An investor from Lightspeed shares early lessons from backing commerce and marketplace companies. They discuss why timing matters more than moving first, use resale platforms like Poshmark and The RealReal as examples, and explain how niche brand-focused marketplaces can compete against giants like Amazon.
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So what were some of those, I would say, like kind of early learnings, you know, investing, I would say, in, you know, kind of commerce and marketplaces maybe that you've taken with you to Lightspeed now?
That's a good question. You know, so there's a couple different learnings. One is, you know, a lot of times as an investor, I really focus on what is the moat? What is the differentiation here? What, how are you able to build something that no one else is able to build? But I actually think in marketplaces, a lot of times the first company to market isn't always the best. And so it's really important to look at companies and think about, look, what is the, what is the new thought? What is the new iteration and the timing that makes this version better than previous versions? So I think a great example of this is the resale space. I think companies like Poshmark and The RealReal really set a great foundation for what the resale space could be, and it showed just how much consumers were interested in this sector and this type of shopping. But at the same time, a lot of those business models were really challenged. If you look at The RealReal, highly operational. If you look at Poshmark, not really a great consumer experience. If you look at various other companies in this space, there was just a lot of challenges that actually made the margins not that great and the customer experience not that great. And so I invested in a company called Archive, which I invested as a scout, and then Lightspeed invested again at the seed and Series A that creates resale platforms for brands. So if you went on like Oscar de la Renta's website, they would have their own peer-to-peer service that's much more Brand, you know, loyal, loyal to the brand and helps the brands as well in terms of regaining some of that revenue. And also is a better, more trusted experience for a lot of consumers. And so that's, I think, an example of looking at a marketplace that exists and not saying just because there is an incumbent means that I shouldn't enter this space. Now, on the other hand, you look at companies like Amazon and no one has disrupted Amazon. You know, it's pretty tough. Even, you know, Walmart has kind of tried to disrupt Amazon and that's tough. So I think it's really hard as a founder to understand where there's room to optimize a marketplace, either focus on a more niche approach or take a better approach that leads to better margins, and where there's an incumbent that's actually really capturing the market in a way that customers like. So that's one of the learnings.
