Every now and then a startup comes to us with the idea of aggregating fragmented markets, seeking our assistance in product management. The common theme behind most of these marketplaces – across corporate gifting, handicraft, printing and other industries – is to make use of technology to mediate a physical business. All of them will enable the business to run on an Internet-connected computer / tablet / smartphone. But many of them will leave the underlying business process unchanged. We step back from them since aggregation models based on digitization alone are destined for failure.
To appreciate this point, let’s see what’d have happened to rideshare had the Ubers and Olas left the underlying issues unchanged: You’d push a button on an app and find that one cabbie refused to drive to a certain location, another cabbie’s vehicle was dirty and a third cabbie wanted extra money to drive empty until your pickup point, and so on. Obviously, you’d hate the experience, go back to your existing transport options and, long story short, Uber wouldn’t be a household name.
Realizing this, cab aggregators went beyond a fancy mobile app to work with cabbies to establish standards in service areas, cleanliness and fares. In other words, they went the extra mile to create a consistent CX, despite the underlying inconsistencies among individual cabbies and cabs. IMO, they burned billions of dollars of VC funding towards driving this consistent CX than on customer acquisition, but I digress.
Marketplace Holy Grail cracked by @anishamydala: Solve one side's pain & SIMULTANEOUSLY deliver gain to other side.
— GTM360 (@GTM360) January 14, 2016
Unfortunately, many aspiring aggregators don’t get this and maintain that they can’t do anything if individual service providers have their own terms of service.
Take MyCuteOffice.com for example.
This startup positions itself as the “Uber for office space” and lists spare office space on its platform. When I recently checked out its website, some offices were available only from 9AM-5PM, some charged extra for WiFi and others would only accept bulk bookings for 10 workstations. This didn’t help me as a potential customer. The diversity of the listings meant I couldn’t even create a shortlist of offices to view physically – let alone finalize on one – by using the platform. As a result, I went away dissatisfied with the platform. (No doubt the platform provided visibility into spare office space that I otherwise lacked but, 20 years after Internet has entered the mainstream, discoverability alone doesn’t suffice.)
I’d have felt positive about MyCuteOffice if all its listings conformed to a set of basic standards viz. 9AM-9PM, WiFi, conference room, etc. We can debate whether free parking space should be a part of the basic package or not. However, there can be no argument that the aggregator must spec a minimum set of features that solve pain areas faced by the market and rally landlords around to support them.
Oyo Rooms is one startup that has done a great job at this. Before Oyo, travelers were never sure what they’d get at a budget hotel – some would throw in free breakfast, others would charge for WiFi, etc. Oyo understood this consumer pain and established a few basic standards:
The startup worked with hundreds of budget hotels in tens of cities all over India and got each one of them to provide these amenities. As a result, the traveler opting for an Oyo Room got a consistent experience, no matter which Oyo property they visited. (This is not very different from the assurance of QSCV – Quality, Service, Cleanliness and Value – that people got when they spotted the yellow McDonalds arch anywhere in the world).
Oyo Rooms has become a big hit because it provides a consistent CX driven by features that alleviate consumer pain areas.
And it’s not just me.
As the startup’s 22 year old founder Ritesh Agarwal himself says in this Times of India article, “You have to understand the problem of your customer or business partner in relevant context to build products…had we continued to focus on making budget hotels discoverable, we wouldn’t have opened up this phenomenal market opportunity. It’s only when we addressed the issue of predictable, standardized, affordable stays that customers responded with such enthusiasm”.
Incidentally, Agarwal started his entrepreneurial career with Oravel, a website that merely enabled discovery of budget hotels without providing consistency in amenities. Oravel failed to take off. Agarwal learned his lesson and pivoted to Oyo Rooms.
Dear Startups, I hope you’re convinced by now that an online aggregation platform will work only if it can solve the underlying customer pain areas. Using technology to merely bring a physical process to the digital world will not cut it any more.
