Insights From Investing In DoorDash With Saar Gur From CRV | EM Group Chat #215

Welcome back to Everything Marketplaces, where we talk with founders and leaders from some of today's top marketplaces. So this is episode 215, which is a group chat that we just had with Sagar, who's a general partner at CRV. CRV is a leading venture fund that's backed marketplaces like DoorDash, PillPack, ClassPass, Patreon, more. So it's a great chat with Sagar where he started off by sharing what led him to venture investing, what he looks for when investing in marketplaces. He walked us through the notable investment he led in DoorDash back in 2013, shared some of his key learnings for founders. We discuss how AI is impacting marketplaces. Saurabh shared lots of tips for founders. We also had a great group Q&A. We did unfortunately run into some issues with the Zoom and had to make a few edits, but I know you'll enjoy this conversation and find it a great watch to the end. So, Saurabh, your name has been coming up on our past group chats with guests, and you have an incredible reputation with both founders and other investors. So it's great to have you join us here today. I want to start off by saying huge thanks for taking the time to do so in advance. We have a lot that we're going to dive into with all your marketplace experience and discussing marketplaces in the age of AI today. But I thought it'd be great if we could start off by briefly sharing our background for those here that might not know.

Yeah, my, I mean, my quick background is, you know, I was the kid of immigrants from Israel, grew up in Pittsburgh, Pennsylvania, you know, studied biochemistry, but graduated in the late '90s. And, you know, it almost sounds funny now, but I thought the internet was going to change the world. It was sort of like all I could think about. In particular, I would just say, you know, with the early marketplaces, I was fascinated by How marketplaces, not only were they incredible businesses in terms of network effects and other things, but they often, if they created like new supply, they seemed to create economic value out of almost like thin air. It just seemed like this like incredible business model. And so that drew me into wanting to work in the internet space. I was lucky to eventually get into Stanford Business School. I've stayed in Palo Alto pretty much since. I worked as an entrepreneur and in some startups. And then ultimately was recruited to CRV in 2007 to help us build our consumer internet practice. The firm had kind of been around almost like forever in terms of the history of venture capital. We're currently investing out of our 20th fund or 19th fund, 20th fund. Yeah, 20th fund. And the firm had made a lot of money in the past in a lot of like internet infrastructure and semiconductors and other things. And I was tasked with helping us move into like SaaS in consumer internet. And yeah, I feel super grateful that I've been able to work with my partners here on being, you know, seed investors in a whole bunch of very cool non-marketplace companies, you know, like, you know, Twitter and Dropbox and, you know, Mercury and others, but a whole bunch of marketplaces like, you know, being the first investors in companies like ClassPass and DoorDash and ResortPass and Wish and Patreon and Top Hatter. And others along the way. So yeah, it's, it's been an incredibly rewarding time to, to be around this space in the last 20 years.

So that's an awesome background, a lot that we're going to get into here. But, you know, I did want to learn a little bit more, you know, what led you to venture investing and can you give us a brief overview about CRV as a venture fund?

Yeah. So CRV historically, we focus mostly on seed and A, which is rare for a firm like ours that's been around and has had the success that we have. Most firms like ours have scaled into Doing lots of things, multiple strategies, managing lots of money. I think it's a function of our group. We just love being involved early. I think it's a different relationship that we have with founders when we're sort of involved at like the idea stage or the, you know, when a company is weeks or months old, not, you know, 10 years old or 20 years old. And so that's a little bit on CRV. We tend to take board seats. We tend to try and get ownership. don't have a ton of investments each per partner. And then I think we, you know, we really try to work as hard as we can with those founders on the journey of building a company. I was recruited, honestly, as I mentioned, I graduated from business school in the dot-com bust. I worked in startups in the internet space going back to because I had this passion for it. And it was at a time when most people had left Silicon Valley, you know, who had chased the dot-com rush. And then as the You know, Web 2.0 came back. I was in the right place at the right time where I, you know, was well networked with a bunch of founders. I was not trying to be an angel investor, but I ended up making some angel investments in some interesting companies and, you know, was trying at that time, there were these incredible founders that actually, they didn't need my advice. I've always loved helping founders when I, when I was, you know, useful and could help. They just needed money and I ended up basically trying to help them raise capital. that put me on the radar screen of a number of venture firms. And the CRV folks, as I mentioned, were kind of trying to figure out how to move into up the stack from, you know, semiconductors and infrastructure to consumer internet. And so they hired me as an early hire to help them do that.

That's really cool to hear and also a helpful overview. And, you know, so what do you look for when investing in marketplaces? And has this changed in the age of AI?

I am very product-oriented, you know, and so I'd say like often for me, there's a lot that has to come together for me to get excited. Sometimes it is though, like there's a gut feel that like, you know, I don't know, you know, we, we seeded ResortPass when it had, you know, I don't know, a handful of hotels where it was like, yeah, this is, this is going to work. And I do think some founders have a secret that the rest of the world doesn't know. They identify a market maybe because they understand a problem deeply and that can bring us along where we just have conviction based on seeing a lot of things and seeing, thinking this is an original product thinker, someone that understands the problem deeply. Same with, you know, Patreon and other things. But, you know, I think the hard part for us at CRV is trying to dream the dream of what can actually be really big. As you know, in marketplaces, there's tons of awesome vertical marketplaces that, you know, might sell, I don't know, you know, AirPod cases or, you know, who knows what. But, you know, to try and really make sense of what can actually, we can see a path that gets really big to be competitive with some of our other investments here because we're a generalist firm is often the challenge. But often I'd say that we've chased waves of technology. So, you know, we'll get into DoorDash and others, but often whether it's mobile or live or, you know, I don't know, crypto and NFTs or other things, you know, we'll often chase a trend or it could be a cultural trend like sneakers or, I don't know, prediction markets or other things that we just think may become a, become a, an under— that are an underestimated market that might become really big, you know, that we'll spend time in those areas. As it relates to AI, I mean, we could talk more about it, but I'd say, you know, the thing that's so interesting to me when you look at a lot of marketplaces is a lot of marketplaces early on, many investors are very shy of them because it can take quite a bit of capital to bootstrap the supply, right? And I think what's been interesting with AI potentially using you know, AI agents or, you know, the technologies of being able to call things, et cetera, is it, it, it potentially may change some of the cost structure on aggregating supply. Or it may be on the coordination side of like, maybe that supply's only available on a short-term basis, but now agents can call and coordinate, make sure you're available for 1 hour on Sunday and, and you're going to show up. So I think those are some of the areas that are really interesting. I think there's a question, but an opportunity potentially on better matching. We've seen some AI agents that historically now can, on job interviews, in dating, can spend 3 hours talking to you about, you know, who you are and then potentially, you know, do a better job matching. And then lastly, I'd say there's a lot of just like the data processing is fascinating to me. I thought we would see more like, you know, an example of like Google Photos. Like you can analyze all my Google Photos and potentially help me You know, make friends or figure out travel or other things. So, you know, AI is a rich dataset to do some of those things. So I think those are all vectors that might enable some, some, you know, really large new marketplaces, but it's, it feels like it's early days. I think the next 2 years are really gonna be an exciting time for some awesome entrepreneurs to, you know, figure some of these things out.

Yeah, certainly. And we are gonna discuss, you know, spend some time by discussing a marketplace in the age of AI. But, you know, before we do, I thought it'd be, you know, helpful if we could Go back to that DoorDash investment that you like, because that's of course one of the most notable marketplaces, you know, so could you walk us through, you know, how you initially, you know, met the team and then, you know, what led you to investing?

I'd say there's like a spectrum. There's sometimes I meet a great founder who convinces me of a market that maybe I wasn't thinking of. And then sometimes I have a thesis and I'm looking for something specific. And then the best investments for me have been when I have a thesis and the founders turn out to be remarkable. And, you know, DoorDash was a unique story in that I actually was looking for a food delivery company. I had famously lost the Series A, you know, of Uber. Travis left our office, went to Benchmark, they closed him. And yet, and he wouldn't, they called, he called me from their office. He's like, you're gonna need to move faster. Anyway, it's a whole nother story. But I'd say what had me fascinated with Uber was taking this moment of frustration and turning it into a moment of delight. You know, this idea that, you know, now it's obvious, you know, people take it for granted, but it used to be, you know, you'd call a taxi and you had no idea if it was gonna show up and you'd be very stressed about, you know, getting to the airport, et cetera. And there was this magical moment, a product moment of seeing that car roll up. And my thought at the time, living in the suburbs with young kids, you know, owning a dirty minivan was like, you know, that's a cool market, but Man, you know, my wife was working, you know, she actually ended up, she owned some local cafes, like homemade yogurt, Greek cafes in the area. And, you know, the idea that someone would do this in food delivery made a lot of sense to me. And at that time, food delivery was only basically pizza shops and Chinese restaurants and Thai food. You know, you didn't, you couldn't access a lot of healthier options and it was like largely unreliable, even if those people were going to come. And so I thought someone's gonna do this in food. That was interesting. I had another perspective, as I mentioned, because my wife owned these yogurt stores and cafes and we had, you know, regularly people were calling us asking us to deliver. And at that time we, you know, we basically had to employ a driver and guarantee hours and have a, you know, a vehicle for them. And so as we saw what was happening, you know, with Uber and Lyft, et cetera, this idea that there could be a pooled set of drivers for restaurants on the supply side also structurally made a ton of sense to me. So anyway, that was the background. I had a clear thesis. I spent a lot of time with some, you know, well-known companies that were kind of working in the space. Postmates, you know, had started 2 years before DoorDash. And yet I, you know, my thought was there was also a lot happening in on-demand that you could, you know, get your laundry on demand. You could order an iPhone and have someone wait in line at the Apple Store. And my thought was a lot of those were low-frequency events, but if you could start with food, it might be the wedge to basically move into all these lower-frequency categories. So it was a pretty clear thesis that doesn't always happen. It rarely happens in my career, but every once in a while, you know, it does. And so I was kind of looking for something in food delivery. Now, the problem was there were hundreds of startups at this point doing on-demand food delivery. And our business, honestly, you know, especially focusing on Cedar A, there's a lot of, you know, luck and timing also in the business. So, you know, I'd say on the, on the skill side of business, there was a little, there was a little company called Fluk with an incredible founder named Adam. It stood for Food Lovers United. He was started in Menlo Park and he was getting some traction and I was still trying to make an investment, you know, in this category. And I was doing diligence on this Food Lovers United. They were going to raise a seed They ended up actually raising that seed from Greylock and another guy named Shervin Pishevar who had invested in Uber. And when I was doing diligence on Food Lovers United, because I happened to know some people in the food industry, I reached out to— there's a very popular restaurant on University Avenue called Oren's Hummus. And I know Oren Dobronsky is an old friend of mine. He's the owner. He's the Oren in Oren's, but I actually knew the general manager. Because I happened, my wife, as I mentioned, like I was in the food business and so I email my friend Misty and I'm like, hey, I'm doing diligence on this company, you know, Food Lovers United. What do you think? And, you know, her, she responds immediately and says like, I don't know why you'd want to invest in any of these companies. There's like a million of them, you know, but, you know, but if you're going to make any of these investments, you should really talk to these kids on Stanford campus. that are just more thoughtful than any of the other teams that we've met. And so, you know, this skill part of the business was actually not investing in Food Lovers United and chasing down these kids at Stanford who had started a company called Palo Alto Delivery and had just rebranded as DoorDash. And when I met them, you know, they very much sit, you know, I still remember meeting with Tony and we were sort of, finishing each other's sentences. He's like, we're building a local logistics company, you know, we're starting in food. I don't want to overstate it. They were 4 kids. If you've ever watched the Y Combinator video, you know, they were kids and they were 4 equal founders. There was no CEO. There were a million reasons not to invest. But, you know, as I said, I really wanted to have an investment in the space and I just thought that the way in which they talked about the business felt very different and they very much knew their ICP. So, you know, one of the things that stood out was while there were a lot of companies trying to do food delivery, they were very early to figure out that our target customer early on is Oren's Hummus, which famously had lines out the door, sort of limited front of house seating, excess kitchen capacity. And they could basically put an iPad in the back of the kitchen versus trying to deal with the hostess at the front and basically saw it as like a big math problem of like, how do we basically make these unit economics work? And solve all 3 parts of the marketplace. You know, the luck part of the story was they had actually presented in front of Y Combinator about, I think, a month before and in front of 400 investors. No one wanted to invest. So when I say there were like hundreds of companies doing food delivery, you know, these guys had had every shot to raise their seed round and they were, you know, I think as Tony tells it, I think there were, they were 2 weeks from running out of money when I basically found them and, and, you know, led their seed. So anyway, and, you know, the company also almost died several times along the way. We had a big, you know, well-financed competitor named Uber that moved into Uber Eats. But, you know, the team really made a lot of great decisions along the way. And, and obviously that one worked out. But yeah, very cool company and story.

We, of course, all look up to DoorDash in the world of marketplaces. So it's really incredible to hear the story kind of going back. But, you know, kind of like in hindsight, you know, what are some of your key learnings from DoorDash that would be helpful for founders building marketplaces today?

I think in terms of the profile, you know, having now worked with a lot of marketplace founders, you know, it's one thing to like have that original insight and try and get the flywheel going. And that's absolutely critical for, I think, any marketplace team, you know, but over time, especially in a competitive market, I think what really stood out was, you You know, the team constantly was very data-driven and optimizing and deeply understood their customer in a way that I think, you know, really helped them break out. I often retell Tony has this incredible story of trying to work with the Cheesecake Factory, and this may be dated, but at the time, you know, the Cheesecake Factory had one store in San Francisco. It was a big partnership we were trying to make work. And that store was in Union Square. It's on like the 4th floor of a mall. And so, you know, basically, you know, you had Uber Eats, you had all these people that, that, you know, all ideally wanted to make the Cheesecake National partnership work. But, you know, the team at DoorDash slowly just started unpacking this problem where it was like, first of all, why is it not working? Well, there is no parking in Union Square, so how do, you know, so they went and got a spot. In the garage across the street. You know, then they realized, well, wait a minute, like, you know, these delivery times are just shit. You know, why is that? Well, turned out, okay, even if you parked in Union Square, you had to go up like 6 escalators to get to the 4th floor. And there were all these shoppers and, you know, it was just a pain. So they're like, okay, how do we basically like get you access in the service elevator to go right up to the front? You know, how do we get an iPad so you're not dealing with the front of house? You know, and, and each of these myth— you know, I, I'll spare you the story because it, you know, but the way Tony tells it, it could be a, you know, 20-minute story, but. By the time you solve like, you know, 30 small details, it sort of compounds over time. And I think that was a key learning was just this intense focus and then sharing those learnings as a team, I think is one of the other things that they did really well and continue to do well is like, you know, when one market's working, what is that market learning and what are those experiments or things can be applied, you know, to other parts of the business.

That's going to be really helpful. And I know we briefly mentioned that AI, but, you know, I want to come back to the topic of it. And 'cause of course, you know, since the kind of early DoorDash days, you know, we've seen how marketplaces evolve, especially more recently with AI. So I guess like as a starting point, you know, how are you seeing AI impact marketplaces? Where do you think we're at today?

Man, it's such a broad question 'cause I, you know, like AI on one end is what's helping drones and, you know, sidewalk robots work. And, you know, we may see a lot of things that are actually, it's really technologies that are enabled by, you know, AI in terms of self-driving and other things that where unit economics may not have worked in the past and may. Then I think there's, you know, as I mentioned, a lot of the cost structure, whether it's, you know, everything from customer support and other things, you know, often marketplaces in the early days, as I mentioned, they consume a lot of capital until they hit escape velocity. Not always, but, you know, this idea of using AI on just like fundamentally changing the unit economics of bootstrapping supply, of running the business day to day, of making customers happy. You know, and then lastly, I think is like, to me on the matching side of like totally new experiences, what does it look like when I, you know, chat with, you know, I don't know, an AI agent for several hours a day and then that leads to some matching or some new experience. I think we're in the early days of that, but, you know, I think that's also, you know, super exciting. And then lastly, like often there's like these new markets that we don't yet fully understand in terms of I don't know what agents are going to be trading with each other or, you know, exploiting arbitrage opportunities across marketplaces, you know, or other things that, you know, I think are just in the early days.

Yeah, certainly early. I actually had a, you know, a question I was going to, or a topic I was going to bring up, which is on opportunities. Are there any maybe specific opportunities that you're excited about?

The amazing thing about, you know, entrepreneurs is that, as I mentioned, you know, they'll change, they'll see things often before we do in terms of new cultural trends or other things that may be related to vertical markets. Like, I don't know, gold becomes a thing and then now all of a sudden you can bootstrap a market that has new demand that just sort of didn't exist in a way before. And we've definitely learned a lot from chasing, again, as I mentioned, like NFTs or now other things that may be emerging markets. And I think that's not going to go away. I do think that we've seen other things just as an example with our experience with Wish and and Top Hatter where like when there were subsidies with, you know, Chinese shipping, all of a sudden you could make unit economics work in ways that, you know, were super interesting. So in many of those markets, honestly, those are harder for us to be top down and it's just like great founders and referrals often that educate us about some of those things. And then, yeah, as I mentioned, like, you know, in AI specifically, we're, I think we are imagining a world where almost every consumer category could be up for grabs. It may not be. And that's everything from, you know, true marketplaces to things like, you know, travel and finance and other things. And so we definitely are spending a lot of time in and around those areas. I'll use an example, by the way. We like, we have a company called Lotus Health that is offering, you know, free primary care in America. And what, you know, while it sounds like it's free primary care, what it looks like is actually really different because there's such, you know, the average primary care visit in the US is less than 16 minutes and they charge your insurance $2,500. When you can have an agent that is infinitely patient, available 24/7, speaks 50 languages, and can actually go gather, call, fax, you know, using it again, all the things agents are great at, get all of your medical records and actually analyze them in depth. You end up with a totally different experience that doesn't look like primary care. We have people literally spending 90 minutes a day, you know, talking to their doctor. and getting fundamentally different outcomes. So I think in that way, we think things like that are going to happen in, you know, marketplaces. But it's, as I mentioned, early days.

Yeah, we have lots of founders building in consumer, so I'm sure that'll lead to some coming on during the group Q&A. But I did want to transition over to talking about fundraising briefly because of course we couldn't have you on without discussing it, you know. So I guess like from the perspective of, you know, fundraising, how are you seeing AI impact that? And do you have any tips maybe for founders that are fundraising at the earlier stages?

You know, having seen a lot of marketplace financings over time, I guess that, you know, there's probably Definitely some headwinds in this market, you know, if you're like a traditional marketplace. One has always been just like the size of the vertical. You know, when you approach a firm like a CRV or I'd just say like any top venture firm, it's just like the market size is often an unknown and we get it wrong, you know, all the time having, you know, seen Whatnot when it was just, you know, Funko Pops or other things, you know, like, you know, these things will happen. But I do think it's on the entrepreneur to try and like dream the dream and sell the vision of how the market size may be underestimated or much bigger. You know, you can't always convince a VC otherwise, but I think that is a challenge. Otherwise, I'd say like, you know, the growth is a, you know, like traditionally marketplaces that they're growing at a pretty good clip called 3 to 5x year over year. It was financeable. And now a lot of, you know, so much of the attention of firms like ours that are generalist firms are focused on these AI companies that, you know, not marketplaces that are just growing, you know, in many cases so quickly that it, I think it does make it really challenging for many of our companies. We basically have told many of them like, assume there is no capital available, just build a great business, you know, get leaner, let's try and hibernate, you know, and grow profitably while you can, even if it costs you on the growth rate side. Other than, as I mentioned, I think the companies that we see that are having success fundraising are approaching, they're seeing some new cultural trend growing quickly, very capital efficient. I think those are the ones that are still getting funded in this market, or they have an AI angle in terms of truly being one of these like, you know, AI job marketplaces, AI dating marketplaces, you know, that are true like natively AI applications. Outside of that, man, I think the only thing that gets our attention, which is a bummer to say, is actually because a lot of it's not actually what we focus on, is companies that are just like moved into the growth category where like they raised the seed and now they're flying. And so it's sort of like an existence proof. Like you don't have to argue with me about the size of business because like you're just growing so fast. And I think those have been able to attract capital. But, but they're, you know, very few and far between.

Yeah. And I guess like related to this, what do you think some of the biggest mistakes are that you, that you see founders make today when fundraising?

I think one of the key insights from the DoorDash team was how quantitative they were. You know, there's like, I think there are founders who are great at pitching the vision and the high-level concept, you know, but, but are not like reading math papers for fun and just like super fluid with the numbers. And I do think, you know, for many of the marketplaces, you know, having founders just be super prepped and quantitative in their pitch. So you come across as both visionary and quantitative, I think is like one of the areas I would just encourage marketplace founders as you're out talking to folks like us to like focus on the quantitative side as well and really make it clear that like you really understand your business, you really understand, you know, the levers and, you know, and, you know, are gonna continue to sort of like optimize and grind on the metrics. I think that's one of the things that I think is helpful. And then, you know, I would just offer the other one is just on scalable customer acquisition. You know, we definitely saw a number of marketplaces that were like Wish, you know, which were heavily dependent on paid customer acquisition. You know, then a change happens in the market and all of a sudden these companies are upside down. That has made a lot of venture firms very reticent you know, to focus on marketplaces that just have a high dependency on paid customer acquisition. So to the extent that you have some great answers around how you can scale, you know, and grow through other scalable channels, I think it's quite helpful.

Definitely. Well, cool. So we're going to get to the group Q&A. Otherwise, you and I could just go on talking about our topics here. And I'll actually ask a question that was added to help kick things off. And it was around defensibility. So, you know, with it being easier than ever to, you know, build and launch today, You know, how do you think about defensibility in the age of AI?

You know, when you actually have, you know, true network effects, you know, you're aggregating truly like long-tail matches on the supply and demand side. I mean, I think though that's like the dream, you know, it doesn't always happen and we definitely see a lot of businesses that can try and catch up. But I'd say that's one element. And then the other is like, you know, we do like looking at things that kind of look weird at the time. You know, because it does give you a little more time to figure things out and build ideally some of that momentum. You know, I'd use an example like, you know, when I seeded Patreon, you know, Jack was a creator. He was not a typical founder out of central casting and the creator economy really didn't exist. Like people didn't understand, you know, like, you know, that was one of the big issues we had in multiple fundraisings was around market size because people didn't believe it. And then, you know, fast forward now, whatever, 12, 14 years later, You know, we know millions of people earn a living on, you know, as creators on the internet, but that was a non-obvious secret that, you know, Jack intuitively believed as a creator. So, you know, I do think that, you know, if you can understand a problem deeply, worry less a bit about like what the venture capitalists in some ways want to hear. And so I do encourage founders, like, it's, you know, it's okay to be weird and learn and build a business, you know, and sometimes out of that, The market just can keep getting more interesting based on what you're learning.

Hey, uh, Julius, I saw you raise your hand. Do you want to jump on here? Hey, Saad.

Um, Julius here, uh, ex-CEO of eBay Switzerland, Ricardo, and building Shack. And I have a question regarding, um, on-demand logistics because I noticed if you sent a package now in San Francisco peer-to-peer via UPS, UPS, it's like $100. But if you use Uber Direct, it only costs $4. So what do you think about integrating like recommerce solutions, C2C, peer-to-peer in cities, uh, and utilizing the, like, the new on-demand logistics networks like Uber Direct? You have these insights sometimes that create a new opportunity to build a market. And thanks to Amazon, or in this, in this example, in logistics, you know, you can, you, you can now exploit an opportunity and, and test a market that didn't work. In New York, there is actually a very successful marketplace today that is doing dress rentals just within New York. And, you know, and I do think that, you know, that's enabled just like you said, because of like just where infrastructure's gone on peer-to-peer, you know, rentals and local delivery. And so actually, yeah, I think there's something absolutely there that might be worth testing and exploring. Awesome.

Hey, Jared, saw you raise your hand. Do you want to jump on here? Hey, sir.

Jared, founder of Napper, 2 to 12-hour hotel stays at brands like Marriott and Hilton for up to 75% off the overnight rate. I was curious, so beyond the idea and traction and all the other metrics, what is the one thing that really excites you about a founder or a team? What's the X factor for you that gets you really excited to invest in someone? You know, I am very drawn to, you know, people's energy and excitement. I'd say like I'm more mission-oriented than mercenary. oriented. So a lot of the founders I've worked with, I feel super lucky. Like it is their life mission to work on the problem they're working on. I use this example. I was fortunate to be a seed investor in Ring, the largest home security company in the world, you know, but Jamie, you know, Jamie left after selling to Amazon and he's actually came back and he's still, you know, he just loves solving crime and working on the Ring business. And, you know, it's not, it's not about the money. Like he just loves that business and he loves what he's working on. And I do feel like I'm definitely drawn, you know, to founders that just kind of care deeply about the problem they're working on. And I do think, yeah, that businesses, these, you know, these businesses that compound over many years, you kind of have to love the business and solving the problems and the grind. And so, you know, I just think ideally the founders like that energy comes across and that makes me want to help them. you know, and do everything I can to make them successful. But you can't fake it. I think there's a lot of people that are running a business that just don't have that, you know, they're not as mission-oriented. You know, it's just a business for them. And I don't know, that can be very successful. It just doesn't, it's not the vibe that I look for or I resonate with.

Hey Adam, I saw you sent me a good question. You want to jump on here?

Saar, great to be with you. Thanks so much for spending time. It's awesome to hear your background. I'm Adam Healy. I'm the founder and CEO of Novella. We're building the first transactional marketplace that helps couples discover and book their wedding vendors all in one place. And, uh, my question is, how quickly do you think consumers are gonna start using agents to do their shopping for them? Like, what are you seeing out in the world today? And should marketplaces, new marketplaces that are building right now, how much should we be focusing our energy on building like B2A? Yeah, it's funny. I mean, as I mentioned with my background, like I go back to what, you know, when I first was exposed to the internet, you know, this idea that you would one day buy a car or skis or a couch on the internet seemed crazy. I mean, it just was like, you know, like books worked for Amazon because it was like I could lose $10, you know, like in the, and I can't find this book in any local bookstore. So it was like the perfect wedge. And then they grew as consumers got more comfortable sticking money in the internet and getting things in return and trust. And we had to go through a social wave with identity and Facebook Connect and other things and reviews and all these things had to be sort of sorted out. So I guess to me, I think we often like in Silicon Valley tend to be surprised. I think Paul Saffo said this best, like when a technology comes out, everything's immediately going to be adopted and then it doesn't. And then 20 years later, we're surprised again when it's like mainstream. And so I do think it's going to take more time, at least from what we're seeing, especially for high-value transactions. Do I think that like, you know, we might let agents do things where not unlike books where like, I don't know, a DoorDash coffee order might get ordered by an agent? Yes. Otherwise, you know, I think it's going to take us some time. I don't think it'll take us 20 years. I do feel that You know, AI at the rate at which it is, is, you know, growing, I think is going to give people trust sooner. But if I were in your shoes, I probably wouldn't initially focus on like, you know, agents booking your entire wedding right away. I think that's gonna be a step out. But I do think AI in terms of reimagining the wedding experience, you know, absolutely, you know, in terms of What does that interface look like now that people are used to asking ChatGPT, you know, versus doing a bunch of searches? A lot of that I think is the ripe area where we're spending time saying, as I've mentioned, you know, travel, real estate, you know, a lot of these, I think just the user experience can be totally reimagined. And that feels like a ripe area to be playing in, you know, while watching what's happening with, you know, actually agents in doing the work.

Hey, David, saw you raise your hand. Do you want to jump on here?

Some of the advice that you shared of around marketplace founders just having a lot of headwinds at this point. I imagine a lot of folks on the call have the mindset of like, hey, I need to, I don't know if it's bootstrap or just like build a great company and build the momentum. I was wondering like, what tactical advice do you have for friends or people in your network who are just building good companies who need to, that might have been VC viable companies in the past, but maybe at this moment in time they are But what tactical advice do you have for folks just like to get their great companies off the ground versus advice that you'd have for, you know, a company that you were actively looking to back right now? I'd say like the advice tends to be specific to each company. But so, you know, given you have a venture background, I'd say, you know, there are some common challenges if you've raised venture, as you may know, you know, you may remember, like if you kill the growth, there was this mantra, you kill the company. You know, in terms of if the company's going to need another round. So the sooner, like we have some companies where we're just super upfront with them, like there is no money, like, you know, available. So like, just make it work, do whatever you need because like, you know, whether you're growing at 20% or 50% or 2x, none of those are going to meet the bar. And I actually think a great, you know, a good partner to any company is going to just be honest. Like we might be wrong, but In most cases, we have more data than the founders. And I think with that, you can actually then make some really tough choices. We are seeing that you can, you know, get a lot out of, you know, AI or coming up with a new business, you know, a different product that maybe was on the roadmap, but actually is worth testing sooner. You know, again, it might— I hate to be too prescriptive without knowing each business and what to do, but I'd say in the, in the You know, in the menu of things, we are seeing things like, you know, cutting deeper than you might have expected, launching a product, you know, iterating on a product, killing an ICP, you know, not on like, you know, Drift, you know, it was like, do you go small business or do you go enterprise? But like, you gotta pick one, you know, and bet the company. You don't straddle like a bunch of stuff. Changing pricing is a big one. You know, it's like, you know, we, we have to, you know, we just, if we're gonna exist, we have to, you know, I don't know, double the price and see, you know, what's left or, but just kind of having good thought partners and wrestling with some of these hard choices and really focusing on where, not fooling yourself on, you know, the metrics, but really testing the economic value and the value prop of what you're doing for customers and how much, you know, do they love you and which ones are the good businesses versus the mediocre businesses. You know, where are their dependencies on, let's say, if paid customer acquisition rates are fluctuating or labor rates are fluctuating or, you know, all these things, you know, ultimately, you know, yeah, you want to just build a good business. And really, I'd say what's happening for us in companies where the funding market has dried up is like you're just forced to test stuff sooner and make some of these harder calls, you know, Bring them way up front to like, you know, today. Yeah, happy to try and riff more, but I guess it's like really dependent on each business. But I probably, as someone who has a bunch of related companies where, you know, they're not AI companies and the market has dried up, it's like, you know, chasing a partnership deal, you know, is, you know, versus going direct to consumers, launching a product that's more elegant that maybe doesn't have the same operational costs. You know, yeah, closing markets, certain markets that are not profitable, you know, at least in the short term, really digging into an ICP, you know, and killing a market segment. You know, all these things are things that I've experienced across our portfolio. And, you know, but I do think many of them are at least giving the companies a chance to be profitable and grow. And, you know, we have some success cases coming out of that for sure. COVID, by the way, was another great example where, you know, ResortPass, you know, just because we, you know, Michael was on the, you know, on this chat, I give a lot of credit to the original founder, Amanda. When, you know, when COVID happened, we had a certain amount of burn, a certain amount of cash. You know, she was just quick to fire like, you know, almost everyone until she had better data. It was extremely painful. Like we had spent months recruiting, you know, like I don't think we had spent like 9 months recruiting a VP Eng at that time and all these people. You know, but to her credit, I, you know, like that saved the company because there was just so much uncertainty for such a long period of time and we just didn't have that much cash, you know, to, to kind of get through that window. So I think some of these hard calls, you know, yeah, are, are what's necessary sometimes, as painful as it can be.

It's going to be helpful. We'll try to get in 2, 2 quick questions if we can. Hey, Molly, do you want to come on? Sorry, raise your hand.

Molly, founder of Recess. It's a marketplace for kids' classes and camps. We've raised $4 million to date. And, um, one of the things that I've found in investor calls that's coming up is this question of kind of when mass consumer agentic purchasing is happening, will, will that cause just mass disintermediation? I would say our thesis is that the agent will go wherever compute is cheapest. And so if we are the repository of, you know, canonical structured real-time inventory, It will still come to us, and that is sort of the barrier to disintermediation. But I don't know, sometimes that argument flies, sometimes it doesn't. I'm curious to get your thoughts on that and how you're thinking about marketplaces in that way. Appreciate you asking the question. You know, in some ways, I personally, as a large DoorDash shareholder, saw this happen where there was a research paper that came out that said all these marketplaces, they're going to get disintermediated, you know, and it led to Tony actually having to like publish the paper to go, I don't know what the fuck you guys are talking about. Like, you know, using the You kind of using like a, the cheesecake, like story, the Cheesecake Factory story I told you. It's like when you actually dig into like the 25 things that, you know, DoorDash does, you know, in one part of the marketplace, let alone all 3 parts of the marketplace, it's unlikely that like any agent is going to like disintermediate them. At least that's what I believe. So I just think I would encourage you to bring the story to life with like, yeah, you know, if you're aggregating the supply and you have the integrations, then you have, you know, people have been, you're the system of record of like, You know, I don't know what spots they have and do they deal with allergies or, you know, blah, all the stuff, blah, you know, that's like in your business. I just think marketplaces are probably, you know, much safer than, you know, these other areas that we're talking about when the cost of software, you know, goes to zero. I think a lot of, you know, software products are likely going to get disintermediated in some ways, but I don't know. I mean, I still feel like there's so much you're doing on the ground to make the marketplace work, to offer all the availability in one place, to create this experience that I'm more skeptical. And I just think it's how you tell the story that may turn folks around and get them more excited that actually the agents will be booking on your platform. But like, you know, the chances that they actually go direct and disintermediate you, it just won't be worth the economics.

Hey, I'm not going to say you raise your hand. We'll try to get in this one last question.

I'm the founder of HelperGenie, which is a platform to find vetted and culturally compatible help that's largely been offline and fragmented right now for childcare, eldercare, cooking, and household help. It's mostly due to the barriers that they've had for language, literacy, tech. And so now the big unlock here is what you said, AI agents for vetting and onboarding and matching and support going forward as we scale. But the early key stages are all about building trust in the communities that we work with. And so that's the approach that we are taking. And I wanted to understand, you mentioned both of these things separately. So have you seen any strategies that have worked well for these kinds of businesses? When does the mix of AI come in? I maybe date myself, but I do think there's companies like Urban Sitter and others that are probably worth, you know, to the extent that, you know, studying, you know, in that often, This idea of like, do other people that I know, have they used this babysitter? You know, what are their reviews using the, the early on they use Facebook Connect. So it's like, oh, I trust other moms that I know, or, and they're creating other affinity. So maybe I don't know that mom, but they're part of the same school as my kid and I can ping them or, you know, all these like related affinities. So, you know, to extrapolate that to you, it's sort of like if I'm, yeah, an Indian mom, I care what other Indian moms think and, you know, You know, so I, I think there's definitely something there as it relates to the AI side. I'd say it like, you know, clearly one of the key features with AI agents is language. And, and, you know, so you may be able to test a number of, you know, different areas, you know, all kind of all at once. But yeah, nothing else, you know, specific. I feel like it's kind of early days still on the AI side. As I mentioned, it feels like the next 2 years or so, you know, maybe the next 5 years, are going to be when we're seeing more interesting companies. Sounds like companies like yours that are experimenting here. But, but yeah, not looking backwards, there's not much I can point to.

That's a great last question and a way to wrap things up. I know we're almost out of time, but, you know, huge thanks for taking time to join us today for the group chat, you know, sharing all of your awesome experience and also helping answer some of the questions that we had during the group Q&A. And I wanted to ask my usual closing question, which is if you could go right back before you entered the world of marketplaces and invest in some of the most notable ones like DoorDash, you know, what would you tell yourself about them?

You know, I still just think marketplaces, you know, in terms of just like how they create economic value and touch so many people out of nothing. Sometimes it feels like, you know, it, they make, you know, I don't know, even for resort guys, like we just make money out of nothing. And these hotels have been around for a long time, you know, and when you can create new supply, you know, it's, it's just been super rewarding and fun. And as you know, when it creates a delightful experience for all sides of the marketplace, they're just, you know, the most fun businesses to be involved in. I wish there were more that we could paint the path of them being You know, big fund returners. I, before this talk, I actually just, you know, was ChatGPTing like, what are the, you know, what are the big public marketplaces? They're just, you know, there's not like hundreds of public companies in the marketplace space in the way that there are with, you know, I don't know, banks or other, you know, areas. So, you know, it's both amazing that the network effects kick in and you can have these winner-take-most characteristics. I wish there were more of them. I wish I was involved in more of them. So I'm grateful for all of you working on marketplace companies out there. I wish you lots of success. And, you know, to the extent that you ever think any of them really have a shot to be, you know, massive, you know, would love to be in touch.

Yeah, certainly. That's great parting advice and encouragement for us all. And then I guess last but not least, you know, time for a quick plug. Where can we keep up with you and follow along at?

I'm not huge on, on, on the, you know, social media and stuff, but, you know, happy to revisit, you know, come back on the podcast at some point. Or you could always, you know, try and reach me on Twitter or email sar@crv.com.

Awesome. You have lots of founders coming your way. We really appreciate you taking time to join us today and paying it forward Founders.