The Trouble With Marketplaces
(And why your "Uber for X" might just become Craigslist with branding)
I’ve worked with hundreds of startups —
Through consulting, teaching, accelerators, and live cohort sessions.
And one of the most popular -but least successful- business models I see?
Two-sided marketplaces.
Why are they so appealing?
Because they sound easy.
You don’t need to pay for the products or services - Providers do the work!
You just build the platform, spend some investor cash on ads, take a cut, and scale.
Except… that’s never how it plays out.
Here’s what most founders miss:
-> They only solve for one side of the market.
(Usually the buyer.)
But supply is where marketplaces live or die.
And high-quality providers aren't waiting around hoping to join your app.
Here's why top providers often say, "No Thanks":
You think their motivation is more customer volume. But they don’t have a volume problem.
The greatest tutors, stylists, consultants, accountants, lawyers, architects have one thing in common:
They’re already busy.
They want higher prices;
Not more low-quality deal flow.
They’ve built their own brand.
You think you’re “saving” them from the work of running a business
So they can focus on “doing what they love.”
But newsflash:
That’s only attractive to new or struggling providers.
For the best folks, your platform doesn’t feel like help —
It feels like erasure.
They can’t see the ROI.
If joining your platform means
Lower prices.
Worse clients.
Platform lock-in.
Brand dilution.
...Why waste time trying it?
...Why stay?
If you're thinking about building a 2-sided marketplace business, here's the real red flag to watch for:
If your pitch includes the mission of “leveling the playing field” —
Ask yourself: Who actually benefits from that?
If one side of the market already has a huge advantage,
Why on earth would they pay you to erase it?
They won’t.
And the other side probably can’t.
And before you ever pitch yourself to your seller-side of the market as
The "Upwork of X"
The "Uber of X"
The "AirBnb of X"
Remember:
“Found them on Upwork” = cheap, temporary labor
Uber = unsustainable pricing, class-action lawsuits, driver churn
Airbnb = regulatory backlash, housing crises, hosts trying to bail
And these are the marketplace SUCCESS stories.
If, after all of this caution, you find you MUST launch a 2-sided marketplace, at least consider this-
The 3-question Marketplace Stress Test:
Is there real market friction — beyond “people want it cheaper”?
Will your platform reward quality providers, or flatten them?
Can you offer meaningful ROI to supply — both short- and long-term?
If the answer is fuzzy on any of these…
You’re not building a marketplace;
You’re building a middleman
Who no one wants to pay.
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