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The same factors that make marketplaces hard to build often make them incredible businesses at scale.

Riffing with @onecaseman @lennysan and @eriktorenberg inspired me to dust off some of my favorite learnings on how to build a marketplace 🧵
Online marketplaces by @jeff_jordan

The #1 job of a marketplace is to create the conditions for what economists call perfect competition. Some of the ways to accomplish this: level playing field, trust and safety, transparency, and economic empowerment.

a16z.com/2015/01/22/onl…
Pen, Pricetag, Flashlight by @mcgd

You can't manage a marketplace like a dictator. It's more like gardening. You can influence and steer, but you can't control. Your primary tools are the pen, the price tag, and the flashlight.

harrisonmetal.com/library/pen-pr…
How to Structure a Marketplace by @simonrothman

When building a marketplace, liquidity isn't the most important thing - it's the only thing. First to liquidity wins.

techcrunch.com/2012/08/19/how…
Marketplace Liquidity by Borja Moreno de los Rios

Liquidity can be defined as the % of all potential transactions that actually fill. Three dimensions to understand when measuring liquidity: density, category concentration, and supply/demand balance.

techcrunch.com/2017/07/11/mar…
Uber’s virtuous cycle by @andrewchen

Most marketplaces business are in fact not operating a single marketplace but many. Uber cities. Thumbtack categories. You have to build and manage liquidity in each market, and it's a never-ending task.

andrewchen.co/ubers-virtuous…
Food delivery wars by @sarahtavel

The battle for food delivery generated many valuable lessons. One critical one: it's not a race to overall GMV growth, but a race toward winning markets.

medium.com/@sarahtavel/fo…
A Rake Too Far by @bgurley

If your goal is to become the definitive place to transact, you need to remove friction from both product and price. Because your commission becomes part of the landed price for the customer, it's important to keep it low.

abovethecrowd.com/2013/04/18/a-r…
How Modern Marketplaces Like Uber and Airbnb Build Trust to Achieve Liquidity by @ai

Another way to remove friction and generate liquidity is to foster trust. Areas to prioritize: ratings, content, human support, frictionless payment, and social proof.

firstround.com/review/How-Mod…
Four Strategies to Win Big with Low Frequency Marketplaces by @onecaseman

It's particularly hard to win when purchase frequency is naturally low. Ways to combat this: SEO, 10x better product, act as insurance, create a non-transactional experience.

caseyaccidental.com/low-frequency-…
Underutilized Fixed Assets by @kevinakwok

Many of the largest marketplaces are built on underutilized fixed assets because it allows them to quickly roll up supply and create liquidity.

kwokchain.com/2020/01/23/und…
How to Kickstart and Scale a Marketplace @lennysan

Many of these articles have been about the theory of building marketplaces. To complement this, here is perhaps the most comprehensive collection of tactical marketplace advice and examples ever built:

lennyrachitsky.com/p/how-to-kicks…
Here's our conversation on the @villageglobal podcast that hits on many of these themes:

breaker.audio/venture-storie…
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More from @danhockenmaier see all

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Dan Hockenmaier
@danhockenmaier
Many companies are under-investing in monetization efforts, partly because it's so tough to get right

One concept that has helped unpack this topic as I've worked with @ElenaVerna @Patticus and @bbalfour on the new @reforge monetization track:

monetization as friction 👇
Monetization is not an output of growth. It's an overlay on the whole system that can either add or eliminate friction

The art of monetization is applying that friction in ways that aren't in tension with growth but enable it
This is why monetization strategy has to be tied to acquisition strategy from day 1:

If dollars are the currency powering growth (paid mkt, sales) more friction can fuel growth

If users are the currency powering growth (virality, NFX) more friction can grind it to a halt
Read 9 tweets
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Dan Hockenmaier
@danhockenmaier
So much of what is written about growth is noise. Here are ten of the concepts I find myself coming back to over and over again 👇
1/ The Hierarchy of Engagement by @sarahtavel

A framework for sustainable growth: (1) users completing the core action (2) accruing benefits and mounting losses to drive retention (3) virtuous loop by which user engagement fuels future growth. medium.com/@sarahtavel/th…
2/ Growth Loops are the New Funnels by @bbalfour @onecaseman @kevinakwok @andrewchen

The fastest growing products are driven by one or more compounding systems where inputs generate outputs that can be re-invested in the input. reforge.com/blog/growth-lo…
Read 11 tweets
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Dan Hockenmaier
@danhockenmaier
Incredibly interesting quote I heard recently from @tylercowen that’s going to require some processing: “I think if you've lived an optimal life, there is actually a lot of regret at the end of it. The best path for a life is not regret minimization... it's something else. (1/4)
“People assume that your deathbed perspective has this unique or special vantage point but it's when your faculties are at their weakest, your memory of what actually happened is at its worst. You're not responsible for any of it anymore” (2/4)
The core economist prescription [is] internalize the externalities. Don't ask me as I'm about to pass away... that guy will say anything. So I hope I'm full of regrets on my deathbed” (3/4)
Read 4 tweets

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5'7" Black Male
@absurdistwords
Same principle.

It's also hard to put social pressure on people who take pride in the marginalization of their ideas and wear it like a badge of honor.

If persecution is part of one's identity, it stops being a liability.
When you are operating on a premise of revealed knowledge, there is inherent value in being out of the mainstream. What you know is beyond common understanding.

The farther out of the mainstream the ideas are, the more valid they are.

Everyone but you is asleep.
Therefore, being debunked is just proof that your revealed knowledge has merit.

If the misguided measures of the world fail to validate the truth of your revealed knowledge, this is just proof of how inadequate those measures are to validate truth.
Read 4 tweets
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Anthony DellaRosa
@ifeelthewind
Okay, so.

a brief history of breadtube.

~ "I remember it so you don't have to."
I feel like this is basically going to be a thread in two acts.

Act one is going to be mostly just light fun,

mostly just me, like,

infodumping about something that was, for a long time, kind of a special interest of mine.
Act two is going to be a little bit heavier and will probably come with trigger warnings.
Read 242 tweets
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Daniel Sinclair
@_DanielSinclair
@CDCgov While I wait for more info to develop in the coming days, make sure to follow @JaneLytv's fantastic coverage of the misinformation that is spreading:
@CDCgov @JaneLytv This is absolutely untrue and there is no reporting to validate it. What is happening in Wuhan is not related to a biological weapon, or a human-caused accidental release, and this emergent reporting of a Chinese national being removed from a Canadian lab is in no way related. Image
@CDCgov @JaneLytv This is trash reporting that is by definition fake news. The Wuhan coronavirus was not released by a lab, and there is no evidence to in any way suggest that. washingtontimes.com/news/2020/jan/…
Read 2700 tweets
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Daniel Sinclair
@_DanielSinclair
Now Japan too 👀 https://t.co/9yeEsUGHDx
It’s probably a good time to remember that the 2002 SARS outbreak killed 774 people across 37 countries and it had a 10% mortality rate. This one looks less deadly, but also looks ripe to — and actively is — going global. on.ft.com/2u6G7zV
Umm, any of y'all have room in your bunker? The Chinese government was withholding the severity of this outbreak & transmission capability, and the number of coronavirus cases has exploded😷
Read 2391 tweets
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David McKenzie
@dmckenzie001
I'm about halfway through Banerjee and Duflo's Good Economics for Hard Times, and thought I'd reflect on the quite stark difference in the way they think about migration versus trade 1/21
A first point is to note that the book is written in a very easy to read format, and weaves together large amounts of the literature into a nice coherent viewpoint (each chapter has ~90 references!). The target reader is largely a rich country citizen worried about the world 2/21
The second chapter is on migration. Their basic message is the basic model of migration increases labor supply and depresses native wages is wrong, and that we shouldn't worry about too much migration, but rather too little 3/21
Read 21 tweets
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Paul Johnston
@PaulDJohnston
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly;
who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph
of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

Theodore Roosevelt

goodreads.com/quotes/7-it-is…
Read 6 tweets

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