How to launch a marketplace from scratch

This is cross-posted from the original article published on Forbes.

In 2018, my company had a marketplace with investors lined up, no borrowers and 60 days to close a deal or lose our equity funding. That scramble taught me the toughest truth about marketplaces: Getting both sides to believe in something that doesn’t exist yet matters more than the launch itself.

If you're building a marketplace from scratch, here's what you’ll likely face before launch, and what you need to know to make the market believe in your product.

Start by making one small thing 10 times better.

Before writing a single line of code, decide whether you’re pursuing revolution or iteration.

Revolutionary businesses change behavior entirely. Airbnb had to convince people that sleeping in strangers’ homes was normal. That kind of shift takes massive capital and time.

Iterative marketplaces improve transactions people already make by removing the friction. Fintech startups can burn cash for years trying to change behavior. Trying to solve an existing problem often shows better results.

In our case, private credit investors already existed, but they couldn’t access yield efficiently. Three recurring issues stood out: $25,000 minimums, 5-year lockups and opaque platforms. We addressed these with $500 minimums, 1-month terms and institutional-grade reporting. From a simple landing page, 10,000 people signed up.

Boring improvements are often the ones that matter. Just remember: Signups validate the problem, not your solution. Don’t confuse the two.

Simplify or die.

Many venture capitalists warn against three-sided marketplaces, where three user groups need to be onboarded for the business to work. Three sides of the market, three times the problems, three times the cost.

In private credit, we needed all three: borrowers, investors and underwriters. To simplify, we asked ourselves three questions about each side: Can we do this without capital risk? Can we credibly learn it? Can we eventually hand it off?

The answer was yes for underwriting, so we became underwriters temporarily to hedge the risk of having to close three different types of clients. Three sides then became two.

Trying to take on one side of the marketplace has challenges: You'll need to learn the business, prove competence and attract established partners—in our case, underwriters—to take that task off your hands.

Do not vertically integrate for the sake of proving out a point; do it to live long enough to delegate it out. In short: Three sides became two, which can then become three again.

Engineering trust from nothing

When you’re starting out, you don’t have much to offer without a track record. To build credibility:

• Leverage every ounce of legitimacy from your background. I pointed to my consulting work and our advisors' track records. Even your LinkedIn profile becomes a proof point. If you lack credibility, partner with someone who has it.

• Transform interest into momentum. Those 10,000 signups became "Join 10,000 investors ready to deploy capital." We never claimed they'd committed money, just that they were ready. Honest, nuanced language can make a world of difference.

• Create real scarcity. Our first deal capped at 50 investors. Small enough to manage if everything went wrong, yet urgent enough to close.

Then, you have to deliver exactly what you promised. Trust compounds faster than features.

Build your MVP.

How do you know an MVP is ready? When real value successfully changes hands.

Our first deal was $500,000. Small in hindsight, but it meant everything at the time. Money moved from real investors to a real borrower. That is when we knew we had a business.

Until cash moves, you're running an experiment. If you have to personally guarantee or subsidize that first transaction, you're building a consulting firm, not a scalable marketplace.

The clearest sign you're on the right track is when one side immediately asks, "What's next?" That pull validates more than any survey or internal debate. Speaking from personal experience, we almost killed the company trying to chase perfection before that first deal, spending months building features nobody used.

Don’t wait to ship. Movement beats meditation.

Find your magnet.

Ask yourself: Which side would end the marketplace if it left? That's your magnet. Spend 80% of your energy keeping that side happy. Marketplaces live and thrive in a managed imbalance. In financial marketplaces like my company's, capital comes first. Money doesn't wait; borrowers always do.

On Monday, chase supply. On Tuesday, convert demand. Use that tension in your message: Tell borrowers about investor appetite, and tell investors about strong deal flow.

The imbalance becomes the pitch, and you can move up the ladder by taking advantage of each side’s fear of missing out to incrementally get more supply and demand.

Do unscalable things.

Don’t outsource your early user relationships. Call your first 100 customers yourself. Listen to them. You’ll learn things no survey can tell you. One user might be a retired CFO who’s skeptical because she got burned before. Another cares most about liquidity. Another wants to feel heard.

These insights reshape your product and messaging. But more importantly, they build loyalty.

To these early users, offer access instead of discounts. Make them feel like insiders, not customers. When you're ready to launch, they’ll become your advocates. In our case, thousands of those original signups converted because they'd seen us deliver behind the scenes. Years later, that trust still powers our growth.

Unscalable conversations build scalable trust.

The scramble is the point.

My company, Percent, looks nothing like our original vision because that vision would have failed.

Markets don't care about your napkin sketch; they care if you solve real problems. You need conviction to survive the daily rejections, but also the flexibility to recognize when the market knows better than you do.

Hold tight to a few principles (ours were lower barriers, transparency and institutional quality) and stay flexible on everything else. Tomorrow, put in the effort to call five potential users. Ask what problems they are facing with their current process. Then, build the smallest fix to their biggest problem.

Everything else is noise until the money moves.