5 Resources For Building a Marketplace Startup

Also known as a platform, marketplace, or double-sided marketplace, these startups can be defined as a two-sided platform a type of business model that connects two distinct groups of users, such as buyers and sellers, service providers and customers, or drivers and riders.

To understand how it works, let's use the example of a ride-sharing platform like Uber or Lyft. On one side of the platform, there are drivers who offer their services to passengers looking for a ride. On the other side of the platform, there are passengers who need a ride and are willing to pay for it.

The platform acts as a mediator between the two sides, providing the technology and infrastructure necessary for them to connect and transact with each other. The platform typically earns revenue by taking a percentage of the transaction value, such as a percentage of the fare paid by the passenger.

What makes a two-sided platform different from a traditional business is that it creates value by bringing together two distinct groups of users, rather than producing or selling a product or service directly. The platform's success depends on its ability to attract and retain both sides of the platform, as well as facilitating efficient transactions between them.

Two-sided platforms are becoming increasingly common in today's economy, and have disrupted a wide range of industries including transportation, hospitality, and e-commerce. They offer unique opportunities and challenges for entrepreneurs, as well as significant benefits for users who benefit from the convenience and accessibility of these platforms.

The challenge facing founders of platforms is that there are two sides that need to be acquired, serviced, and scaled.

Here are some resources that can help you understand the delicate balance required when building a marketplace or platform.

1. The Cold Start Problem: How to Start and Scale Network Effects by Andrew Chen

   Admittedly, I am not the biggest fan of business books. However, I loved Andrew Chen’s book. In "The Cold Start Problem: How to Start and Scale Network Effects," Andrew Chen provides a comprehensive guide for entrepreneurs looking to build successful network effect businesses. Chen covers a range of topics, from defining network effects and understanding their impact on startups to identifying effective growth strategies and avoiding common pitfalls.

2. Marketplace Academy by Sharetribe

   Marketplace Academy is an online learning platform that provides courses, workshops, and coaching for marketplace founders. The platform covers a range of topics, including marketplace strategy, product development, and growth marketing.

3. The Evolution of Managed Marketplaces by Anand Iyer

   The article explores the evolution of managed marketplaces, which are online platforms that connect buyers and sellers while also providing additional services such as payment processing, dispute resolution, and marketing. It also explores some of the challenges and risks associated with managed marketplaces and provides insights into how companies can mitigate these risks and build successful businesses in this space.

4. How to Kickstart and Scale a Marketplace Business by Lenny Rachitsky

   Lenny’s blog post provides tips and insights for entrepreneurs looking to start and scale a successful marketplace business. The article covers a range of topics, including identifying a profitable niche, building a two-sided network, and implementing effective growth strategies. I love that he breaks down each part of what it takes and provides you with a comprehensive guide.

5. The a16z Marketplace 100: 2023 by Olivia Moore and Zach Cohen

   This blog post highlights the top 100 marketplaces of 2023, as selected by the a16z marketplace team. The list includes a diverse range of companies from various industries and geographies and provides insights into the key trends and challenges shaping the marketplace landscape.

Two-sided platforms have revolutionized the way businesses operate and connect with their customers. They offer unique opportunities and challenges for entrepreneurs, and building a successful platform requires a delicate balance of acquiring, servicing, and scaling both sides of the platform. It is challenging but, not impossible. In fact, if you can crack it, you may be able to build a company as large as Uber, SkiptheDishes, or Airbnb. With the right strategies, entrepreneurs can create successful platforms that provide value for both users and the platform itself.

Curated and edited by me, written by ChatGPT.