How to Build a Marketplace Where the Product IS the Supply

Building a successful marketplace may appear, at first blush, to be a technical problem: create software that elegantly connects supply and demand. But as Casey Winters, a marketplace maestro and veteran startup growth leader, uncovers in an episode of In Depth, the truth is far more nuanced—and profoundly insightful.

At the heart of it lies this core lesson: the true "product" of a marketplace isn’t your software; it’s your supply. And as a founder, your job is to elevate that supply to ever-higher levels of excellence.

This insight might seem obvious in hindsight, but Winters explains how ignoring it is the pitfall many marketplace founders stumble into.

A Pivotal Moment: The Realization That Changes Everything

“The product in a marketplace is the supply, not your software. The software has to work to connect you to supply, but if supply doesn’t do a good job, they’re going to blame the marketplace because you recommended that person,” Winters explained. This is a game-changing realization for founders designing marketplaces.

For Winters, this lesson crystallized during his time scaling Grubhub. In the early days, Grubhub wasn't a polished product. It was "an embarrassingly bad product," as he put it. But it thrived—and grew into a billion-dollar company—because it focused obsessively on the quality and scope of its supply. Initially, Grubhub simply uploaded every restaurant menu it could find and made it searchable. While the user experience lacked sophistication, customers were astonished by the number of restaurants they didn’t even know delivered to their area. With demand rolling in, Grubhub used its newfound leverage to improve the software AND raise the standards of the restaurant supply base.

This was no accident. “You have to get good at understanding and raising the standards of supply over time,” Winters emphasized. He argued that many early-stage founders fail to grasp this and pay the ultimate price for it: their marketplaces fizzle out as mismatch or poor-quality supply drives potential customers away.

Real Stakes: Why This Matters

This isn’t just a philosophical lesson—it’s one with real, measurable stakes. A marketplace that neglects to ensure quality supply forfeits its rarest and most elusive asset: trust. Think about it: every transaction involves a leap of faith that the provider—the driver, the tailor, the dog walker—will deliver. If they don’t, customers won’t be forgiving. They won't distinguish between the marketplace and the supplier; they’ll hold the entire platform accountable.

Winters offers an example from Airbnb, which at one point allowed hosts and guests to arrange bookings manually through "request to book." Sounds useful, right? Not quite. The friction in waiting hours—sometimes days—for a response often resulted in frustrated customers turning to hotels instead. Airbnb fixed this by instituting "Instant Book," where listings were immediately reservable. To make it work, the platform didn’t just leave hosts to figure it out themselves. Airbnb incentivized good hosts to adopt this behavior by showing them higher in search results. And, over time, the platform made Instant Book mandatory for a growing percentage of hosts.

This wasn’t just a feature. It was a deliberate, systematic way of elevating the supply to match (and shape) demand expectations. The result? Increased customer satisfaction, fewer cancellations, and soaring trust in the platform.

It’s Not Always Comfortable—But the Strategy Pays Off

As Winters explained, improving supply often involves tough trade-offs. Sometimes, it means kicking off low-performing suppliers who don’t meet quality benchmarks. He shared how Grubhub unapologetically removed restaurants with consistently poor ratings and frequent customer complaints.

But raising the standards isn’t always punitive. In many cases, it’s about guiding suppliers toward better practices. Winters gave the example of Eventbrite, where creators often struggled to market their own events effectively. Rather than just hope for the best, Eventbrite built email and marketing tools that creators could use to drive ticket sales. They didn’t just stop there—they made it clear that better marketing would directly correspond to higher visibility for events on the platform. These tools were a win-win: creators sold more tickets, and Eventbrite grew its reputation as the go-to resource for successful events.

Over time, platforms like Grubhub, Airbnb, and Eventbrite learned something crucial: marketplaces don’t succeed in spite of human behavior; they succeed because they shape it.

Actionable Takeaways for Founders

So, how can founders apply this insight? Winters laid out a roadmap. First, embrace that your job is not just about acquiring supply but optimizing it for quality. This requires real data: what attributes predict better engagement and satisfaction for your demand side? Measure them, enforce standards, and incentivize compliance.

Second, identify non-scalable ways to ensure early supplier quality. Use this phase to learn everything you can about their pain points and inefficiencies, and then design tools or workflows that help them succeed. Over time, you'll have leverage to mandate best practices and raise the bar for everyone.

And finally, take responsibility for failures. In the formative years, if a transaction goes wrong, eat the cost, take care of the customer, and ensure it doesn’t happen again. As Winters succinctly put it, "If there’s an issue with the order, just take it on as the marketplace.”

The payoff, in retention and brand integrity, is worth it. Ultimately, what separates great marketplaces from mediocre ones is whether they view their job as simply organizing existing supply—or elevating it. The latter is infinitely harder, but it’s the only way to build enduring trust and defensible market leadership.

For founders of early-stage marketplaces, there’s no fluff here—this simple but profound shift in how you measure your “product” could be what steers your platform toward enduring success.

Listen to the full episode here.