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We're sharing a guest blog post from our community EIR Danny Martinez, which covers some of the common mistakes and learnings around marketplace expansion. This was previously shared as a post in the community here.
Hey EM, I’ve been helping earlier-stage marketplaces with expansion & growth over the past few months and wanted to help put together a post sharing some of the common mistakes I’ve observed, along with lessons that founders have shared here in the community. I’ll try to be comprehensive in this post and also try a format where I break down mistakes that seem to be common, put together themes, share insights, and takeaways. This will apply to marketplaces that expand primary based on geo and as always, marketplaces are nuanced so this might not specifically apply.
To start with, expanding your marketplace to new markets sounds relatively straightforward. You have product-market fit in your launch market and, hence, a playbook ready for your next launch. How hard can it be? Take it from someone who’s talked to many founders about marketplace expansion. There is a lot that can – and usually does – go wrong. In this post, I’ll uncover some common mistakes and how you can avoid falling into these traps.
I recently asked founders and operators from the EM community to share their war stories. Here are four categories of mistakes with relevant examples from real-life expansion efforts. Read on to avoid making unnecessary mistakes.
If you think back to your early days of starting a marketplace, you likely heard the phrase "speak to your customers" a lot. But now that you have product-market fit, it’s a muscle that may not be as strong as it once was. Get ready to strengthen it again. What you know about your customers and what enabled you to get to product market fit in your launch market is not necessarily what gets you to local product market fit.
These are new customers that may have different languages, problems and contexts. As a result, the distribution channels you’ve previously used to reach them may or may not be relevant. I’m not saying you need to start from scratch, but rather that you need to revisit your assumptions.
Common themes:
Specific examples:
"We made the mistake of not localizing our marketing and messaging. Our LA-based voice didn't resonate in European markets where communication styles are more reserved. We also overlooked differences in how artists use studios in different regions – from drinking policies to group preferences."
"It's critical to thoroughly research your local competitors, their value propositions, and how they connect with different customer segments that you're also trying to attract. Your differentiator might be your larger brand presence, unique product approach, or ability to adapt to local operations. Whatever it is, you need to identify it and really try to leverage it."
“When we took a step back to prioritize markets and "relaunch" some, I don't think we took the proper time to understand all of the nuances with markets. A great example of this is the way bookings were taking place and in certain markets where we had more "plug & play" home studios, they were booked more in hourly intervals. In markets with more professionalized studios, they were booked in 6+ hour blocks, day rates, etc.”
-Mike Williams, previously Founder of Studiotime
“We learned the hard way about local number formatting. In France, they use a comma instead of a period as the decimal mark. This minor oversight made our platform appear less trustworthy to new users, leading to higher bounce rates and poorer marketing metrics across the board."
-Dan Orkin, Ex-Reverb (responsible for growing Europe)
“Relying on the same playbook everywhere: Each new market introduces a unique set of challenges, and what worked in one market will not necessarily work in another. The strategies that helped you establish PMF may not scale universally – whether it's your paid marketing return on ad spend, supply-side onboarding, or SEO effectiveness. As others have called out, past performance does not guarantee future results. Stay flexible and have strategic thinkers on hand to navigate the inevitable hurdles that arise in unfamiliar territory.”
-Matt Bendett, Co-founder of Peerspace
A mistake I see time and time again is founders underestimating what it’s going to take to make a new market successful. A common theme is to think that you’ll get rocketship growth with very little investment. This can lead to spreading resources too thin and not giving your product a fair chance of gaining traction in a new market. The key is to balance ambition with realism, not going too far in either direction.
Common themes:
Specific examples:
"Not constraining from the beginning. I think this is something that might have been more common when many were going very narrow in a vertical, but not understanding the benefits of constraining geos to build up liquidity and then expand (vs. trying to go broad across geos since going so narrow in one category)."
"Thinking that since we were narrow in category, we needed to go broad across all markets. I think this gave us the perception of being "the largest" when it came to supply and what appeared to be a large marketplace (and quickly growing early-on), but it took years to build liquidity in some markets."
-Mike Williams, previously Founder of Studiotime
"Other big mistake was trying to expand into too many countries too quickly, which limited our ability to really deeply think through the customer experience in each one individually."
-Dan Orkin, Ex-Reverb (responsible for growing Europe)
"Launching multiple markets at once may seem like an attractive path to scale, but doing so often dilutes focus and increases operational complexity. Make sure you have enough people available to build and engage your early supply in authentic ways."
-Matt Bendett, Co-founder of Peerspace
When expanding to new markets, it's easy to underestimate the operational issues of coordinating teams across different locations and cultures. Many founders assume their existing processes and structures will seamlessly translate to managing and working with a team remotely. However, the reality often involves deliberate and precise coordination between central and local teams, each with its own priorities and perspectives. This is an issue I experienced up close when working at both eBay and Airbnb.
Common themes:
Specific examples:
"Assuming you are leveraging centralized or off-shore help in certain areas of your market launch, you will have some critical hires in local geos where geographic, cultural, and language expertise are critical for success. Allow ample time for recruiting and onboarding local talent, and be prepared for notice periods and hiring surprises that can slow momentum."
"Coordinate with your marketing and product teams with plenty of lead time to make sure you have a go-to-market process in place with agreed upon resources you will need from them. Miscommunication or unclear expectations can lead to delays, missed goals, or inconsistency in brand messaging. Regular cross-functional meetings and alignment on KPIs, timelines, and responsibilities are essential to avoid operational silos."
-Matt Bendett, Co-founder of Peerspace
It’s super important to make sure there are clear goals for the team on the ground to understand how they are performing relative to expectations and for all those involved with expansion efforts to understand what success looks like. But at this point, it can be tempting to overcomplicate things. Over-indexing on previous results and forgetting that a different market will require different assumptions can often lead to miscalculations when creating goals. Overall, I recommend keeping things very basic and adjusting your assumptions as you go.
Common themes:
Specific examples:
“It's tempting to justify expansion with aggressive forecasts, particularly when you've reached product-market fit (PMF) and solid unit economics in your home market. However, if you haven't fully optimized your initial market, expanding can lead to more challenges than growth. When forecasting a new market, temper your expectations. Apply a conservative reduction (in the range of 30-50%) to account for unknowns like slow user acquisition, lower purchasing power, or misalignment between your brand and the local audience. Simultaneously, carefully model your OpEx from headcount to SaaS licenses and marketing costs. A conservative P&L forecast will provide a more realistic foundation for investment decisions and help you avoid organizational strain."
“Tied closely to your P&L, expansion is often de-risked by assumptions about operational efficiency and rapid time to payback. Teams frequently underestimate the time it takes to operationalize a new market and overestimate the speed of organic growth. Small deviations in your forecast can compound over time, leading to significant delays in profitability. Be prepared to pivot your strategies if early indicators suggest you won't hit your original goals. The ability to course-correct or exit underperforming markets quickly will be key to protecting broader business health."
-Matt Bendett, Co-founder of Peerspace
Expanding your marketplace into new markets is an exciting time for any founder. But it can be easy to fall into the trap of assumptions. As you can see from the experiences shared above, there are many pitfalls to be aware of.
Here are the main takeaways to keep in mind:
Overall: Be ready to pivot your approach if things aren't working as planned. What worked in one market may not work in another, so maintain a learning mindset throughout the process. Expansion is not just about entering new markets – it's about doing so in a way that sets your marketplace up for long-term, sustainable success.
Thanks to Mike Williams, Matt Bendett, and Dan Orkin for sharing their insights and their contributions to this post.
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.
