The Way We Work
April 30, 2012 by Jenna Weiner

Building a peer-to-peer Internet marketplace is no easy endeavor.

It requires maintaining a precarious balance on both the supply and demand sides, trying to find the appropriate level of involvement in marketplace operations, and establishing trust between two parties who typically never meet in person but who usually exchange sensitive information.

These were some of the topics discussed last Thursday night at a panel in downtown San Francisco, titled The Nuts and Bolts of Building a Peer-to-Peer Internet Marketplace.

The second in a series of marketplace panels co-sponsored by and Crosslink Capital,
the panel included:

  • Gary Swart, CEO of oDesk
  • Bo Fishback, co-founder and CEO of Zaarly;
  • Doug Feirstein, co-founder of Liveops;
  • Matt Mickiewicz, co-founder of 99designs; and
  • Steven Cox, co-founder and CEO of

The panel was moderated by Sunil Rajaraman, co-founder and CEO of Here are some of the highlights from the panel’s discussion.

Build up both sides of the marketplace… then let it take off

The panel kicked off by discussing what is arguably the most difficult aspect of launching and sustaining a marketplace business: balancing supply and demand.

The panelists acknowledged that there is generally a tipping point, when building supply and demand on both sides becomes less manual and is instead sustained from momentum. When asked what triggered that tipping point, many of the panelists noted that it was when they introduced peer ratings.

Gary added that oDesk really encountered its momentum “tipping point” when it reached the level of transparency that it has today — not just with peer ratings, but also with work history, skills tests, portfolios, and more.

Establish trust by building it into the platform

Another point of discussion was the importance of establishing trust in the marketplace. When people are exchanging sensitive information online such as credit card numbers or proprietary company information — especially with people they never actually meet in person — it is critical that users trust both the platform and the other users.

One way of ensuring trust is through high-touch methods such as pre-screening users or reviewing each transaction. While this works up to a certain point, the panelists discussed, it is far from scalable. That level of friction can actually inhibit growth, Gary said, adding that “at some point you have to let the marketplace mechanisms work.”

The way to establish trust in a scalable way, multiple panelists noted, was to build it into the platform itself. For oDesk, that comes from the Work Diary, which enables clients to have a high level of visibility into the work as it happens — so they can “trust but verify,” said Gary.

The panelists also came back to the topic of transparency, which is key for establishing trust.

Don’t focus on disintermediation, focus on value

The issue of disintermediation — using the marketplace to find what you are looking for and then moving the relationship offline — was a popular topic, and the panelists had some interesting approaches to it.

While other panelists discussed how they stay one step ahead of disintermediation and fraud, Bo from Zaarly talked about how he ignores disintermediation entirely and focuses on building the best platform possible, knowing that the rest will fall into place. “What I care about is that people have an amazing experience,” he said. “We try to make magic. If we make magic, that’s all we care about.”

Gary had a similar view, that it is best to focus attention on delivering value. When the platform provides enough value throughout the entire process and relationship — instead of just upfront for the match — disintermediation no longer seems appealing, he noted.

An additional benefit of this focus is that it encourages acquisition through word of mouth, which helps build out both sides of the marketplace. “Give users a reason to tell a friend, then a way to tell a friend,” Gary said.

Watch this space

It became clear from both the lively panel discussion and the highly engaged and entrepreneurial audience that there are many exciting developments happening in the world of peer-to-peer Internet marketplaces. As Bo from Zaarly noted, “there are going to be some amazing companies in this space, doing things that just weren’t even possible five years ago.”

Do you have any insights about best practices for Internet marketplaces from your own experiences? Please share them in the comments section below!

Jenna Weiner

Content Marketer

Jenna Weiner is the former content marketing manager at oDesk and was the editor-in-chief of the oDesk blog. With a background in business and technology writing, she specializes in content marketing and strategy, public relations, and branding. Before joining oDesk, Jenna was a writer and editor for Monitor Group’s marketing department (now Monitor Deloitte) and was the Business & Technology Section Editor for Brafton Inc.… read more