New essay up. On Making Uncommon Knowledge Common + the Rich Barton Playbookhttps://kwokchain.com/2019/04/09/making-uncommon-knowledge-common/ …
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What's the Rich Barton Playbook? 1. Create Data Content Loops 2. Use them to disintermediate incumbents and dominate search 3. Take this traction and use it to own demand in the industry Or as he puts it "Power to the People"
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Barton's companies' data content loops - Prices for flights and hotels: travel agent --> Expedia - Value of home: broker --> Zillow - Reviews of companies: Recruiter --> Glassdoor Use these to own search and have strong free user acq. Bootstrap demand until other loops kick in
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Like his mantra Power to the People, Barton’s companies take power from incumbents and give it to consumers Instead of hoarding info they make the data transparent
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Take whispered conversations and make them public Glassdoor: how employees really feel about company Zillow: How much house is worth Expedia: Prices and availability of flights Few topics adults gossip about more than work, real estate, and travel. Or as core to their net worth
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Before incumbents had credibility through obscurity - Brokers had more access to MLS data than sellers. Which gave them leverage and entrenched their importance in process - Few people interviewing had access to compensation research or knew unvarnished truth about company
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Incumbents intermediated their markets and gained an edge from people’s lack of knowledge Very hard to break out of this. Job applicant is unlikely to know current employee. And need to know them very well for them to feel comfortable saying negative things about company too
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This sparse commons is a classic case of market failure Some incumbents take advantage of the information asymmetry But for most, better to have third party that - finds, adds, and curates third party data into commons - verifies information - aligns incentives of contributors
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Rich Barton's companies became public Schelling Points They create common knowledge that only middlemen had prior. And push it to the public The more people use and trust Glassdoor. The more others are confident they can add reviews anonymously. And so on. This compounds
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Barton's companies use these data content loops to own search Search is a great low-cost acq channel. But few generate enough high volume AND high quality web pages about their industries to fully capitalize on itpic.twitter.com/iTj5P8UxMn
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The data content loops make Barton's companies the authoritative source on their industries By having super relevant information about every hotel, home, or company someone might be interested in Expedia, Zillow, and Glassdoor become the ideal destination for consumers
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There have been refinements to this model - Expedia (and its competitors) used acquisitions to own not just top search slots, but entire page - Zillow made page for almost every home in US - Glassdoor did this for companies but with user generated data, which is more defensible
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And the results speak for themselves Majority of traffic for all of Barton’s companies come from search or direct This makes their acquisition far cheaper than any company focused on paid acquisition. And makes building company in low frequency market possiblepic.twitter.com/rox4R0qHZk
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The ultimate purpose of using these data content loops and SEO is to own demand side of industry and become a trusted brand Each wants to be first place visited when planning - Expedia: travel - Glassdoor: companies to work for - Zillow: selling your home or buying one
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Saturation and Sequencing Barton's playbook is strong because it wedges into new markets *and* transitions that to durable long term advantage at scale Data content loops, like underutilized fixed assets, are very effective for hitting minimum viable scopepic.twitter.com/RSvx8lc3jg
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Zillow is great example of this playbook The data for estimating the price of houses had existed, and many brokers used the MLS systems to estimate it, but nobody had made that available to the masses Zillow changed that with their Zestimatepic.twitter.com/CZJZWVcnpn
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Zillow's Zestimate let anyone look up their home and see its value Even better they could look up their friends' homes Within a day of launch, Zillow had a million people checking out their Zestimate
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Artist's impression of even better representation of Zestimate's appealpic.twitter.com/WdYtAdsZLX
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Zillow has a Zestimate for 100M+ homes in the US It became the kernel used to create a webpage for every home. Letting Zillow become dominant at Search Try searching for your house on Google. Zillow's probably the top result
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Nobody had indexed all the homes in the US and brought that data online until Zillow and Trulia This was fertile search real estate to grab--and they used the Zestimate to claim it
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The Zestimate became common knowledge. It wasn't always perfectly accurate, but it forced realtors to justify when their valuations deviated Zillow became for homes what the Kelley Blue Book is for cars And the more people used it, the more powerful it became as an anchor
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The tech industry is a process by which we collectively push forward our understanding of industries and new business models Enterprise and SaaS have become far better understood. And playbooks like Barton's are a sign of the patterns and contours for consumer repeatability too
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