As the millennial generation continues to fuel the on-demand economy, more entrepreneurs will venture into the on-demand space (whether it is on-demand food, haircare, dry-cleaning-you name it!) in hopes of capturing a slice of this market. While I believe there will be continued growth and disruption in the space, there are a few tips I have learned from Tressed about managing failure in a two-sided platform. The points below are weighted towards managing failure with respect to the supply side, as I believe they are the ones that are most affected by a start-up’s failure.
- Do not make false promises: As a Field 3 start-up, our team was eager to conquer the multicultural hair care market. We had the right mix of stylists who could cater to a variety of styles. While our initial idea had significant traction, upon greater analysis we realized that creating a service that catered solely to multi-cultural hair added significant complexity to our business that we were not prepared to handle. Given the volume of requests we had originally received, our team and our stylists were convinced that
we were driving towards explosive growth and the stylists would have to eventually join us as full-time employees. Needless to say, when we told our non-blowout stylists that we had decided to pivot and focus exclusively on blow-outs and up-dos, they were not only disappointed at the pivot, but were also disappointed at the fact that we had positioned ourselves as an established business with an established business model. Let your employees know the stage of your business-more likely than not they will try to help you grow your company.
- Treat your employees like you would like to be treated: Sarah and I have spent a lot of time with our stylists-over dinner, drinks, casual conversations, texts, etc. We got to know them, their family situation, their daughters’ names, etc. While many companies in the on-demand space simply look at their ‘supply’ base as contractors, truly getting to know your employees will buy you the leeway that you need as you are going through the complexities of managing a two-sided platform. They will respect you as people, respect what you are trying to build, and truly act in the best interest of the business as you scale, pivot, or fail.
- Identify ways to be helpful: Failure + pivots are part of start-up life. As entrepreneurs, we understand that there will constantly be changes to the team, business, or business model. We are taught not only to anticipate failure, but even to expect it. For employees and contractors, however, constant change is not necessarily something that they have been taught to expect, especially when dealing with ‘reputable’ HBS companies. Identify ways to help employees/contractors that you have had to let go for decisions that were outside of their control. In our case, we will always refer our ethnic hair care stylists to customers who ask about services that are not offered on our current platform and we have offered to write recommendations or be listed as references for every one of our excellent stylists that is no longer on our platform due to our pivot.