In a recent article for TechCrunch, Venky Ganesan (@venkyganesan) divulges the 10 laws that entrepreneurs should abide by to create successful marketplaces. In this day and age, on-demand marketplaces have become mainstream and entrepreneurs have invested over $12 billion into this sharing economy. Because of the burgeoning nature of the sharing economy, it’s important for entrepreneurs to optimize their marketplaces for long-lasting success. Here are the 10 laws Ganesan insists are integral for success:

• Vertical not horizontal

Marketplaces that are focused in a vertical tend to attract critical mass more quickly. If the marketplace is horizontal and broad, it becomes more difficult to achieve liquidity. In comparison to companies like eBay, Uber (and vertical marketplaces in general) have much less matching friction since everyone on the app is there for the same purpose of finding a ride.

• Cater to services over goods

Service-based marketplaces have the largest potential markets, as services account for about 80% of the U.S. private-sector GDP. Services are also more frequent and recurring than the transfer of goods -- one may find something in their house to sell once a year, but the use of Uber is much more frequent.

• Local before international

Today, most marketplaces penetrate locally before they even think about expanding internationally. Therefore, local marketplaces are able to efficiently drive growth at a very early stage as services like Facebook can grow geo-specific liquidity.

• Consider on-demand

Uber’s ability to provide a homogenous supply base on-demand has changed business. Because this homogenous supply is available instantly, these marketplaces can hold the pricing and supply power.

• Create consumer habits

Successful marketplaces instill habits in consumers when they find that their purchasing experience was unbeatable compared  to alternatives. Investors track consumer marketplace retention and have found that the top marketplaces have a 20% initial revenue retention rate.

• Curation

By leveraging data, marketplaces can curate supply for customers. Curated marketplaces ensure appropriate prices and that buyers find quality suppliers. With additions like peer reviews, marketplaces can help customers make better decisions rather than relying on word of mouth.

• Shadow market

The potential for market expansion with the introduction of a quality service is far more important than the size of the core market. Investors should focus on what the market looks like for adjacencies, as well as what the market looks like to competing services.

• NPS

In the long-run, marketplaces have the potential to be extremely profitable businesses. As services become mainstream, the customer acquisition cost (CAC) will invariably increase which will create pressure to sustain profitable growth. A service with strong growth can acquire efficiently even as CAC increases. The best in-class buyer NPS exceeds 40% while seller NPS should exceed 20%.

• Don’t neglect suppliers

Successful marketplaces should also focus on the retention characteristics of marketplace supply. Suppliers, unlike customers, may use the platform as a means of full-time income. Many suppliers for labor-based marketplaces shift their behavior after signing on by increasing hours and income on the platform.

• Boost rake

As marketplaces scale, they should take advantages of opportunities to boost the rake of their business. Additional income streams not only boost the financial profile of the business, but are also able to lock-in more sellers who have quality experiences. Successful marketplaces will offer tools for both sides to increase the value of the business.

With these 10 laws in mind, your on-demand marketplace has the potential to become the next Uber for X.