How To Know If You're Supply or Demand Constrained 🤹‍♂️ - Phase 2 of Kickstarting and Scaling a Marketplace Business


Hatched by Glasp

Aug 28, 2023

3 min read


How To Know If You're Supply or Demand Constrained 🤹‍♂️ - Phase 2 of Kickstarting and Scaling a Marketplace Business

At some point, if enough pieces fall in place and the flywheel starts to whirl, you’ll begin to realize that maybe, just maybe, you’ve got a real working marketplace on your hands. Around this time, you will also begin to find that your early tactics and assumptions become increasingly less effective. Before we dive in — how do you know when it’s time to “scale”? It’s rarely a binary decision, but few signals to look for: You believe that you have PMF. A simple heuristic is that retention and growth are healthy in your early geo/category. You have a strong hypothesis for how to launch a new market or category. There is a strong competitive threat and you need to respond.

Step 1: Determine if you are supply or demand constrained

What does being supply-constrained or demand-constrained even mean? It simply means that your biggest constraint to driving additional transactions is a lack of supply (e.g. Airbnb Homes, Uber drivers) or a lack of demand (e.g. Rover dog owners, TaskRabbit customers). About 40% of the companies I talked to started off supply-constrained and then continued to be supply-constrained throughout all of their history. Initially, we used occupancy rate — if it was above a certain % we were supply constrained. Then, we moved to a model where we looked at occupancy rate vs. bookings rate, and when there was a downward inflection point we knew what occupancy rate that market was supply constrained at.

人はなぜ生きるのか?(遺物論編)|Kazuki Nakayashiki|note

私は人が生きる最大の理由は、「健全なる思想を後世へ遺物として残していくこと」なのではないかと思うのです。 全てのことは必ず言動を通して外部に現れ、言動を通してしか受け取れないのです。 意志や目標がなければそもそも言動に現れることはない 何かを知ることで、初めて人は問題点や改善点に気付き、こうしたい、ああしたいという意志や目標が現れる 愚者は自分の経験のみから学び、賢者は他者の経験すなわち歴史からも学ぶ 神、天、道、これらを信じるか信じないかが問題なのではなく、思想、信念、信仰を通して健全なる良心を保つこと、これこそが真に大事なのだと思う 真に心の底から信じていないということであり、真に心の底から信じているのであれば行動に現れないわけがない 人の生きる目的が健全なる思想を後世へ遺物として残していくことであるならば、真に成すべきはどんな状況でも健全なる思想や信念を忘れず、情愛を持って知を発展し、正面から世の中の課題と向き合い、意志を持って解決していこうと誠心誠意努力し続けることなのではないか.

Combining the two contents, we can draw some interesting parallels. Both emphasize the importance of understanding constraints and having a clear purpose. In the context of kickstarting and scaling a marketplace business, identifying whether you are supply or demand constrained is crucial. This knowledge allows you to focus your efforts on addressing the right issues. Similarly, in the philosophical perspective, understanding the constraints of human existence and having a clear purpose, such as preserving healthy ideologies for future generations, is seen as the ultimate reason for living.

Interestingly, both perspectives also highlight the significance of action and continuous improvement. In the marketplace business, as you transition from the early stages to scaling, the tactics and assumptions that once worked may become less effective. This necessitates a proactive approach to adapt and find new solutions. Similarly, in the philosophical perspective, individuals are urged to constantly learn from their experiences and the experiences of others, developing their knowledge and actively working towards resolving societal challenges.

So, how can we apply these insights to our own lives and businesses? Here are three actionable pieces of advice:

  • 1. Assess your constraints: Take the time to analyze your situation and determine whether you are supply or demand constrained. This understanding will guide your decision-making and resource allocation, allowing you to address the most pressing issues first.
  • 2. Embrace adaptability: As you progress and encounter new challenges, be willing to adapt your strategies and tactics. What worked in the past may not work in the future, so stay open-minded and actively seek out innovative solutions.
  • 3. Have a clear purpose: Whether in business or life, having a clear purpose provides direction and motivation. Identify what truly matters to you and focus your efforts on achieving your goals. This will help you navigate through uncertainties and stay committed to your mission.

In conclusion, the journey of kickstarting and scaling a marketplace business parallels the philosophical question of the purpose of human existence. Both require an understanding of constraints, a proactive approach to problem-solving, and a clear purpose. By incorporating these insights into our own lives and businesses, we can strive for growth, success, and leaving a meaningful legacy.

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