The difference between a marketplace and a community

It’s hard to overstate how much power online platforms now have across the globe.

They enable us to easily book a room in São Paulo, scan the news headlines in Nairobi, search for a job in Wellington, and connect us to the people, products, and services around us.

The dominant model for all of this activity is the modern marketplace.

Amazon, Airbnb, Didi Chuxing, Uber, Stripe, WeWork, these are all marketplaces, designed for people to buy and sell products and/or services. The model also extends to social media, where platforms like Facebook have marketplace features and are also viewed as a marketplace for information, ideas exchanged, views shared, beliefs tested etc.

But a marketplace isn’t a community, and the differences matter.

Marketplace vs. community

At the core, modern marketplaces reflect a direct window into capitalism. Someone has something (a product, knowledge, or a view point) and someone else wants or needs that thing.

This two-sided model works and has plenty of benefits, but while there are some features that mimic community, there are also key differences…

Online marketplaces are built for scale, and tend to favor network effects and transaction value

From the powerful Amazon recommendation engine to Facebook’s constantly changing news feed algorithm that factors in trust and relevance, no matter what’s being traded the core is transactional.

In a community, value is significantly more complex. We might “like” something for a number of different reasons, sometimes it is a bookmark, a token of appreciation, a social signal that lets someone know you saw the train wreck, a disagreement but thanks for raising this question, and so on. This is also true for specific product transactions, too.

Roles in a community are fuzzy on purpose

In a marketplace model, transactions require clear roles e.g. buyer, seller, platform admin, etc.

When new opportunities or value exchanges come up, they are often filtered through those same roles and it tends to restrict the ability to build community, which is by nature porous and allows for new people to come and go, experiment with ideas, fail, and shift their beliefs, location, and work.

It’s much easier to layer community on top of a marketplace, rather than the other way around

This is why Airbnb, Lyft, and other startups often have a brand publishing unit. When I worked in product operations at, we curated and created data visualizations incl. infographics and videos, making it easy for creators to build a profile, share their work, sign up for our marketplace, and get gigs.

If one of their graphics hit the front page of Reddit, that meant anywhere from 750,000 to 1M visitors on-site, browsing our community, looking at graphics, each time increasing the profile of the marketplace.

On the other hand, building a community and then dropping a marketplace on top is much harder, because the trust and authority elements of a community are much more complicated and often non-binary.

Is the payment method of a buyer legitimate? Is someone reviewing a product they’ve actually purchased? The dynamics of a modern marketplace are much more straightforward than a community.

This is also why valuing a startup like WeWork at $47 billion is a pretty iffy proposition. Co-working is inherently a community building exercise with value that goes beyond quarterly or annual earnings, and not just a real estate play that you can drop on top.