How Momentum Built Supply-Side Control: The Infrastructure-First Marketplace Strategy

How Momentum Built Supply-Side Control: The Infrastructure-First Marketplace Strategy

Every marketplace playbook says the same thing: achieve liquidity, optimize matching algorithms, scale through network effects. Preston Bryant ignored all of it and built warehouses instead.

In a recent episode of Category Visionaries, Preston Bryant, Founder and CEO of Momentum, revealed how he scaled a recycling marketplace to over $150 million in transactions by inverting conventional marketplace wisdom. Instead of chasing two-sided liquidity, he built physical infrastructure. Instead of optimizing matching, he controlled supply. Instead of relying on network effects, he guaranteed quality through ownership.

The result: a defensible business in an industry where purely digital marketplaces consistently fail.

Why Digital-First Fails in Physical Markets

Most marketplace founders start with software because software scales. It’s the venture capital orthodoxy: build a platform, connect buyers and sellers, take a percentage, repeat. Capital-light, high-margin, infinitely scalable.

This works brilliantly when you’re matching software developers with clients or connecting rideshare drivers with passengers. It fails catastrophically in industries where quality variance kills deals and reliability matters more than price.

Preston learned this lesson by watching other marketplaces attempt—and fail—to digitize recycling. The problem wasn’t technology. It was trust.

In recycling, a contaminated load doesn’t just cost money—it shuts down processing lines. Inconsistent suppliers don’t just create frustration—they make financial models impossible. The industry ran on decades-old relationships because relationships meant predictability in an inherently unpredictable business.

A software platform that simply connects buyers and sellers doesn’t solve this fundamental problem. It digitizes the dysfunction.

The Infrastructure Thesis

Preston’s insight: the only way to build a successful digital marketplace in recycling was to first solve the physical reliability problem. And the only way to solve reliability was ownership.

“We built out all the logistics infrastructure, all the processing infrastructure. We have locations in like 30 different states across the country,” Preston explains.

This wasn’t a nice-to-have or a future phase. It was the foundation that made everything else possible. Each processing facility gave Momentum direct control over quality, consistency, and reliability—the three things that mattered most to buyers but were impossible to guarantee through a pure marketplace model.

The infrastructure served multiple strategic purposes simultaneously. First, it gave Momentum the ability to guarantee what independent suppliers couldn’t: consistent quality and reliable delivery. Second, it created proprietary data on material flows, pricing dynamics, and processing efficiency that competitors couldn’t replicate. Third, it built operational expertise that became a moat—knowing how to actually run recycling operations at scale.

Supply-Side Control as Competitive Moat

The genius of Preston’s approach becomes clear when you map it against competitive dynamics. A purely digital marketplace competing on software features can be replicated by well-funded competitors. Processing facilities in 30 states with trained operators and established supplier relationships cannot.

This infrastructure creates asymmetric advantages across every dimension of competition. When Momentum guarantees quality to buyers, it’s not a marketing promise—it’s backed by physical processing capabilities. When Momentum offers faster delivery, it’s enabled by distributed facilities, not optimistic logistics planning. When Momentum provides pricing transparency, it’s built on actual transaction data from owned operations.

Competitors can build better software. They can offer lower fees. They can invest in marketing and sales. What they can’t do is quickly replicate 30 processing facilities with the operational knowledge to run them profitably.

The infrastructure also changes the unit economics equation. While it increases fixed costs, it dramatically improves gross margins by capturing value that pure marketplaces must leave on the table. Momentum isn’t just facilitating transactions—it’s participating in them through processing, logistics, and quality assurance services that command premium pricing.

The Consulting Business as Infrastructure Precursor

Before building physical facilities, Preston built something even more valuable: supplier relationships and market knowledge.

“We started a consulting business helping recycling companies get set up on all these different marketplaces,” Preston shares. This consulting work wasn’t revenue diversification—it was reconnaissance and relationship building.

By helping recyclers establish digital presences, Momentum gained two critical assets. First, deep relationships with potential suppliers who would eventually feed material into Momentum’s own facilities. Second, detailed knowledge of supplier capabilities, pain points, and operational realities—intelligence that informed every subsequent infrastructure investment.

When Momentum eventually built processing facilities, they weren’t making blind bets on locations and capabilities. They were investing based on direct knowledge of supply concentrations, material flows, and supplier needs gathered through years of consulting work.

Infrastructure Enables Customer Experience Advantages

The physical footprint doesn’t just solve supply-side problems—it enables customer-facing advantages that purely digital competitors can’t match.

Preston’s willingness to absorb shipping costs, for instance, is only economically viable because of Momentum’s distributed infrastructure. “We don’t charge for shipping. We just eat all the shipping costs,” Preston explains. With facilities in 30 states, the actual cost of “free shipping” is dramatically lower than it would be for a centralized operation.

The extended payment terms that help Momentum win enterprise customers—net 120 in some cases—are also enabled by infrastructure ownership. “We offer net 120 day payment terms to some of our larger customers,” Preston notes. This is only sustainable because Momentum controls processing and can manage working capital more efficiently than pure marketplaces dependent on independent suppliers.

These customer experience advantages look like pricing or terms decisions, but they’re actually infrastructure advantages. The willingness to absorb costs that competitors can’t profitably bear stems directly from owned facilities and operational control.

When to Choose Infrastructure Over Pure Platform

Preston’s strategy isn’t universally applicable—it’s specific to market conditions where physical control creates defensibility. The pattern recognition for B2B founders: consider infrastructure-first when these conditions exist.

First, when quality variance in the supply side creates deal-breaking risk for buyers. If inconsistent supply doesn’t just frustrate customers but makes the product fundamentally unreliable, pure marketplace models struggle.

Second, when existing market participants compete on relationships rather than price. This signals that trust and reliability matter more than efficiency—conditions where infrastructure ownership creates competitive advantages.

Third, when the total addressable market is large enough to support infrastructure investment but concentrated enough that distributed facilities create meaningful advantages. Momentum’s 30-state footprint works because recycling volumes are substantial but regionally concentrated.

Fourth, when operational expertise creates compounding advantages. If running the physical operations generates proprietary insights that improve the platform, infrastructure becomes an intelligence engine, not just an operational necessity.

The Long-Term Compounding Effects

Preston’s infrastructure investments create advantages that compound over time rather than commoditize. Each facility generates data on material flows, processing efficiency, and pricing dynamics. This data improves facility operations, which generates better data, which enables better customer pricing and terms.

The supplier relationships built through owned facilities also compound. As Momentum processes more material through its facilities, it deepens relationships with suppliers who trust Momentum’s quality standards and payment reliability. These relationships create preferential access to supply during shortages and better pricing during gluts.

The operational expertise compounds as well. “We built out all the logistics infrastructure, all the processing infrastructure,” Preston emphasizes. This isn’t just about owning assets—it’s about developing organizational capabilities in facility operations, logistics optimization, and quality control that become increasingly difficult for competitors to replicate.

The Counterintuitive Path to Marketplace Success

Preston built a marketplace by first becoming an operator. While venture-backed competitors chased network effects and platform dynamics, he invested in the unsexy work of running processing facilities and building logistics networks.

The irony: by ignoring marketplace orthodoxy, Preston built a more defensible marketplace. The infrastructure that seems to contradict platform economics actually enables superior platform economics through better unit economics, lower customer acquisition costs, and structural competitive advantages.

For B2B founders evaluating marketplace opportunities in physical industries, Preston’s playbook offers a clear alternative to pure platform plays: own the hard parts that create trust, build infrastructure that competitors can’t quickly replicate, and use physical control to enable digital advantages.

The best marketplace isn’t always the one with the best software. Sometimes it’s the one with the best warehouses.