When I heard that one of our UK competitors is shutting down, I had mixed feelings, even though my colleagues and business partners were saying that it’s the best news since our YC-backed Silicon Valley copycat competitor raised $2.5mln.
My mixed feelings had a lot to do with a conversation I had with one of the leading Sand Hill Road VCs a couple of years ago, but I’ll get back to that conversation a bit later.
Our UK competitor, having raised £500k from early-stage VCs and angels, positioned themselves as the ultimate platform for creatives. I’ve never met the founders personally but from my experience of using their product, they’ve done well. They set themselves the task of creating a better product on a shoestring budget and they’ve achieved it.
But this post is not about them, nor is it about us. This post is about a much wider issue:
Creative Marketplaces Are Dead! Long Live Creative Marketplaces!
To give you the full flavour of the sorry state of the creative marketplace industry, I have to start with a typical (simplified) user journey of, say, finding a photographer:
- Google: find a photographer near me;
- Click on “MarketPlace A” ad and go to their landing page;
- Look through a few dozen photographer profiles;
- Find one that appeals to you;
- Contact the photographer about their prices (if too expensive, repeat a-d);
- Ask them about their availability for your date (if not available, repeat a-e);
- Try saving 10-30% by dealing directly with a photographer (outside the MarketPlace eco-system) and paying cash;
- Confirm date and time by text or email;
- Pray that your photographer turns up on time and doesn’t cancel at the last minute;
- Enjoy the photoshoot;
- In a few days’ time get watermarked photos to choose the ones you like and want to be retouched;
- If lucky, get your photos a few days after that on a CD, USB, WeTransfer, DropBox or some other means of photo sharing your corporate firewall doesn’t allow to open;
- If your experience has been overall negative, bad luck. You’ve already paid cash and there is nothing you can do to get a refund or the chance to reshoot the session;
- If your experience with the photographer has been positive, next time you go directly to them and you forget about the Marketplace that put you in touch with the photographer;
- With that user experience in mind, now let’s dig a bit deeper into the main problems.
I’ll start with the most important fallacy of an old-fashioned creative marketplace:
Success in business comes not from a beautiful product, but from solving problems for your customers.
Customers are not looking to find a photographer with an outgoing personality, blond hair, with precisely 10 years of experience, Nikon camera with a 50mm lens and a mild Scouse accent.
They are looking for someone to deliver something specific, have an overall seamless experience at a fair price. You can read more about these specific things here: What You Sell and What Your Customers Buy – Are Two Very Different Things.
Marketplaces fall at this first hurdle. Their raison d’être is to match professionals with clients. Realistically, no one can compete with Google’s AI in matching anyone with anything.
Matching a client with a photographer is just the tip of the iceberg. The bummock (yes, that’s what the lower part of the iceberg is actually called) is what gets the job done for the client and where you get a chance to add real value. Marketplaces don’t add any value to clients other than matching them with a suitable photographer.
2) MARKETPLACES HAVE TWO TYPES OF CLIENTS: BUY SIDE AND SELL SIDE
The inherent difficulty with marketplaces is that you always have to balance two sides of the equation: supply and demand. Which means that in practice you have two types of clients: creatives and users/buyers.
The problem with that is simple – as an organisation, you cannot align your strategy and team to serve both sets of customers equally well. You’ll lean towards one or the other and do both poorly.
Most marketplaces charge 15%-30% commission on the business they bring to their supply side. Therefore, they tend to spend too much time pleasing their suppliers and creating various features for them, trying to make sure their photographers, videographers and designers stick with them and invite other suppliers to the market, so that the law of large numbers works in their favour.
To create a truly outstanding product the whole organisation should care about one thing and one thing only: the client (demand side). Make millions of clients happy and your creatives will queue up to join your platform. Every minute you spend courting your supply side is a minute you don’t spend courting your demand side.
3) UNIVERSAL END-TO-END EXPERIENCE FOR CLIENTS
Capturing one’s splendid mementoes is not just about having great photographers, it’s a lot more. It’s a full experience from initial contact to booking, to support, to the great photographer with the latest equipment, professional retouching, easy payment, customer aftercare and much more.
When you don’t have full control of the entire process from start to finish (initial contact to photos being delivered and stored), you don’t have a brand. When you don’t have a brand, you don’t have a business.
4) FOCUS ON ONE NICHE
When you are trying to be all things to all people, you are doing a disservice to everyone. It’s hard enough to get most things right in one niche. Applying the same beautifully designed mobile responsive hammer to nails, bolts, screws and wooden pegs just won’t work.
When you need photos to be taken, videos to be recorded and edited or logos to be drawn up, these have very different user journeys with very different timelines, client interactions, pricing packages etc.
Most creative marketplaces do all of these and get all of them wrong. Instead, they should have concentrated on one niche first (think of Amazon in the late 1990’s and its bookstore) and when they have a lion’s share of that market, move to other niches.
5) UNIT ECONOMICS
My favourite point, because it’s the big red elephant right in the middle of the room. When you don’t control the entire end-to-end process and just match clients with suppliers, there is no incentive for your clients and suppliers to use the platform. This means that the Lifetime Value of the Client becomes criminally low. Furthermore, when a client enjoyed working with photographer John, they will not just use John for their next event, but will also recommend John to their friends, not the Marketplace that put them in touch.
So on very many levels traditional creative marketplaces are broken.
Which leads me back to my conversation with a General Partner of a large Sand Hill Road VC firm back in 2015. When I told him about our business, he didn’t say what most UK VCs say: “The market is too small” (even though just this totally fragmented Photography Industry is $40bln a year worldwide and with our product can easily grow to $100bln+). Instead, he said that he’s seen many photography marketplaces fail in the past and the model simply doesn’t work. So the closure of our competitors this year is just another chink for his anti-photography-marketplace-armour.
But the fact that we fully agree with him that the prevailing model is broken and we were actually born out of frustration with it and did everything to make sure we don’t repeat industry mistakes was not sufficient. That’s why I’m still in two minds over whether our competitor’s closure is good news or bad.
Anyhow, another Photography Marketplace is dead. Long live photography marketplaces!
P.S. So what does Splento do again?
Splento is the pioneering photography platform that allows you to hire a pre-vetted and carefully tested professional photographer in your area, on-demand, meaning you can book your photographers in as little as 4 hours in advance in just a few clicks.
How are we different from other photography companies and marketplaces?
Our photographers do one thing only: take photos. We do everything else, from client interactions and support, to photo retouching, delivery and storage.
What about pricing?
We keep it simple with fixed and fair prices. Splento photographers are very affordable (our prices start at just £69 an hour), but we are not the “budget” photography option. We work with only 1% of photographers that apply to join our platform because we only choose the best.
You see, most professional photographers charge hundreds of pounds for an hour of their time because they need to cover many more hours of business administration, photo retouching and customer support. By eliminating all these overheads, Splento enables photographers to spend much more of their time shooting, which means we can charge much less per hour for the same excellent work.