Thinking about SEMs before bed

Recently, I’ve been reading about SaaS-enabled marketplaces. I’m mostly interested in whether or not some of the great SEMs of today strategically set out to create these competitive moats, or if they stumbled into it.

Chris Dixon argues that Instagram is one of the easiest examples to understand. At the time, Instagram was the best place to get free filters for photos. He argues that users came for the filter, but stayed for the network. What started as a tool (the filter) turned into a network (feed). The network enabled a premier online marketplace for programmatic advertising and retail sales.

Snapchat, on the other hand, never made it there. With a clunky UX and a prophecy to remain loyal to its original MVP, knowing where your friends are, missed out on this opportunity. I’m a big fan of Snapchat and think it has merit in the market, but it would have been interesting to see an advance in their original business model to include such capabilities. With a potential Amazon acquisition, this just might happen.

Even if Snapchat gets acquired, it won’t matter. Instagram won in a zero-sum game. The next frontier of marketplaces will lie within the physical realm. One where I could imagine using vitals and real-life experiences to make recommendations/drive sales.

If your Apple Watch knew you just ran 5 miles and was hooked up to your Meal Pal app, it could remind you to order something with more protein in it because you need it to fuel your day. Or, if you had your phone connected to all apps, and it was Jon’s birthday, it could remind me his favorite baseball team is the Mets (since he posts on facebook about it so much), and I could buy tickets for him since they’re in town.

The winner of the marketplace will be the company that understands the consumer and can predict what they’ll want through data-driven insights.

It’s a bit far fetched to think people would be okay with giving their phone all that access, but it would be a superior marketplace. You wouldn’t have to come for the network, because you’re always plugged into it.

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