Why I think “Marketplaces” are not just software, but a human opportunity

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Many people are worried that software automates human jobs out of existence. But not all software is like that. There are software businesses that have created many thousands of new jobs, and not just jobs at software companies, but new, independent jobs for people all over the world. These businesses use software to create marketplaces, and on those marketplaces sellers of goods and services can thrive: Hundreds of thousands of small businesses who sell on eBay or Etsy, tens of thousands of bands who sell music and merchandise on Bandcamp, tens of thousands of designers who sell web site designs on WordPress, to name a few. This is software used for a great purpose, to attract a large group of buyers and then open up that aggregated buying power to third party vendors instead of keeping it all to yourself. It’s the digital equivalent of using the town center to open a farmers market instead of a box store.

Let me dig into WordPress as an example because I know it well. WordPress helps people create and run web sites and currently powers over 27% of all sites on the internet. The design, building, and hosting of all those millions of sites has created tens of thousands of jobs for WordPress consultants and businesses – good jobs that pay well and can be held anywhere. Those jobs exist because WordPress is an open platform designed to let anyone participate and offer their services. The software itself is not that different from other web site tools – Blogger, Wix, Squarespace, they all offer features similar to WordPress – but none of them have created so many jobs. Some have tried. Blogger gives site owners a cut when showing Google Ads. Wix has some third party plugins. But those are not true marketplaces, they are just add-ons designed to boost the host’s core revenues – a digital share cropping arrangement that does not lead to independent jobs and businesses.

There is nothing inherent in all software that automates and kills jobs, it’s the business model that we choose to sell that software that dictates how the money flows and which services get valued and paid for. In my capacity as an investor at True Ventures, I love meeting entrepreneurs who want to pursue building marketplace businesses. If you have a seed stage startup with an open, marketplace-based business model, I’d love to talk to you to learn more about it.

Photo credit: CC by SMcGarnigle

Published by

Toni Schneider

Partner at True Ventures. Team lead at Automattic. Advisor at Atipica, Bandcamp, Handshake, Hatch Baby, Madefire, Renovo Motors, and Tend.ai.

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