Building marketplaces with Sara Mauskopf

There’s a (now old) Paul Graham adage that aptly describes Sara Mauskopf’s journey with Winnie, a marketplace for childcare: “Marketplaces are so hard to get rolling that you should expect to take heroic measures at first.”

During the six years that the childcare marketplace has been alive, it has had to take several heroic measures, pivoting multiple times, shifting who it’s building for, and expanding its services into everything from hiring to marketing.

“When you start a company, you don’t really expect how long it takes to build a big business,” laughs Mauskopf over Zoom from San Francisco. “I think if I’d known then what I know now, what a long, grueling roller coaster it all is, I would not have done it. If anyone actually knew how hard it was, no one would ever have children and no one would ever start companies.”

Since its launch, the two-sided marketplace has raised over $20M in funding, served more than 20 million parents, and listed upwards of 250,000 childcare providers on its site.

Mauskopf describes Winnie as the largest marketplace of its kind — but she's quick to say that the journey is far from over. The childcare space hasn't yet had its moment. And Winnie is not yet an Airbnb.

As Mauskopf explains, there are still several heroic measures left for the company to take and several heroic goals for the company to achieve. It might take years, involve regulatory changes, and a sea change in how investors value childcare. Which is why Mauskopf has decided to pace herself.

Building for parents

The first iteration of Winnie was developed — as is often the case — out of Mauskopf’s own need as a parent. In 2015, Mauskopf returned to her job as the Director of Product at Postmates, after a self-described “super short” maternity leave for her first child. Product had been Mauskopf’s life since she had graduated MIT with a computer science degree; prior to Postmates, she had spent four years managing product at pre-IPO Twitter.

But she found that returning to work wasn’t as easy as she had expected it to be. Quality, trustworthy childcare was difficult to come across and vetting it felt like a full time job. And even though her husband was helping her with childcare efforts, Mauskopf began to feel that the brunt of the work was quietly falling on her plate.

Mauskopf opened up to her coworker and now co-founder Anne Halsall, a senior product designer at Postmates and another working mother. “We were like — it’s ironic that we’re working for this company that’s all about getting food delivered quickly and making lives more convenient, but we’re still dealing with the challenges of slow childcare.”

In 2016, they began to fundraise off a basic website without much information; by the end of that year, they’d raised a $2.25M round from a long list of investors, including Homebrew, BBG Ventures, Ludlow Ventures, and Rethink Capital.

Simultaneously, they started to map out the childcare space. “We had two engineers in the beginning,” Mauskopf remembers. “We built an iOS app and didn’t even have a website. The way we got data was just through a bunch of public APIs like FourSquare and it was mostly user-entered and not vetted.”

At first, the site had a wide range of options — anything a kid could want. “It didn’t have product-market fit at all,” says Mauskopf. “It was a Yelp for parents that helped them find places to go with their kids. Playgrounds, playspaces, daycares. Daycares were an afterthought we threw in. It didn’t even have preschool data. And it was making absolutely no money.”

But Mauskopf’s product background paid off; they’d set up analytics early to track the behavior of those who had landed on their site. “With that limited data, we started to see that people were using us to search for daycare and preschools. The ones who happened to find one were having this magical experience.”

One weekend, Halsall came up with two new hypotheses:

1. What if Winnie only focused on daycares?
2. What if Winnie improved its data?

The team turned to the database of daycare licenses, where all daycares in the U.S. need to register. They used this data to map out just San Francisco. And they shared the site in a Facebook group of mothers that they had been posting on for a while with lukewarm results.

“When we put up the website with the San Francisco daycares, people were like, oh my god, this is amazing, thank you. I needed this. That was our proof of concept. Like, okay, we've hit on the thing that people are actually going to use,” says Mauskopf.

Mauskopf emphasizes that product-market fit isn’t a one-time thing; it’s something you do every day. Since, they’ve built out a data collection pipeline to get user-generated data with structured data fields. They’ve expanded across the U.S. And they vet their data closely — do daycares have openings? Are they responsive?

It’s a sensitive space; Mauskopf explains that something as simple as which daycare ranks first can impact trust and whether parents return to Winnie.

"There's a lot of thought that goes into the flow of our marketplace," she says. "We want parents to return, for after-school care, for preschools, for summer camp. But if they try Winnie and don't actually enroll, they'll never recommend us and they're never going to come back."

Building for daycares

One side of Winnie's marketplace is for parents. The other side is for daycares — and as Winnie has matured and has started charging daycares for the marketplace, services that cater to these businesses have grown in importance.

“It’s funny because we started out by saying — let’s make parents’ lives easier,” says Mauskopf. “But the real unlock in the industry is that we have to work with the businesses. That’s who I’m building for now.”

Mauskopf’s first foray into this part of the marketplace was with home daycares, which are run out of individual homes, hold licenses, and have annual inspections. “When we started using licensing data, we started to see that half the daycares in the U.S. were home daycares, but they wouldn’t show up on Google Maps.”

The team quickly realized that adding this subset of daycares to Winnie would help serve more parents — these places might offer non-traditional services like hyper-individualized care or immersion classes in small languages that would help Winnie expand what parents could find on their platform.

But as they dug deeper, they learned that home daycare businesses were very poor at marketing themselves, culminating in a long list of issues. One issue is a lack of full occupancy, which Mauskopf explains is the key to operating a successful daycare — with or without full occupancy, fixed costs are the same.

“These businesses end up struggling,” says Mauskopf. “There are lines out the door for a center that charges twice as much and doesn’t have care as specialized because no one knows they exist.”

Now, Mauskopf’s gaze has started to extend beyond the existing structure of the market to regulations that might change the very nature of smaller daycares.

“Some of the ways that daycares are regulated are really burdensome,” she says. “You might not even follow these guidelines in your own home. There are rules on everything from the number of toys each child should have to how far a napping area needs to be from a play area. It makes it really burdensome to run a daycare. And all of these unimportant regulations are tied up with the stuff that does actually impact safety and care.”

Mauskopf believes that services like Winnie can add economic value to the daycare industry. And in turn, those like Mauskopf will have a real platform upon which to stand and champion for regulatory changes that will benefit home daycares.

Building for yourself

Mauskopf emphasizes that an important aspect of Winnie’s impact is its internal culture — its pace of growth, the metrics it tracks, how it treats employees. She hearkens back to 2016, right after Winnie had raised its seed round and hired two engineers. Mauskopf’s child was six months old.

“It was then that my husband was diagnosed with cancer, a very aggressive form of lymphoma. I got the news and was like: What do I do now? Do I give money back to the investors? But I felt very guilty because I’d just convinced these two people to quit their jobs and work for us.”

Halsall pushed for Mauskopf to take time away from the company. And during those months that Mauskopf was on leave, Winnie continued to grow.

“It showed me that I’m not that important to the company,” she says. “I can step away. And I have since then, to have two babies. Life goes on. And we can build a company that’s flexible and supports people through these times."

For that reason, Mauskopf has also started turning to impact investors, who often supply more patient capital and measure companies on both financial and social impact metrics. While it’s important for Mauskopf to have mothers on the cap table who understand the unique challenges of finding childcare, she explains that there’s a bigger gap in understanding their users — the daycare business owners.

“I tell investors that the biggest challenge is teaching them about this market, showing them how we impact these 50,000 businesses positively, and explaining to them how we can do it at scale,” she says.

"And I tell them that even though we have a consumer audience that they might understand, our target is the businesses that run these services. The daycare owners."

"And it's important to remember that they look nothing like you or me or any of the startup and tech people that we know.”