We're sharing a guest blog post from our community EIR Danny Martinez that summarizes a deep dive series of posts on marketplace expansion. This was previously shared as a post in the community here.
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Thanks for all of the great feedback on the recent series of posts I shared covering considerations with marketplace expansion. To quickly recap, Part 1 covered marketing considerations, Part 2 covered sales considerations, and Part 3 covered product, support, legal, & other considerations. Each post included insights from my experience at Airbnb, eBay, and also from community members from marketplaces like DoorDash, Uber, Booking.com, Houzz, Trulia, Zillow, and more. Since this is a common topic, I wanted to put together a post to have as a community resource and starting point for learning more about considerations when expanding your marketplace into new markets or geographies (geos). This should be particularly helpful for founders & teams building localised marketplaces that are expanding into new cities, regions, and even countries.

To start with, once geo specific marketplaces find product market fit, the next question is usually when and how to expand into new markets. It may be tempting to think this being as easy as hiring a market launcher for a new geo, giving them a budget, and then sitting back and watching a new market takeoff. In reality though, this process is much more nuanced, and there are many pitfalls to watch out for.

In a series of posts, I covered how different marketplaces have approached expansion into new geos (cities, regions, & countries). I’ll include a brief summary of each here with the key considerations and takeaways.

‍Note: It’s also worth noting that new cities might not be too dissimilar, whereas new regions or countries might be (so should be considered accordingly). Expansion into each of these have specific considerations, but just like the deep dive series, I’ll keep this post more general to cover them all to cover market or geo expansion more broadly.‍

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Marketing considerations

To start with, there are many approaches you can take from a people perspective when opening a new geo. You could in theory assign the task of "launching" to someone from your central office or "HQ". You could also hire someone in the geo that you’d like to expand into and leave it to them as a "launcher". Which roles you resource from your HQ (i.e. centralised roles) vs. which ones you resource from the launch city (i.e. localised) is a nuanced one that takes careful consideration.

With that in mind, here are the 3 primary considerations:

1. What roles should be localised vs. centralised
2. How to think about channel mix in different markets
3. Brand marketing in new markets
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Key takeaways

All in all, expansion is not an easy task, whether it be a new city, region, or internationally. While this post does help highlight more on the differences with markets for international expansion (since usually more dissimilar compared to new cities or even regions), there are 3 key marketing considerations to keep in mind when expanding as a marketplace:

1. Centralization vs. localization: Balancing roles between HQ and launch geos is key. Centralising technical functions like SEO/SEM, whilst using local expertise for creative campaigns to harness regional insights is usually the way to go.
2. Channel mix: Don't assume channels effective in HQ will work as effectively  in new markets. Prioritise local experience and product messaging before driving traffic, and launch geos after thorough preparation.
3. Brand marketing: Beyond the measurability of performance marketing, brand marketing builds trust and long-term relationships. Campaigns that resonate with universal sentiments, like Airbnb's "live there" campaign, can achieve success across diverse global markets.

For more on marketing considerations, you can see the deep dive post Marketing considerations when expanding your marketplace into new geos (cities, regions, & countries).
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Sales considerations‍

When it comes to building a sales team for geo expansion, there are two contrasting strategies you might consider:

• The centralised approach with sending a sales representative from headquarters to spearhead the launch in a new geography.
• The outsourced approach with engaging a sales agency or hiring external sales professionals to handle the entire process.
  

So which is right? To help answer that, the following are beneficial to ask:

1. What you should consider before launching in a new market: This can be studying the local market, finding Product-Market Fit with speed vs. accuracy, and understanding that preparation Is key.
2. The ideal sales profiles to target for hiring in a new geography: This is usually hiring from within the industry and hiring at a mid-level.
3. How to set up a sales function (in a remote geo) for success: This can be seeding great talent from home, setting up new hires for success, and consolidating for culture.
4. Defining and measuring success for sales teams in new geos: This is usually agreeing on goals and constraining your launch geo.

Key takeaways

When it comes to geo-expansion with a focus on sales, there are a number of key considerations that can dictate the success or failure of your efforts, which are:

• Do your research: Before going full-scale, assess if your product fits the local market and understand what your competition is doing. Is your business model and product setup the right one, and will you have product market fit in this geo?
• Build local teams: Look for candidates with local knowledge and industry experience. Ideally, aim for mid-level hires who can grow into leadership roles. Hire for entrepreneurial abilities, as this isn’t a standard sales role.
• Prioritize onboarding and culture: Sending someone from your HQ to seed the culture and knowledge can set your new hires up for success. Invest in onboarding programs that make remote employees feel part of the larger organisation.‍
• Define clear success metrics: Setting up specific, ambitious (yet realistic) sales goals that are tailored for your new geo will offer a clear success roadmap. Don't forget to account for seasonality and other local factors in your targets (work through these with your launch team) and make sure to reverse out to input metrics.‍
• Constrain launch areas: Consider starting small to test the waters and solve for liquidity in the marketplace. Uber's strategy of targeting specific high-demand neighbourhoods provides a great blueprint for this.

For more on sales considerations, you can see the deep dive post Sales considerations when expanding your marketplace into new geos (cities, regions, & countries).

Product, support, legal, & other considerations

When it comes to thinking about expansion, it’s tempting to spend the majority of your time and effort on short term marketing & sales initiatives. But doing so exclusively, results in neglecting really important parts of the equation: how you’ll best serve the customers you successfully onboard and how you stay on the right side of the regulatory environment (product and support for the former, legal for the latter).
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This brings up what I believe is a really important point when it comes to expanding into new geos, which is that you need to be comfortable with risk. One of the main advantages an early stage startup has is its ability to move quickly and take risks.

Product

As previously mentioned, understanding and adapting to the local nuances of a new geo is critical when thinking about expansion, and that’s especially true for the product. A central concept to bear in mind is that of the Minimum Bookable Product (MBP), which means ensuring that the core functionalities are appropriately localised and operational from the outset (whilst remembering the M in MBP!)

Here are a few product tips:

• Gather insights: This is usually a dual process involving both qualitative (user research) and quantitative (data analysis) inputs. This step is vital for comprehending the local market, especially the needs and expectations of both sides of your marketplace. It's also crucial in deciding what's essential for your product at launch, and whether you need to make any changes to your core product to serve customers in your new geo well.
• Adapt to local norms: As mentioned above, like Airbnb, there are some norms you can likely ignore for a launch (at least temporarily). But there are others that may make sense to adapt to from the get go. Consider Uber’s foray into Japan: the standard U.S. practice of conducting driver background checks does not exist. Instead it involves obtaining a judicial letter from a judge. Changing the onboarding steps was a must
• Apply the 80/20 rule: While it's tempting to want to incorporate every insight from research into the product roadmap, remember that the most valuable learnings often come from actual user interactions with your product, not just their hypothetical use. Focus on the non-negotiables and be ready to ship it!
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Support

You could argue that this support is as important (depending on the situation, it could be even more important!) than the product. Considerations like time zones, the nature of issues (time-sensitive, regulatory), and the importance of language are all crucial. Initially, it's often beneficial to start with an internal (local) team, aligning with the concept of what "good enough" is for a launch, and then considering the offshoring/outsourcing path for scale.
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Here are a few support tips:

• Get started: At a bare minimum, having support agents that are in the same time zone, and are fluent in the local language is the bar to aim for. Hiring for these in-house usually makes more sense to begin with (easier to provide the right context, etc) whilst in the longer term you may want to consider passing this on to an external vendor - or even just using vendors during peak periods.
• Prepare for the worst: I’ve been around marketplaces for long enough to have seen some really edge case scenarios, which have instilled a profound respect in me for anyone working in a support role at a marketplace! As with any product that connects human beings, there will always be a risk you haven’t accounted for, but mapping out the most probable ones which you put a process in place for, is crucial. You want to avoid ending up in the local newspapers for the wrong reasons!
• Select vendors: When you do eventually decide to outsource, you’ll want to make sure you meet the team lead, and the person/team accountable for quality assurance. Look out for a decent level of responsiveness, and a strong level of communication from the get go, to avoid issues down the line. 
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Legal

Your approach to legal matters should vary significantly, depending on the industry you’re in. If you’re venturing into an unregulated industry, the approach might be to launch first and address regulatory concerns as they arise. However, for regulated industries (e.g. home sharing or car sharing), a more cautious approach is warranted due to potential future licensing implications.

Here are a few legal tips:

• Find lawyers: Ideally, focus on those that have direct experience with marketplaces. Lawyers who can identify red flags in your new geo and help with terms of use and privacy policies. Ideally get word of mouth recommendations, or ask people in your network that are locals and have the right connections.
• Vet lawyers: When choosing between different options, asking direct questions is key. Inquire about their experience with marketplace startups and ask for references. Have they directly dealt with companies that have similar issues to you (there could be tax, worker classification and other local laws/regulations that apply)
• Non-negotiables: As a bare minimum, it’s recommended to have enforceable terms of use and a compliant privacy policy. Terms of use and privacy policies should not take a ton of time to develop; however, it is imperative that your lawyer understands your marketplace to ensure the vocabulary is consistent and reflective of the marketplace dynamics. If you’re going to engage people for business in a new country (contractors, workers, etc) make sure you have the relevant nondisclosure, employment and contractor agreements (with confidentiality, noncompete, IP assignment, non solicitation, etc.).
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Key takeaways‍

As we wrap up these considerations, it's crucial to remember the pivotal role that product, support, and legal play in maximising your chances of launching and succeeding in a new geo. Here's a few key takeaways from this last post and tips to keep in mind:

• Understand and adapt your product to the local nuances: Speaking to your local users is key to understanding this. Embracing the concept of a Minimum Bookable Product (MBP) at the beginning is vital, whilst over time you should focus on refinements and keep a close eye on regulatory constraints (depending on your industry, you may want to do this from the very beginning).
• Provide a basic level of support for your new geo: Localised (and timely!) support, aligned with regional requirements and languages, is a must. Initially, it might make sense to manage this in-house, evolving later into a more scalable, outsourced model. Preparing for the unexpected and having processes for probable risks will safeguard your marketplace's reputation.
• Set the right legal foundations for the long term: Legal considerations vary significantly across industries and geographies. A nuanced approach is required, more so in regulated industries. Find legal advisors that are well-versed with marketplace dynamics and local regulations. Some non-negotiables to keep in mind are enforceable terms of use, compliant privacy policies, and nondisclosure, employment and contractor agreements.
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For more on product, support, & legal considerations, you can see the deep dive post Product, support, & legal considerations when expanding your marketplace into new geos (cities, regions, & countries).

Hopefully the above is helpful as a comprehensive post covering marketplace expansion for everyone here that’s in the earlier stages and looking to learn more about it and some of the main considerations. As noted above, there are nuances and exceptions to everything, but this post hopefully helps summarize my deep dive post series. Thanks to all of the community members that also shared insights, quotes, and more that you can see in each post.
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Please let me know if you have any specific questions on this in the comments below, your own experience, or if you’d like to chat through this more below.

You can connect with Danny to discuss this post in the Everything Marketplaces community here. A big thanks to Danny for also being an active EIR in the community, where he is often sharing his marketplace experience, insights, and helping early stage founders.