The Postmate Effect: Why Being #2 in Your Market Is Now a Billion-Dollar Opportunity

Back in 2018, my board was convinced we were thinking too small. "You need to dominate your market," one investor told me. "Nobody remembers who came in second."

He was wrong. And Postmates proved it.

In July 2020, Uber acquired Postmates for $2.65 billion. At the time, Postmates was the fourth-largest food delivery service in the U.S., with just 8% market share. Fourth place! Yet they commanded a valuation higher than many market leaders in other industries.

This fundamentally changed how I think about building Concord—and it should change how you think about building your company too.

The Old Playbook Is Dead

When I started Concord in 2014, the Silicon Valley wisdom was clear: dominate your market or die trying. Every pitch deck needed to show how you'd capture 50%+ market share. Every board meeting focused on crushing competitors. The goal was always monopoly-like dominance.

This made sense in a world where network effects created winner-take-all dynamics. But something changed around 2019, and COVID accelerated it: markets got bigger, customers got more sophisticated, and suddenly there was room for multiple winners.

I call this the "Postmate Effect"—the realization that being #2, #3, or even #4 in a massive, growing market can be more valuable than being #1 in a stagnant one.

Why Second Place Became First-Class

Here's what changed:

Market expansion trumps market share. When Postmates sold, the food delivery market was exploding. Being #4 in a $50 billion market beats being #1 in a $500 million market every time.

Specialization creates defensible positions. Postmates wasn't trying to beat DoorDash at its own game. They focused on alcohol delivery, non-food items, and specific geographic strongholds like Los Angeles. They found their niche and owned it.

Consolidation creates liquidity. As markets mature, the big players need to acquire to maintain growth. Uber paid $2.65 billion not to eliminate competition, but to strengthen their position against DoorDash. Being a strong #2 or #3 makes you an attractive acquisition target.

Different customers want different things. Not everyone wants the market leader's solution. Some customers specifically seek alternatives. At Concord, 65-70% of our customers don't even have legal teams—they need simple contract reminder software, not enterprise-grade complexity.

Our Postmate Moment

In 2020, we faced our own Postmate moment. We had about equal market share across SMB, mid-market, and enterprise. My board pushed hard for us to go all-in on enterprise to "win" the CLM market.

But I looked at companies like HubSpot and PandaDoc—neither dominated their markets, yet both built fantastic businesses by focusing on specific customer segments. They weren't trying to be everything to everyone.

We chose to focus on SMB and mid-market, essentially conceding the enterprise CLM market to competitors. Some board members thought I was crazy. "You're choosing to be #2 or #3," they said, as if that was a death sentence.

Today, we serve over 1,500 companies profitably. We're not the biggest CLM company, but we're the best for our specific customers. And that's worth more than being a mediocre #1.

The New Rules of the Game

If you're building a B2B SaaS company today, here's what the Postmate Effect means for you:

1. Market size matters more than market position. I'd rather have 10% of a growing $10 billion market than 50% of a shrinking $1 billion market. Focus on riding waves, not creating them.

2. Pick your battles carefully. You don't need to win every customer. When enterprise companies come to us wanting complex legal operations software with six-month implementations, we politely refer them to competitors. That's not our battle to fight.

3. Build for acquisition or profitability, not domination. The old VC model pushed for market domination at all costs. The new model recognizes that solid #2 and #3 players can exit successfully or run profitably. Postmates returned more to investors than many "market leaders" ever will.

4. Differentiation beats market share. Postmates succeeded by being different, not bigger. They delivered alcohol when others wouldn't. They had Postmates Party for group orders. They built a beloved brand among millennials. Find what makes you unique and double down.

5. Let the giants fight each other. While DoorDash and Uber Eats spent billions on market share wars, Postmates quietly built a business worth $2.65 billion. Sometimes the best strategy is to let the elephants fight while you eat the peanuts they drop.

The Bottom Line

Five years ago, I would have been embarrassed to admit we weren't trying to dominate our market. Today, I'm proud of it. We've built a profitable, sustainable business by explicitly choosing not to be #1.

The Postmate Effect isn't about settling for less—it's about recognizing that in today's massive, global markets, there's room for multiple winners. You don't need to be the biggest to build something valuable. You just need to be the best for your specific customers.

So the next time an investor asks about your plan for market domination, tell them about Postmates. Tell them how a fourth-place player sold for $2.65 billion. Tell them how choosing your battles carefully can be worth more than trying to win them all.

Because in the end, it's better to be a profitable #2 than a bankrupt #1. Just ask Postmates.