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5 Questions, 25 CEOs

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5 Questions, 25 CEOs

The Marketplace 100 is rooted in numbers—the data behind companies’ growth and GMV. But spreadsheets ultimately convey an incomplete view of a startup’s success. The core of every company is the people building it and community behind it. So we went to the source: we surveyed 25 CEOs and marketplace executives on their pandemic pivots, lessons learned, advice for fellow entrepreneurs, and outlook for marketplaces in the year ahead. 

Responses have been edited for length and clarity.

1. How did you adjust or recalibrate your growth strategy in 2020?

We decided to focus on turning buyers into sellers during the pandemic, which helped us balance supply and demand. In the lockdown, it was a way to show customers who had never sold before a new opportunity to make money from home. We also changed our marketing strategy to target a whole new customer base: luxury buyers who hadn’t previously shopped at online marketplaces, but couldn’t go to stores. —Tracy DiNunzio, Tradesy CEO

We experienced a large increase in demand. So where we would have otherwise invested in marketing, we doubled down on SEO to facilitate the organic demand we were receiving instead. —Lana Elie, Floom CEO

Marketplaces need “flywheel boosters” to get a market liquid and growing. Previously, we used a set of boosters that relied on COVID-impacted elements, like people congregating together. Throughout 2020, we had to adapt and seed markets through virtual means, such as finding existing data sources and retargeting via SMS and email. —Kevin Tan, Snackpass CEO

While everyone was figuring out how to adapt to online-only shopping, we were re-adjusting our online platform focus from app to web. As a mobile-first platform with the majority of our transactions taking place on our iOS app, we suddenly experienced a huge lift in website traffic. During this unstable time, more consumers were searching online for used kids’ clothes—and they were spending far more time at home on their laptops and desktops, rather than grabbing five minutes on their phone during lunch breaks or while waiting in line at the grocery store. Our strategy shifted from scaling our existing in-app programs to focusing on improved web visibility through optimizing SEO and activating these new buyers through web improvements. —Mary Fallon, Kidizen CCO

We deviated from our operational plans to meet the moment. The result was developing timely solutions, like microschools, or forging new partnerships (such as with Yelp) that we had not originally considered for that year. We thought the pandemic would detract from our operations, but in many ways, it has been a driver of innovation. —Chris Bennett, Wonderschool CEO

The early days of the COVID pandemic shook our business to its core, with bookings grinding to a halt and thousands of cancellations. Our team reacted quickly to preserve the business by reducing expenses and securing operating capital. We also got creative in an effort to help by facilitating thousands of bookings for frontline healthcare workers and critical infrastructure workers. Once state parks and beaches reopened in early April and May, domestic travel drove a record-breaking summer for us. —Jon Gray, RVshare CEO

We combined the Letgo marketplace with ours this year, so our community of buyers and sellers became much larger. That expansion was crucial. We saw demand increase exponentially for items like puzzles, stationary bikes, laptops, baseball cards, video games, and desks; we could provide our buyers with better deals and our sellers with a more active buying audience. —Nick Huzar, OfferUp CEO

When stay-at-home orders began, it directly affected booking volume on the platform. We gave Hipcampers the option to donate the value of their booking directly to our Hosts if they had to cancel—25 percent of bookers generously opted to do so. —Alyssa Ravasio, Hipcamp CEO

2. What’s the most salient lesson you learned from leading a marketplace company over the course of 2020?

In the face of a calamity, act fast. Early on, we had no idea what the future held for a company focused on bringing people together in-person. Sadly, we were forced to dramatically downsize our team and implement a number of other cost-cutting measures. By doing it within weeks of the start of the pandemic, we had many degrees of freedom to capitalize on the unexpected upswing in the business a few months later. Rip the bandaid off. —Eric Shoup, Peerspace CEO

The past year showed me the real power of preparation. In 2019, we’d changed our business model from tech platform to delivery operations, giving us more control over the customer experience, allowing us to scale quickly when consumer demand skyrocketed last spring. —Rogelio Choy, Eaze CEO

From personal experience, I can tell you that living through an economic cycle changes you. It builds resilience, it puts things in perspective. For me, it further instilled the value of being frugal and to never live beyond my means. It also taught me there is really zero job security anywhere, so you better enjoy what you do. I’d encourage founders to be intentional about how they spend their time. Write down what you want to accomplish each day and focus on it.  —Nick Huzar, OfferUp CEO

Invest in your foundation. We made a commitment in the spring of 2020 to hunker down and make our foundation stronger. We spent time on the less sexy work behind the scenes, as well as tackling some riskier moves that had the potential to improve the economics, but were less predictable. Those infrastructure investments ultimately positioned us for faster and more profitable scaling as the world started to normalize quicker than expected in our industry. —Shanna Tellerman, Modsy CEO

This year I learned how important it is to be in direct touch with your community on both sides of the marketplace and create avenues for feedback, especially as your business grows. I’ve made sure hosts and Hipcampers have direct access to me as we scale, and that anyone on my team can put time on my calendar, regardless of tenure or seniority. —Alyssa Ravasio, Hipcamp CEO

Consumer internet marketplaces scale beautifully with fully remote workforces. Our physical offices have been closed since mid-March of 2020 and our business hasn’t missed a beat. The trend of more flexibility in employment makes me excited about the future of work. —Jon Gray, RVshare CEO

Adaptability was paramount, whether that meant finding new ways for consumers to access your goods or rethinking supply chains. We simply needed to adapt to be more discoverable. —Mary Fallon, Kidizen CCO

We faced a demand shock that caused our business to grow 15X, which is unprecedented at our scale. We needed to radically scale up our teacher community, team, and capacity to keep up with demand while simultaneously moving to a fully remote workforce and dealing with the personal impacts of the pandemic. What allowed us to thrive was a deep focus on people first. There’s an idea in business that your product will reflect your org structure. I believe in a broader version of this: your impact on the world as a company will reflect your people and culture. —Amir Nathoo, Outschool CEO

3. What one piece of advice would you give to a marketplace startup founder today?

Once you’ve achieved product market fit, keep it simple. It’s fine to frequently pivot to find it, but once you have a product-market fit it is focus that drives scale which builds the network effects that make a marketplace valuable. —Jon Gray, RVshare CEO

Always prioritize your unit economics, even if you know marketplaces take time and a lot of traction to fully prove them out. Have a clear path to where they need to be for you to achieve success and how you’ll get there. It’s one of the few things you can rely on in fast-changing times. —Lana Elie, Floom CEO

Align your business model with the community you’re serving, so that if they succeed, you succeed. —Ethan Diamond, Bandcamp CEO

Have a clear strategy for solving the cold start problem, and be ready to grind it out until it’s solved. —Grant Lafontaine, Whatnot CEO

If you are building a local marketplace, keep in mind that in most cases you have to start from scratch for every new market. You will need a simple, predictable, and reliable playbook to scale and duplicate your success in your initial markets. —Kevin Tan, Snackpass CEO

Long-term thinking with near-term milestones. Our most successful initiatives have all included a long term roadmap with clear targets and objectives (sometimes over 2+ years) that we broke down into quarterly milestones that were measurable. This has allowed teams to have a strong north star that feels slightly out of reach, but also stay laser focused on the near term targets. —Shanna Tellerman, Modsy CEO

Pay attention to how your customers are using your product in unexpected ways. For example, Facebook Marketplace was developed after noticing people using Facebook Groups to organize sales. Parents looking to both sell and purchase kids’ items were particularly active in these forums, and we thought we could make community commerce an easier experience. More recently, we saw businesses using Facebook Live to broadcast items for sale, so we’re building tools to make video shopping easier. —Vishu Gupta, Vice President Engineering, Facebook Marketplace 

The narrower your initial focus, the better. It allows you to truly understand your consumers’ needs and more rapidly offer them a better foundational user experience. The wildly unpredictable past year has exposed the cracks in our traditional retail ecosystem, making it ripe for new marketplace opportunities. 2020 made us ask questions that shouldn’t be ignored going forward: Does your audience need what you offer, and are you providing easier access to it than anyone else? —Mary Fallon, Kidizen CCO

Focus all your efforts on serving one customer segment deeply. After you’ve won over this “beachhead” customer segment, you can then expand your focus to include the next segment.  Solving the generic customer’s need is a recipe for a vanilla product. —Eric Shoup, Peerspace CEO

For a marketplace to be successful, you have to build trust on both sides. The same goes for your internal teams. Every business faces challenges; some challenges are expected, others you don’t see coming. In order to withstand unforeseen challenges and come out stronger, your team must feel heard and supported by you every day. —Scott Cutler, StockX CEO

Small changes can have a big impact in a marketplace ecosystem, both positive and negative. Marketplaces are sensitive to changes in pricing, supply/demand balance, curation, etc. For every new feature you introduce, come up with 5 to 10 surprising downstream effects that might result, and put monitoring in place for those things. —Tracy DiNunzio, Tradesy CEO

Even as a predominately enabling marketplace, don’t underestimate the end-to-end responsibility your customers expect you to take for each transaction. —John Lagerling, Mercari CEO

Test your theory by creating an MVP before building your full product. Let user feedback drive the direction of what you actually build. —Reham Fagiri, AptDeco CEO

Try to find a space with some sort of natural imbalance: unstructured demand or supply that overlaps with a theme that people can be passionate about. The more exciting the theme is for the founder and for people, the bigger the opportunity to build a lasting product and brand. —David Troya, Glamping Hub CEO

4. What’s an underrated trend in the current marketplace ecosystem?

Expert advice and curation. I think the original marketplace model has valued “more is more” and left the consumer to wade through massive assortment and selection to determine what is good and what is garbage. Consumers want to turn to a marketplace where they can rely on the quality of the suppliers or products and where the marketplace itself adds a layer of curation. —Shanna Tellerman, Modsy CEO

Using data to drive personalized recommendations and conversions. This model creates for a much better user experience and sustainable revenue backbone, compared to older marketplace businesses that charge for ad space based on eyeballs, but not action. This type of marketplace takes longer to build and perfect, but it also means deeper customer connections, better content, and ultimately a more valuable business. —Shan-Lyn Ma, Zola CEO

Consumers are tuned in to the dynamics of social justice and economics than ever before. Voting with your wallet isn’t a new concept, but conscious consumerism has entered a new phase and that’s a great thing. We’ve invested in programs like our Momentum Business Accelerator and our social equity menu to meet those consumer expectations. —Rogelio Choy, Eaze CEO

Integrating third-party marketplace opportunities as a service into retailers’ existing footprints, both online and offline. We’ve seen larger retailers use their physical spaces to add the convenience of ordering their goods online and picking them up in-store. We’ve also seen smaller retailers offer up their real estate as drop-off locations for third-party brand returns, solving a pain point in the retail value chain. There’s a larger opportunity here to drive both higher web and foot traffic to under-trafficked retailers while adding new value for their existing customer base. —Mary Fallon, Kidizen CCO

Increased information sharing and collaboration happening between employees at different marketplaces. Marketplace growth and operations are increasingly becoming a discipline unto itself within tech, lending itself to best practice sharing. I have seen more cross-company Slack channels, marketplace forums, and informal outreach than I had seen pre-COVID. —Eric Shoup, Peerspace CEO

Social commerce is going to fundamentally change the online marketplace ecosystem over the next decade in the Western world. —Grant Lafontaine, Whatnot CEO

Shopping via live video is a compelling shopping format that’s been popular in Asia, but it’s still underdeveloped in Western markets. —Vishu Gupta, Vice President Engineering, Facebook Marketplace 

5. What’s your outlook for marketplaces in your category in the coming year? 

In Beauty:

We’re going to see booking of pent-up demand. Also, things like at home services, previously reserved for an ultra high-end price point, will continue to be more mainstream. Professionals who’ve become independent are not necessarily going to go back to being employees or paying rent at locations if they’ve built a strong client base over the last year. Features like dynamic pricing, new client delivery, and yield management were very new last year, but are the expectation of stylists today. —Melody McCloskey, StyleSeat CEO

In Food & Beverage:

COVID changes related to efficiency will endure, such as using digital ordering modes to decrease labor costs. These trends are inevitable and are only slowed down by late adopters. Consumer jobs to be done related to food are timeless. —Kevin Tan, Snackpass CEO

In Shopping and Ecommerce:

Consumers are more inclined to align their purchases with their values and are increasingly turning towards alternatives to shopping new, like resale and secondhand. This is a behavior we’ve seen for years amongst Gen Z, and we’ll likely see this mindset becoming adopted by more and more consumers in a post-COVID world—especially those over the age of 26. —Maria Raga, Depop CEO

As we look to the future, we’re zeroed in on Gen Z consumers. These next-gen customers are foregoing primary retail channels and going straight to the secondary market to find high-demand current culture items, whether that be streetwear, electronics, collectibles, or sneakers. We’re also seeing expansion in the ways in which people invest that we are even more excited about, with the recent attention around alternative investments and growing appreciation for marketplace experiences. —Scott Cutler, StockX CEO

We’re going to continue seeing an expansion in buying and selling in niche categories. For example, we’ve seen an incredible trend in trading cards: from January 2020 to January 2021, Mercari saw a 405% year-over-year increase in orders for trading cards of all types. This year, common themes we’re looking at on our platform include “sprucing up the space” and “nesting.” —John Lagerling, Mercari CEO

In Furniture & Decor:

The furniture and decor category had one of the lowest ecommerce penetration levels prior to the pandemic. The past year was an accelerator for the inevitable: the shift of a larger portion of sales in this category online. The category is a bit trickier and more intimidating to shop online than other consumer goods verticals. However, the advantage of new services and technology gives customers more confidence, comfort, and visualization that removes the friction when shopping online. —Shanna Tellerman, Modsy CEO

In Travel:

I’m bullish on the future of travel, and travel marketplaces specifically, going forward. The trend of workplace flexibility is durable and it will lead to travelers taking more trips at the same value. —Jon Gray, RVshare CEO

In Cannabis:

For cannabis, delivery is here to stay. Consumers who might not have considered delivery before COVID are now used to the safety and convenience of getting products to their doorsteps. Looking ahead, I expect delivery will keep growing and become an intrinsic part of every legal market. —Rogelio Choy, Eaze CEO

In Pets:

The pet space has historically been extremely fragmented and offline, making it difficult to navigate. We see that changing dramatically over the next 2 to 5 years. Additionally, in many areas of tech the primary focus has been lower prices and increased convenience. Whether in pet care or other areas like healthcare and childcare, online marketplaces can deliver a third, often overlooked part of the value proposition equation: access to quality. They can do that by helping consumers understand what “good” means in the first place, helping them determine which providers meet that standard, and connecting them with those providers. Marketplace founders can design the systems powering their platforms to create an upwards spiral of quality, rather than the downward spiral that can happen when there’s too much of a focus on price or convenience. —Lauren McDevitt, Good Dog cofounder and Chief Experience Officer

In Office Space:

I’m bullish on the need for venue rental post-COVID. Companies are dropping their office leases, but still need to get their employees together periodically, leading to a need for high quality, short-term space. Second, the Creator ecosystem is exploding, and they are looking for the right aesthetic for their next photo shoot, music video, TV commercial, and more. —Eric Shoup, Peerspace CEO

In Health & Wellness:

Pre-COVID-19, America was not in great mental shape. Suicide has been climbing steadily and rates of anxiety and depression were staggering before the pandemic set in. This pandemic has brought the need for more accessible and utilized mental health care into the spotlight. For all the pain COVID-19 has caused, we hope one benefit will be that more people can now accept mental wellness as a critical part of overall health. —Mark Frank, SonderMind CEO

In Wholesale:

The wholesale industry will center around online connection, and be better off for it. This year formed new habits and norms for wholesale—it will be extremely difficult to revert back to the traditional trade show and buying models. On the consumer side, however, we’ve seen a return to the desire for in-person connection. There are aspects of local retail that e-commerce simply can’t replicate or compete on. Between increased enthusiasm for the shop local movement, support for small businesses, and the community feeling that shopping small provides, local retail is thriving. —Max Rhodes, Faire CEO

In Music:

Marketplaces that foster a sense of community and give sellers a way to directly engage with their audiences will continue to thrive. That’s especially true in the world of music, where fans increasingly want a direct connection with the artists they love. —Ethan Diamond, Bandcamp CEO

 

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The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. In addition, this content may include third-party advertisements; a16z has not reviewed such advertisements and does not endorse any advertising content contained therein.

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Traduction de l’article de Lauren Murrow : Article Original

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