A separate hub will dare to challenge

A separate hub will dare to challenge

As Schibsted Nordic Marketplaces transitions towards the next generation marketplaces, a separate unit will find, nail and scale tomorrow’s winning business models. The Nordic Accelerator Unit will make sure that Schibsted has the ability to innovate and challenge itself.

Schibsted has developed world leading marketplaces and is the largest online classifieds group in the Nordics. Now, as we are facing our largest transition in 20 years: going from a horizontal operating model, with strong brands embracing many categories, towards a new, vertical, specialised operating model, it’s time to make change possible.

Evolving user needs

This transition is fuelled by evolving user needs, leading to disruption which creates great opportunities. New business models and new user segments will emerge, enabled by new technologies that will deliver frictionless experiences.

This urges us to find, nail and accelerate initiatives to build relevant new positions that deliver upon these users’ needs. We need to act, both on short term opportunities by sustai­ning innovation in current verticals, as well as on the longer term with potentially disruptive innovation. Successful companies invariably face the “innovator’s dilemma”: navigating between catering to customers’ current needs, while adopting new innovations and technologies to fulfil their future needs.

A separate hub will dare to challenge

The Nordic Accelerator Unit is our response to this dilemma. Its sole purpose is to find, nail and scale tomorrow’s winning business models which help create a more sustainable future. It
will separate and accelerate key initiatives to build a relevant, systematic flow of new initiatives. The ambition is to deliver two new businesses that
exceed the size of Schibsted’s core marketplaces today.

There are great examples of more specialised, niche marketplaces around the globe. They address the needs of a smaller user segment, typically by increasing convenience. Target users are often “non-consumers” today, either because they lack the financial means or skills to buy the traditional product. Gross margin per unit, certainly at start, will be significantly lower compared to a traditional model.

Small things can get big

Established incumbents, like Schibsted, have difficulties as to why they would tap into this. After all, they deliver good value to current users, the new segment is rather small and margins in the new model are not even close to current operating models.

But as history has shown, small things can get big. Netflix started as a DVD-by-mail rental service. Blockbuster, at the time the video distribution market leader, could have responded to the new competition, but why would they? Netflix was only serving a small user segment that Blockbuster didn’t serve anyway, and there was no big money in this niche. The hesitance to respond is logical as Blockbuster had a different profit formula compared to the newcomers.

Airbnb and Uber are similar examples, closer to our own focus areas. Needless to say, Airbnb exceeded USD 2 billion revenue and 700 million EBITDA in Q2 2022.

Enable scale

The Nordic Accelerator Unit will make sure we deliver upon the next growth curve and enable proven cases to scale fast. Experimenting with new ideas, building up a pipeline and scaling proven cases fast requires a different way of allocating resources than we do in our core business. It also requires a different governance structure, with other processes and an independent profit formula. The unit will make sure to support the verticals in the best way possible and deliver upon our common ambition.

Research shows that setting up an accelerator increases our chances of success; the survival rate of companies nurtured in a business incubator is 87% versus 44% for unassisted enterprises, so odds are in our favour.

Five cases with great potential

We will start by adapting five cases that are already part of our market­places’ brands today. They all have a potential to grow big and will benefit from being part of the accelerating hub.

Qasa (a modern way to rent and let out houses), Pliq (preloved fashion), Nettbil (C2B car auction), Honk (car subscription platform) and Nybrukt (refurbished electronics platform) have nailed their concept and will get the attention, help and governance needed to accelerate quickly whilst benefiting from being (partly) part of Schibsted.

We will also benefit from the experiences of the Future Nordic Marketplaces team in FINN, which will be part of the hub. They build Honk and Nybrukt and bring people and learnings that are now anchored in the strategy going forward, into the hub.

This together with learnings from other accelerators show that there are other important principles to take into account:

Win-win opportunities

Partnerships are key; Entering into new business areas requires different competences and people. Partnership, especially with start-ups with experience in the area, can create win-win opportunities.

Try-and-learn culture; A success ratio of 10% is not strange for start-ups. Therefore it’s important to celebrate failure, share and embed learnings and stop initiatives in time when KPI’s are not met, without blaming the people working on it.

Current assets to experiment, new assets to scale; With great brands and technology and a fantastic user base, we can very quickly experiment with hypotheses by creating first versions of ideas and learn fast whether they have potential. However, when the MVP is proven, the MVP should most often be thrown out and built up separately to scale. This increases speed, and decreases dependencies on core technology and brands.

Strong co-operation with the core

Success requires efforts from the whole organisation; With a small high-autonomy, cross-functional team (which is the way to go for creating MVP’s) you can achieve a lot. But without strong co-operation with the core, success rates will rapidly drop. Alignment of ambition and strategy, the ability to get help from experts, access to users and customers and using the brands are our competitive advantage compared to a start-up. Advisory groups of experts within the organisation that help new initiatives fly is a best practice here.

Start small but enable scaling; Ideas are often great on paper and can engage users and customers when asked for interest in a survey. Securing the first paying customers in is a different story. Getting an MVP out in the market as soon as possible provides a quick indication of the size of the opportunity.

These are only part of the principles that we embedded within our strategy going forward. The most important differentiator to succeed, however, will be the people. Building upon Schibsted’s tradition of great entrepreneurial mindset, we will be a fearless force for change.

Author Rob van Sundert

Rob van Sundert
Nordic Accelerator Unit
Years in Schibsted: 4