We're sharing a recent post on our blog from our community member Danny Martinez (previously Airbnb, eBay) on how to get the flywheel spinning with your first marketplace customers. This was previously shared as a deep dive post in the community here.
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Finding customers for your nascent marketplace can seem like a daunting task. You might be thinking "How do I go after customers before I even have a product?" or "How do I ensure my first set of customers has a great experience?" If so, you are not alone and I've been hearing these questions and similar from founders more frequently over the past few weeks.

So, I decided to share some tips and ideas on how to overcome these initial hurdles. Through my conversations with founders, it's become apparent that these are common issues, and there are certain tactics which can work across marketplaces.

While this list is by no means exhaustive, and I anticipate that your marketplace will have unique aspects that may require specific strategies, I hope this can spark some ideas to get you started.

In the early days of a new venture, you’ll rely heavily on "early adopters". Given my propensity for using too many apps (much to the amusement of my friends and my wife's occasional eye rolls), I think I can offer some insights into what motivates this persona.

As I have done in previous posts, I’ll look at this through the lens of the customer journey, focusing on the stages of discovery, consideration, and activation. I’ll discuss three different marketplaces that have recently caught my attention for examples to use as well:

1. Kindred - a members-only home exchange network. Pure home swapping, they run a give to get model where money doesn’t exchange hands, instead you purely pay for cleaning and service fee (they’re also launching in Europe this summer!).
2. Tekalent - A product that connects early stage startups with remote engineers in emerging markets. Given the high demand for engineers, Tekalent offers a more cost-effective solution for getting prototypes off the ground.
3. Lenkie - a service play for marketplaces. If you have a marketplace, and you want to remove friction for your users to get started, Lenkie provides you with an integration that provides the infrastructure to lend capital to your users.
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Discovery

When considering a new service, several things cross my mind: Is it solving an actual problem I have? Is it more efficient than my current solution? And, what's the downside?

Kindred is a particularly memorable recent example. Here’s what went through my mind specifically, and how they got me to give it a try:

1. Solving an actual problem? - I worked at Airbnb from 2016 to 2020, and still love the product. But I think the pricing is now too similar to hotels, hence there is potential for a new solution to come in and re-disrupt the space.
2. Is this more efficient? - This of course means different things for different people. For me, pricing is key: I’m assured the cost is a small fraction of an average comparable stay (e.g. a 14 night trip to NYC is ~15% of the price on other platforms)
3. What’s the worst that could happen? - This will also differ depending on your preferences. You could have a bad experience, but at that difference in price, I’m willing to take the risk (I’d also personally use HotelTonight as a fallback!)
   
   

Consideration

After looking over the website and confirming that it addresses a problem I have, and it's more efficient than my existing solutions with limited downside, the question arises: What can push early users over the line?

A tactic that both Kindred and Tekalent are using is the concept of a "founding member" or "founding customer". These members receive some form of incentive or benefit to try out the product, functioning similarly to "beta testers".

This also plays into the identity of early adopters, who like to explore shiny new products. These members are also usually the ones that will kickstart your word of mouth efforts most (because, like my wife will attest to, we can’t wait to tell other people about our discovery!)

Here‘s a link for Kindred’s Europe founding member offer and for Tekalent’s founding customer offer, for example.
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Activation

Now that you’ve secured your early adopter’s attention, how can you keep them interested? Here is where you should strive to guarantee that both sides of your marketplace can interact and transact smoothly.

The 101 is making sure that whatever side of your marketplace is turning up, has people on the other hand to interact/transact with. Get this wrong and you’ll lose users early. How do you do this before you have enough users in the marketplace? - it sounds basic, but in the very early days, you’re best off acting like an agency. It’s absolutely key that your users have a great first experience, if that means you manually taking the time to connect them with someone else (ensuring they’re a good fit), then that’s what it takes!

Additionally, consider how you might delight marketplace users during their onboarding. One creative idea I heard during my time at Airbnb was to give hosts a loan to help them set up their Airbnbs in supply-constrained areas. Though it sounded simple, the execution was far from it (who is worthy of a loan? - how do we make sure we deploy capital to the right hosts? - how do we avoid people gaming the system and keep fraud at a minimum?)

Luckily, the team at Lenkie have found a solution for this: they provide marketplaces with embedded funding options to both buyers and sellers to help finance transactions on their marketplace. This has proven to be a game changer for some users, enabling them to get their ventures off the ground rapidly and efficiently. Easol (an experience marketplace) shared a quote from one of their customers, after taking a loan powered by Lenkie: This has been a game changer for our festival. The whole application process was so easy, and we had the money in our banks within 24 hours. This was key to helping us get started!‍

Conclusion

These are just a few of the tactics you can use to kickstart and maintain the momentum of your marketplace's flywheel. Each marketplace is unique, and it's about finding the strategies that resonate with your unique audience and product offering.

I invite you to share your experiences - what strategies have worked for you? How have you managed to get your marketplace's flywheel spinning? Remember, the beginning of any marketplace journey is often the hardest part, but once you get that flywheel spinning, the momentum will build and the potential for growth is limitless.

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 community member, where he is often sharing his marketplace experience, insights, and helping early stage founders.