying to build the next Zillow (real estate marketplace) in Canada and would like to learn more about your experiences.
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mswen
Helped to build xPeerient which was a two sided marketplace for enterprise IT
buyers and sellers.

We built a good platform with some cool tech innovations and even had CIOs on
the buyer side of the equation who loved it. However that enthusiasm for the
platform and the visibility that it gave into the vendor selection process was
not matched by velocity of putting projects into the system. We didn't have
the financial staying power to wait out long purchase cycles. In retrospect it
seems to me that many people who were directly responsible for vendor
selection on projects don't necessarily feel like their process is broken and
may in fact be uncomfortable with unfiltered transparency that a unified
platform gives senior executives into their daily responsibilities. So while a
CIO would tell us we will have 30 projects on the platform over the next 6
months the reality would be 1 or 2 and then some of those would get delayed,
which delayed our revenue.

In the end the start-up ran out of money before it could gain sufficient
market traction. About 18 months later the founder located a home for our
technology, selling to a larger firm that already had a base of customers but
could use a more efficient back-end for organizing and delivering service.

So some happy ending for the founder as he recovered his investment, made some
gains and got a few years as CTO of the acquiring company.

I think the angels and VCs came out with some very modest gain as well, but
certainly not the kind of gain that make headlines.

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tixocloud
That's really interesting. How did the platform get started? For example,
convincing sellers to list on the marketplace?

You've pointed out my biggest worry in that the revenue stream from the sell
side might be unstable enough. And I am wondering how I can deal with that.

In your opinion, do marketplaces usually require a significant amount of
capital before they are able to hit profitability?

~~~
mswen
The founder and a couple others of us had previous work that put us in
relationships with a lot of CIOs in medium to very large corporations. One of
the pain points that we heard over and over was the IT acquisition process and
dealing with overwhelming sales pressure from vendors wanting their attention.

By creating a two-sided market we could establish project parameters and reach
out to vendors without revealing the identity of the buyers until the vendor
had made the short list.

Our thought was that if you get the buyers on the platform and they tell all
their vendors here is how we do business if you want to propose/bid on our
projects you have to go through this platform - then we would collect a
commission on awarded projects.

But, CIOs loved the idea and platform but staff who actually manage vendors
and acquisition wouldn't consistently use the platform. And, most CIOs didn't
love the platform so much that they would pull out the big guns and make using
the platform mandatory for their staff.

I don't know if it takes lots of capital but it was clearly going to take a
round B and investors got scared by the lack of anything resembling
sustainable revenue. I feel like with capital to last another couple of years
we could have overcome the staff adoption problem but as it was we ran out of
money.

~~~
tixocloud
Thanks for sharing. I've been told that the adoption of new software/process
is one of the biggest challenges, especially in the B2B space. Coupled with
the fact that there are multiple stakeholders with decision makers being
different from the users and I can see the challenge of a B2B marketplace.

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sharemywin
is your url in your profile. I'm looking at building a marketplace in another
space.

~~~
tixocloud
It is but we are thinking about pivoting at the moment to a different customer
segment.

What are you thinking about working on? Perhaps we can exchange ideas if it's
non-competitive.

