In the spirit of transparency, I want to be very clear that we haven't solved this—far from it. But we have created a mechanism to:
- Match businesses with really good freelance content creators
- Provide a reliable stream of well-paying work to folks in our community
- Facilitate the work rather than doing it ourselves (this is key)
Our work is far from finished, but I wanted to share some of the progress we've made on this and some of the things we're still figuring out.
First, why a marketplace?
Of all the many ways that communities generate revenue—sponsorships, memberships, affiliates, job boards, etc.—why create a marketplace? It's hard, complicated and time-consuming.
One thing I've learned is that for communities, some lines of business can simply be "turned on" at a certain scale. For example, almost any community can run a decent job board with a few thousand members. It's nearly as simple as signing up for Niceboard or Pallet, then letting your members know. Same for sponsorships. Once you aggregate enough people, your community becomes an interesting source of potential customers for lots of other companies. At a larger scale, I think the same can be true for affiliates. (We don't do this yet and I'm not sure that we will.)
A marketplace is the opposite. The scale of the community helps a little, but the marketplace still has to be created, marketed, sold, managed, refined, etc. Operational complexity starts to get overwhelming even with two customers. But in observing our community, I noticed five important things that convinced me that we should do this:
- Freelance projects get way more interest than full-time roles (supply side already exists)
- Companies were already sourcing freelancers through the group, even though the experience was really bad (clear demand)
- There is no central place to find good freelancers or quality gigs (high market fragmentation)
- Companies hire freelancers all the time, but only hire FTEs occasionally (high frequency)
- There are lots of headaches involved with payments/getting paid (obvious pain points)
This intrigued me. The demand is clear and the experience stinks. That made a marketplace feel like a natural way for Superpath to add value. We could clean up the experience for both sides, and take a cut for our work. (Note: the marketplace is not required. You can still use our Slack group to source writers for free.)
As soon as we announced this, we signed up a few customers. It worked! Well, that's when it got complicated also. We've spent a lot of time refining the process. We want our marketplace to be an awesome experience for both sides. Companies should be able to count on Superpath for really good content, and freelancers should expect to work with useful content briefs and get paid well and quickly. Turns out it takes a lot of effort to make this simple for both parties. But that's the deal—we absorb the headaches so that supply and demand can transact easily.
Managed vs. "true" vs. reverse marketplaces
Superpath runs a managed marketplace. This means that we add value as a middleman on an ongoing basis, and take a larger cut for the added value. Here's a quick look at how that works:
- We sell a content subscription to a B2B SaaS company.
- We collect article topics, then source writers to do the work.
- If the company needs ideas, we provide them at no extra cost.
- We have a part-time editor that edits everything and adheres to style guides.
As a managed marketplace, we have to charge and pay standardized rates to make the unit economics work. In a "true" marketplace, writers could set their own rates. This distinction is hugely important if you plan to make your own marketplace—it affects every single thing that you do, how you make money and how you grow.
|Managed Marketplace||True Marketplace|
|Pricing||Set by middleman||Set by supply side|
|Scale to win||Small to medium||Massive|
Another important difference is that Superpath is responsible for happy customers. What happens if we fall behind on a subscription? What if a writer delivers a piece late? In a true marketplace, this might affect the supply side's rating. But in a managed marketplace, it's on us to stay on schedule, source new writers if needed, and generally ensure that the customer is happy. These kinds of issues are inherent to a managed marketplace—the middleman is largely responsible for customer success.
We've talked a lot about how we might make a true marketplace work. Upwork is an example of a true marketplace. Freelancers can set their own rates and build a reputation by getting positive reviews. Companies decide which freelancers to work with and Upwork takes a small fee called a take rate or "rake" for matching. Once that match is made, Upwork gets out of the way. A true marketplace relies heavily on software and algorithms to function. It requires a massive scale to be profitable since take rates are so low. Airbnb, for example, takes 3%. And that 3% is the company's gross revenue, not profit. They need to match a freaking ton of guests and hosts to actually make money.
I'd like to test this one day but the tech investment is significant. There are a few SaaS products that let people create marketplaces for cheap (like $100/month or so). But Superpath is a "reverse" marketplace. That means, among other things, that the demand side creates the listing. There aren't any out-of-box solutions for this kind of thing.
|Listings||Created by supply||Created by demand|
|Relationship||One seller, many buyers||One buyer, many sellers|
|Growth constraint||Demand side||Supply side|
There is almost no information out there on reverse marketplaces. In general, marketplace businesses are built for consumers and aim for scale. Reverse marketplaces like Upwork, MarketerHire and Toptal can succeed at a much smaller scale. There are no reverse marketplace SaaS tools, so these companies have to build their own software. This is really, really expensive. One of the main reasons we're running a managed, reverse marketplace is because we can do it on Airtable for $48/month.
If our marketplace continues to go well, perhaps we'll consider investing in tech later on. And if we do, maybe we'll spin out a SaaS offering too. 🙂
"Aren't you basically running an agency?"
This is an obvious question, and a good one too. The answer is "no" for a few reasons but most importantly is that most agencies hire a team to service clients. I don't want to do that for a few reasons:
- It's really expensive and those costs are passed on to the customer.
- There are so many good freelancers out there.
- Sourcing freelancers from our community is a huge value-add to members. (We win as our community wins.)
- Working with freelancers gives us tons of flexibility to meet customer needs, i.e. we can source subject matter experts for short-term needs.
- In-house content marketers don't actually write that much!
Could you create an agency without a team? I guess so, but I'd argue that you've actually just created a marketplace. Our customers may not know or care whether we call this a marketplace or an agency. I hope they see Superpath as a reliable source of good content—that's it.
Internally, I think it's really important that we treat it like a marketplace. We're centralizing a really fragmented industry not creating a professional services business.
When you ask in-house content teams how they find freelancers, most use LinkedIn, Twitter and their personal networks. That works for some people, but it doesn't scale and it leaves a lot of people hunting for talented writers on Fiverr, Craigslist and Facebook groups. Worse yet, when a good writer churns out for whatever reason, they have to start over again. We manage supply—along with payments, topic ideation and process—so you never have to worry about that.
Frankly, I see this as a massive opportunity. We've got a few related projects in the works to help us accelerate the process, which I plan to keep writing about. Thanks for reading and stay tuned. 😎