Why Marketplace Growth Happens One Market at a Time

When you're building a marketplace, there is one problem that matters more than almost anything else: getting both sides to show up.

Uber had this problem in its early days. Riders don't want to open an app with no drivers, and drivers have no reason to spend their time on an app where there are no riders. So you can build the best technology in the world, but if the marketplace isn't liquid enough for either side to get what it wants, you have a very expensive version of an empty parking lot.

Sytes had the same problem in the beginning. Landlords and developers didn't have much reason to participate if there weren't tenants actively looking for space, while tenants weren't going to spend time posting their requirements if there weren't enough quality sites being submitted. That's the network effect in its simplest form, and solving it requires more than simply putting a marketplace online and waiting for everyone to discover it.

Uber's solution was to sequence the growth. Instead of trying to build a nationwide network overnight, they focused on individual markets and made sure there was enough supply to create a useful experience. Drivers were given incentives to participate before there were enough riders to guarantee them consistent business, and once a city developed enough activity, the model could be replicated somewhere else.

We're taking a similar approach with Sytes, although our version of "supply" and "demand" looks a little different.

In commercial real estate, the scarce assets are qualified sites and verified tenant expansion requirements. A landlord needs to know that the tenant looking for 10,000 square feet is actually expanding, while a tenant needs to know that the property being submitted is actually capable of meeting its requirements. If you can't reliably connect those two pieces, the marketplace doesn't create much value for either side.

That's why we've built Sytes market by market rather than trying to cover the entire country from day one. We started in Florida, where we could concentrate enough tenant demand and real estate supply to make the platform useful locally. Once that market developed, we expanded into the Southeast, and from there we moved into Texas.

Texas was the inflection point.

Once we had enough activity in a market that large, the network started behaving differently. More users brought more opportunities, more opportunities created more matches, and those matches gave everyone another reason to participate. It becomes a much easier proposition to sell when you can show a landlord that there are already tenants looking for exactly the kind of property they own.

That's the part of network effects that can be difficult to appreciate from the outside. Growth isn't always linear. A marketplace can spend months building one side of the equation, and then suddenly reach a point where participation starts feeding itself. Uber experienced something similar as ride availability improved and wait times fell. Once riders knew they could reliably get a car, they used the service more often, which gave drivers more opportunities, which improved availability further.

We're seeing that same basic dynamic develop across Sytes.

The result is that we've gone from a Florida-focused platform to having deals being negotiated as far away as Hawaii and the U.S. Virgin Islands. That's a pretty good indication that the marketplace has moved beyond the question of whether it can work and into the much more interesting question of where it can work next.

And that's where we're focusing now.

Our network is stronger in some markets than others, and New England and the Pacific Northwest are two areas where we need more participation from landlords, developers, and brokers. There are already tenants on Sytes looking for opportunities across Connecticut, Massachusetts, Maine, New Hampshire, Vermont, Rhode Island, Washington, and Oregon. The demand exists. What we need is more quality real estate for those tenants to discover.

If you own or represent property in those markets, you're not being asked to create demand from scratch. You're helping complete a marketplace that already has tenants looking for deals.

That's the entire point of network effects: once the right people can find each other quickly enough, everyone benefits.

We're not trying to build the biggest marketplace just for the sake of having the biggest marketplace. We're trying to make it easier for a tenant with a real requirement to find the right site, and for a landlord with the right site to find the tenant who needs it.

The faster those two sides meet, the faster the deals happen. And once the deals start happening, the network tends to take care of the rest.