hierarchy-of-marketplaces
Installation
SKILL.md
The Hierarchy of Marketplaces is a strategic framework for moving beyond "Vanity GMV" to build a dominant, high-margin business. It forces focus on user happiness and market "tipping" rather than raw transaction volume.
Overview: The Core Metric — Happy GMV
The goal of a marketplace is not just GMV; it is Happy GMV.
- Vanity GMV: Transactions that occur due to heavy subsidies or one-off needs where the user has no intention of returning.
- Happy GMV: Transactions where the buyer and seller are so satisfied they abandon substitutes. This is the only GMV that leads to retention and long-term defensibility.
Level 1: Focus (Boil the Thimble)
Do not try to "warm the ocean" by spreading resources across a large market. Instead, focus ambition like a laser on a "thimble" of water to get it white-hot.
- Constrain the Opportunity: Limit the marketplace by geography (e.g., one city) or category (e.g., only handmade goods) to reach "Minimum Viable Happiness" faster.
- Identify Scarcity: Recognize that your primary constraints are capital and your own attention.
- Find the White-Hot Center: Target a segment where the current substitutes are most painful.
- Example: DoorDash started in the suburbs where no one else delivered, making those customers "happier" than city dwellers who already had options.
- Ignore Total GMV: Focus on cohort retention. If a specific niche is retaining at a high rate, you have reached Level 1 success.
Level 2: Tip the Market
Once a segment is white-hot, you must transition from "things that don't scale" to "tipping loops." A market is "tipped" when it becomes easier to grow than to stagnate.