Marketplace Exits: How Andrew Wilkinson & Tiny Evaluate Network Effects and Liquidity

Marketplace Exits: How Andrew Wilkinson & Tiny Evaluate Network Effects and Liquidity is the playbook I use to price and close marketplace deals fast without getting lost in vanity metrics.
You’ll see exactly how I test liquidity, score network effects, and separate durable flywheels from promo-fueled mirages.
I’ll write in plain English, first person, and give you copy-paste checklists you can use today.
When I mention focus and communication habits that speed deals, I’ll link to posts on this site for deeper dives.

What Makes a Marketplace “Exit-Ready”

I want proof that your marketplace matches supply and demand quickly, cleanly, and profitably.
Exit-ready means the engine works without heavy coupons or hand-holding.
I look for repeat usage, defensible density, and a take rate that survives the removal of subsidies.
If you need a mindset reset on ruthless focus, see our blog post: Delete 95% of Your Email.

Liquidity in Plain English (And How I Measure It)

Liquidity is “a qualified buyer finds a qualified seller at a fair price fast.”
I measure time-to-first-match, fill rate, and % of new listings matched inside SLA.
I also track repeat match rate because one-and-done marketplaces are fragile.
If those curves flatten or improve as you grow, I lean in.

Network Effects I’ll Actually Pay For

I pay for cross-side effects (more buyers bring more sellers and vice versa).
I pay for same-side effects when reputation and reviews compound trust.
I pay for data network effects when better matching improves conversion over time.
If your “network effect” is really just ad spend, I haircut.

Liquidity Pockets: Heatmaps Beat Averages

I don’t buy the global average.
I buy the hot pockets where density is real.
Show me city-category pairs with high fill rates and short match times.
I’ll fund expansion from those strongholds, not averages that hide deserts.

Supply Health: Density, Uniqueness, Multihoming

I test supplier uniqueness and multihoming friction.
If your best suppliers list everywhere, tell me why they prefer you.
Contracts, integrations, or workflow depth earn a multiple.
If supply would vanish after close, I slow down.

Demand Health: Intent, Repeat, CAC Without Subsidies

I remove coupons and measure organic intent.
I check repeat purchase frequency and contribution margin by cohort.
If CAC payback stays sane after turning down promo burn, I relax.
If intent collapses, I compress price or fix the engine first.

Take Rate & Leakage: Where Value Is Captured

I want a take rate strong enough to fund trust, support, and R&D.
I map leakage routes (off-platform deals) and your countermeasures.
Contracts, payments on-platform, and insurance/warranty coverage reduce leakage.
If your take rate needs coupons to stick, it won’t survive diligence.

Density by Geo and Category: The Barbell Strategy

I prefer a barbell of a few dominant strongholds plus a credible playbook for the next wave.
Show city × category dashboards with targets and owners.
I’ll fund the copy-paste rollout after close if the motion is real.
Sprawl without depth is value leakage.

Price Discovery Quality & Match Time

I look at bid-ask spreads, win-rates, and median time to match.
Narrow spreads and fast matches mean your marketplace creates trust and transparency.
I want the algorithm and reputation systems that make prices feel “fair” to both sides.
That’s defensibility you can measure.

Trust & Safety: The Unsexy Multiple Expander

I underwrite verification, reviews, chargeback rate, dispute cycle time, and fraud tooling.
Clean trust & safety lowers refunds and churn.
It also reduces the legal tail risk that buyers fear.
Boring systems here create real enterprise value.

Subsidies: Fuel or Life Support

I split spend into launch fuel vs life support.
Fuel accelerates a working engine.
Life support hides a broken one.
If the engine stalls when discounts pause, I won’t pay for the “growth.”

Disintermediation: How You Keep the Second Transaction

I don’t assume users will stay.
I look for on-platform payments, value-add insurance, dispute protection, and tooling that makes off-platform painful.
If the second transaction happens on-platform, the moat is real.
If not, take rate is at risk.

Compressing Time-to-Liquidity: Playbooks That Work

I like supply seeding in tight verticals, managed matches early, and cold-start boosts that sunset on schedule.
I reward workflow integrations and inventory sync that make listing effortless.
I penalize tactics that can’t be turned off without killing growth.
Playbooks should scale down on cost as density grows.

Marketplace Unit Economics (Contribution Margin Per Transaction)

I compute CM/Tx = Take Rate × GMV − variable costs (payments, support, claims, refunds).
I want CM/Tx positive before fixed costs, and improving with scale.
Show me refunds, chargebacks, and success costs explicitly.
Hiding them only delays a price cut.

Post-Close Levers I Can Pull

I expand your hot pockets, tune the match engine, and add trust add-ons (insurance, escrow, verification).
I fix pricing fences so pros pay for pro-grade tools.
I upgrade email/SMS to lift repeat.
For narrative and clarity in your plan, see: Never Tell, Always Storytell.

Working Capital & Seasonality for Marketplaces

Marketplaces feel light on working capital until refunds and seasonality bite.
I model deferred balances, dispute reserves, and peak season support costs.
We set a normalized working capital peg from 12 monthly snapshots and true-up dollar-for-dollar at close.
If you want the peg concept in one page, read: Working Capital Peg Explained on this site.

Data Room: The Vital 20% for Marketplaces

Upload first:
Liquidity: time-to-match, fill rate, repeat match rate by geo/category.
Cohorts: buyer and seller retention, GMV/user, CM/user.
Economics: take rate, CM/Tx, refunds, chargebacks.
Trust: verification rate, dispute metrics, resolution SLAs.
Keep Q&A in one thread so we don’t lose time.
For email discipline, see: I Don’t Respond to Long Emails.

LOI Structure: Nuances for Marketplaces

I keep economics non-binding and guardrails binding.
I cap indemnities, set a modest escrow, and lock the peg definitions.
If concentration or platform risk is high, I may use a short, small earnout tied to gross profit with ironclad governance.
Cash at close is still my default.

Red Flags That Stall or Kill Marketplace Deals

Promo-dependent demand that vanishes without coupons.
Supplier multihoming with no stickiness.
High leakage and off-platform payments.
Refunds and chargebacks that scale faster than GMV.
I’d rather you show the bruise and the fix than hide it.

A 30-Day Timeline That Actually Works

Days 1–3: Send a four-line email, share an 8-slide deck, and stage the vital 20% data room.
Days 4–10: Align on terms, sign the LOI, and begin focused diligence.
Days 11–20: Run liquidity/cohort verification, trust & safety review, and draft the SPA.
Days 21–30: Final markups, funds flow, Day-1 communications, and KPI cadence.
For rhythm that keeps you moving, skim: 02: Journaling With AI.

Examples You Can Steal

Example A — Liquidity pocket heatmap.
A services marketplace shows sub-24h time-to-match and 80% fill rate in Austin-Home Cleaning and Denver-Handyman.
We price those pockets, then fund a copy-paste rollout to two adjacent cities.

Example B — Disintermediation defense.
A B2B parts exchange keeps on-platform payments + warranty and offers bulk-order financing.
Leakage drops to <8% and take rate holds.
I stretch the multiple.

Example C — Subsidy sunset.
A rentals marketplace replaces $200k/month coupons with deposit insurance + better filters.
Fill rate stays flat and CM/Tx rises +18%.
Cash at close increases.

Copy-Paste Checklists

Liquidity Pack (One Page).
Time-to-first-match (median, 90th).
Fill rate by geo/category.
% listings matched inside SLA.
Repeat match rate.
Leakage estimate and countermeasures.

Trust & Safety Pack.
Verification rate.
Fraud rate, chargebacks per 1,000 orders.
Dispute initiation and resolution time.
Refund cost per order and trend.

Unit Economics Pack.
Take rate by segment.
Variable costs (payments, support, insurance).
CM/Tx and CM/user by cohort.
Refunds/chargebacks explicitly shown.

FAQs

How do you define liquidity for marketplace exits.
Fast, fair matches with high fill and strong repeat without heavy subsidies.

What network effect gets the highest multiple.
Cross-side effects with growing same-side trust and data-driven matching that improves conversion.

Do coupons kill a deal.
No, but if demand dies when coupons stop, your price does too.
Prove the engine works at steady-state.

How do you measure leakage.
Payment flow on-platform, follow-up transaction capture, and supplier/buyer surveys with incentives to report.

What’s a healthy take rate.
One that funds trust, support, and R&D after refunds and chargebacks while remaining competitive.

Will you accept an earnout for marketplaces.
Sometimes, short and small, tied to gross profit with locked governance and audit rights.

How do you treat seasonality.
We peg working capital from 12 monthly snapshots, adjust for seasonality, and true-up at close.

What’s the single most important slide.
Liqudity heatmap with time-to-match, fill rate, and repeat by geo/category.

How do you view multihoming suppliers.
Acceptable if you own the workflow, payments, or guarantees that make you their default.

What kills deals late.
Hidden refunds, off-platform payments, and promo-propped demand.
Disclose early and show fixes.

Do you need audited financials.
No.
I need cash-tied P&Ls, cohort tables, and refund/chargeback truth.

Can we close in ~30 days.
Yes with a tight data room, crisp comms, and standard docs.
Speed is a choice.

Conclusion

Marketplace Exits: How Andrew Wilkinson & Tiny Evaluate Network Effects and Liquidity comes down to three proofs: genuine liquidity, compounding network effects, and clean unit economics without life-support subsidies.
Show hot pockets, defend your take rate, reduce leakage, and lock a fair peg, and I can push for more cash at close and a ~30-day close.
Get Your Copy of Never Enough at https://www.neverenough.com/

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