Peerspace's expansion leader explains how they solved the marketplace cold-start problem by focusing on Power Hosts instead of chasing volume. A 90/10 split showed most revenue came from a tiny fraction of hosts, so they invested in phone calls, in-person support, and community events to build credibility. City-specific milestones like 50-100 listings and first 100 bookings became inflection points for growth.
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marketplaces, we of course, you know, face the chicken and the egg or the cold start problem. So, you know, how did you get your kind of first listings on the platform and, you know, start to generate demand or bookings and, you know, kind of really get the flywheel spinning?
Yeah, good question. I mean, this is where I spent most of my time at Peerspace because I was on the expansion growth ops side of things. And I think at the time we ended up, if I'm being honest with myself, we stumbled around in the dark a lot here in the early days. Trying to figure out what is the playbook, what should it be, how, how do we win. At the time, you know, we didn't have the Everything Marketplaces community where there was so much information and content sharing happening. There was investors giving their opinion. There were some scarce blog posts, which are actually, I think, still some of the best ones, like Casey Winters has written a lot of great things on marketplaces that everybody should read. So talking about the chicken and the egg and how, you know, you should approach marketplaces, you know, there's a lot of talk about winner takes all and which side of the marketplace you, you, you go with. And I think as a learning, every marketplace is a little bit different and your approach might need to be tailored to what kind of marketplace you are. For a prosumer-oriented marketplace, We thought at the time that if we could capture all the supply, then the marketplace would look really viable and everything, the flywheel would kind of start by having as much supply as possible. I think what we learned is, yes, there's this 80/20 rule where 20% of the marketplace supply are driving 80% of the revenue. And I would say it's probably even more heavily weighted, like 90/10. So what happens in that scenario is your marketplace looks vibrant if a customer comes to the site looking for a listing, but it's pretty unreliable, the experience, right? They might knock on several doors and nobody answers, and that could create a bad experience. So you really, what we learned over time is there's credibility that comes with supply, but you really need them to be engaged. Which means you also need early demand, either volumes of demand or high frequency of use from a smaller demand pool. And we focused on championing the key hosts early on. And so we said, okay, these guys are doing things exactly like we would want them to be. And so let's really lean into making them evangelists for the franchise, making sure they have lots of bookings and getting them really involved. And so, so yeah, what we ended up doing over time is, you know, yes, we had a decent amount of supply, many of which would lapse because they just weren't the right supply or the right, you know, cohort of hosts. But we would lean into the ones that were driving the bookings and then we would hang on for dear life to drive conversion. Like we had humans Calling hosts, calling guests to make these early bookings happen, making sure they had a great experience. These are the tactics that don't scale early on, but I think you have to do. So we'd host, host community events. We create host ambassador programs. Our Power Host program was something we did early on to just make sure that they got the love. We would do phone calls, be present and available, or be in person if we could. to help meet a host or a guest. There were surprise and delight initiatives we would do where we would send, you know, a box of cupcakes to the guests when their team would have an offsite early on or an event that were, of course, Peerspace branded just to kind of show like, hey, we're really happy that you're here. Thanks for trusting us and booking with Peerspace. And I think that it's very hard to measure what that did, but I really do think it, it helped us in the early days and created some momentum, which started to build in our first cities, which were the Bay Area and Los Angeles. So yeah, I think that's kind of what we learned in the early days. I'd say probably after we launched 3 or 4 cities, we got to like a magic number of what we think we needed to see, like the next tranche of growth happen. And so we, we ultimately said like, okay, depending on the size of the market, we need 50 to 100 spaces to start and that we would get inflection points at different milestones. You get your first 100 bookings, you get your first 100 published reviews at some point, that's going to lead the next group of demand in and see more credibility and trust in the marketplace and the platform, and, and that'll add to more bookings. It wasn't scientific in those early days, I have to say, but we tried to create a repeatable process as we went to New York and then Chicago and other cities like Seattle along the way. So, so yeah, that this, this is like the hardest part is kind of getting, getting things started. But I think the biggest learning I had is for expansion specifically. You need somebody owning that process only from a strategic standpoint. They need to be relentless, have a lot of agency to own that strategy and maintain the resources to keep things going as the business grows. You're always gonna need this muscle. And so it, if the business is growing or product development is, is happening and you're getting this urge to sort of centralize some of these things, but you're not quite You're not in many markets yet. There's always going to be that need in the early stage for the local presence. Even you may not be local, you may be remote, but the focus and like babysitting these markets and these early customers and making sure that they understand that there's people behind the service. I think that's really important in those early days. And that's something that you will always need. And The types of functions will probably scale a little bit and evolve as things grow. But you definitely need to be focused on expansion strategy and try to focus that person and not have them be bogged down with other parts of the job as well.
