Uber is a car company that owns no cars.
Facebook is a content company that creates no content.
Airbnb is a real estate company that owns no real estate.
We've all seen successful marketplaces.
But how do you start a marketplace when you don't own or create anything?
This article was based on Lenny Rachitsky's "How to Kickstart and Scale a Marketplace Business".
To read his full article, click here.
A marketplace business is one that connects demand and supply and leads to a financial transaction.
When your marketplace is getting started, it's hard because you have neither supply nor demand.
You must convince one side to commit before the other side.
This is the chicken-and-egg problem.
Two ways of constraining the market are by Geography and Category.
For example, Airbnb started with just New York.
Most successful marketplaces focused on growing the supply side.
"In the early days, we were only focused on driving supply. We found that supply drove demand." -Tamara Mendelsohn (Eventbrite CMO)
Other examples of companies starting with supply are Lyft, Patreon, and Thumbtack.
There are many ways to drive initial supply & demand.
Some of the most effective ways include
- Direct sales
- Word of mouth
Lenny Rachitsky lists a total of 17 different methods. Check out his article for full details
Airbnb: marketplace for homes
Uber: marketplace for cars
Lyft: marketplace for cars
Alibaba: marketplace for shopping
Etsy: marketplace for craft/vintage items
DoorDash: marketplace for food delivery
Rover: marketplace for dog walking/sitting
OpenSea: marketplace for NFTs
TaskRabbit: marketplace for tasks
Weee!: marketplace for Asian & Hispanic food delivery