"you need to kick-start one or both sides, such that the initial constraint is not always the same as the long-term constraint."

"At any point in time, your biggest constraint to driving growth will either be a lack of demand or lack of supply. That’s why my first piece of advice when talking to marketplace Founders is to determine if you are a supply-constrained or demand-constrained marketplace."

"There’s a simple heuristic for determining where you’re constrained. Which side are you more worried about in the mid-term? Where do you think long-term you will be spending more of your time and money?"

"growing the supply side is often about finding ways to turn infrequent engagement from suppliers into “power sellers” or “power users.” The goal is to increase the number of transactions with these suppliers so that they become persistent users. You want to become their primary channel and source of income."

"Deepening the relationship enables the supply side to become familiar with the norms of the platform and specific customer needs from this channel which in turn increases the quality of user experience, customer experience, and overall revenue."

"it is important to dig deep into understanding the unit economics and LTV of supply-side acquisition."

"One cost-effective starting point is capturing more demand with the same or similar types of supply (e.g. enable your product to be sold to more geographies), then once you dominate there, you can move to adjacent categories."

"Growing the demand-side is often about product innovation to attract users and product expansion at a low cost to capture more demand."

"global network effects are attractive because the value to consumers in those marketplaces is driven by the total number of users on the network."

"While local marketplaces are hard to get going, they can be highly defensible. But you need to be really thoughtful in your geographic expansion."

"For local marketplaces, expanding into new geographies too early can leave you vulnerable."

"If you have a global marketplace with strong network effects, blitzscaling is critical because (1) the prize is bigger, and (2) you can’t defend your turf as easily."

"Competitors can easily capture valuable supply if you don’t scale quickly enough, which is an existential risk for every global marketplace."

"Most of the value for local marketplaces is derived from the addition of more users in the same local market."

"The exception is if you scale to enough local markets, like Uber, you can unlock scale advantages and pricing power similar to a global marketplace."

"To grow beyond your dominant market, a common strategy for local marketplaces is to achieve market leadership (typically 1 or 2 player) on the constrained side of the market first, then replicate this extremely quickly in other geographies."

"DoorDash captured the less competitive suburban markets, acquiring users who retained better and purchased more food per transaction. Now, suburban markets are DoorDash’s cash cows."

"Are You Supply or Demand Constrained?"

"There’s a simple heuristic for determining where you’re constrained."

"Which side are you more worried about in the mid-term? Where do you think long-term you will be spending more of your time and money?"

"Supply Constrained"

"Examples: Uber, Airbnb, StockX, DoorDash, OpenTable, and Hipcamp."

"The best examples of successful supply-constrained marketplaces are those that use some form of innovation to unlock new supply within a market."

"From then on, growing the supply side is often about finding ways to turn infrequent engagement from suppliers into “power sellers” or “power users.”"

"You want to become their primary channel and source of income."

"Demand Constrained"

"Examples: Amazon, Zillow, Expedia, and Booking.com."

"Demand-constrained marketplaces need to find new demand they can serve as cheaply as possible"

"When demand is your scarce and expensive resource, without a series of efficient and scalable demand-side acquisition strategies, you can put a huge strain on your unit economics."

"A unique opportunity for these types of marketplaces is in unlocking new marketing channels."

"In heavily demand-constrained marketplaces, there is often significant supply-side multi-tenanting so it is less critical to spend time concentrating demand into a few suppliers because they will go wherever the demand is"

"As you scale, however, deepening the supply side and reducing multi-tenanting is critical."

"Does Your Marketplace Have A Local, Regional, or Global Network Effect?"

"If you have a local marketplace, you are by definition more geographically constrained. These types of marketplaces only increase in value as more users in a specific neighborhood or city join the network."

"While local marketplaces are hard to get going, they can be highly defensible."

"However, starting early on, you need to expand to enough similar markets to reach sufficient market coverage in order to satisfy the demand and supply side."

"Global Network Effects"

"Examples: Airbnb, eBay, Etsy, and Google."

"these purely digital, global marketplaces still need to localize their products."

"Local Network Effects"

"Examples: Uber, DoorDash, Grubhub, and Thumbtack."

"DoorDash, created a novel go-to-market for local networks. They diverged from many other marketplaces and didn’t follow Uber’s well-known go-to-market (city-by-city expansion with local GMs)."

"This DoorDash example proves that there’s another go-to-market in local marketplaces."