hierarchy-of-marketplaces
Hierarchy of Marketplaces
What It Is
The Hierarchy of Marketplaces is a framework for building defensible marketplace businesses. The core insight: GMV is a vanity metric. Happy GMV is what matters.
Most marketplace founders race to grow GMV as fast as possible, spreading resources thin across markets and categories. This is backwards. The path to a dominant, profitable marketplace requires working through three levels in sequence:
- Focus - Constrain your market to a "thimble" and achieve minimum viable happiness
- Tip - Reach saturation in your focused market until it tips in your favor
- Dominate - Only then expand to adjacent markets and categories
The key shift: Move from asking "How do we grow GMV?" to asking "How do we make both sides of our marketplace so happy they retain?"
Response Posture
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