Article · long-form article

All About Network Effects & Marketplaces

Andreessen Horowitz (a16z) · a16z.com Free Intermediate

A16z is the definitive source on marketplace and network-effect business models, having funded and studied more of them than anyone. Their writing explains take rates, liquidity, and the cold-start problem with real rigor.

  • Marketplace revenue is GMV multiplied by take rate, both must be healthy
  • Solve the chicken-and-egg problem by going extremely narrow first
  • Liquidity, not raw scale, is what makes a marketplace valuable early on
Open on a16z.com ↗

It answers 2 questions

  1. What's the difference between SaaS, marketplace, and transactional business models?
  2. How does a marketplace actually make money and solve the chicken-and-egg problem?

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