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Business  10, Jun 2014

Echelon 2014: Eren Bali’s Udemy, hot chick of a marketplace

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It’s all about the chicken and the egg. Egg and the chicken. Udemy Co-founder Eren Bali shares how that can be resolved

“Marketplaces are really powerful business; they can solve many powerful problems in the world,” said Eren Bali, Co-Founder and Chairman, Udemy, kicking off the first keynote at Echelon 2014 today.

“Everybody talks about them, but there’s not a lot of information on how you can build a company like that,” he added, as he went on to update delegates on how the e-learning marketplace is doing.

Based in San Francisco, US, Udemy is a four-year-old predominantly online marketplace for online courses, which launched its mobile platform in early-2013.

Currently, it has more than three million students, and 17 thousand published courses on its platform. Students have completed about 2.2 million hours worth of courses. To date, the company has raised more than US$48 million, after completing a Series C round earlier this year.

Chicken and egg
Marketplaces are all about the chicken and the egg. It’s a catch-22; you can’t have the chicken before the egg, or the egg before the chicken. A website like Udemy wouldn’t fare well without a substantial user base of both instructors and students.

Bali emphasised this point by quoting Simon Rothnam from Greylock Ventures, who said, “Liquidity isn’t the most important thing. It’s the only thing.”

However, sometimes, just staring at liquidity — which is the ability to facilitate a high frequency of transactions without reductions in pricing — isn’t enough. When a startup can only come up with an egg, it will have to do what Bali termed as “fake the chicken”.

In Udemy’s case, when it was in its early years, many of the courses were created by the team to give an impression that the site was particularly popular among instructors.

Another example of a startup “faking the chicken” include Reddit, a user-generated content platform, which was first started with fake accounts. However, as the website grew bigger and attracted more loyal visitors, who then became fans, such strategies need to be tamed with curation.

Bali also quoted Paul Graham, Co-founder, Y-Combinator, who said, “Do things that don’t scale.” While faking popularity and interest is one way of doing just that, marketplaces can also pay more attention to its customers and provide a better user experience. This is not limited to technology; for example, job marketplaces can offer to educate job seekers on proper interview etiquette.

“When you’re small, and you do unscalable things, that can give you a competitive advantage,” he said.

In conclusion, he also shared a number of growth tips for early-stage marketplaces. Firstly, startups venturing into this space should look into becoming more purpose-driven. One example would be OpenTable, which isn’t just another way for restaurants to advertise and market to new customers, but a platform to provide a better restaurant booking experience.

Secondly, like Udemy, startups can use daily deal sites and newsletters to reach out to new users.

Lastly, these marketplaces should remember to provide users with a “magical” experience. Not only will this help a startup build the user base that it needs to hit liquidity, it will allow the product to travel further through word of mouth recommendations.

This is a live coverage of Echelon 2014, Asia’s largest tech conference. Follow the hashtag #echelon2014 to join the Twitter conversation. View the full coverage here.

Elaine Huang

Elaine Huang

Elaine is a fervent believer that if there ever is a zombie apocalypse, we will all be snapping away at them with our phones and posting them onto Instagram. A Mass Communication graduate of Ngee Ann Polytechnic's School of Film and Media Studies, she enjoys writing about technology and entrepreneurs. When not hashtagging her way through all sorts of trouble, Elaine is probably contemplating how to write in the third person.

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