As the Founder & CEO of Applico, the platform innovation company, I spend a lot of time iterating on platform business models. Applico has also built many platform service marketplaces like the leading on-demand beauty platform Glamsquad and we have also built on top of Booker multiple times.
That said, I was quite confused when I saw recently that a business called MyTime raised a Series B round for $9+ million with sophisticated investors like Khosla and Upfront Ventures.
Here’s my problem: MyTime’s business model falls far short.
Commoditized Services Marketplaces Regulate Prices. MyTime Does Not.
A lot of local services are commoditized: getting your hair blown out, an oil change, a handyman, etc.
It is the platform’s responsibility to ensure that you get a quality service provided to you and to remove as much friction from the transaction as possible. This is a big reason why Glamsquad’s pricing for a blowout, makeup, or nails appointment is fixed. The pricing is controlled by Glamsquad. Just like how the price of your car ride is controlled by Uber. There are a limited number of variables to decide which kind of service you want in a commoditized marketplace.
Without having access to MyTime’s data, I would imagine that the majority of their service offerings are commoditized and they should be regulating prices to help provide value to their consumers. However, they do not.
Given that they have been around for four years, it doesn’t seem likely that this is something “on their roadmap.” Rather, it’s a strategic decision by the company’s leadership to not do this at the cost of their customers.
There are plenty of examples of other platforms that bring a standardized level of quality & price to their consumers whose producers are existing businesses like Hotel Tonight. It seems like MyTime’s way of regulating price is to offer discounted prices to consumers at off-peak times. However, since MyTime doesn’t know what the actual service is that’s being provided (no service offering standardization) and, as a result, doesn’t have full knowledge of the rest of its ecosystems inventory for that specific service offering, its discounting tool is more of a guessing game rather than strategic optimization of supply & demand.
A revenue model out of whack.
They charge a 37% commission on new customer orders which is very odd.
They also charge subscription fees for merchants to participate and use their software. Give it away for free! You just raised $10 million. The last thing you want to do right now is setup another barrier of entry for new producers to join.
Why not take a flat commission off all bookings that come from a MyTime consumer? How about something more reasonable like 20% flat fee regardless of new vs. returning customer?
If they use MyTime’s point-of-sale system, they should naturally take a low % fee just as any other POS provider would.
Keep the revenue model clean and simple. When your service providers win, you win. Keep barriers to entry low and monetize recurring usage and growth. That’s how you put your money where your mouth is.
Raising Series B money without a firm business model is risky business.
Raising larger and larger rounds of capital is seen as a sign of “successful” tech startups these days; however, raising Series B capital without a firm business model is very risky.
You don’t have full control of your own destiny anymore. If you mess up, you, the CEO, can get booted (in most VC investment structures).
These changes to pricing and monetization are absolutely core to MyTime’s business model. And, given that they’ve been around for four years, should’ve been figured out by now.
If they don’t remove more friction, other players will steamroll them like Amazon or specialized marketplaces focusing on a specific category of service provider like Vive.
The First Step
There is still time for MyTime to correct these errors in their model, but they must act quickly. It is impossible for them regulate pricing without standardizing the services which are provided. This is no easy task.
MyTime will first need to bring some form of consistency across their ecosystem for the services that consumers are purchasing. For example, a regular manicure vs. a gel manicure are two different things and make sense why one would be more expensive than the other; however, MyTime currently doesn’t have the visibility to properly understand those differences because of the lack of data uniformity across their system. Only until they start standardizing will they be able to optimize the cost of the services to their consumers.
Filed under: Platform Innovation | Topics: mytime, platform innovation