Understand your customers

How do I define an ideal customer for a two-sided marketplace where I have to pick two of them?

In a marketplace you have two ICPs, but they are not equal partners: pick the harder side to attract as your anchor and define it precisely first. Usually supply is scarcer or pickier, so nail the ideal supplier profile, then define the demand side that specifically wants what that supply offers. Trying to define both broadly at once gives you a thin, unmatched marketplace, so start narrow enough that a supplier and a buyer can actually find each other in one city or one category. Treat the constrained side as the one that shapes everything, and refine from your earliest real matches.

Go deeper

23 resources, 22 link-checked.

▶️ Video
✓ Link checked Free Intermediate

If you would rather hear the marketplace tactics than read them, this is James Currier walking through the same framework on stage. He is direct about which side to attack first and how founders manufacture liquidity before it exists naturally. Good to watch once, then keep the written 19 tactics piece open as a checklist.

Solving the Chicken or Egg Problem

On NFX (YouTube) by James Currier ~20 min

  • Start with the side that is harder to get, not the easy one
  • Early liquidity is manufactured by founders, it is not organic
  • Pick a small enough market that it can actually feel full
Watch on YouTube youtube.com →
▶️ Video
✓ Link checked Free Beginner

When you are new to a space, your instinct is to explain your idea and hope people nod, which teaches you nothing. This YC talk is a concrete guide to running discovery interviews the right way: extract data from the person instead of pitching, and use a small set of questions that work in any industry, including one you are still learning. It pairs well with The Mom Test as the applied version you can watch before your next call.

How to Talk to Users

On Y Combinator (Startup School) by Eric Migicovsky ~25 min

  • The interview is to extract data, not to sell: stop talking about your idea and let them talk about their problem.
  • Skip hypothetical questions (would you use this) and ask what they have actually done to solve the problem today.
  • A handful of questions works across any industry, so you can start interviewing before you are an expert in the space.
Watch on YouTube youtube.com →
🎧 Podcast
✓ Link checked Freemium Advanced

Lauzier has run marketplace growth at Lyft, Thumbtack and Reforge, and this conversation gets into how a precise definition on one side changes your matching, pricing and quality decisions later. Listen once you have a first cut of both ICPs, it shows you what breaks if either definition is too broad. It is a good gut check before you scale past your first city or category.

How marketplaces win: Liquidity, growth levers, quality, and more

On Lenny's Podcast by Benjamin Lauzier ~1 hr

  • A vague ICP on either side shows up later as bad matches and weak liquidity
  • Liquidity problems are usually a symptom of an unclear or overly broad customer definition
  • Quality and growth levers depend on knowing exactly who you are matching
Open lennysnewsletter.com →
🎧 Podcast
✓ Link checked India Free Intermediate

Agarwal describes how OYO had to define its ideal hotel partner precisely, small, underperforming, willing to be upgraded, before it could promise a consistent experience to the demand side. It is a useful Indian example of picking the harder, more fragmented side, thousands of small independent hotel owners, as the anchor. Listen for how narrowly OYO scoped its first partner hotels before expanding.

Ritesh Agarwal on Building OYO, the Decacorn of India's Hotel Industry

On SeedToScale (Accel India) by Ritesh Agarwal, hosted by Anand Daniel

  • OYO anchored on a precise hotel partner profile before defining what travelers would get
  • The supply side was the fragmented, harder to standardize side, and got defined first
  • Consistency for demand came from narrow, disciplined supply selection, not marketing
Open seedtoscale.com →
🎧 Podcast
✓ Link checked India Free Intermediate

This traces Urban Company's earliest days recruiting and defining their first service professionals in one city before expanding categories or geographies, a direct Indian example of starting narrow enough that supply and demand can actually find each other. It shows the messy, manual early process of figuring out exactly which professionals to onboard first, a good listen if your marketplace involves any kind of service professional as supply.

Untold Seed Stories: The First 500 Days of Urban Company

On SeedToScale by Abhiraj Bhal, hosted by Abhinav Chaturvedi

  • Urban Company started with a narrow set of service categories in one city before expanding
  • Early supply selection was manual and specific, not automated or broad
  • Expansion followed only after the first narrow match was working reliably
Open seedtoscale.com →
🎧 Podcast
✓ Link checked Free Beginner

Gebbia tells the founding story from the side of the person actually going door to door defining who their first hosts should be, a good complement to Paul Graham's essay on the same events. Listen for the texture of how narrow and specific the first host actually was in practice, their own apartment, one conference, one city. Useful if you learn better from a story than from a framework.

Airbnb: Joe Gebbia

On How I Built This with Guy Raz, NPR by Joe Gebbia, hosted by Guy Raz ~45 min

  • The earliest Airbnb hosts were an extremely narrow, specific group, not a broad market
  • Real early traction came from one city and one occasion, a sold out conference, not a general launch
  • The founders' own direct involvement in defining that narrow supply group mattered more than any tool
Open npr.org →
🎧 Podcast
✓ Link checked India Free Intermediate

Sardana built Pronto directly on the insight that India's home services market was broken for workers even more than for customers, so she anchored her ICP on the worker side first. It is a current Indian example of choosing the harder, more overlooked side of a two sided marketplace as your starting definition. Listen for how she describes the specific worker profile before she describes the customer she was building for.

Anjali Sardana on Obsession, $11M Funding & Building Pronto at 23

On Hisaab Kitaab by Anjali Sardana

  • Pronto anchored its ICP on the underserved worker side before defining its customer profile
  • A supply demand mismatch you notice firsthand can be a strong signal for which side to define first
  • The demand side definition followed from what the defined supply side could reliably deliver
Watch on YouTube youtube.com →
🎧 Podcast
Free Beginner

Chesky tells the Airbnb story in his own voice, including flying to New York to meet hosts and re-shoot their listing photos by hand. Hearing the founder narrate the unscalable early grind makes the lesson stick better than reading about it. A good listen for a commute when you need conviction that hand work is the job.

Airbnb's Brian Chesky: Do Things That Don't Scale

On Masters of Scale (Reid Hoffman) by Reid Hoffman 35 min

  • Chesky and his cofounders personally visited hosts and photographed listings
  • Better photos roughly doubled weekly revenue, a fix found by going in person
  • Handcrafted early work is where you learn what customers actually need
Open mastersofscale.com →
✍️ Essay
✓ Link checked Free Intermediate

For a two-sided marketplace, the first real decision is which side to define and win first, and this essay makes the case plainly: figure out which side is harder to get, because that side is usually the more valuable one, and once you have it the other side gets 2 to 10 times easier. It then walks through concrete ways to seed that harder side without the other side existing yet, so it is a starting point for the pick-two problem rather than abstract theory. NFX has studied more marketplace network-effect businesses than almost anyone, which is why this is the canonical reference founders keep returning to.

19 Tactics to Solve the Chicken-or-Egg Problem and Grow Your Marketplace

From NFX by James Currier Long read (about 25 minutes)

  • Identify the constrained (harder to acquire) side first, and define your ideal customer there, because that side sets the pace for the whole marketplace.
  • You can build standalone value for one side before the other exists (for example a tool suppliers use whether or not buyers are present) so you are not stuck waiting for both.
  • There are many concrete seeding levers (subsidies, geographic or category constraints, manual matching), so pick the two or three that fit your niche instead of trying all of them.
Open nfx.com →
📖 Book
✓ Link checked Paid Intermediate

Before you tune CAC and take rate, this book gives you the structural picture of why marketplace economics compound: network effects, the chicken-and-egg cold start, and how pricing on one side subsidizes the other. Co-authored by Sangeet Paul Choudary, it stays readable while grounding the strategy behind the numbers you will later model. Read it as the framing layer under the spreadsheets.

Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

From W. W. Norton & Company by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary

  • Network effects, not features, are what make a two-sided model defensible, so your model should show them kicking in
  • You often price and subsidize one side to seed the other, which is why a naive per-side CAC read can mislead you
  • Solving the cold start (which side to build first) shapes every early acquisition and pricing choice you make
Open wwnorton.com →
📄 Article
✓ Link checked Free Intermediate

This is the most concrete answer to which of your two customers to define first, built from interviews with 17 major marketplaces (Airbnb, Uber, Etsy, DoorDash and more) rather than one founder's opinion. The finding is blunt: about 80 percent of successful marketplaces poured their early effort into the constrained side, usually supply, and built liquidity in one narrow niche before expanding. It is a practical playbook you can map onto your own marketplace this week.

How to Kickstart and Scale a Marketplace Business, Part 2: Cracking the Chicken-and-Egg Problem (Supply vs. Demand)

From Lenny's Newsletter by Lenny Rachitsky Long read (about 20 minutes)

  • Most successful marketplaces defined and won the constrained side first (usually supply), then let demand follow, so start by naming your ideal customer on that side.
  • Early liquidity comes from going deliberately narrow (one city, one category) and getting it genuinely working before you widen the definition of who you serve.
  • The number of levers the biggest marketplaces used to grow that first side was small (a median of two), so focus beats spreading effort across both sides at once.
Open lennysnewsletter.com →
✍️ Essay
✓ Link checked Free Advanced

Before you sweat which side to seed, Gurley helps you judge whether your marketplace is even structurally worth building. He lays out ten factors (fragmentation, frequency, payment flow, network effects) that separate marketplaces that snowball from ones that stay empty. It is the investor lens on why some two sided ideas never reach liquidity no matter how hard you push.

All Markets Are Not Created Equal: 10 Factors to Consider When Evaluating Digital Marketplaces

From Above the Crowd by Bill Gurley 20 min read

  • Great marketplaces enhance a market, they do not just aggregate it
  • High fragmentation on both sides makes a marketplace more defensible
  • Being in the payment flow is far stronger than sitting outside it
Open abovethecrowd.com →
📄 Article
✓ Link checked Freemium Intermediate

Market size is meaningless until you know exactly who you're for, and Lenny turns that into a concrete, repeatable ICP exercise from real B2B operators. It grounds your SAM in an actual customer definition instead of a fuzzy segment.

How to identify your ideal customer profile (ICP)

From Lenny's Newsletter by Lenny Rachitsky ~15 min read

  • Define the specific customer you serve before you size the market, not after.
  • A sharp ICP makes your bottom-up market math credible and your GTM focused.
  • Narrowing 'who it's for' is what makes a small beachhead winnable.
Open lennysnewsletter.com →
📄 Article
✓ Link checked Free Intermediate

Since supply is usually the side you bootstrap by hand, this is a focused list of 28 concrete ways real marketplaces did it. It goes wide (referrals, going vertical, recruiting from competitors, building tools sellers want) so you can find tactics that fit your category. Keep it as a brainstorming sheet when your supply side is stuck.

28 Ways to Grow Supply in a Marketplace

From andrewchen.com by Lenny Rachitsky (via Andrew Chen) 15 min read

  • There are many supply tactics, most marketplaces only need a few
  • Building a useful tool for sellers can pull supply in on its own
  • Recruit supply from wherever those sellers already operate today
Open andrewchen.com →
📄 Article
✓ Link checked Freemium Intermediate

This is the counter case, marketplaces where demand was actually the constrained side and defining the ideal buyer first is what mattered. Read it so you do not blindly apply supply first sequencing if your category is actually demand constrained. It gives you the diagnostic questions to figure out which pattern you are in.

Demand driving supply

From Lenny's Newsletter by Brian Rothenberg

  • Not every marketplace is supply constrained, some grow by locking down unique demand first
  • The signal is whether supply shows up easily once real demand already exists
  • Diagnose your category before copying someone else's sequencing
Open lennysnewsletter.com →
📖 Book
✓ Link checked Paid Intermediate

Evans and Schmalensee studied why most attempts at multisided platforms fail, and a recurring reason is founders never nailed a precise definition of either side before trying to scale both. This gives you failure cases alongside the well known winners, which is rare in marketplace writing. Read the chapters on pricing and design once your two ICPs are drafted.

Matchmakers: The New Economics of Multisided Platforms

From Harvard Business Review Press by David S. Evans, Richard Schmalensee

  • Most multisided platform attempts fail, often from spreading thin across undefined segments
  • Pricing and rules should be designed around your narrowest, clearest definition of each side
  • Failure cases teach as much here as the familiar success stories do
Open amazon.com →
📄 Article
✓ Link checked Free Intermediate

This forces you to decide how you will define and select your supply side, not just that you should. It compares three different supply strategies so you can see whether your narrow ideal supplier should be curated tightly or opened broadly within its niche. Useful right after you have named your anchor side, before you start recruiting it.

Marketplace Supply Strategy: Comprehensive, Exclusive, or Curated

From Andreessen Horowitz by Casey Winters, Anne Lewandowski

  • Comprehensive, exclusive and curated supply strategies each fit a different kind of marketplace
  • Your supply strategy should follow from how precisely you have defined the ideal supplier
  • Curated supply usually wins in categories where quality and trust matter most to demand
Open a16z.com →
📄 Article
✓ Link checked Free Advanced

This warns you against a specific mistake that happens after you correctly anchor on supply: building every feature suppliers ask for until you are running a service tool instead of a marketplace. It matters here because a narrow, well defined supply ICP can tempt you to over serve that one side at the expense of matching them to demand. Read it once supply is defined and you are tempted to keep customizing for them.

The Supply Features Trap Of Marketplaces

From Reforge Blog by Gilad Horev

  • Building every feature your defined supply side requests can quietly turn your marketplace into a service tool
  • Tie supply investment back to marketplace transaction volume, not supplier satisfaction alone
  • A precise ICP does not mean building everything that ICP asks for
Open reforge.com →
📄 Article
✓ Link checked Free Intermediate

A customer acquisition playbook that helps you commit to a growth lane and get world class at it, backed by case studies. It is useful for turning scattered platform reliance into a deliberate acquisition strategy plus a plan to convert those users. Concrete frameworks, not platitudes.

Drive Growth by Picking the Right Lane: A Customer Acquisition Playbook for Consumer Startups

From First Round Review by Dan Hockenmaier, Lenny Rachitsky

  • Commit to a lane instead of chasing every channel.
  • Great acquisition still needs an owned retention engine.
  • Study companies that mastered one channel, then diversified.
Open review.firstround.com →
✍️ Essay
✓ Link checked Free Beginner

The permission slip to recruit users by hand, do things manually, and deliver 'insanely great' experiences to your first few customers. The cheapest, most honest way to validate demand is to go get it one person at a time.

Do Things That Don't Scale

From paulgraham.com by Paul Graham ~15 min read

  • Recruit your first users manually, don't wait for them to come.
  • A tiny group of users who love you beats a big group who like you.
  • Manual, unscalable effort early is a feature, not a failure.
Open paulgraham.com →
📖 Book
✓ Link checked Paid Beginner

The single best thing ever written on customer conversations. It teaches you to ask about the customer's life and past behaviour, not your idea, so you can't be lied to. If a founder reads one thing before talking to a single customer, it's this.

The Mom Test

From momtestbook.com by Rob Fitzpatrick ~130 pages

  • Talk about their life, not your idea.
  • Ask about specifics in the past, not opinions about the future.
  • 'That's so cool, I'd totally buy it' is a compliment, not data, dig for commitment and evidence.
Open momtestbook.com →
✍️ Essay
✓ Link checked Free Intermediate

This is the canonical a16z reference that defines the marketplace vocabulary you actually need before you build a model: GMV vs revenue, take rate, match rate, and market depth (which is how liquidity really shows up). It keeps you honest about the fact that a marketplace has two sides to feed, so your unit economics have to reflect both supply and demand, not just orders. Treat it as the shared language, then plug your own numbers into it.

13 Metrics Every Marketplace Company Should Track

From Andreessen Horowitz (a16z) by Jeff Jordan, Li Jin, D'Arcy Coolican, Andrew Chen (a16z)

  • GMV is not revenue: your revenue is only the take rate slice of GMV, so model the two separately from day one
  • Liquidity is the make-or-break metric, tracked as match rate and time to match, not as headline user counts
  • Unit economics for a marketplace has to fold in the cost of building both sides, since supply attracts demand and vice versa
Open a16z.com →
🛠️ Tool
✓ Link checked Free Beginner

A quick, free way to get a first-draft persona document out of your head and onto one page, useful exactly because our short answer warns against over-investing here. Use it to produce something shareable in ten minutes, not as a research process in itself. Fine for a first pass, not a substitute for actually talking to customers.

Make My Persona

From HubSpot

  • A persona document should take minutes to draft, not days.
  • Capture goals, pain points, and communication preferences, skip decorative demographic filler.
  • Export it and move on to validating it with real conversations.
Open hubspot.com →

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