The Liquidity & Depth Audit
by Dan Hockenmaier • Head of Strategy and Analytics at Faire
A renowned marketplace expert who previously worked at Thumbtack during its scaling phase and founded the strategy consulting firm Basis One. He is considered one of the world's leading authorities on marketplace dynamics, growth models, and unit economics.
🎙️ Episode Context
Dan Hockenmaier deconstructs the complex mechanics of building and scaling marketplace businesses, contrasting them with traditional SaaS models. He provides a masterclass on constructing growth models, defining true liquidity, and making high-stakes strategic decisions regarding verticalization and expansion.
Problem It Solves
Helps marketplaces move beyond vanity metrics like GMV to measure the actual health and defensibility of the platform.
Framework Overview
A framework for evaluating marketplace health by focusing on reliability (Liquidity) and share of wallet (Depth) rather than just aggregate growth.
🧠 Framework Structure
Define Liquidity as a reliability met...
Measure Share of Wallet: What percent...
Prioritize depth (Share of Wallet) ov...
Only expand to new verticals if you h...
When to Use
When evaluating the health of a marketplace startup or deciding between growing the user base vs. deepening engagement.
Common Mistakes
Assuming GMV growth means the marketplace is healthy, while ignoring that users are finding matches less than 50% of the time.
Real World Example
Faire looking at independent retailers' shelves to see what percentage of their inventory was sourced via Faire vs. other channels as a primary health metric.
If you could tell me we could grow GMV 10% by getting 10% more customers or by getting 10% more of our current customers' wallet, I would take the latter.
— Dan Hockenmaier