Sparsh shares how to jumpstart marketplace growth by identifying which side powers your flywheel—demand or supply—then hyper-focusing acquisition there. Convoy concentrated shippers in one freight lane before recruiting carriers; Belong used performance marketing and referrals to attract homes first. Once one side is locked in with a strong catalyst like NPS or word-of-mouth, network effects compound and acquisition costs drop.
Chapters
For the first one, really getting the marketplace off the ground, and this is super simple and I'm sure, you know, you guys all get it, but I'll just reiterate my learning was it really comes down to figuring out what side of the marketplace turns your flywheel, right? Are you a demand-led marketplace? Are you a supply-led marketplace? Figure that out first. At Convoy, you're a demand-led marketplace. You need shippers before you have any business to give to the truckers, right? If you try to bring on truckers and you have no work for them, they'll never come back. Um, so like, that was Convoy, and Belong, we're the opposite. We're a supply-led marketplace, right? Uh, you need homes before you can get renters, right? Like, you have no homes, renters never come back. Um, so step A is like, figure out what turns the marketplace. Are you demand-led? Are you supply-led? And then hyperfocus on that segment of the marketplace, right? Like, how— what can you do to get that segment like cold start that segment and get it off the ground, right? So that when you have that, with that, like, say, you know, load in hand or home in hand, you can go get the trucker or renter to then get, you know, close the loop, match the— like, provide that matching function that marketplaces thrive on, and then get that flywheel turning, right? So that was like my big learning, which is like find what that thing is that turns your flywheel, and then hyper, hyper focus on acquiring that segment of the marketplace, right? And nothing else matters. And when you get that right, you'll get a really nice network effect. And as your network grows, the key is to keep doing that and do it more cheaply. And if you can do that, you have a business that really succeeds and thrives, right? And so that was like, you know, again, high level sort of my learning there, and I can give specific examples too. But the second piece of the high-level learning there is you need a catalyst to get your flywheel turning more quickly so that you can really over time reduce, like I said, the cost of acquisition and the cost of growing your network so you have a profitable, successful business. And that's what makes marketplace is so exciting is because if you have this flywheel that's not only driving growth more rapidly, but more cheaply, you're almost impossible to defeat, right? Like the capital it takes to come and compete with you at that point is just somewhat prohibitive. So that's what makes it really exciting. And then you need to get that cost curve down, you need some sort of catalyst. And what I found in the, at least the marketplaces that I've operated in, uh, is it's often been, uh, because these were service-based business, good service and experience, right? Uh, because like NPS sort of being that thing you focus on, right? Or customers, some measure of customer satisfaction. Because if you crack that and do that right for that segment that drives your marketplace especially, right, you will get this really nice word-of-mouth engine And it works both in enterprise, which was Convoy, but also consumer, which is Belong. Obviously much easier with consumer, but you got this right, really nice engine where folks will tell other folks about you, and you get this nicely growing network. And as your network grows, that becomes even easier and easier, right? And if you do that right, like you'll get your cost curve down, you'll get really strong economics and everything I mentioned. So those were like the key learnings there. And at Convoy, for me, really— and this is interesting because one was enterprise, one was consumer. Getting— like, to share a specific example, getting the marketplace off the ground in Convoy was more straightforward to a certain degree, right? Because it's enterprise sales. And until you have a sales force, you're just really calling down every customer you can, you leverage your investors, and try to get some freight, get a foot in the door so you can prove your worth and value, and then expand the— it's like land and expand, right? And then expand your account with those customers. And you can then, based on that, if you're hyper-focused again, right? Like, say, like what we did at Convoy was really focused on one lane from San Francisco to Seattle and get all the customers that ship that freight. right, and land with each of those customers and then expand with each of them, you'll really then get that flywheel turning in that market, right? And then you can go to the next market from there with those same customers and so on, right? So that's what we did at Convoy and at Belong really. Now this is a consumer marketplace, so slightly different, and I had to learn some new things, And really, you know, what gets your flywheel turning or your first set of homes is like you don't have really like an enterprise sales force, but you do have, you know, really marketing that drives the engine early on. So you turn on performance marketing, get some leads, you'll get your early adopters, right? And you turn on your referral engines and leverage your networks. Right, and I think with those 2, you can really start to build a customer base, and then if you again focus on that catalyst, which is really great experience with that first set of customers, again, you're off to the races. So, um, that's sort of my learning so far.
