00:00if you pick up your phone I guarantee
00:01you'll see a bunch of marketplace
00:03companies whether it be Airbnb Uber
00:05doordash or Amazon now these
00:07marketplaces have become household names
00:08and in a way completely reshaped our
00:10expectations around Commerce but these
00:12are not the only marketplaces around in
00:14fact you'll find tons of marketplaces
00:16covering nearly every aspect of Our
00:17Lives from rfe rentals to wedding decor
00:20to That Celebrity ad review always
00:22wanted or even that key lime pie from
00:24across the country that you just needed
00:27over the last decade we've seen the
00:28marketplace model evolve and grow and
00:30this year a16c is back with our fourth
00:33edition of the marketplace 100. a
00:35ranking of the top private marketplaces
00:36by gmv giving a unique window into what
00:40and this year's list features nearly
00:42three dozen newcomers including
00:44marketplaces for refurbished electronics
00:46precious metals and sustainably Reese
00:48meet but in this episode we break down
00:49the key trends from the report
00:51so what categories risk to the top what
00:54consumer behaviors remain post pandemic
00:56what infrastructure tools are needed and
00:58what is going on with mental health
01:00but we also discuss in a world where
01:02marketplaces are more competitive than
01:04ever what it takes to build a thriving
01:06workplace covering themes across trust
01:08and safety disintermediation and where
01:10AI fits into this mix
01:12and we discuss all this and more with
01:13Asics and Z's consumer Partners Connie
01:15Chan Olivia Moore and Zach Cohen and we
01:17could only cover so much in this episode
01:19so if you'd like to see the full ranking
01:21of the largest consumer-facing
01:22marketplaces and private companies you
01:23can find the full report at a6c.com
01:26Marketplace Dash 100.
01:29as a reminder the content here is for
01:32informational purposes only should not
01:34be taken as legal business tax or
01:36investment advice or be used to evaluate
01:38any investment or security and is not
01:40directed at any investors or potential
01:42investors in any ACC fund for more
01:44details please see a16z.com disclosures
01:57there are so many different areas of
01:59technology that people are talking about
02:01today whether it be AI or longevity
02:03science or rocketry and those are all
02:05very exciting but marketplaces is
02:07something that a16z keeps coming back to
02:09and so Connie I want to hear from you
02:11why are marketplaces still so important
02:15we are obsessed with marketplaces and we
02:18have been since our Inception a lot of
02:20that comes from actually our partner
02:22Jeff Jordan who himself has been an
02:24operator in a Pioneer in Marketplace is
02:27holding leadership roles at eBay at
02:30OpenTable and because of his experience
02:32we have all been trained to believe that
02:35marketplaces are truly phenomenal
02:37phenomenal business models and there's a
02:39couple reasons for that we are in the
02:42Venture Capital business so we are
02:43looking for outsized returns many of the
02:46biggest returns historically have all
02:50and this is because marketplaces
02:51generally share two traits that are
02:53incredibly valuable and attractive to
02:56first they generally have a very strong
02:59theory of defensibility
03:00a Marketplace the larger it gets the
03:03harder it is to disrupt let's think
03:06about the biggest marketplaces today I
03:10is still a vibrant Marketplace
03:14and you look at this website and you
03:16you're thinking like these are links
03:18this is just text there's no photos
03:20there's no videos you don't need it
03:22apparently because that Marketplace has
03:24liquidity it has traffic of buyers and
03:27sellers it has traffic some a renter and
03:30landlords and so you still get lots of
03:33matches that are happening people try
03:36but it's still working right so theory
03:39of defensibility is very strong with
03:40marketplaces which is something we
03:42absolutely love and that comes from
03:46Network effects are inherently built
03:48into Marketplace basically the gist of
03:51network effects means the larger you get
03:53the more beneficial your platform is to
03:56everyone involved take Airbnb for
03:58example a fantastic Marketplace the more
04:00homes that are listed on Airbnb the more
04:02likely all travelers or people who need
04:05a rental place are going to go to Airbnb
04:07as that go-to place that has
04:09comprehensive Supply
04:10and likewise the supply goes wherever
04:13the demand is and so marketplaces are
04:16just beautiful for these two reasons
04:18theory of defensibility and network
04:20effects I mean I love that you brought
04:22up Airbnb because I don't know if I'm
04:23the only one who needed a reminder that
04:25Airbnb Uber a lot of these super
04:28familiar companies are marketplaces and
04:30also huge companies I could even say
04:32generation defining companies that
04:35didn't exist a couple decades ago right
04:38and so when we're evaluating these
04:40marketplaces and developing the
04:42marketplace 100 how do we think about
04:44what metrics really matter because today
04:46in 2023 there really are so many
04:48marketplaces to compare yeah we have a
04:51ton of amazing data this year we
04:53expanded our sample size by three times
04:55so there were more than 12 000 companies
04:58that we looked at when deciding kind of
05:00what would go in the marketplace 100.
05:02the number one factor we look at is
05:04consistent across years and that's
05:06arguably the most important kind of Top
05:08Line metric for almost all marketplaces
05:11which is gross merchandise value or gmv
05:14so that's over the course of a year for
05:17this report it was the year 2022. how
05:20much did consumer tumors transact
05:22aggregated across all of the purchases
05:24on the platform so how much did people
05:26spend on your Marketplace and then we
05:29kind of ranked from top to bottom the
05:32platforms that had the most consumer
05:34spend gmv in some ways is almost a
05:37lagging indicator of all of these other
05:40kind of amazing things that marketplaces
05:42have built to make themselves ideally a
05:44sticky and highly retentive platform so
05:47while gmv is kind of the end result of
05:49all the work that they do when we
05:51evaluate marketplaces to invest we're
05:53often looking at things like growth in
05:55active supply and demand conversion from
05:58listing to sale and then retention so
06:01both on the user side and on the revenue
06:04side once a seller has sold an item How
06:06likely is it that they come back to sell
06:08another one and in the best case they
06:11don't just come back to sell one more
06:12but they sell one in the first month and
06:15then five in the second month and really
06:17start building a very powerful business
06:19on a Marketplace at another yeah
06:21obviously we don't have data across 12
06:23000 companies from the companies
06:25themselves do you want to share a little
06:26bit about what data we're utilizing to
06:29gauge the GMP yes so this is a new data
06:33provider for us that we're excited to
06:34use called consumer Edge and so
06:37basically consumer Edge purchases and
06:39then Aggregates actual credit card
06:41transactions from real consumers
06:45anonymized yes we're not able to look in
06:48and see who's actually making what
06:50purchases wear which is a good thing I
06:52think but they use this sample set that
06:55they have of a couple million consumers
06:58to then estimate what that looks like
06:59for the broader us and gives us a pretty
07:03good sense of what marketplaces are on
07:05top across the country so this is our
07:07fourth year and in 2023 we saw 34
07:11newcomers and I don't know about you but
07:1430 of the list being completely new
07:17marketplaces that stands out to me and
07:19so were there any surprise surprising
07:21newcomers among that 34. yes yes we had
07:24a ton of newcomers this year we also had
07:27a lot last year we actually had a few
07:29more last year I think it was 37 and to
07:31Connie's point about why we love
07:32marketplaces I think this just shows how
07:35much opportunity there still is left to
07:38build uh companies that break out with
07:40this business model because you might
07:41think like uber is already Public
07:43airbnbs public lifts public like how
07:46much more is there to build in
07:47marketplaces and I think the answer is a
07:50lot uh we had six uh newcomers in the
07:54top 20 this year and we had one newcomer
07:57actually in the top ten which is called
07:58Rock Auto it's a bootstrapped family
08:01business around selling car parts which
08:03is so exciting to see which also looks
08:05like Craigslist yes exactly we saw a few
08:10Auto marketplaces this year and I think
08:12for those one of the learnings has been
08:14just the volume of inventory matters
08:16most and people don't care how cool the
08:18listing looks or if they can see a lot
08:19of fun videos well it also depends right
08:22because some marketplaces you're going
08:23there to look for a specific item right
08:26for the car auto parts like I have a car
08:29something broke down I need a spark plug
08:31whatever it is like I just care about
08:33who has it can they get it to me and is
08:37and then there's other marketplaces
08:39where you're in a browsing behavior and
08:41then those marketplaces need to do a lot
08:43more to surface products you like figure
08:45out your taste those companies need to
08:48have a better ux those companies need to
08:51invest in user experience because you're
08:53not going there to search for a specific
08:55SKU is there an example of a Marketplace
08:57that you think has that really strong ux
09:00yeah I think what's really interesting
09:01uh is happening in shopping uh
09:04specifically what not which is actually
09:06making shopping more of an entertainment
09:07product and less of a transaction
09:09product so different than the car part
09:11marketplaces I need a muffler I'm going
09:13to go on and click on a link you go on
09:15whatnot and there's a lot more of this
09:17kind of Discovery entertainment shopping
09:19kind of landscape and I think that this
09:21is very different consumer Behavior than
09:23we've seen in the past where you've seen
09:24I go on a product page I search for a
09:26product I add it to cart and that kind
09:29of static e-commerce transaction
09:31experience is getting a little boring
09:33and consumers want more shopping
09:34entertainment I completely agree I think
09:36again for for Commerce and all
09:39marketplaces are Commerce at the end of
09:41the day like they all result in a
09:42transaction and if you think about
09:45transactions it's that search-based type
09:48of transaction I know exactly what I'm
09:50looking for I just need to go to the
09:52place that has the most Supply and then
09:55the other one is really Discovery based
09:57I I need to be inspired I need to find
10:00things that I might want to buy
10:02very big distinction and so the user
10:05interface is really dramatically
10:08evolving on the latter where there's a
10:10lot more room to to enhance product
10:12Discovery right and whatnot is a great
10:15example of that we think video as a
10:17format is still really new when it comes
10:21we grew up watching infomercials we know
10:23that video is fantastic at the way to
10:25sell things but they hadn't really made
10:27their way into Marketplace yet
10:30and so now video is starting to disrupt
10:33marketplaces in a really interesting way
10:34whether it's short video pre-recorded
10:36video live video they all bring nuances
10:39and flavors to marketplaces that
10:41ultimately give buyers more conviction
10:44in what they're buying and more joy and
10:46Delight in that shopping experience
10:48another example of this is Teemo right
10:50it's not on the list because it's not a
10:52private company but that thing has grown
10:55massively what can we learn from temu as
10:57it's kind of risen in the last year or
11:00so for sure so Timo doesn't have video
11:02they don't focus on video but they also
11:04don't need it for the type
11:05they're selling right timu is a monster
11:08in terms of its growth I mean Olivia and
11:10I chat about the stats we're tracking it
11:12all the time it is insane how quickly
11:14this company has grown largely
11:16um catalyzed by paid ads but it has
11:18continued to grow and the repeat
11:20purchase based on the credit card data
11:22that we're seeing is strong
11:24now what I think is really interesting
11:27and a major nugget to learn from timu is
11:30product Discovery personalization
11:33and also gamification of shopping they
11:36have lots of coupons and games that you
11:38can even play I Remember Olivia was
11:40playing like some fishing game inside of
11:43Teemu to win some free slippers and it's
11:46just something fun that we do right it
11:48makes shopping fun again but going back
11:50to that personalization which I think is
11:51a very new thing for marketplaces and
11:54Commerce in the US in general to adopt
11:56when we go on Amazon we all go to the
11:58search bar but that's not how we shop in
12:00real life when I go to Costco when I go
12:03to Target I go into buy one thing I
12:05leave with like 10 things right usually
12:09and the natural way that we shop in real
12:12life is we get inspiration as we go
12:13along and the reason why timu is even
12:16more powerful than replicating a trip to
12:18Target is because the more I browse it
12:21the more it learns about what I like
12:23just like those of you who have used
12:25Tick Tock within a couple of swipes
12:27within that first day they can figure
12:29out exactly what to show you that will
12:31make you happy and what they show you is
12:34different than what they show me is
12:35different than what they show Olivia is
12:36different than what they show back same
12:38thing with simu what they are showing
12:40you is constantly changing and
12:42personalized to your shopping behavior
12:45and that personalization of shopping I
12:48think we're going to see more Commerce
12:49players try and replicate that because
12:51that ultimately increase the conversion
12:53another key theme if you look at the
12:55data seems to be around curation so how
12:57are we seeing that play out there's
12:59Locale doing it in food since doing it
13:01in clothing good dog doing an impacts
13:03where they're probably you know adding a
13:05layer of curation if you kind of look
13:07historically at marketplaces you kind of
13:10see that wave one you're talking about
13:11the Amazon and ebays which were all
13:13about quantity and Supply Gathering they
13:15thought let's gather as much Supply have
13:17as many people list on our Marketplace
13:19as possible and then we can get as many
13:22customers as we possibly can because
13:23we're going to own as much Supply as
13:25possible that worked but the kind of
13:27second generation is these open-ended
13:29marketplaces that kind of have these
13:30tiered curation levels we saw with Uber
13:33black and Airbnb plus which there's
13:35still an open-ended Marketplace anyone
13:37can list but to get that special layer
13:39of curation the suppliers have to go
13:41through additional vetting process and
13:43consumers will pay a premium for that
13:44and I think that kind of wave three the
13:46locales the senses of the world are
13:48providing that curation layer uh as just
13:51the marketplace itself I think actually
13:53Zach is touching upon is a really
13:55important point because that curation in
13:58some ways is kind of
14:00kind of the ultimate pillar for all
14:02marketplaces which is trust and safety
14:05trust and safety is Paramount if you
14:07want to build a successful Marketplace
14:09because there's buyer fraud there's
14:11seller fraud there's this fraud all over
14:13the place if you don't build in the
14:15right mechanism into a Marketplace and
14:17you have to start thinking about those
14:19things from day one and in some ways
14:22this kind of curation that the platform
14:25takes on or this extra layer of vetting
14:28that the platform takes on is enhancing
14:32that trust and safety element on the
14:34platform even something like a t-mu you
14:37will see that has been a very important
14:39reason why they've been successful we
14:42oftentimes read about a lot of people
14:43writing off temu as another wish right A
14:46lot of people say that oh this is the
14:48same thing as wish really ridiculously
14:52it's a huge difference
14:55is that wish would allow people
14:58to shop on wish and then the factory
15:00ships directly so it's just like a
15:07the factories have to ship their
15:09products to the warehouses someone is
15:12packing it all in a Teemu bag and
15:14everything arrives in one package that
15:16means there is a baseline of quality
15:19control that means teamu has looked at
15:22every product that's being sold to some
15:25extent or has some oversight of that
15:27product to some extent because they are
15:29the one shipping it out how do they
15:31achieve those prices then so I mean it
15:34depends on you know how much time you
15:36spend evaluating or checking every item
15:38like obviously they're not gonna like
15:40open the package for everything but they
15:43are they have some sense of control
15:45right they have more control than
15:48Someone Like A Wish over what's getting
15:49sent out for example if something shows
15:52up and the packages are are in terrible
15:55shape they see that before they decide
15:57to send that off to the customer and so
16:01enhances the the sense of trust and
16:03safety on that platform it gives buyers
16:06more reason to trust it it hopefully can
16:10reduce things like returns and increase
16:12things like repeat purchase Behavior it
16:14all comes down to conviction that
16:17whatever I bought is something I
16:18actually want that's what all shopping
16:20boils down to right and so this extra
16:23curation is just giving me more
16:25conviction that what I bought is exactly
16:27what I want ideally because someone on
16:30the platform or whatever other mechanism
16:31built and trust and safety has ensured
16:34that housing the other amazing thing
16:36we're seeing as a result of like the new
16:39layers of trust and safety on these
16:41curated marketplaces is that they're
16:44bringing online suppliers who would
16:46never have listed on a Marketplace
16:48before because they're worried about
16:50maybe the brand risk or kind of the
16:52affiliation with for example in Amazon
16:55there's lots of high-end Brands who will
16:58say will never put our products on
16:59Amazon but they will put them on sense
17:02or another Marketplace that's kind of a
17:04more curated list of like high-end items
17:07Locale found this in food where there
17:09was a lot of merchants who you know they
17:12make one or two incredible items and
17:14they won't put them on on doordash
17:16because they kind of don't trust that
17:18it's going to be a great experience for
17:19the consumer receiving that item they
17:22want it to be a hundred out of a hundred
17:24every time given how much kind of
17:26thought and care they put into making
17:27these items and so this new wave of
17:30curated marketplaces not only makes the
17:33user happy that like what the kind of
17:36what what I ordered versus what I
17:38actually get I mean that that always
17:39pops up but it makes suppliers happy and
17:42it allows many suppliers to participate
17:44in marketplaces for the first time when
17:47they've haven't been able to or excited
17:49to do that before I have a quick
17:51question about kind of timu and Trust do
17:55you think it's really
17:56them install you know instilling trust
17:58into the consumer do you think the
18:00prices are just driven so low that
18:02consumers are kind of bypassing trust
18:04and saying I'll get affordable laundry
18:06which I actually bought
18:10I know exactly what you bought I totally
18:13know exactly I'm sure I'm sure you've
18:16ads from it um or is it just me saying
18:19it's eight bucks hey this looks kind of
18:22interesting maybe you'll help me in a
18:25um you know or do you think it's an
18:26actual trust layer because it's all
18:28branded no I think the trust comes after
18:30the fact actually in in this case right
18:32it's like you purchased the item but
18:35most likely this thing that shows up at
18:38at the higher shot than if it was just a
18:40pure listings Marketplace and they had
18:42no oversight there's just a higher
18:43chance that it might be good enough or
18:46close enough to the listing right
18:48they're not going to get it 100 of the
18:51um but if it's just this kind of
18:52free-for-all where the platform has no
18:55then your repeat purchase rate might
18:59reflect that I think there's a lot of
19:01kind of Suspicion maybe on behalf of
19:03consumers that TAMU wouldn't deliver
19:05that trusted safety layer if you go on
19:07YouTube and usually it's young women in
19:10their 20s and 30s that do all these
19:11reviews of discount platforms and the
19:14title will always be like is TAMU a scam
19:16and then if you actually watch the video
19:18they're usually like pretty impressed
19:20especially compared to wish and even
19:22AliExpress and other platforms that
19:24they've tried that kind of play on the
19:26same themes but to Connie's Point like
19:28what's coming out in the data at least
19:30from what we can see is temu's repeat
19:35five times higher if you get to like
19:37month six and Beyond people are coming
19:39back and spending way more than they are
19:42on wish and other platforms because it
19:44is actually delivering on that trust and
19:47safety layer to some extent though I I
19:49do maybe agree with your concerns act
19:51that like affordable laundry wishing is
19:56well I would say that the prices
19:58obviously do matter the prices are very
20:00important because for driving behavior
20:01but the thing is like the prices are so
20:03low that if you buy 10 items and a long
20:07three or four or five
20:09hit the mark you kind of feel okay
20:12I would also say trust is not just trust
20:16with the supplier giving you the thing
20:19you want but that if that's not true
20:20that the marketplace will do you right
20:22it'll give you a refund or it'll give
20:25you a replacement or it'll it'll have
20:27reviews for that sell or seller that you
20:29can say hey I didn't get what I want but
20:31let's take a step back and talk about
20:33you know we have 34 newcomers were there
20:36any other trends that the three of you
20:39saw that really are indicative of what
20:41might be to come with upcoming
20:43marketplaces I mean maybe we can talk
20:45about mental health that's been a huge
20:46Trend in this year's result so there
20:48were four companies on the list in
20:50mental health this year two were
20:52newcomers which was fantastic two had
20:54been on the list in the past but there
20:57was actually one Trend that ran through
20:59all of them which we don't often see
21:00kind of uniting a category so I think
21:03really points to like a clear thing
21:05that's happening in consumer Behavior
21:06which is that all of them help consumers
21:09find and match with therapists yes that
21:12has existed for a very long time
21:14um but beyond that find and match with
21:16therapists that take their insurance and
21:18are going to allow them to access
21:20appointments at you know ten dollars
21:23twenty dollars thirty dollars per
21:25appointment versus in the past 60 plus
21:29of therapy appointments were not covered
21:31by insurance and those cost upwards of a
21:33hundred two hundred dollars an hour and
21:36that's an example of like going Beyond a
21:39Marketplace just being a place to list
21:42supply and demand but these marketplaces
21:45are actually helping these therapists
21:46get credentialed uh to be able to accept
21:49insurance and to join this group
21:51practice which is just an enormous boost
21:54both for their businesses but also for
21:56all of these consumers who are finally
21:58able to access therapy often for the
22:00first time because it's actually
22:01affordable now which is amazing yeah the
22:04ability to take offline Supply
22:05especially ones that you know therapists
22:07who are already vetted and bringing them
22:09online and allowing consumers to have
22:12Choice even within a network and moving
22:15away from just going on a provider's
22:17list and looking at a non-actionable
22:19list of you know 50 to 100 mental health
22:21practitioners near you and be able to
22:22click and make an appointment within
22:24minutes removes a lot of the friction
22:25and provides a lot more access to people
22:27to you know a pretty inaccessible good
22:30before this kind of marketplace existed
22:31like Airbnb is the ultimate example of
22:34this right like a lot of people are now
22:37host on Airbnb that never engaged in
22:41that kind of practice before the
22:43platform existed at a hundred percent
22:45generated a brand new batch of Supply
22:48are there examples of Industries where
22:51you feel like that's still untapped
22:52where there is that Supply that's
22:54waiting to be brought onto a Marketplace
22:57it's a great question as we map
22:59marketplaces there's categories of
23:04um and there are some categories that
23:06still don't have a dominant Marketplace
23:08and so the question in those cases
23:10especially if they're big categories of
23:12spend is like what is necessary to
23:14finally get a massive hopefully 10 20 50
23:17billion dollar company up and running
23:19there I would say one example where
23:21we've seen that not happen quite yet and
23:24where we're actively looking every week
23:28um and the problem with that one so far
23:30has actually been that repeat rate on
23:33like a day by day week by week basis is
23:36still somewhat low and so there's this
23:38question of how do you acquire customers
23:40in a way that you're still kind of
23:42making you know enough margin on the
23:45first or second order that you're not
23:46way underwater on what you paid to
23:48acquire them but ideally even better
23:51than that you develop a brand or a
23:53subscription or something else that does
23:54keep them coming back more often than
23:57they know normally might for just a
23:59broad Home Services platform
24:01actually with Home Services maybe we can
24:03talk about one concern that marketplaces
24:06always have to deal with which is this
24:07intermediation right what happens if you
24:10find this great match and then you're
24:13like well the next time I find that
24:16transact on platform why don't I
24:18transact off platform because I have
24:19their phone number now right and then
24:22they save money I save money it's a
24:24um maybe we can talk a little bit about
24:26this intermediation and and why that is
24:28an issue with some marketplaces and how
24:30they address that yeah this
24:32intermediation I feel like is the
24:33elephant in the room when it comes to a
24:35lot of marketplaces and probably the
24:37easiest and like most obvious question
24:39to answer when you're to ask when you're
24:41talking to someone building a
24:42Marketplace what we've seen is that
24:44there is a way to kind of get around
24:46this intermediation and that's you have
24:49to be providing enough value to both
24:51sides of the platform that they will
24:53stick with you no matter what so one
24:55example I'll give from my own life my
24:58little brother his whole life had a math
24:59tutor she was this amazing woman named
25:01Therese and my mom found her on a
25:04tutoring Marketplace called wisance and
25:07my mom being like the smart organized
25:09person she was and not wanting to pay
25:11the fee to the marketplace every time
25:13would always try to say like hey I can
25:15schedule with you directly but Therese
25:18had built such a book of business on
25:20wisan and loved like the coordination
25:23the payments like the trust that they
25:25provided to her that even for one client
25:28that she trusted she wasn't willing to
25:30disintermediate because it put her
25:32status and her Identity On The
25:34Marketplace at risk she would have
25:36gotten kicked off if they found her out
25:37for this one time and so this is
25:39different for a tutoring Marketplace
25:41than for you know a Collectibles
25:43Marketplace or a Home Services
25:44Marketplace but in general we find that
25:47if you're providing services to buyers
25:49which are often around you know fast
25:51shipping trust and safety better
25:53Discovery and then services for sellers
25:56which can be as complex as actually
25:58giving them financing to run their
26:00businesses on the platform then they're
26:02like much less likely to disintermediate
26:04over time yeah I think does an amazing
26:07job at this on the marketplace 100 list
26:09so this is a Marketplace that allows you
26:11to book excursions think with wineries
26:14hot air balloons anything that you would
26:15kind of do while traveling and for
26:17consumers this is an aggregation of a
26:20bunch of different amazing experiences
26:21that you can have while traveling
26:22instead of searching online and there's
26:24you know insurance and refunds and and
26:27an easy kind of purchase and on the
26:30supply side they're actually providing a
26:31vertical software that allows these
26:33businesses to run digitally because a
26:35lot of them are offline whether that's
26:37bookings financing all of that kind of
26:39supply side software and that not only
26:42keeps the supplier happy it keeps them
26:44you know sticky and retained and again
26:46the network effect component that Connie
26:48spoke about when you're at scale that
26:50kind of risk kind of moves away as
26:52marketplaces become more and more mature
26:54so we've talked about several Trends
26:56already whether it be home services
26:58we've talked about entertainment-based
27:00shopping but there are six key trends
27:02from the report that I would really
27:04encourage people to go visit but I'm
27:06curious to hear from the three of you
27:08which of these Trends feel transient and
27:11maybe are writing some sort of
27:13short-term economic wave let's say like
27:15supply chain woes versus consumer trends
27:18that we think are really foundational
27:20and will impact the you know next three
27:23five ten years of consumer marketplaces
27:25to come I think video is here to stay
27:27and as someone who has shopped through
27:30video as someone who has sold through
27:32video it is really different than a
27:34static Marketplace and granted
27:37there are places for someone like a
27:39Teemu too where you don't need to watch
27:41a video necessarily to discover a
27:42product although I would argue that some
27:44of the before and afters or the demos of
27:46the you know the portable laundry thing
27:49that Zach bought probably would help him
27:54seeing them probably would drive him to
27:59but I just think video as a behavior is
28:01going to permeate marketplaces and
28:05I mean who knows like when you're
28:08looking at an Airbnb maybe the video
28:10tours might get you to convert better
28:13than just the photo tours right and
28:15maybe video reviews especially for Gen Z
28:18that that really trusts authentic video
28:20reviews might be more compelling than
28:23text and so I think video is just going
28:25to make its way into all marketplaces
28:27whether it's the actual selling
28:29experience like something like a whatnot
28:31or whether it's just a new type of AD
28:33Discovery a new type of media format
28:35that's used to help describe a product
28:38I I agree and I feel like a lot of
28:40sellers on marketplaces in the past
28:43maybe year year and a half have probably
28:45tried posting a tick tock or an
28:47Instagram reel for the first time and
28:49I've seen the crazy engagement and kind
28:51of the crazy demand generation that they
28:53can get from something like that so I
28:56honestly wouldn't be surprised to see
28:58the supply side of many marketplaces
29:00start to kind of push the platform on
29:02like when are we going to be able to add
29:04videos when are we going to be able to
29:05do video shows things like that because
29:07it can just be like such a game changer
29:09for a business I think for a for kind of
29:12a more transient short-term theme I
29:14think ticketing is one that Olivia and I
29:16as we look through the data were
29:17surprised that it was still above 21
29:19levels I think we thought 21 was kind of
29:21that Revenge year when you look at kind
29:23of 2022 and you see all the ticket
29:26marketing places growing you kind of
29:28think of two things that happen one is
29:30there's a lot of pent-up demand that
29:32Revenge travel Behavior and the second
29:33thing is actually just shows were being
29:35pushed into 2022. you have Harry Styles
29:38tour which had 45 shows pushed into 2022
29:41so this kind of combination of pent-up
29:43demand and shows being delayed led to
29:46this kind of like first half of the year
29:48really large GMB growth but if you start
29:51to look at the data on a monthly level
29:53you start to see the second half of 2022
29:55really slow down from ticketing
29:57marketplaces and I think that will
29:59continue uh to happen I would be I would
30:01be surprised if taking marketing places
30:03were it prevalent on the list going
30:04forward but I think that their growth
30:06will slow down uh in the years to come
30:08and 2021 though to Zach's point was
30:11already a massive jump from 2020 and
30:14even by the end of 2021 we were already
30:16kind of surpassing the pre-covid 2019
30:19levels so the fact that we still saw
30:22quite a few ticketing marketplaces
30:25arguably at scale doubling year over
30:28year was really kind of a surprising and
30:30cool Trend to see yeah I think also the
30:33the sea Geeks to the world
30:35um and kind of other like more Legacy
30:38kind of normal standard secondary ticket
30:41Marketplace is still holding on the list
30:43there are companies like dice which is
30:45really helping with Discovery and you
30:46plug into Spotify and you're able to
30:48recommend your artists and see shows
30:49near you and that has allowed it to grow
30:51unless I think it was in the 40s this
30:53year but it's just interesting to see
30:54that the ticket Marketplace is still
30:57very transaction focused consumers are
30:59not loyal they're loyal to price you
31:01know another Trend we've seen is that a
31:03bunch of non-marketplace companies are
31:06entering the marketplace category
31:08perhaps most notably a few social
31:10companies like Facebook Facebook
31:12Marketplace has become a core component
31:14of that business and so curious to hear
31:16your thoughts on what other companies or
31:19Industries you're seeing actually shift
31:21into this category I mean I think a lot
31:24of these large platforms are all going
31:26to figure out they want to dabble into
31:28Commerce and there's so many benefits
31:30that they do that it actually drives
31:32their advertising engines because now
31:34that you have a Commerce layer at the
31:36supply generally is willing to buy ads
31:39to get more business right and so you're
31:42going to see a lot of these large
31:44incumbent social apps whether it's a
31:47tick tock or a Facebook
31:50do more I think in Commerce in general
31:53and and I think this is largely because
31:55they have two main benefits I mean one
31:58they know a lot about you as the user
32:00and I went back to that personalization
32:02right like if the area of marketplaces
32:05that still has a ton of room to grow is
32:08Discovery then actually knowing a lot
32:11about Olivia about stuff about that what
32:14you guys are more likely to buy gives me
32:17a huge Edge in knowing what to show you
32:19right so these platforms naturally
32:21already know a lot about your
32:22preferences in theory and and the second
32:25thing that they have is just mind share
32:28time share and the reason why this is
32:30important is because when you are in
32:32product discovery mode
32:35it's about getting that user to open
32:37your app to see what's available and
32:40they may or may not convert
32:42very different Behavior again from
32:44buying that spark plug on RockAuto I
32:47will never browse that site unless I
32:49actually need a car part
32:51but if I'm looking for just some random
32:54deal or just to see what's out there
32:57again going back to that element of
32:59entertainment which is just intrinsic to
33:01offline shopping in the real world
33:03that benefits from traffic and retention
33:07and just amount of time I'm looking at
33:11and so those types of marketplaces can
33:14naturally live on these social platforms
33:16because they already have that traffic
33:18they have the repeat usage they have the
33:20Mind share and they also know a lot
33:22about you as an end user I think that's
33:24a great example because I think about
33:26how many times I've bought something off
33:29of tick tock and it's hard to do now
33:31right you come across the video you get
33:34the item name from the comments you go
33:36look it up on wherever it is then you
33:38complete the purchase so it's a couple
33:40steps and I've still done it probably 10
33:43times because it's just such a great
33:46personalized products and so when you
33:49think about Tick Tock as they've been
33:51hinting at layering in kind of an in-app
33:54marketplace where you could do that in
33:56one click where your pavement
33:58information is saved your shipping
33:59information is same you can order it
34:01directly from the video I feel like that
34:04kind of thing is just going to be
34:05incredibly incredibly powerful there are
34:08also questions and I think these are
34:10still TBD is would you welcome shopping
34:14and that's still TBD for a lot of things
34:16for some people they might say like well
34:19I came to this platform to do this I I
34:21don't want to shop here and I find that
34:23intrusive but I think for a lot of users
34:25they will find that they're okay
34:26shopping from anywhere I see articles on
34:29CNN that are like we tried this item and
34:32this is what we thought and people are
34:36so I I just think people are looking to
34:39shop looking for that Discovery looking
34:41for that inspiration more often than not
34:43so I actually don't buy that like oh I
34:46don't have the intent of shopping when I
34:48go there I think that changes I think
34:50consumer Behavior changes as long as the
34:53recommendations and the personalizations
34:55are good enough I want to know how many
34:58listeners are going to end up buying
34:59this laundry machine from this podcast I
35:03need a referral code yeah I think on top
35:05of also all the information and users
35:07you have on your users I think the graph
35:10of social is changing a lot so you see
35:13like Instagram you know maybe five years
35:15ago you'd go on to connect and see what
35:16your friends are doing and now most
35:18usage on Instagram is interest based and
35:19you're following creators and now
35:21there's a whole layer of companies that
35:22are linking bio companies or Creator
35:24influencer Marketplace companies and
35:26these are basically pushing towards
35:29having native Marketplace on platform so
35:32it feels like companies are already
35:33seeing this happen organically through
35:36uh you know either the graph changing or
35:38through creators coming out the platform
35:39to push product I think is a natural fit
35:43and I mean some of you are too young to
35:45remember this but like Amazon is is
35:48ultimately one of the best examples of
35:49this right where when they opened up to
35:51third-party sellers that dramatically
35:54increase the supply of what you can buy
35:56on Amazon right and there's lots of
36:00platforms like that where they may open
36:03up to third-party sellers like a Sheen
36:05right eventually these platforms that
36:08are selling things that are coming from
36:10their warehouses they might open it up
36:12and let factories ship directly they
36:15might let the seller ship directly as
36:16long as they can build enough trust and
36:18safety mechanisms whether it's good
36:20return Services good Logistics services
36:22or more curation or more trust or
36:25however they choose to build it when we
36:27think of looking forward because I know
36:29everyone loves using this this report to
36:32really understand what's to come what
36:33Marketplace should I found or what
36:34Marketplace should I look out for what
36:37categories do you all think might be to
36:39come are there any sleeper categories
36:41for 2024 I wish we had a crystal ball
36:43and we could see exactly what categories
36:46were going to grow you know 500 percent
36:48year over year because then we'd go
36:49invest in all of those companies today I
36:53do think there are a couple categories
36:55like I mentioned before where we feel
36:57like something is hopefully poised to
36:59break out that we haven't seen yet one
37:01would be home services I think there's
37:03still a lot to do in automotive not just
37:05the parts but the actual purchase of the
37:07car and there's also I think room for a
37:11big kind of indeed killer that takes
37:13these kind of blue collar jobs and makes
37:15them much easier to find and match and
37:18build a LinkedIn for those types of jobs
37:20as well almost where there's like an
37:22identity layer and a reviews layer
37:24around that we still haven't seen
37:26anything really kind of inflect there
37:27and so we're always looking for that I
37:30do think one Trend it's not a category
37:32but it might play across categories
37:35would be kind of this intersection of AI
37:38and marketplaces that I'm actually
37:40starting to see play out on both the
37:43supply side and and the demand side of
37:45marketplaces already which is really
37:46exciting Olivia why don't you share some
37:49examples I completely agree yes so temu
37:52is a great example on the demand side
37:53and that you open the app and it's
37:55analyzed everything you've ever looked
37:57at or scrolled over or clicked on in the
38:00past and it recommends things this is
38:02kind of similar to what doordash does
38:03now as well and has been doing for a few
38:05years they've published a ton of blog
38:08posts about this but they've had a very
38:10technical custom algorithm
38:13um where they kind of predict based on
38:15what you've looked at and what people
38:16around you have ordered all of these
38:18factors like what can we show Connie
38:20first that makes her most likely to
38:22actually order something after she lands
38:28yes location is a big one what you've
38:31ordered what you've reviewed what's
38:32closest to you what will be fulfilled
38:34fastest what other people in your
38:36neighborhood like all of these factors
38:38are really important and you know if
38:40you're not doordash in the past it's
38:42really hard to build that kind of
38:43customized algorithm but this is now
38:46becoming accessible to a lot more
38:47marketplaces at different stages which
38:49is exciting on the supply side where
38:52we're mostly seeing it is almost in
38:55small business tooling that gets built
38:57into these marketplaces so suppliers on
39:00marketplaces let's take like turo for an
39:02example it can be anyone from one person
39:06who's listing one car all the way up to
39:08you know maybe a five person business
39:11that has purchased 50 cars to list on
39:13the turo platform and especially if you
39:16fall kind of closer to the small
39:18business end of that category you have
39:21marketing challenges you have customer
39:23support challenges you have to do your
39:25financials and your taxes and your
39:27accounting every year and so what we're
39:30starting to see a lot of marketplaces do
39:32is build in these AI powered tools for
39:35their suppliers that helps them run
39:37their businesses more efficiently and
39:39they can then spend more time getting
39:41bookings and making customers happy and
39:44less time doing all the like back office
39:46stuff that comes with running a small
39:49travel's a great example we've looked at
39:51some travel companies where they can use
39:53AI to create these amazing itineraries
39:56in minutes and seconds
40:00that are hyper personalized based off
40:02your budget they thought the number of
40:04days you're in that City based off what
40:06you've already seen in the past and you
40:07don't want to go revisit the same place
40:09AI can make because they have time so
40:12much for that supply side to deliver
40:14some of these Services yeah I think also
40:16that the search is a really important
40:18component right like AI really can
40:20superpower the search uh you know into
40:22first travel example how many days your
40:24budget where you want to stay places you
40:26want to visit even if they don't have
40:28that data on you with a couple sentence
40:30search contextually AI can really
40:32generate amazing amazing itineraries or
40:35find the exact match on a Marketplace
40:37for you so it might remove friction to
40:39purchase I think there's a lot that will
40:41come from here is there also room for
40:43companies to provide that middle layer
40:45to marketplaces if they don't want to
40:46develop that technology themselves I
40:49think so we've seen a new rise of kind
40:51of marketplace infrastructure companies
40:53that do everything from like how do I
40:55run ads on my Marketplace how do I
40:57handle reviews how do I stack right
41:00companies in the search results many of
41:02which are now starting to become large
41:04Venture scale businesses of their own
41:06and so I think there's definitely room
41:09for like AI Marketplace infrastructure
41:11layer that would be excited to see yeah
41:14I think why it's such an exciting time
41:16to start a Marketplace because there's
41:17just so many amazing third-party tools
41:19that can get you up and running really
41:20really quickly post purchase handling
41:23returns shipping all of that can be
41:26really outsourced and your Marketplace
41:28can be you know more than asset light
41:30which is the term that we like to use
41:31and I think gen AI will just kind of
41:34supercharge all of those powers and add
41:36even more so often when something
41:38becomes easier to create when it becomes
41:40democratized it becomes a lot more
41:42competitive and I mean to that end we've
41:44seen so many marketplaces pop up over
41:46the last few years and so how would you
41:48advise Founders then in this very
41:51competitive landscape how do you stand
41:53out given that it's easier than ever to
41:55create one yeah I think when you want to
41:58build a new Marketplace you either have
42:00have brand new unique Supply that no one
42:03else has or you have better pricing that
42:06no one else has that's chemo or you have
42:08just a much better fun experience and
42:11that's what not if you deliver something
42:13new then I think you have the right to
42:16the right to win the right to exist and
42:19that has to come through some value
42:21proposition that doesn't exist in the
42:23market today because remember existing
42:24marketplaces are very sticky Craigslist
42:26is still around right
42:29so what experience are you offering
42:32that's super differentiated
42:34it's either the product
42:37um or it's the the actual user
42:38experience yeah one thing to add on that
42:41to kind of go back to what we were
42:42saying about trust and safety is a how
42:45sneaker marketplaces first emerge which
42:48goat and stockx have been in the in the
42:50top 10 for the last few years on the
42:52list but I actually went back and looked
42:54at a bunch of the very first Reddit
42:55posts that got made about stockx in
42:58particular and I was like I love doing
43:10yeah exactly and well because it's very
43:13honest like you can't I think it's once
43:16a company is successful it's easy to go
43:18back and kind of paint a straight line
43:19of how they got to where they are but
43:21when you can actually dig into the weeds
43:23of how they got their first customers
43:24it's often like pretty fascinating and
43:26maybe even a little different than like
43:28the team behind the company initially
43:30remembers but the question that I had on
43:32sneaker marketplaces was like eBay
43:34already existed and I I would say was
43:37still like very much in its prime when
43:39these sneaker marketplaces first started
43:41popping up and so like why were people
43:43using something that wasn't eBay for
43:45that my original theory was for trust
43:49and safety on the buyer's side like
43:50buyers wanted to make sure these items
43:52were legitimate that they were going to
43:54be authenticated what I actually found
43:56was sellers kept getting ripped off by
43:59buyers who would order these expensive
44:01sneakers get the sneakers and then
44:04dispute the charge with the credit card
44:06company or otherwise say that they
44:07weren't real or weren't authentic and
44:10these sellers were getting ripped off
44:11and like losing a ton of money on their
44:14businesses because these broader more
44:16open platforms weren't providing trust
44:19and safety for sellers not just the
44:21buyers Airbnb does this as well in that
44:23trust and safety I think goes both ways
44:26and so I guess the learning from this
44:28for me is like even if it doesn't seem
44:30like there's room to create a new
44:32Marketplace there's always something
44:34about the experience on existing
44:36platforms that one side is probably
44:39secretly unhappy with and is willing to
44:42change to something new if you're kind
44:43of able to nail it and finally get it
44:45really right for them yeah let's see how
44:47that emerges next year hopefully we do
44:49round five of the marketplace 100 But
44:51Connie curious to hear from you we've
44:54done four years of this report any high
44:56level thoughts around what we're seeing
44:58with marketplaces and again what's to
45:00come I think the main message I also
45:03just want to convey congratulations to
45:05all 100 companies that made it on the
45:07list this year building a Marketplace is
45:10really hard really hard the early days
45:13Supply so that you have Supply there for
45:16your demand getting enough demand so
45:18that your suppliers don't lose interest
45:21that is so hard to catalyze and it takes
45:24a long time to get right it takes a
45:26while to find product Market fit it
45:28takes a while to get that flywheel
45:30working and so for all the founders who
45:34have toiled for all the employees at
45:35these companies in the marketplace 100
45:37we know how hard it's been and we
45:41congratulate you for the success you've
45:43seen because getting on that list is
45:45but the good news is for marketplaces
45:48when you do get that product Market fit
45:50when you do get that flywheel going
45:53staying power is great and the potential
45:56of what you can expand into is massive
45:59right again we love marketplaces we
46:01really respect marketplaces and the
46:03teams that build them and we just want
46:05to extend our congratulations to all the
46:07companies that made it on the list this
46:08year and because we love marketplaces so
46:11much we're also going to kick off a
46:12short series of podcasts where we talk a
46:16some of the marketplaces that we really
46:18respect and what are the learnings from
46:20whether it's Matrix that they're
46:21tracking that are unique or interesting
46:23or how did they do things that are
46:25unique to get their seller or buyers to
46:28really start catalyzing that flywheel
46:30and we will also be launching a market
46:32newsletter shortly so more details on
46:35how to sign up for that will come
46:39thanks for listening to the a16z podcast
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