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Choose a North-Star Metric for a Marketplace

Tests whether you understand liquidity as the marketplace health metric - measured per side, per market cell - and can find the binding constraint.

Interview prompt

You run a two-sided marketplace. What's your north-star metric, and how do you measure whether the marketplace is healthy?

What interviewers evaluate

Do you pick a match/transaction-quality north star rather than GMV or user counts?
Do you define liquidity from both sides (demand fill rate, supply utilization)?
Do you use the two sides to identify which one is the binding constraint?
Do you measure per market cell (geo × category × time) instead of trusting averages?
Do you include economic and quality guardrails (subsidized liquidity isn't durable)?

North star - successful matches meeting a quality bar (completed transaction within a time/experience threshold), not GMV or signups.
Demand-side liquidity - fill rate (requests that convert to completed matches) and time-to-match.
Supply-side liquidity - utilization (share of supply hours/listings that transact in a window).
Find the constraint - low fill + high utilization = supply-constrained; high fill + low utilization = demand-constrained. Invest accordingly.
Per-cell measurement - liquidity by geo × category × time; track the share of cells above threshold, not the average.
Guardrails - contribution margin/take rate, match quality (repeats, disputes, cancellations), disintermediation.

Try structuring your own answer first, then reveal a strong worked example.

How do you know which side of the marketplace to invest in next quarter?
Define the health metrics for a home-services / freelance / dating marketplace.
GMV is growing 30% but you suspect the marketplace is unhealthy - what do you check?

Choosing GMV or signups as the north star (both can grow while match quality collapses).
Measuring only one side - fill rate without utilization can't locate the constraint.
Trusting aggregate liquidity and missing dead market cells.
Ignoring subsidy economics - discount-fueled liquidity evaporates with the discounts.
Forgetting disintermediation in categories with repeat relationships.

Fill rate is 92% overall but 40% in your newest city. Where does the next dollar go?
Utilization is high and drivers are churning anyway. What's going on?
How would your liquidity metrics differ for a dating app, where 'supply' is also 'demand'?

Related cases

Choose a North-Star Metric for a Marketplace

Tests whether you understand liquidity as the marketplace health metric - measured per side, per market cell - and can find the binding constraint.

Interview prompt

You run a two-sided marketplace. What's your north-star metric, and how do you measure whether the marketplace is healthy?

Do you pick a match/transaction-quality north star rather than GMV or user counts?
Do you define liquidity from both sides (demand fill rate, supply utilization)?
Do you use the two sides to identify which one is the binding constraint?
Do you measure per market cell (geo × category × time) instead of trusting averages?
Do you include economic and quality guardrails (subsidized liquidity isn't durable)?

North star - successful matches meeting a quality bar (completed transaction within a time/experience threshold), not GMV or signups.
Demand-side liquidity - fill rate (requests that convert to completed matches) and time-to-match.
Supply-side liquidity - utilization (share of supply hours/listings that transact in a window).
Find the constraint - low fill + high utilization = supply-constrained; high fill + low utilization = demand-constrained. Invest accordingly.
Per-cell measurement - liquidity by geo × category × time; track the share of cells above threshold, not the average.
Guardrails - contribution margin/take rate, match quality (repeats, disputes, cancellations), disintermediation.

Try structuring your own answer first, then reveal a strong worked example.

How do you know which side of the marketplace to invest in next quarter?
Define the health metrics for a home-services / freelance / dating marketplace.
GMV is growing 30% but you suspect the marketplace is unhealthy - what do you check?

Choosing GMV or signups as the north star (both can grow while match quality collapses).
Measuring only one side - fill rate without utilization can't locate the constraint.
Trusting aggregate liquidity and missing dead market cells.
Ignoring subsidy economics - discount-fueled liquidity evaporates with the discounts.
Forgetting disintermediation in categories with repeat relationships.

Fill rate is 92% overall but 40% in your newest city. Where does the next dollar go?
Utilization is high and drivers are churning anyway. What's going on?
How would your liquidity metrics differ for a dating app, where 'supply' is also 'demand'?