How to launch a marketplace: A zero-to-one experience

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Product Coalition

12 min readJul 11, 2020

I’d like to share a few product management insights from Synch, a company I co-founded in 2017, to help entrepreneurs who are launching new marketplaces. I will briefly walk you through my zero-to-one experience so that you can draw conclusions on what to do, what not to do.

Even though the article is intended for entrepreneurs, it could also provide fundamental insights to product managers who are tasked to improve metrics in a marketplace. Please keep in mind that in an established marketplace, the metrics such as supply-demand balance within cohorts (geography, behaviour, time range) along with competitor’s features, are much more critical than the fundamentals. Because you have to focus on optimization and fine-tuning, rather than establishing the platform.

Before I begin, I have to mention that starting a marketplace could be challenging because you have to operate within two separate markets simultaneously, and the most common failure reason is market readiness. If the two sides of the market don’t have an appetite for a marketplace, your execution doesn’t really matter. A marketplace can only be thriving if you can dramatically improve inefficiencies on either side of the market. (eBay: Price optimization through auctions, Airbnb: Supply expansion with home-stays, ZocDoc: Easy calendar bookings, Uber: Rider waiting time reduction, etc.). If the inefficiencies are not so glaring, likely, a marketplace may not be the right product model.

Brief context on Synch:

Synch is a digital healthcare marketplace for chronically ill patients to discover and book functional medicine doctors.
We founded Synch with a mission to improve the lives of 70 million American patients who are suffering from one or more chronic health conditions. We decided to focus on “functional medicine” vertical that typically falls outside most standard insurance plans.
In a nutshell, we launched the product as a marketplace where the supply side consists of “doctors”, and the demand side consists of “patients”. Our big assumption was that chronically ill patients need a discovery platform for functional medicine doctors and easily book appointments.
We provided a strong business incentive for the supply side since the majority of the doctors were trying to increase new leads and calendar utilization. This incentive allowed us to charge the doctors a subscription fee to be in the platform (after initial vetting) and still pay a % fee on each consultation.
The demand side incentives were mostly driven by health needs of the patients. The longevity of a patient suffering from a chronic disease and the severity of symptoms are the main incentives for the patient to seek medical therapies outside conventional medicine. We had to make a few assumptions on the demand side:

1) There are enough patients who are willing to pay out-of-pocket costs for functional medicine

2) Lack of credible discovery platforms is the main barrier for patients to try functional medicine

3) Booking is typically the primary hurdle for any type of patient-doctor interaction

What we concluded was that the supply side had an appetite for a marketplace, and the demand side had inefficiencies that needed to be improved. We did not know whether the healthcare vertical needed a market, but we felt very strongly about testing our assumptions. To put the marketplace dynamics into an Uber or Lyft context, imagine the following:

** No supply shortage on the driver side (doctors are willing to pay to be available on the platform),

** Certain cars can only carry specific riders (doctor specialization matters, yet it doesn’t create supply shortage),

** Riders have a financial incentive (health insurance) to stick to taxis (conventional medicine)

** Riders rarely reach their destination with taxis (traditional medicine does not provide a long term root cause solution to chronic health conditions)

Product management at point zero

Let’s start with the product goals and KPIs:

Goal:

The main goal of the platform was to create bookings for doctors. With this goal in mind, we decided to focus on the following metrics.

The KPIs:

Acquisition: SEO (Google keywords ranking), Paid Ads CTR, CPC, Daily Number of visitors
Activation: Sign ups, User profile completion, Number of bookings, Health condition searches, Number of profiles views, Bounce rate at the search page, Bounce rate at profile page, number of booking page views, Newsletter signups
Retention: Repeat bookings, Time interval between visits, Number of forum questions, NPS, Number of doctor reviews
Monetization: Lastly, monetization metrics such as revenue, LTV, CAC are essential; however, they shouldn’t be your primary focus if you can’t succeed in the activation and retention metrics. My suggestion is to have a vision for monetization and document the assumptions and goals before building the product.

Before I jump into tactics, here is a quick side note on A/B testing:

The best way to iterate on solutions is by conducting A/B tests which can typically improve products by 10x/100x. If you have enough users and enough development & design resources, you should go for it. However, I recommend NOT doing A/B testing if a) you don’t have enough traffic, b) the cost of conducting the test outweighs the benefit.

At Synch, we did a bunch of A/B testing on acquisition side because it was low effort and it was the top of the funnel. We had to be very careful about tactics on the rest of the improvements, and we chose not to conduct A/B tests on the product side.

Launch Strategy

We launched the product only within the San Francisco Bay Area where there are more than 100,000 people who have multiple chronic conditions and who can afford out of pocket costs for healthcare. We have selected a few other metropolitan areas as the next pilot locations for similar reasons.

We decided to streamline the metrics in a unique geography before expanding to other geographies, and we filled up our doctor side of the marketplace.

Tactics and results

Step 1) Acquisition:

Paid Ads and SEO tactics deserve a whole book chapter, so I won’t go into that. By trying a few different channels and messaging techniques, we were able to reduce CPC from $40 to ~$0.8 in the span of a few weeks.
With the combination of SEO and social media efforts, we were able to generate enough visitors on the platform to start tracking other metrics.
We have tested our learnings in different geographies and validated that the strategy to bring visitors to the website works.

Step 2) Activation:

We designed the home page, profile pages and search pages to have visitors try functional medicine. We have tested a dozen tactics to improve the metrics here. To keep it simple, I’ll just categorize them in two distinct categories: 1) Messaging, 2) User flow
In every attempt, we knew that there has to be a piece about educating the user about “functional medicine” and how it is very different from “alternative medicine”. Keep in mind that our target users were already using conventional medicine because they had health issues. With syncH, we were introducing them a new path to accelerate their treatment and improve their wellbeing.
The most important metrics we focused here were “new signup rate” and “new booking rate.”
In our first month, new signup rate (new signup/visitors) rate was less than 0.5%
In the first three months, the new booking rate (new booking/number of visitors) was -almost- zero. We received two paid bookings from our friends, but we ignored those bookings in our metrics.

Tactics to improve activation:

Messaging

Our original tagline was “Marketplace for holistic medicine”, and we figured out that mentioning keywords such as “holistic” was creating a false perception about the scientific roots of functional medicine. Furthermore, the “marketplace” keyword was not helping the user to trust the doctors on the platform. While changing the overall messaging on the website, we changed the tagline to “See a doctor who cares.”

Synch 2017 | Homepage slider improvements

In our initial design, call-to-action was not prominent. We have decided to add a CTA button on the slider and a few more on the home page. This helped the users start onboarding much quicker.
Lastly, in our signup form, we used to ask so many questions on the patients’ health conditions. We decided to make some of the questions optional while allowing the users to fill up the questionnaire later.
As a result, our ‘new signup rate’ has increased roughly by 1%.

2. User Flow

We allowed everyone to see doctor profile pages and doctor search pages without a signup requirement. This was a conscious choice from the beginning because we wanted to promote doctor profile as much as possible. The doctor profile was one of the ways to build credibility with the users, so we decided to keep it available to the public.
The paths that we have tested are as follows:

a) Featuring doctors on the homepage: We have tested featuring 2, 4 or 6 rotating doctors on the home page. Clicking a featured doctor would take the user directly to the instant booking page; it merely removed one click from booking.

b) Highlighting “health conditions” on the homepage: We have tested highlighting of health conditions on the home page. Since there are more than 110 chronic health conditions, we chose 6 most common conditions that Americans suffer and we showcased related symptoms and potential treatment methods for each condition. We tried directing the users directly to signup after this page with selected health conditions, as well as having them land on a doctor search page.

c) Free 15-minute video consultation: We requested a few of our doctors to make themselves available for a free video consultation, to provide the frictionless in-person experience. This was a massive success since there was a clear incentive for patients to try out the background and get to know doctors without spending money.

d) Price transparency: Through the user research, we discovered that price transparency was removing mental friction from the users. The doctors also had no problem with transparency. In the end, we started showing all pricing tiers and options to the user, which increased the number of bookings.

Synch 2017 | Doctor search page improvements

e) Booking a session without signup: As we observed signup process being friction, we removed the signup process and simply asked the users to book sessions right away. Because we eliminated the signup flow, we had not collected credit card information. Although this test has improved activations/bookings by 10%, it also increased “no shows” which was frustrating for our doctors.

Synch 2017 | Doctor profile page improvements — Notice the “Book for free” button

f) Health newsletter signup: Many visitors were interested in finding out more about the healthy living and functional medicine. By simply asking the users to sign up to a newsletter, we would gain access to emails which we then used to continue user education and activation. Newsletters have increased user signup by 5–7%.

Results:

After six months, we improved the new signup rate to 3.5% and new bookings at 0.5%. We had achieved 0-to-1 on bookings and improved onboarding by 7x.
However, about 80% of our bookings were free consultations (non-revenue) which brings us to focus on the retention metrics.

Step 3) Retention

The most important goal here was to increase repeat bookings.

The primary tactics on retention were mostly email follow-ups, newsletters, forum post invitations, post-session phone follow-ups. We also created more informative landing pages for health conditions and enriched the pages with case studies, vlog and blog posts from doctors, treatment methods and so on. Our retention efforts were mostly focused on persuasion on functional medicine benefits.
After each booking, we would ask the user to rate the experience (an NPS score) and share a review about the doctor. I personally consider anything above 30 as a good NPS score, and the NPS trend is more important than the absolute number along with what the users complain about. We were hoping to hear complaints about technology or pre-/post-session experience because those were the areas we could improve on with the product.
Through the surveys, we learned that users like the experience overall and that they found the functional medicine as beneficial to their health. But patients were not convinced about spending out-of-pocket money for the next 5–10 sessions in 6 months. (That’s $1500-$5000 USD range for a patient)
I’ll talk about a customer journey to briefly explain what that means: When a patient is suffering from a Crohn’s Disease for many years, they typically have to go through colonoscopy for diagnosis, and they are given anti-inflammatory drugs to suppress the symptoms. Even after diagnosis and treatment, the patient continues to suffer from uncomfortable symptoms daily. The patients are typically within the conventional medicine system through their work provided health insurance. Even if the total healthcare cost is $150k-$250k in the span of a few years, the patient rarely spends more than $1000 out of pocket money in a year. In this case, the patient is willing to change their lifestyle and nutritional habits, they are also ready to get more testing with 1000 biomarkers to get a more granular understanding of their body. However, when asked to pay $5k out of pocket costs for a treatment, it becomes considerable friction.
At our 9-month mark, we got a much better sense of the constraints on the demand side of the market. We learned that partnering with financial institutions for healthcare expenses is a tremendous burden to take, and the demand side of the market may be much smaller than we originally anticipated. Our attempts to increase retention did not bear any fruit, and we didn’t successfully improve our metrics on that front.

Step 4) Monetization

Briefly, our business model was based on 15% fee of each session (Average session cost is $300 → $45 for Synch for each session). To turn this marketplace into a commercial success, we had to get close to an LTV/CAC ratio of 1.
When starting the business, we had assumed an average patient would pay for 3 sessions ($300x 3 = $900 → LTV: $135 fee for Synch). We also thought that we could keep CAC under $50 per patient, which could get us close to the LTV/CAC ratio of 3.
In reality, after 9 months, with 0.1% (paid) booking rate and $0.8 CPC for visitors, our overall CAC was $800 while our LTV was $40. (LTV/CAC ratio of 0.05 — we weren’t even close to our worst case)

Suggestions to entrepreneurs

In Zero-to-One, Peter Thiel rightly highlights that “It’s very hard to go from 0 to 1 without a team.” He goes on saying that

“..a startup messed up at its foundation cannot be fixed.”

Getting it right from the first day is very important. Being optimistic and confident are expected entrepreneurial traits; however, I have met founders who consciously avoid self-reflection because it distracted their optimism. Please assume that you could be wrong. While there is no prescription to founding a successful company, I’d encourage entrepreneurs asking the following questions to self-reflect:

Founders: Have you addressed the discrepancies between the founders about each other’s strengths, weaknesses and contribution levels?
Assumptions: Have you validated the initial assumptions about the significance of the problem you are solving?
Business Plan: Have you addressed the objections to your business plan?
Resources: Have you gathered resources (money, tech stack, team, knowledge, etc.) to ship and iterate on your product?
Performance tracking: Have you identified objective and measurable goals with defined timelines? Have you agreed on metrics to track? Have you put in place tools to track metrics?
One step ahead: What would be your next step if you reach or miss your goals?
Risk assessment: What are your top three risks today?

What did we learn from Synch?

Starting and growing a business is very difficult but closing a business is even more difficult. Obviously, we made a few tactical mistakes which we learned from. Our primary strength was tracking and improving the performance with metrics. Metrics helped us learn sooner and recalibrate faster.

My greatest mistake early on was that I had not recognized the importance of bringing industry experts into the team. The lack of expertise in a complex industry impaired our ability to develop the correct strategy, the right connections and experimentation of B2B2C models. If I have to put it in an analogy, we had entered a dark cave with a faint candle instead of a powerful torch and hoped that we’d find the exit.

It took us more than six months to figure out the healthcare industry intricacies and patient behaviours. In a startup, you have very few chances to make bets and adjust your course. Your best performance has to be coupled with the correct strategy. At the twelve-month mark, we understood that we’d need a hard-pivot and we realized that we did not have resources to do so. My co-founder and I believed that we completed our goals by failing fast, and it was time for us to move on. Looking back, I am grateful that we were able to test ideas quickly, measure results effectively and make decisions confidently without sacrificing a few years.

If you have any questions on my experience at Synch, on entrepreneurship or about product management in general, please feel free to reach out via Linkedin.