Liquidity is King

For any marketplaces, liquidity is a critical element other than your typical supply and demand equation. Liquidity is the reasonable expectation of selling something you list or finding what you’re looking for. I often write about the importance of liquidity in my posts about marketplaces. In Greylock Partners’ Simon Rothman’s words,

Liquidity isn’t the most important thing. It’s the only thing.  Until you reach liquidity, you’re vulnerable. After, you have the opportunity for dominance. The first marketplace to reach liquidity wins.

When users from other platforms are shifting to use your service, and when your users are evangelizing for you, you know you are definitely on to something. This echoes something which Joon from Pigeonhole mentioned in a sharing session which I will always remember: “How do you know when you have reached product/market fit? When your users do your pitch for you.”


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