The Hierarchy of Marketplaces — Introduction and Level 1: Do Things, Tell People.

The Hierarchy of Marketplaces — Introduction and Level 1: Do Things, Tell People.

In the competitive world of marketplaces, success lies in finding the right market and making buyers and sellers happy. It's not about the size of the market or the Gross Merchandise Value (GMV), but rather about creating enduring value and happiness for users. GMV may seem like a significant metric, but it can lead you astray if you focus solely on it. Instead, concentrate on making your users genuinely happy and satisfied with their transactions.

Happiness is the key to building a strong marketplace. Regardless of how large an incumbent may be, they are always vulnerable to a new entrant that offers a better and happier experience. Your moat, in this case, is user happiness. By focusing on quality growth and pursuing happiness, you'll naturally achieve growth. Don't make growth the goal; make happiness the goal, and growth will follow.

Choosing the right market is crucial. While it's essential to target a sizable market, it's equally important to ensure that it's not a dead end. The best marketplace founders have a keen understanding of which opportunities to pursue and how to sequence them. Start by identifying which cross-section of your cohorts is retaining best and double down on that use case or market instead. Find a niche within the larger market that you can dominate and excel in.

To build your marketplace's reputation and attract the right people, you need to do things and tell people about it. Create something cool and interesting that you can talk about. Even if it's not the most useful thing you've ever made, if it sparks interest and excitement, it's worth pursuing. Attend events where your target audience is present and share your creation with them. Talk passionately about what you've made and why it's unique. This enthusiasm will make you sound knowledgeable and confident, even if the audience is not directly interested in your creation.

Events are the perfect opportunity to connect with like-minded individuals who appreciate cool and interesting things. By sharing your work, you'll make friends who find what you do fascinating. These connections can lead to valuable contacts, business opportunities, and even job offers. By making a name for yourself as "the person who did that cool thing," you become the go-to expert in your field. When someone needs assistance or wants to collaborate on a project related to your creation, they will come to you first.

In conclusion, the hierarchy of marketplaces is built on the foundation of user happiness. Size and GMV are not the determining factors of success. Instead, focus on creating enduring value, pursuing quality growth, and making buyers and sellers genuinely happy. Choose the right market and find a niche within it that you can dominate. Finally, create something cool and interesting, share it with the world, and become known as the expert in your field. By following these actionable steps, you can build a successful marketplace that stands out from the competition.