
How to Kickstart and Scale a Marketplace - wp381640
https://www.lennyrachitsky.com/p/how-to-kickstart-and-scale-a-marketplace
======
WaitWaitWha
Mark Hume McCormack.

There is no one else to read when it comes to market entry. He invented an
entire industry. He moved from sector to sector with ease. At a very high
level:

He started sports representation with golf; then moved into tennis; moved into
other individual sports & high visibility figure representation (sumo
anyone?); then team sports; expanded onto designing the event venues (golf
courses, car races); added marketing and advertising at these events. And he
was not done there. Now he had the players, the fields, so he expanded to
training in sports academies, and all along the way he took pictures, and
videos of the events and sport figures for resale. Most of historical sport
video footage was his. I have not even scratched the service of what he has
done with his perseverance and ability to pivot.

2003 sucked for me.

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tzaman
One of the major worries that I've had when launching our marketplace was
poaching; What if clients (the demand side) decide to hire developers (the
supply side) outside of our platform? Of course, we had rules against that in
terms of service, but hey, circumventing those is not a big risk.

But, luckily for us, the value that we provided to both parties (and still do)
outweighed the risk of losing their accounts for violating TOS, so we very
rarely see that.

Regarding chicken and egg problem, we manually found and pre-screened 10
people to provide supply in advance, so when the first client came, they'd
have someone to hire. Earned $13 the third day after launch. Happiest day ever
:)

Today we have 19 employees and are profitable (we've hit profitability the
third year, we're now 7 years "old").
[https://codeable.io](https://codeable.io)

~~~
ttoinou

       Of course, we had rules against that in terms of service,
       but hey, circumventing those is not a big risk
    

And maybe not legal nor enforceable

~~~
theoldthrowaway
Code blocks are used for code, not quotes

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birken
> "In one rare, fascinating, and deliberate case, Thumbtack decided to eschew
> any constraint"

For the record, the eschewing of any constraints was due to a combination of
naivety and then later stumbling upon a successful method of "driving initial
supply" rather than any sort of deliberate decision of the best way to build a
marketplace. Sander's blurb is actually quite well phrased, and he does not
take any undue credit for the prevailing thinking at the time, but it is all
ex post facto analysis.

Very enjoyable article though. Will be interested to follow along.

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donniefitz2
I haven't read anything profound or non-obvious on this topic and there's a
lot written about it.

The one thing I have learned creating and trying to get a 2 sided marketplace
off the ground ([https://gearoffer.com](https://gearoffer.com)) is that it's
excruciating, painful and nearly impossible.

The one thing you must have is perseverance. A lot of perseverance.

~~~
EGreg
I can try to distill some of my own musings. I don’t know if they’re obvious
or not.

1\. Before launching a marketplace, grow a community interacting around
content you get from free sources (or via a subscription) such as youtube, the
web, restaurants, books etc.

2\. Then link to existing marketplaces of sellers via an API (eg Amazon
affiliates, OpenTable, Ticketmaster etc.)

3\. Once you have enough people, build a more vendor-friendly sales process,
reach out to vendors and see if they would list on you directly. Sometimes
their contracts don’t allow them (eg with ticketmaster).

Now if you are intent on building a community from scratch, you will still
need:

1a. A policy of subscribing to interests during onboarding (eg like with
meetup.com) and telling people that they’ll get notifications as things are
posted.

1b. Initially showing infinite scroll of ALL matching group activities around
the user, with filters to filter it down by categories that have at least 1
result, so it never looks like a ghost town in most categories.

1c. Have subcommunities based on eg zipcode or city and let people grow them.
For an example see
[https://yang2020.app/communities](https://yang2020.app/communities)

1d. Have a system of credits users can earn for referring new users to the
app.

1e. Leaderboard system per zipcode / week, who has the most credits. The
leaders get some badges (digital goods) or even some real world goods.

Disclaimer: at [https://qbix.com](https://qbix.com) we build software for
exactly this. Your job is to come up with the community idea, get the content
license, get the various subcommunities, and we do the rest. We built
[https://yang2020.app](https://yang2020.app) for example, for Yang Gangs to
unite. It lets you organize a local event/rally, rides to and from the event,
checkins, and also uses some of the later Web features that finally work on
all mobile browsers, like PaymentRequest (to pay for tickets) and WebRTC (to
videochat or even screenshare). If you’re a developer it’s open source so you
can grab it at
[https://github.com/Qbix/Platform](https://github.com/Qbix/Platform) and just
build whatever on it.

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stanislavb
Amazing research. I'd say, many people underestimate the phase of "1: Crack
the chicken-and-egg problem ".

I think there are 3 ways to do that:

1) Investing a lot of money in ads and PR (many people won't have the
resources)

2) Being the first one in a niche with high demand (e.g. AirBnb)

3) Staying afloat long enough to get enough traction.

I've been bootstrapping a software marketplace for quite some time now -
[https://www.saashub.com](https://www.saashub.com). A side-project initially
and going full-time for the last few months. I can share, and believe, that
SaaSHub is on the verge to crack the egg :) . It had 10k page-views yesterday.
My expectations are that once it gets to 50-100k page-views a day, it would
have cracked problem #1. Time will tell.

~~~
travbrack
You're working on this full time? It looks like this site isn't monetized at
all. Did I miss something?

~~~
stanislavb
There are featured listings with a monthly subscription.

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dragonsh
Amazon and Alibaba are the largest marketplace in the world and all these
examples are just very small. Without including their model and growth the
analysis will be always incomplete.

Perseverance is one of the biggest asset in building a marketplace, besides
the qualities or technical innovations and I do not see it even discussed.

Amazon solved Chicken and Egg problem by buying inventory itself and countless
innovative and non innovative work, I feel what stands out in it is
perseverance.

Alibaba solved the problem by buying themselves from vendors listed on their
marketplace to give them an illusion that the marketplace works. Also they did
countless innovative and non innovative work. Here also it’s perseverance
which made what they are.

~~~
mytailorisrich
Amazon did not start as a marketplace. It started to allow third party sellers
in 2002, iirc.

~~~
sharemywin
I think that's the point. you could look at it like they seeded their supply
and built the demand side first.

~~~
mytailorisrich
I don't think we can say that Amazon became the largest online retailer just
to seed their supply.

~~~
sharemywin
It's funny because most of their profits come from PPC and AWS. The way I look
at it their global retail and warehousing operation is Jeff Bezos Hobby.

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bernardlunn
Lots of good research but the Paul Graham post on Do Things that don’t scale
was way more succinct and insightful

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losthobbies
This is a really interesting article, I've been looking for something like
this as I'm teasing out a marketplace type side project at the moment and I
couldn't find anything interesting.

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transitivebs
Really useful insights as we're trying to kick off an API marketplace powered
by OSS -- thanks!

~~~
Bombthecat
More info please :)

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dillonmckay
I would pay to not have to wait to read parts 2 and 3.

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throwaway35784
> I’m frequently asked about what Airbnb did right

This is the problem. They _didn 't_ do it right. They broke TOSes. They
committed fraud. They misled home owners and renters. They broke hospitality
laws. They broke licensing and employment laws. They evaded taxes. They bait n
switched customers. They enabled more fraud from their market place
participants.

They didn't get big by doing things right.

~~~
LyndsySimon
I’d argue that the definition of “right” is highly subjective.

If the goal is “get big and be profitable”: they are big and profitable. Ipso
facto, they did it right.

Whether of not many of the things you mentioned are right are wrong is a
matter of debate. For me, I wouldn’t consider the following “wrong”:

> They broke hospitality laws. > They broke licensing and employment laws.

Several of the other points are ambiguous to me because I’m not terribly
familiar with Airbnb’s history.

More to the point... to some degree, skirting and even blatantly ignoring law
and regulation is celebrated in our industry. We call it “disruption”. I’m all
for that, but whether it’s right or wrong is - as I said before - a matter of
perspective.

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xwdv
Tl;dr: sell things in the marketplace and buy things from users who put up
things to sell in the marketplace until users are organically selling and
buying from each other, and make sure the whole platform doesn’t suck. That’s
basically it.

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magwa101
this article says just about nothing

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magwa101
blerg

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nancycut9
This is the largest anonymous and free marketplace for hacking :
[https://www.hackerslist.co/](https://www.hackerslist.co/)

~~~
czbond
While I respect the goal of what you're doing, your initial IP address
terminates in Arizona. You could be opening yourself up to legal issues there
(I am not a lawyer). Maybe operate and run it out of another country?
Essentially, depending on how you're communicating with your hackers could be
open to application log seizure etc to (attempt) to identify them or clients.

