Article · ~25 min read

How to Kickstart and Scale a Marketplace Business (Part 1)

Lenny Rachitsky · Lenny's Newsletter Freemium Intermediate

Lenny interviewed dozens of people who built Airbnb, DoorDash, Thumbtack, Etsy, and Uber, then distilled how they actually got started. This opening piece frames the chicken and egg problem and why almost every winner picked one side to build first. It is the single best overview of the exact question you are asking.

  • Nearly every marketplace solved the cold start by focusing on one side
  • Liquidity, not brand or polish, is the early priority
  • The biggest marketplaces leaned on just a couple of supply levers
Open on lennysnewsletter.com ↗

It answers 4 questions

  1. Can I validate a marketplace idea before I have supply or demand?
  2. I'm a solo technical founder. How do I MVP a two-sided marketplace when I need both buyers and sellers before it works at all?
  3. I'm building outside the big startup hubs with almost no budget. What's the cheapest no-code stack to launch a marketplace or directory?
  4. I run a two-sided marketplace. Do I get my first customers by starting with supply or demand, and how do I avoid the empty-restaurant problem?

Read with it

  1. The single best thing ever written on customer conversations. It teaches you to ask about the customer's life and past... momtestbook.com Book · ~130 pages The Mom Test Rob Fitzpatrick
  2. The permission slip to recruit users by hand, do things manually, and deliver 'insanely great' experiences to your first few... paulgraham.com Essay · ~15 min read Do Things That Don't Scale Paul Graham
  3. For a two-sided marketplace, the first real decision is which side to define and win first, and this essay makes the case... NFX Essay · Long read (about 25 minutes) 19 Tactics to Solve the Chicken-or-Egg Problem and Grow Your Marketplace James Currier
  4. Andrew Chen ran rider growth at Uber and now invests at a16z, so this is the canonical breakdown of how marketplaces get off... andrewchen.com Essay · ~20 min read Required reading for marketplace startups: The 20 best essays Andrew Chen
  5. Once you decide supply is the harder side to get, this piece is the tactical playbook for signing up those first suppliers by... Lenny's Newsletter Article · ~25 min read How to Kickstart and Scale a Marketplace Business (Part 3): Growing Initial Supply Lenny Rachitsky
  6. The definitive playbook for network and community-led products, drawn from Andrew Chen's a16z experience and interviews with... Harper Business Book · Book (~368 pages) The Cold Start Problem: How to Start and Scale Network Effects Andrew Chen
eChai Partner Brands The partnership →