Part 2 of Lenny Rachitsky’s series on marketplace growth is now available. This one is focused on deciding which side of the marketplace to focus on (supply or demand).
The key highlight is that 80% of the marketplaces he examined grew on the back of supply side growth. Whether it was Lyft, Eventbrite or Opentable, all of them focused on growing the catalog available to them.
There were a few exceptions. Rover and Taskrabbit didn’t have supply issues - primarily because supply was independent entreprenuers doing this stuff on the side. Basically anyone could walk a dog or do a taskrabbit - you don’t need to be licensed. Another one was Zillow - where supply was just public data - not actual listings - which they used to bootstrap demand which then allowed them to get real data. It was an interesting ‘bait and switch approach’.
Another highlight is Patreon, which thought of itself as a marketplace first but now has clarified that it isn’t one at all, and only serves creators in the same way Shopify serves entrepreneurs. It’s a shift in thinking that’s creating an entirely new category of software - one that A16Z dubs the ‘passion economy’.