Unicorn startup execs debate 'marketplace economy' challenges

Execs at Squarespace, Postmates, Lyft and Stripe discuss how to scale growth rapidly while maintaining a high level of customer service -- not to mention respecting local laws and customs.
Written by Rachel King, Contributor

SAN FRANCISCO---Tech startups valued at $1 billion or more, now often referred to as "unicorns," are regarded from Wall Street to Silicon Valley as some of the most buzzworthy and hottest commodities of the moment.

But while headlines could imply these private companies have no problem raising billions upon billions of dollars in venture capital, they still face the same scaling and growth issues as any other business - if not more so being under the close microscope of social media.

"Regular businesses have one constraint, which is onboarding customers," said Stripe co-founder and president John Collison during a panel discussion about the sharing, or "marketplace," economy on Friday morning.

For these kinds of cloud-based platforms and services, Collinson suggested there are two constraints: onboarding both customers and sellers.

Postmates co-founder and CTO Sean Plaice noted how the originally food delivery-focused startup recently started branching out to other goods, but a core challenge for the San Francisco-based company is brainstorming creative new ways to do that.

The commerce sides of these businesses are apparent, Collison observed, differentiating Squarespace as a bigger player in e-commerce through its full-scale website development service for businesses.

Natalie Gibralter, director of e-commerce products at Squarespace, concurred, explaining the Software-as-a-Service startup has grown to offer more than just fulfill website creation orders but to take part in building brands from the ground up, which she stressed has been key to the success of the New York-based business thus far.

Squarespace was originally billed as a do-it-yourself (DIY) tool, Gibralter recalled, acknowledging it "unintentionally" evolved into a third-party ecosystem through its developer platform, which often sees developers constructing a website from scratch and then handing over a base product to a marketing team client.

Andrew Boyajian, director of international and payments at Kickstarter, reflected how the global crowdfunding platform had to dig deeper when delivering its original product to international markets. This has involved a lot of translation and localization challenges, Boyajian admitted, sometimes concerning details as simple as how dates are formatted.

But it's also critical to look closer at consumer behavior by market, Boyajian reminded. In Germany, he cited as one example, consumers usually opt for bank transfers more frequently than credit card transactions, which has influenced how Kickstarter tailored its approach to e-commerce.

At Lyft, CTO Chris Lambert replied growth has become more predictable on a week-to-week basis, which has helped the ride-sharing service predict and keep up with demand on a daily basis.

"You always want to make efficient dispatching and pricing decisions with that growth," Lambert asserted.

One of the core experiences for consumers, Lambert described, is opening the app and finding a ride, but there's a lot of complexity in making that process - often expected to take no more than a minute or two - happen efficiently. But even if there is someone reasonably close on the map, if there is a more efficient match within the next minute, Lyft will hold out with results to make the experience better for the rider.

Postmates conducts a similar process, Plaice followed up, outlining how orders are placed first and then couriers are assigned based on a more optimized algorithm later. Pointing out the "dead time" for Lyft passengers waiting for a driver than food prep is certainly a different window and challenge altogether, Plaice said reducing wait times for couriers after the order is placed is one of the most important goals at Postmates.

Several of the executives on the panel stressed the value of their internal data - versus say traffic estimates provided by Google Waze, as one example - in reducing these dead times. Lyft relies on a number of metrics, including a passenger's own travel time history. For Postmates, it might be average food preparation time estimates at certain times of day, taking into account driving times versus sending a bike messenger.

"Our cyclists are faster," Plaice laughed.

Aside from heavy cash infusions, another way these businesses have gone about establishing more credence with analysts and investors has been through inking deals with major corporations with well-known storied brands.

Among the handful of companies represented on the panel, Postmates might be at the forefront of this trend following delivery agreements forged with Chipotle and Starbucks earlier this year.

When asked why Starbucks opted for a delivery agreement with Postmates versus another familiar unicorn ride-sharing service (Uber), Plaice paused, postulating ultimately it has to do with the Postmates brand and name itself.

"It resonates with Starbucks because of the relationship they have with their baristas," Plaice posited. "There is a deep empathy for the people who do the work there."

Quipping he didn't "want to sound preachy," he added Starbucks might have a different opinion of how Uber demonstrates that.

Editorial standards