Hey - it’s Fiona

I’ve just landed in Australia and am officially on holiday mode. We’re here visiting my husband’s family, soaking up the sunshine, and enjoying that glorious jet lag that has me wide awake at 4am and ready for a second breakfast by 9.

Before I left, I had a really interesting sales call with a founder based in Texas. They asked:

Should our marketplace be open or closed?

It’s a deceptively simple question, but the implications are huge. It affects trust, liquidity, onboarding, user experience, and ultimately, growth. So that’s what we’re diving into this week.

Should I build a closed marketplace or an open one?

This is one of the earliest decisions you'll need to make as a marketplace founder, and one of the most strategic. Yet it’s rarely talked about with the weight it deserves.

At a basic level:

• Open marketplaces allow anyone to join and participate. Think eBay, Etsy, or Gumtree.

• Closed marketplaces restrict access. You might need approval to join, pass a vetting process, or be invited by an existing user. Think The Expert, The Marque, or TopTal.

But this binary framing is too simplistic. Most marketplaces fall somewhere on a spectrum, and the decision you make here should be driven by one thing: what kind of trust your users need in order to transact.

When open works well

Open marketplaces thrive on volume and liquidity. They work best when:

• Supply is high and relatively interchangeable (e.g. second-hand books, vintage furniture, dog walkers).

• Price sensitivity is more important than trust.

• Users want to browse a wide variety of options.

If you're building something where more choice = better experience, open can help you scale faster. Onboarding is easier. Growth is often organic, as users invite others or share listings.

But there's a cost: quality control. In an open marketplace, anyone can list. That can mean duplicate listings, poor service, or spammy content. You’ll need strong moderation tools, search filters, reviews, and a robust reporting system.

When closed makes more sense

Closed marketplaces create curation, exclusivity, and trust. They work best when:

• Supply quality varies widely and the stakes are high (e.g. babysitters, legal professionals, luxury services).

• Trust is critical to conversion.

• Users are time-poor and value a vetted experience.

This is common in high-value, low-frequency marketplaces – where a single bad experience can destroy user trust. In these cases, being closed can actually accelerate growth, because users feel safer.

But the trade-offs are real:

• Onboarding suppliers takes longer.

• You’ll need to set and enforce standards.

• Liquidity is harder to build quickly.

There’s a spectrum – and you can move along it

It’s rarely all-or-nothing. Many marketplaces start closed to ensure quality, then open up gradually as they scale.

Examples:

• Airbnb originally hand-approved every host.

• The Expert vets every interior designer before they’re listed.

• TaskRabbit tightened its onboarding significantly after early trust issues.

You can also build hybrid models:

• A closed supply side (vetted service providers), with an open demand side (anyone can book).

• Tiered access, where premium users see more trusted listings or receive concierge support.

• Invite-only models that slowly open as reputation systems kick in.

What should drive your decision?

Instead of asking “What’s easier to build?”, ask:

1. What does trust look like in this market? Is it built through user reviews, or does it need to be embedded from the start?

2. What’s at stake in a poor-quality match? Will it damage the brand, or just frustrate a user?

3. How much variability is there in supply? Can anyone do the job, or are there real skill, quality, or safety concerns?

4. What does early traction look like? Do you need to impress your first 100 users with quality, or flood them with options?

Design implications

This choice affects everything from UX to onboarding flows:

Open:

• Quick sign-ups

• Easy listing creation

• Filtering and sorting are essential

• Reviews and badges become trust proxies

Closed:

• More friction upfront (forms, verification)

• More polished, trustworthy first impression

• Content may be editorially curated

• Trust is embedded in the design – through exclusivity, storytelling, and layout

Choosing between open and closed isn’t just a product decision, it’s a positioning decision. It shapes how users perceive your brand, how you grow supply and demand, and how trust is established from day one. There’s no one-size-fits-all answer, but being intentional about this choice early on will save you time, energy, and awkward product pivots later. Think about the user experience you want to create, and work backwards from trust.

—> ✉️ Reply with your questions and I’ll answer them in a future issue.

Here’s some examples of marketplaces across the open–closed spectrum

The Expert

The Expert is a beautifully executed closed marketplace connecting users with top-tier interior designers. You can’t just sign up as a designer – you’re handpicked. The result is a luxury feel and a strong sense of trust. Pricing is transparent, bookings are seamless, and the curation makes it feel high-end from the first click.

Treatwell

Treatwell is an on open marketplace for salons and beauty treatments. Anyone can list, and users choose based on availability, price, and reviews. The interface leans heavily on filters and user-generated trust signals to help people navigate choice.

Toptal

Toptal is a classic closed model: only the top 3% of freelance talent make it in. The pitch is all about trust and curation. They invest heavily in vetting – but it’s rewarded with a premium positioning and high-value clients.

Fiona Burns

Find me on LinkedIn or Book a 1:1 call

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