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What is the potential for marketplaces to disrupt the point of sale (POS) systems, and how can Faire gain more gravity in retailers' workflow?

Ameet Shah

Partner at Golden Ventures

When I was at Zynga, we had this strategy to protect the core franchises by offering complimentary games in the same category. I'll use Words With Friends as an example, a classic word game that was one of the biggest titles at the company. We thought of Words With Friends as a fortress and strategically built products that acted as adjacent squares or moats. Launching a series of other word games -- likely fast follows of different products -- gave us the advantage of feeding the core product. I think this analogy is similar for product expansion -- it’s really about protecting the fortress. It allows you to avoid being outflanked by a competitor in another area. By offering this new product offering, you force other groups to be 10x better than not just your core solution but all of the solutions that are out there.

There are pros and cons to that approach. It gives companies the flexibility to capture and/or protect the market share through these adjacent products. This means, for example, I could treat one of these products as a loss leader and give it away for free, and the fact that that product is connected with some of my other products allows for seamless data to flow between the two. As we know, aggregating all the data into one solution creates additional value and product expansion opportunities on its own.

The other strategy is to enable a developer ecosystem and let other companies fill the holes and offer best-in-class solutions on your platform. Shopify has done an incredible job of that through its developer ecosystem and enabled merchants. I give them a ton of credit – they’ve always maintained the position of not trying to compete with the developer ecosystem. I think they’ve done a fantastic job on that front. 

Perhaps this is a non-obvious point, but expanding your product offering is making your product more self-serve -- which is another way of saying, “We're outsourcing some of the work that's required to the customer.” As a result, the operational burden no longer falls on your team and falls to the marketplace operator and provides the control they want.

Find this answer in Ameet Shah, partner at Golden Ventures, on the economics of vertical SaaS marketplaces
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