Excellent article. The time for thin marketplaces is over. Go deep and make your experience AI native while you still can. Assume LLMs will become formidable at much of what you do so you aren't surprised later if they do get there.
Great article, many Thx! Do you consider property portals /classifieds (like Rightmove, etc) as market places? How Do you think about them in the LLM /AI realm?
However, I’m skeptical about the advice to 'play hardball' and withhold structured data. That feels like a short-term hedge with a long-term expiration date.
If LLMs/Agents become the primary way demand searches for services, suppliers (plumbers, hotels, drivers) will eventually maximize their own utility by self-publishing their data directly to the models (via schema markup or direct APIs), effectively bypassing the marketplace's gatekeeping.
At that point, the marketplace’s data monopoly dissolves, and they are left competing purely on ops/logistics. Do you view the 'data moat' as a permanent wedge, or just a bridge until supply learns to speak 'AI' fluently?
I can give some context about the travel industry. I previously worked for Booking.com. I see history repeating itself. Google has been trying to become the one place for all your travel needs since ~2015, but it couldn't go beyond the travel search experience, which is another ads (CPC) product.
Same for Amazon. It also tried to get into the travel business multiple times. Definitely both of these companies don't lack financial resources or technical expertise.
My diagnosis:
1. They both couldn't navigate the operational complexity of the post-purchase experience (24/7 everywhere on earth), and immediate need to react at scale during disasters.
2. Travel is a separate industry that has its own regulations that an aggregator needs to comply with (A single transaction has regulations for travelers, and regulations for hotels/homes)
3. Travel is a big cost transaction. Consumers spend significant time on researching how to get the best value for their money. FOMO is influencing their process. The big travel players are in continues process of inventing ways to source
a. Exclusive data about hotels/homes that de-risk the transaction (data that hotels themselves might not have)
b. Source exclusive discounts and bundle them in creative ways to get the best ROI
c. Optimize how to present the data and pricing to each customer
LLM based search (My money is on Google AI, not ChatGPT) will have a leg up on what they know about the customer, but will face the same challenges that faced Google and Amazon before. ROI wise, it will be way more profitable for LLM players to adopt an Ads (CPC) model, and let the travel OTAs deal with the messy travel business.
The question is how to do ads without hurting customer trust. This is Google's bread and butter, and customers are used to seeing Ads on Google. ChatGPT is new to this game and customers are not used to seeing ads on ChatGPT.
That's why I believe the near future of travel is not going to change much. Same players at each step of the funnel but some new tech.
Thank you for the context! The operational complexity and regulatory hurdle is very real. If anything, this slows down the timeline people are projecting for how quickly LLMs are going to be able to move into new industries.
Excellent article. The time for thin marketplaces is over. Go deep and make your experience AI native while you still can. Assume LLMs will become formidable at much of what you do so you aren't surprised later if they do get there.
"thin marketplaces" is such a good way to put it
Been watching too many poker analysis videos.
Superb 👌 insights
Thank you!
Amazing article!!
thanks!
Great article, many Thx! Do you consider property portals /classifieds (like Rightmove, etc) as market places? How Do you think about them in the LLM /AI realm?
This is a great breakdown Dan.
However, I’m skeptical about the advice to 'play hardball' and withhold structured data. That feels like a short-term hedge with a long-term expiration date.
If LLMs/Agents become the primary way demand searches for services, suppliers (plumbers, hotels, drivers) will eventually maximize their own utility by self-publishing their data directly to the models (via schema markup or direct APIs), effectively bypassing the marketplace's gatekeeping.
At that point, the marketplace’s data monopoly dissolves, and they are left competing purely on ops/logistics. Do you view the 'data moat' as a permanent wedge, or just a bridge until supply learns to speak 'AI' fluently?
Great article!
I can give some context about the travel industry. I previously worked for Booking.com. I see history repeating itself. Google has been trying to become the one place for all your travel needs since ~2015, but it couldn't go beyond the travel search experience, which is another ads (CPC) product.
Same for Amazon. It also tried to get into the travel business multiple times. Definitely both of these companies don't lack financial resources or technical expertise.
My diagnosis:
1. They both couldn't navigate the operational complexity of the post-purchase experience (24/7 everywhere on earth), and immediate need to react at scale during disasters.
2. Travel is a separate industry that has its own regulations that an aggregator needs to comply with (A single transaction has regulations for travelers, and regulations for hotels/homes)
3. Travel is a big cost transaction. Consumers spend significant time on researching how to get the best value for their money. FOMO is influencing their process. The big travel players are in continues process of inventing ways to source
a. Exclusive data about hotels/homes that de-risk the transaction (data that hotels themselves might not have)
b. Source exclusive discounts and bundle them in creative ways to get the best ROI
c. Optimize how to present the data and pricing to each customer
LLM based search (My money is on Google AI, not ChatGPT) will have a leg up on what they know about the customer, but will face the same challenges that faced Google and Amazon before. ROI wise, it will be way more profitable for LLM players to adopt an Ads (CPC) model, and let the travel OTAs deal with the messy travel business.
The question is how to do ads without hurting customer trust. This is Google's bread and butter, and customers are used to seeing Ads on Google. ChatGPT is new to this game and customers are not used to seeing ads on ChatGPT.
That's why I believe the near future of travel is not going to change much. Same players at each step of the funnel but some new tech.
Thank you for the context! The operational complexity and regulatory hurdle is very real. If anything, this slows down the timeline people are projecting for how quickly LLMs are going to be able to move into new industries.