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Idea Review: Connecting Artisans to Customers

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Connecting Artisans to Customers, is definitely the idea I get pitched the most. Seriously, it is not even a contest. Whenever a prospective startup founder wants to have a session with me, two times out of five, it is about connecting artisans to customers or some variation of it, for example connecting mechanics to customers.

The idea is a typical marketplace play, where you build a technology platform, which acts as the marketplace for customers and artisans to do transactions. You typically earn money by taking a tiny percentage of every transaction that happens on your platform. The business is simple, it is attractive and it has huge potential. But why do few people succeed at it?

First, let’s look at all you will need, to run this business.

You are going to need the platform, obviously. It could be a web app people go to by typing a url on their browser, or it could be a mobile app people install on their phone, or it could be both. Entrepreneurs are usually confused on which platform to start with, and there is a simple formula or framework for determining this, but that’s a conversation for another time. For now, let’s just say you need a platform.

Next, you will need to determine who to bring to the platform first between the artisans and the customers. I have written about this conundrum already; it is the artisans you want to bring to the platform first. So you need to find a way to build your list of artisans. How many artisans would you consider the magic number? 100 artisans? 500? 1,000?

Then you find a way to bring in the potential customers. This is all about creating awareness. You want your target market to know this platform exists, so you will need to have all your activities or tactics for creating this awareness written down somewhere, ready to execute. Obviously, you will need to track each activity. How many web visits or app downloads to you expect from each marketing activity?

Finally, you have to get the potential customers and artisans to actually engage in transactions. No point having 10,000 web visits or app installs, if no one actually does any transaction.

So to summarise, the business operations can be simplified into four parts. 

  1. Build the technology platform
  2. Get your list of Artisans
  3. Create awareness amongst your target customers
  4. Get both parties to engage in transactions successfully.

Guess which part everyone seems to focus on? Yep, the technology platform. Absolutely every single person I have had a session with, is all focused on the technology. Most of the startup funds they have, is going into building and maintaining the technology platform. But the technology is not the business.

Think about it, you could run the same business without a technology platform. All you need is a Whatsapp number or Instagram handle anyone can message if they need a good artisan, and boom! You are in business.

More importantly, which of the 4 parts do you think is your intellectual property?

Is it the technology platform? No, it isn’t. There are technology startups where the technology platform holds the intellectual property, but not in a marketplace startup. If your primary business is based on connecting one group of people to another, as in a marketplace, then the technology platform is not valuable. Anyone can build it. Easily.

If you were building, for example, an accounting software for small businesses, then yes, the technology is your intellectual property, it is valuable.

So if it is not the technology platform, is it the list of Artisans? Yes, that list represents intellectual property, and it is a valuable asset. You can always sell that list for money or even offer the list in exchange for equity in another startup.

What about your awareness among potential customers? Yes, that is intellectual property too. (Hopefully, you have this awareness in some measurable form, like a list of users). This is valuable asset. You can always offer those potential customers a different product. This is something a lot of startups eventually do if their original idea fails; it is called pivoting. 

And finally, your ability to get both parties to engage in transactions? Yes, this is probably your most valuable intellectual property. This is where product managers spend most of their time and resources. And your ability do this successfully can always be replicated across any marketplace business.

It should be clear by now, why many technology entrepreneurs fail at this business. They focus all their time and resources on the one part of the business that is least valuable. The one part that proves nothing about your chances of success. 

So is a technology platform useless? No, not at all. Technology is infrastructure, like good road. With a technology platform you will be able to handle more artisans, customers and transactions than you would without it. So yes, it is valuable, and if you read the previous sentence again, you will realise the technology platform becomes more valuable as you acquire more artisans, customer and transactions. It’s perceived value is dependent on those 3, just like the value of a good road is dependent on the commercial activities it helps to facilitate. 

How does all these help you, the entrepreneur, that wants to go into a similar business?

The first step is to think beyond the technology. Ask yourself, if there was no technology platform, how would I run such a business? Trust me, you will need to do exactly the same thing, even with a technology platform.

When you ignore the technology platform and focus on the other parts, a lot of things become more clear. For example, it becomes painfully obvious you do not have the resources to acquire a list of artisans in Lagos, much less Nigeria. So you are forced to focus on a small geographic location and possibly a more specific type of artisan like mechanics, or carpenters or plumbers or tailors etc. 

You will also realise “everyone” cannot be your customer. You do not have the resources to engage in activities that will create awareness for “everyone”. You will need to focus on a specific type of customer. Combine this with your focus on a specific type of artisan and/or geolocation, and you have created a market niche for yourself. This is startup 101.

Once you have a plan in place for getting your first 100 transactions without a technology platform, then you can come back to thinking about the technology platform. Believe me, you will think about the platform differently, and best of all, you execution will be totally different from the tech guy that thinks his platform will magically make everything work. I guarantee it!

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Mayowa Okegbenle

The Innovators' Friend

Mayowa is a friend to Innovators. He started his first tech company in 2007, along with his friend Shola. Together, they embarked on a 8 year journey which saw them sell enterprise software in over 22 countries, feature in international publications, and have their software translated to 7 languages.

Since that experience, Mayowa has worked with several startups, advising them on technology innovation and entrepreneurship. In 2018, Mayowa attended a 3 months Technology Entrepreneurship masterclass in London's Accelerator Academy, sponsored by the City of London. At the Academy, he collaborated with other successful entrepreneurs from different continents.

Mayowa isn't just your everyday strategist, he has been through the journey and he gives practical advise on how startups should identify their entry product and attain market fit.
Mayowa is currently doing his Executive MBA at the prestigious Lagos Business School, where he is also a Senior Adviser to the Enterpreneurship Club.

Mayowa is married with a daughter, whom he considers his most valuable startup.

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