The hierarchy of engagement | Sarah Tavel (Benchmark, Greylock, Pinterest)

The Nugget

Building a successful marketplace requires a meticulous alignment with a hierarchy of focus, tipping the market, and market dominance, emphasizing user happiness as the cornerstone of growth and sustainability.

Key quotes

“The most interesting markets you have to think of them like currents where you’re just trying to ride the momentum.”
“You can never rest on your laurels when you’re building a marketplace.”
“Every strength has a corresponding weakness and vice versa.”
“We get excited about markets that might seem small from the outside.”
“Not all markets are susceptible to tipping.”

Starting with a highly focused market (the thimble approach) helps in creating a 'white hot center' where user happiness is maximized, setting the foundation for scalable growth.
Success indicators include retaining users, creating happy GMV (Gross Merchandise Value), and achieving an experience that prompts users to return and engage further.

Efficiently scaling requires identifying and maximizing 'tipping loops,' which are mechanisms that catalyze growth and user happiness, moving the marketplace closer to a tipping point where organic growth begins to significantly outpace paid or effortful growth strategies.
Tipping is contingent upon reaching a saturation point within the market, necessitating an initial deep focus before expansion.

Post-tipping stage involves aggressively scaling while maintaining quality and user satisfaction, expanding into adjacent markets or deeper into the existing market with new offerings. It's a strategic push towards becoming the unequivocal leader in the marketplace sector.
The journey towards market dominance is perpetual, with continuous innovation and adaptation required to meet evolving customer expectations and to ward off competition.

Not all marketplaces are the same. Understanding whether a market is primed for tipping involves analyzing factors like supplier concentration, competition, and the innate characteristics of the market itself.
Smaller, underestimated markets often provide fertile ground for marketplace innovation, with great potential for growth and eventual dominance, given the right conditions and strategic execution.

🔍 Focus is Key: Start small, dominate, then expand. Perfect your core value proposition before scaling.
🔄 Spot the Tipping Loops: Identify actions that self-perpetuate growth and happiness. Think search ranking improvements and rewarding top suppliers.
🏆 Dominate With Diligence: Even if you lead, never relax. Market dominance is maintained through relentless innovation and responsiveness to market dynamics.
💡 See the Currents: Look for markets with momentum. Riding a rising trend can be more fruitful than battling stagnant waters.

This summary contains AI-generated information and may have important inaccuracies or omissions.