How marketplaces win: Liquidity, growth levers, quality, and more | Benjamin Lauzier (Lyft, Thumbtack, Reforge)

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Benjamin Lauzier has been building and scaling marketplaces for almost 15 years. He was the VP of product and growth at Thumbtack, where he rebuilt the product team and Thumbtack’s growth levers, re-architected their revenue model, and helped double the company’s growth within three years. Prior to Thumbtack, Ben was at Lyft for six years, where he led the supply side of the product organization to a point where 1% of U.S. workers were driving for Lyft every month. Currently, he advises marketplace teams and founders, teaches a Reforge course on marketplace growth, and has recently launched a health tech company called Nurra, which connects users with care advocates to navigate the health-care system. In our conversation, we cover:

• What defines a marketplace business

• Strategies for growing supply and demand in the early stages

• How to measure liquidity and other marketplace health metrics

• How to evaluate if a marketplace model is right for your idea

• Lessons from Lyft, Thumbtack, and other successful marketplaces

• The differences between product management in the U.S. and Europe

Some takeaways:

1. Your first priority in building a marketplace business should be to concentrate on achieving product-market fit for the hardest side of your marketplace first. Identify which side is the hardest (aka most valuable), and grow that side first.

2. Once you get started, focus on liquidity—how efficiently your marketplace matches supply and demand. High liquidity results in better user experiences and increased retention. A simple way to gauge this is to analyze your fill rate: the percentage of demand that successfully translates into transactions. The higher your fill rate, the better your marketplace is performing.

3. Signs that a marketplace model is the right model for your idea:

   1. High fragmentation on both sides

   2. Relatively uniform set of needs

   3. High barriers in matchmaking or transaction creation

4. A few reasons marketplaces fail:

   1. Not maintaining a high bar for quality

   2. Failing to achieve liquidity (efficiently matching buyers and sellers)

   3. Ignoring one side of the marketplace for too long

5. If you have highly engaged users, tap into their passion for onboarding new customers. For instance, Lyft implemented a mentor program where they paid their top drivers to conduct onboarding sessions for new drivers. By providing mentorship, Lyft significantly improved retention rates among new drivers. Those who received guidance and support were more likely to stay engaged with the platform, resulting in a more stable workforce and reduced turnover costs.

6. Product management practices in Europe can differ significantly from those in the U.S. Due to a less liquid job market in Europe, employees have more job security but potentially less autonomy. Founders and managers in Europe might struggle to let go of control, leading to a more micromanaged environment. Conversely, U.S. companies often emphasize equity and ownership, giving product teams more responsibility and autonomy. If you’re operating in Europe and want to emulate the U.S. approach, consider investing in education around equity and fostering a culture of ownership and accountability within your teams.

Where to find Benjamin Lauzier:

• LinkedIn: https://www.linkedin.com/in/benjaminlauzier/

• Ben’s Reforge course: https://www.reforge.com/courses/marketplace-growth/details

In this episode, we cover:

(00:00) Ben’s background

(02:24) Defining a marketplace

(07:52) Challenges in building a marketplace

(13:28) Methods for growing supply

(15:57) Understanding marketplace liquidity

(21:36) Identifying product-market fit in marketplaces

(24:10) Evaluating marketplace business models

(27:20) Common pitfalls and failures in marketplaces

(36:23) Managed marketplaces and quality control

(42:26) Lyft’s rental car initiative

(46:35) Mentorship and ambassador programs

(51:21) Driver recruitment strategies

(54:12) Lyft vs. Uber: a strategic analysis

(59:24) Cultural differences in tech: Europe vs. U.S.

(01:10:30) Building a health advocacy platform

(01:16:52) Lightning round and final thoughts

Referenced:

• Craigslist: https://www.craigslist.org/

• Lyft: https://www.lyft.com/

• Shopify: https://www.shopify.com/

• Airbnb: https://www.airbnb.com/

• eBay: https://www.ebay.com/

• Faire: https://www.faire.com/

• Rover: https://www.rover.com/

• Thumbtack: https://www.thumbtack.com/

• Taskrabbit: https://www.taskrabbit.com/

• OpenTable: https://www.opentable.com/

• DoorDash: https://www.doordash.com/

• The Sean Ellis Test for Measuring Product-Market Fit: https://productcoalition.com/using-sean-ellis-test-for-measuring-your-product-market-fit-c8ac98053c2c

• The original growth hacker reveals his secrets | Sean Ellis (author of “Hacking Growth”): https://www.lennysnewsletter.com/p/the-original-growth-hacker-sean-ellis

• Sidecar: https://en.wikipedia.org/wiki/Sidecar_(company)

• Cherry Is Shutting Down Its On-Demand Car Wash Service, Will Refund Pre-Paid Customers: https://techcrunch.com/2012/12/23/cherry-car-wash-shut-down/

• Toptal: https://www.toptal.com/

• Lyft Express Drive: https://www.lyft.com/expressdrive

• Ambassadors and Partnerships at Lyft: https://www.lyft.com/ambassador

• Twilio: https://pages.twilio.com/

• Mozza: https://www.mozza.io/

• Mistral AI: https://mistral.ai/

• Hugging Face: https://huggingface.co/

• Gemini: https://gemini.google.com/app

• Paul Graham’s “Founder Mode”: https://paulgraham.com/foundermode.html

• Nurra Health: https://nurra.me/

• Misbehaving: The Making of Behavioral Economics: https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X

• Range: Why Generalists Triumph in a Specialized World: https://www.amazon.com/Range-Generalists-Triumph-Specialized-World/dp/0735214484

• Immune: A Journey into the Mysterious System That Keeps You Alive: https://www.amazon.com/Immune-Journey-Mysterious-System-Keeps/dp/0593241312/

• Kurzgesagt YouTube channel: https://www.youtube.com/@kurzgesagt

• The Last of Us on HBO: https://www.hbo.com/the-last-of-us

• The Arc browser: https://arc.net/

• Competing with giants: An inside look at how The Browser Company builds product | Josh Miller (CEO): https://www.lennysnewsletter.com/p/competing-with-giants-an-inside-look

• John Muir quote: https://www.brainyquote.com/quotes/john_muir_3802

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Lenny may be an investor in the companies discussed.