[MUSIC] Hello everybody. It's good to have you back and welcome to module two. In this module, we're going to focus on what I call matchmaker models, some people call them marketplace models, and how you can put them to work in your business. So, let's dive right in. First, let's be sure what we're talking about. Matchmaker models bring together buyers and sellers with the matchmaker never owning and typically never touching what is bought and sold. The matchmaker gets paid by commissions or fees from buyers, or sellers, or both. And typically, but not necessarily, it's done online these days. So what's to like about matchmaker models? Well actually, there's a lot to like. Number one, anybody can write code, or just find the code you need on the Internet, it's all available today, and just do it. It takes little or no cash to get started, just some people who want to buy stuff and people who want to sell that stuff. It's not rocket science. And if you don't write code, learn, or find a partner who can. Or these days, you just buy your licence to the software you need, it's all online, very inexpensive. So it's very simple to start a matchmaker business. In the book, you'll find the detailed story of how Airbnb got started. With a couple of mattresses, air mattresses, on the founder's living room floor in San Francisco. And you'll find another detailed story of a matchmaker start up, DogVacay, that brings together dog sitters and dog owners. There's a failure story in the book too which I'm going to tell you about in this module as well. After all, isn't failure often the best teacher? But let's consider some other matchmakers not in the book here. So think about Uber for example, who do they bring together? People who like to drive and have a car, and people who need to go somewhere. Or Craigslist, bringing together buyers and sellers of all sorts of stuff together. Then there's TaskRabbit, bringing together people who lack the time to do some of their everyday tasks, go shopping, fix something, whatever it is, with people happy to do those tasks. Do I need to take my car to get the breaks fixed? No problem, TaskRabbit can handle it. Do I need to go to IKEA to buy some dinnerware for a party I'm hosting next weekend? Easy, TaskRabbit will do it. Freecycle, some of you may know, even brings together people who just want to get rid of their stuff for free with others who are willing to take it. Come and take it of course. They monetize that business by charging makers of fast moving consumer goods for promoting or giving away samples. Very cool, check it out, freecycle.com. As in all customer funded models, as the Freecycle example shows, a key challenge is always to figure out who's going to pay you. Might be the buyers, might be the sellers, you have to figure that out, okay? So you get the drift here, I think. Let's take 60 seconds and do a little exercise. I'd like you to do this. Look around you, wherever you're sitting, or standing, or riding, even on a bus today, and notice the things that you find around you. Maybe there's art on the walls, or furniture on the floor, or stuff on your desk. For which of those things could somebody, maybe you, build a matchmaker business, bringing buyers and sellers of those things. Or maybe services that those things might sometimes require together, okay. So have you got the task? Okay, I suggest you pause right now. Do that task and come back to me when you're ready to move on. Okay, now, I'm not sure what you see, but here are some of the things I see around me today. There are window coverings, and one of them has a broken cord, could somebody bring people with broken window coverings together with retired handyman who could fix them? I don't know, maybe. TaskRabbit could perhaps do it, but they might not serve your area. They might be not so narrowly focused and skilled at finding somebody who knows how to really fix window coverings. My office could use a good cleaning most of the time. Maybe there's somebody more focused than TaskRabbit that could clean my office for me once in a while. So my point isn't that these are good business ideas, they probably aren't. But if you discipline yourself to be alert, to what goes on around you, what you see around you. You may find another category like taxi rides, spare rooms, dogs that need a dog sitter, all those sorts of things that could be ready to be disrupted through a matchmaker model that you could build. Now before I move on to telling you what lies ahead in the rest of module two, I want to give you a little quiz. Here it is. In a matchmaker model, which should you build first? Suppliers so there's enough stuff to buy, or buyers so suppliers have somebody to sell to. What do you think? Pause here and answer please. Okay, actually, the answer here is both. If you have too many suppliers with no buyers, you're going to have unhappy suppliers, right? And they won't stay with you. So if you think you have to build tons and tons of supply before you can even start getting demand, you're going to have unhappy suppliers. But on the other hand, too many buyers coming to your site with nothing to sell means they won't come back either. So what good matchmakers do is they build up both sides of the market place in tandem. A few on one side, then some on the other, then back and forth as the business grows. It's tricky, but it's really important. So which has to come first, chickens or eggs? Actually, it's both, right? Mother nature probably wouldn't approve. So what lies ahead in the rest of module two. First, I'm going to tell you a remarkable story, it's one not in the book, of the matchmaker and the travel industry in Europe who built the business from scratch. And sold it 7 years later for more than 25 million Euros. Guess how it's funded? Yup, you're right, by its customers, almost entirely. After that, I'm going to interview one of DogVacay's dog sitters to give you the inside story of how matchmaker businesses work for those who use them on the supply side. After that, we'll have a failure story. This one's in the book. And I'm going to give you a couple of additional insights that it teaches that are crucial to building good matchmaker models. Then, I'm going to interview Nitzan Yudan, a London based entrepreneur who's building a vibrant matchmaker business that matches flats for rent for medium term stays, with those who need them. Wouldn't you think the rental market is already saturated by Airbnb, and HomeAway, and all the rest? Well, think again. Last, I'm going to talk with one of California's savviest investors, a guy named Ivan Nikkhoo, in Internet businesses. He's got some unique insights into what he calls the uberization of today's markets, that everybody, including you, needs to understand. Then after the interviews, I'll be back to you to talk about a couple of key final issues. Number one, what's likely to go wrong in your matchmaker business? As every entrepreneur knows, Murphy's law is alive and well. And I'll tee up some key things you're going to want to look for in chapter three of the customer funded business, if you're reading along. And some optional articles on some of the keys to matchmaker businesses that you'll find online. Finally, I'm going to give you an assignment to do before we move on to module three. So enjoy this round of interviews and I'll be right back after we complete them. [MUSIC]