I had an opportunity to talk to Jussi Lystimäki of Adevinta Ventures on how he built and scaled Tori’s classified marketplace in Finland and what he learned about marketplaces along the way. Jussi breaks down many tactics and playbooks that you want to understand if you operate a marketplace, or are starting one and are keen to grow it to a significant scale.
Jussi Lystimäki is currently a VP at Adevinta Ventures. Adevinta (formerly Schibsted Media Group) is a marketplace specialist based in Barcelona, Spain. Before running Adevinta Ventures Jussi built and scaled Adevinta’s Finnish classified marketplace and ran it for six years. Subsequently he oversaw number of Adevinta’s European marketplaces. Adevinta operates digital marketplaces in 16 countries in Europe, Latin America and North Africa. Unlike companies like Uber or Upwork, Adevinta’s marketplaces operate under local brand names that are different in each country. Marketplaces include Leboncoin in France, InfoJobs in Spain, Subito in Italy and Tori in Finland.
We had almost two hour long conversation that you can find below. I recommended it especially for those interested in all the details that go into a scaling a marketplace. Below is a summary of some of the most interesting bits Jussi told me.
Build to scale in less competed verticals and monetize later
When starting out Jussi looked at the Finnish population and compared it to other countries where Schibsted had already classified marketplaces up and running to see whether there was room for a new player in the market. He concluded that indeed Finland had only a fraction of the population using competing services. Benchmarking Sweden Jussi figured they could get 40% of Finnish population to use a classifieds marketplace. In 2009 only 20% were using competing services in Finland whereas in Sweden where Schibsted had one of their better performing classified marketplaces Blocket, they had 60% of the country using it and annual revenues of 100M€. Jussi estimated that he should be able to build 50M€ revenue run rate in Finland given the size of the market but didn’t know how long that would take. That was Jussi’s thesis starting Tori. Today Tori is well on its way making 20M€+ annually with classifieds and loan services and has become the number one classifieds marketplace in Finland.
Historically all classified marketplaces have come from media houses and were build in tight verticals like only-used-cars. Schibsted business logic was that by building a horizontal market place that’s free to use and offering a superior place to trade furniture, sports equipment and other less competed used products, they would be able to built the most popular horizontal marketplace in any given country. Only once they have the users they would introduce cars, homes and other highly competed verticals to monetize the already popular marketplace. Go horizontal build a marketplace for less competed products and introduce the highly competed verticals to monetize only after you have the audience.
10 000 relevant decisions in three years
Jussi’s advice is to have a key thesis that you start immediately testing when you start out. Jussi’s thesis was that he has three years, roughly 1000 days and should make about 10 relevant decisions a day. Jussi figured his focus should be on distinguishing what make a decision relevant and then aim to make at least half of the 10,000 decisions right during the three years to succeed.
Key insight was to focus everyday on what would move the marketplace forward and to build liquidity. Everything else was noise. This become the framework which Jussi used for every decision. Jussi’s KPI in the very beginning was 24 hour turn around cycle so all the ads that were posted got responding offers in 24 hours. Jussi built his personal daily routine around this and made sure to adjust marketing spend to hit this metric every morning before doing anything else.
Jussi didn’t delegate the performance marketing and supply management in the first two years since there was nobody qualified in Finland to delegate it to and more importantly since he realized that if he would understand this crucial part then he would intimately understand Tori’s marketplace dynamics and what would it need to succeed.
Also when the team realised that the quality supply was what would be central to Tori’s success, Jussi and team checked every new post from every potential seller before posting it to the marketplace so they could ensure high quality and unique content. Demand was 10 to 20 times more easier to ramp up than quality supply. While they did this they also learned a ton when they saw what people wanted to sell. A fortunate side effect of not automating the posting.
Taking performance marketing playbook to brand marketing channels
Once the online channels started to get saturated in Finland for Tori and the customer acquisition cost for AdWords and banner ads started to rise, Jussi looked into other channels with bigger reach in line with his decision making framework.
Jussi and team didn’t want to move directly to TV advertising since he didn’t know how it would behave and any mistake on TV would be costly. They chose to start with radio that’s far cheaper, less competed and has shorter reserve-cycles for ad slots. This enabled fast iteration and reaction times so they could quickly change ad copy and focus if needed.
Jussi took a cue from Apple’s marketing when the company introduced the iPhone in 2009 and believed they could use radio to teach how to use the marketplace through user stories. Something they could not do with keyword- or banner-advertising.
In search of faster growth Jussi pioneered a radical new way to drive growth when they combined performance marketing’s efficiency and brand advertising’s reach. Jussi looked at the Google search queries on what was being searched for and used the search data to design their brand adversing on the radio. The radio spots highlighted the very products that people searched on Google and then invited them to Tori to find those bargains.
He then stepped it up and took the same model to TV. Since the lead times for TV advertising are so long he couldn’t use real time search queries as with Radio. To design around this, Jussi and his team looked at previous years queries and what had been searched at that time of the year. Brilliant!
The key to the very fast growth was to drop the bomb and use TV only a few days a year and then use performance marketing to capitalise on the awareness and get great conversion rates with AdWords and banners since you already built the awareness. Once the team found the right the moment they went all during those few days. They bought every media property they could get, including TV.
There’s a lot more in the two hour discussion including how Jussi got Google to change their rules and how Google allocated Tori their own dedicated ad-server so they could support Tori’s marketing volumes which were unprecedented at the time, how Jussi build a banner factory by outsourcing the production of half a million banners, the nature of winner-takes-all marketplaces and what KPIs Jussi used to steer the growth phase of the company, eventually becoming the number one classified marketplace in the country. The growth Jussi was able to ignite was so strong and unprecedented he was invited to join the global management team and share his playbook with all the other countries Schibsted had marketplaces in.
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