How to Kickstart and Scale a Marketplace Business

Lenny Rachitsky’s research shows that the vast majority of unicorn marketplaces focused on tackling supply before demand. If you have an exclusive lock over supply, that can be used as a unique and compounding moat.

This is because marketplaces are not a race to growing GMV, they are a race to creating the most value for both the supply and demand side (liquidity). When you start in a small, focused market, it’s a lot easier to build liquidity and get to a meaningful percentage of that market, becoming the best place for both the supply and demand to go.

Any startup that could be described as a marketplace usually has to start in a subset of the market, but this can work for other startups as well. It's always worth asking if there's a subset of the market in which you can get a critical mass of users quickly.

Service marketplaces must continuously provide value in terms of either discovery, convenience or trust. In line with this, successful service marketplaces tend to be either repeated-discovery, online-first or SaaS-enabled.