Investing In Venture Scale Marketplaces With Jett Fein From Headline | EM Group Chat #153

So welcome back to Everything Marketplaces, where we talk with founders and leaders from some of today's top marketplaces. So this is episode 153, which is a really great group chat that we just had with Jet Fine, who's a partner at Headline. So Headline is a leading venture fund that's invested in notable marketplaces like Gopuff, Farfetch, Rappi, Shipt, The RealReal, and more. So this is really a great chat with Jet where we started off by discussing what make marketplaces great businesses from the investor point of view. We got to learn more about Headline as a leading venture fund, what they look for in marketplaces that they invest in. Jet shared some of the biggest mistakes that he sees early-stage marketplace founders often make when fundraising. We covered some specific trends and opportunities for marketplaces. We also had a great group Q&A. So really enjoyed this conversation. Now you're going to find it a great watch to the end. So Jet, welcome to the group chat, and this is long overdue. So I'm really excited to have you join us here today and would like to start off by saying a huge thanks for taking the time to do so in advance. So before we really dive into Headline and more about what you look for in marketplaces when investing, I think it might be great if you can start off by briefly sharing your background for those that might not know you here.

Mike, thanks so much for having me. It's great to see some familiar faces and names on this group chat. Really exciting to see those names and faces. Yeah, sure. So for those of you that don't know me, I'm Jet Fine. I'm one of the partners at Headline. We are a global venture capital platform managing about $4 billion of assets under management today across our funds in the US, Europe, Latin America, and Asia. We invest across many different sectors. So, you know, consumer internet, fintech, infrastructure software, vertical software, And, you know, over the years, marketplace business models has been, you know, one of the models that we remain very attracted to and have had a lot of experience investing into. So companies in the portfolio that many of you may be familiar with are companies like Farfetch, The RealReal, GoPuff, Playbook, you know, even a company like Bumble, Deposit Solutions on the fintech side as a marketplace. So many of different flavors, different stages, and different experiences. We invest product market fit and later. So early signs of product market fit could be seed, could be Series A, all the way through the growth stage. And we support founders and companies all the way through exit with both capital and our experience and network. So I'm happy to dive in further, Mike, but that's a quick snapshot on Headline. I've been with Headline for a little over 10 years now, leading early-stage investments across the consumer internet and software with a particular love for marketplace business models.

Yeah, that's a great kind of background and definitely some notable marketplace names that we all know of. So a lot we're going to get into here, but I guess, you know, to start with, you know, what initially attracted you to marketplaces? And, you know, from an investor point of view, you know, what do you think make them great businesses?

You know, the internet was basically built for marketplace businesses, right? I mean, if you think about sort of the best use case of the internet, it's almost, it's to connect people, right? And fundamentally, The internet is made for connecting people. And so initially you had, you know, suppliers connecting with consumers and businesses. What I think is particularly exciting now and has been for some time obviously is the ability that marketplaces give to folks to kind of become their own business, right? Earn a living on their own terms. And a well-executed marketplace can help sort of elevate the livelihoods of people all around the world, give them a platform to monetize, find customers. And so fundamentally, I think that's what's quite exciting. You know, I think none of this will be surprising to anyone on this call, but marketplaces are a great business model because fundamentally they create these network effects, right? That, you know, every additional sort of node that you add can create a better experience for everyone else. And so they scale quite nicely. Marketplaces also have a way to become winner takes all or winner take most in a market. And so I think from the venture capital perspective, that's incredibly exciting, right? Because you can produce absolutely enormous outcomes If you invest in the right and the winning marketplace of a particular category. And so that's one of the reasons why VCs like marketplaces. That said, they are one of the harder business models to execute well. You have to match supply and demand. Oftentimes supply is quite constrained. And so you have to figure out hacks to sort of build supply scalably. And so So they make for really hairy, challenging, but fun and worthwhile business cases.

Yeah, no, that's great. That's a, you got some head nods here, so it's definitely relatable when you said challenging. So we're going to jump in a little bit more as far as, you know, what you specifically look for in marketplaces that you invest in. But I guess, you know, you gave us a very brief kind of overview, but could you share a little bit more maybe on the headline as far as like a fund? you know, what marketplace type that you look for, kind of stage you invest at, check size, et cetera?

We're pretty opportunistic. So I think we're very open-minded to marketplace business models across the sectors that we care about. And so everything from consumer marketplaces like The RealReal and Farfetch to B2B marketplaces that we have an investment in a company out of the UK called Novota. That's a marketplace in the diamond space that's helping connect diamond cutters to diamond retailers and suppliers and brands, right? And so very, very opportunistic in terms of the sector. I think, you know, the dynamics are fairly translatable across sector in a marketplace business. With some nuance, of course. So we will look at B2B and B2C marketplaces across sectors, across geographies. In terms of the stage, and I don't know if I'm jumping the gun here, Mike, but in terms of the stage that we look at, you know, we are, we're very focused on determining quantitatively the early signs of product-market fit. And I think this is something that we have become more and more focused on in the past several years as we've sort of honed our own investment focus. So, you know, generally what that means for us is we want to see emerging signs of repeatability in the business model. You know, I think if you think about it from the investor's shoes, an investor like us needs something that we can hang our hat on to say there are emerging signs of repeatability and scalability in this business so that if you invest a dollar into this particular effort, whether it's paid marketing, supply acquisition, whatever it might be, that you're earning $2 back, right? Or $3 back, right? And we need to see those signs start emerging. And, you know, we have developed a process at Headline that we think does that fairly effectively. You know, it tends to mean that, you know, really early stage marketplaces, right? Obviously pre-launch or pre-product is not going to be a fit for Headline. But certainly there's some flexibility in terms of the stage if we can see Those emerging signs of repeatability and scalability.

Yeah, no, that's going to be really helpful. And I guess, you know, if we, you know, I would say kind of double-click on that a little bit. So when you're looking for those signals, you know, what are some of the specific kind of metrics that you're looking for? And maybe if you want to use an example, if you can, for a marketplace.

So fundamentally, our belief is that a business generates real enterprise value, any business, that is this is marketplaces, non-marketplaces, any, a business generates real enterprise value when there is a segment of customers or users that come back and transact, fundamentally transact over a very long period of time. And so what does that mean? So that means that if you look at the retention curve, of your users. And in marketplaces, obviously you have 2 sides of that, right? You have a supply and a demand side. But fundamentally what it means is that when you look at the retention curve, that that retention curve flatlines, right? And it doesn't continue to trend down to zero. So we are less concerned about at what level that retention curve flatlines at. It could be 2%, it could be 50%, it could be north of 100%, but it can't continue to trend to zero. It has to actually asymptote. And, and why? Because, because that means that there's an end customer or user of your platform that's getting long-term value, right? That there's a subset of customers. And again, it doesn't matter whether that's 10 customers or 10,000, but that there is a subset of customers that's getting very long-term value. And so we need to be able to see that emerging flatline in the retention. And so, so in a marketplace, what could that mean? So that could mean a few things. That could mean that on the demand side, that customers come back over and over and over again, right?

And purchase.

From your supply side, right? That there's a subset of those customers that come back over and over and over again and continue to purchase. On the supply side, that means that you have a supplier, a vendor that over time sells more and more and more and more product, right? To the demand side. So those are the kinds of things we're looking for and we need to see those emerging signs Really in any business that we look at.

No, that's definitely going to lead to some questions here when we get to the group Q&A. So I guess, you know, kind of zoom out, if we say, you know, like Series A, and of course, you know, as founders, we kind of hear about the kind of, you know, the benchmarks or kind of goalposts being moved out a little bit more, you know, what are those kind of general kind of, I would say, like benchmarks kind of look like for raising a Series A and maybe with kind of consumer marketplaces?

So I think, you know, Part of the answer to this question is probably going to be unsatisfactory, and I get it because I don't have a— there's not like a headline GMV number that I think, you know, a marketplace has to have before it becomes interesting to me. More importantly is the retention behavior like I just described, right? It's starting to see that asymptotic retention on the demand side or on the supply side, right? And seeing that both sides of the marketplace are getting value, long-term value from the marketplace. And so to me, it's actually, it's not about GMV. I mean, obviously GMV is the metric for marketplaces, right? There has to, you know, that's sort of the best That is one of the best proxies, but it's it's not about sort of an absolute GMV number. It's it's about it's about understanding really through the data whether we believe that there are early signs that that the customers or the suppliers are getting value from the the platform, and so. You know, I get asked this all the time. There's not a headline GMV number that we have to see. There's really not. I mean, we've invested very early in marketplaces. When we invested in The RealReal, for example, we were the very first investor in that marketplace. You know, I mean, it was less than a few million dollars in GMV annually. I mean, it was very, very small. But it was clear that there were some emerging signs that the consumers were obsessed with that platform.

I'm glad you mentioned an example. So it's always cool to hear about, you know, the early days, kind of, you know, a few million in GMB and then, you know, later at the public stages. So what about, you know, as far as like founders, are there any kind of like specific traits that you look for in founders when investing?

That's always a good question. I I kind of like to say, you know, when you see it a little bit, right? I think founders and what I've learned over my career is that founders really do come in lots of different types. I mean, really, they do. And we're quite open to all backgrounds. I think if you actually at Headline, if you look across our portfolio and you look across The, what we call the drivers of our portfolio. And now I'm probably talking more about the consumer businesses, but, you know, the founders come from all walks of life. In fact, the best performing companies in our portfolio, the founders don't match any pattern. I mean, they didn't all go to Stanford, they didn't all go to Harvard, they didn't all come out of Uber or Airbnb. And They don't all, uh, in fact, the vast majority of them don't live in Silicon Valley and aren't building their businesses in Silicon Valley. They build businesses in places like Memphis, Tennessee, Jacksonville, Florida, Madison, Wisconsin, Philadelphia. Um, and so maybe more than most, I mean, we are extremely open-minded. Um, what I like to say is that, you know, product-market fit is an incredibly elusive characteristic of a business. And when any founder can successfully get their business to product market fit, that founder has demonstrated that they're in the very, very top 1% echelon of all founders. It is incredibly hard to do. And so if you've gotten a business to product market fit, you've already kind of made it to that top 1%. And And really the proof's in the pudding at that point, right? And so we're very, we're much less concerned about pedigree. We're much less concerned about where you went to school, what you did before. We're excited by novel approaches, big markets, repeatability, and of course, early signs of product-market fit.

Yeah. Now, so you've of course seen, you know, a lot of pitches, so many that I'm sure you probably lost count of at this point. So are there any specific kind of mistakes that you see marketplace founders commonly make when they're fundraising at the earlier stages?

I think to me it falls into 2 buckets. So as a founder, you at the same time have to be at 35,000 feet and you have to be at like 1 inch, right? And the mistake that I see often is people tend to really Optimize for one of those two, and so recognize my my advice would be kind of recognize where your strengths are. You don't have to be excellent at both, but you have to be capable of both, and so make sure that you're able to get to the 35,000-foot level and tell the story. Really paint the picture. And the vision of what this could be if you succeed, right? I think for an investor, there's nothing more exciting than leaving a pitch meeting and thinking about, wow, you know, that business could be a $10, $20, $30 billion business, right? You know, if X, Y, and Z happens. And so you do have to be able to tell that story. The second thing is you have to be able to be at 1 inch, right? And you have to be able to point to where in the data there are those emerging signs of repeatability because an investor like myself is an internal salesperson, right? Every investor is, for the most part, is part of a partnership. Partnerships make decisions together. And so after a pitch meeting, that investor has to go back and sell his or her partners. And so there needs to be something for that investor to hang their hat on to say, there is an emerging sign that this business is scalable, that it's working, and here's why in the data. These are the facts. And the founder has to be able to credibly talk about Those things that are apparent from the data and the execution to date. And so you have to be excellent at one of those, capable of both, so that the investor can really build conviction both for the larger vision, but also the things early days that he or she can hang their hat on in the data.

Yeah, this is gonna be a really helpful tip. So we're actually gonna just jump into questions here in a little bit because I'm getting quite a few messages and I promised founders we'd save a lot of time for the group Q&A here. But, you know, kind of before we do though, are there any specific kind of trends or maybe opportunities for marketplaces that you're specifically excited about?

I mean, we're constantly seeing exciting marketplace opportunities. I think we're, we at Headline actually tend to be a little less trend-focused. We're much more opportunistic. It's sort of like I mentioned, it's It's when a founder, you know, we're never going to be smarter than the founder, right? And so we put a lot of trust into founders and we don't try to, we don't have this crystal ball that we, you know, sit around at a table with and try to predict kind of the marketplaces that founders are creating. What we try to do is recognize when lightning strikes, right? And when something really is in the early phases of working. And so I would say that we're actually just honestly less trend-focused and more keyed into recognizing when that lightning has hit. But I can just tell you, you know, some of the most exciting marketplace businesses that I've seen over the past 3 months have ranged from, handicrafts on the consumer side to healthcare navigation. You know, I mentioned Novota in the diamond space. That business is doing fantastic, you know, and lots of kinds, you know, and lots of sectors in between. I mean, you know, it really ranges and we're seeing new and new subtypes of marketplaces Every day and we'll follow the founders kind of where they lead us.

Yeah. And there's certainly so many different marketplaces, so we have quite the mix in the community as well. So actually had a question that someone just sent me earlier, but it was kind of around being capital efficient and being aggressive with growth. So of course, being capital efficient right now is very important and it seems to be more so for investors. So yeah, so how do you advise or recommend founders think through Capital efficiency and kind of balancing growth.

Capital efficiency in our minds is probably one of the strongest predictors for success long-term. And so, you know, it's up, I talked a lot before about repeatability and retention. I would say that the, you know, the sibling to retention, if you will, is capital efficiency. It's as important to us. And so, I mean, what does that mean? I mean, that means for, you know, every dollar of spend, you're generating as much as possible, right? In growth, in profit, right? Whatever that might be. And so the best founders that we see are the ones who are able to find scalable growth hacks utilizing as little capital as possible. And it can mean so many, so many different things. I mean, you know, I'm involved with a company based in New York called Playbook. It's a marketplace for fitness and wellness creators, right? So think of the top, you know, Instagram influencers that are in the fitness space, right? They're selling content, courses, merch to individuals that want to purchase that content. And, you know, they were always undercapitalized as a business until we invested. And the founding team was just incredibly scrappy with building the supply side. It was hand-to-hand combat, right? Just real nonstop supply side acquisition of those creators. And it's not scalable long-term, right? They've had to build a lot of structures that are scalable to acquire supply. But in the early days, that's what it took to get the business to where it was that made it interesting when we came along. And they spent very, very little capital doing it. And so it was a very positive sign that they were able to build such a robust supply side on such little capital.

Now, that's going to be super helpful. That's a great example too, with Playbook. I was actually going to ask about Playbook. So cool. Hey, was that Preeti? Do you want to come on?

So my question, quick intro. I'm the founder of Adventure Tripper. We are a travel as a service platform. which enables creatives and brands to leverage trends towards outdoors fitness to build stronger, deeper communities, more engaged communities, and also enhance their revenue. My question is, you know, you are opportunistic about where you invest in rather than focused on certain, you know, niche areas. How do you then provide the founders the support for somebody's— something like travel and, you know, which could be very nichey? That was one. And a related question is because you do have presence across different continents. For me, for instance, India is the fastest growing adventure travel market. How do you enable the cross-pollination between, you know, the founders or what you're seeing in different geographies? So just curious about, you know, more around the support you provide to the founders in your portfolio.

Good question. Great to meet you, Preeti. Thanks. Thanks for the question. There are a number of of ways that we help founders. I think we can start with sort of the global aspect. I think most marketplaces that get started today kind of have the opportunity from day one to be global. And certainly, you know, we have teams in Europe, in Latin America, in Asia, and We've helped many portfolio companies expand internationally. We have a great marketplace business that's based in Brazil called Gympass.

Yes.

Sure. So, you know, Gympass. So that was a business that got started in Brazil. We were a very early investor in that business. They wanted to come to the US, they wanted to go to Europe. We helped them set up infrastructure in both those regions so that they could expand into those regions. You know, Farfetch was the same way. You know, they got started in London. They wanted to go to Asia, very big luxury market, obviously. We helped them set up infrastructure in Japan, which was where they wanted to go. We helped them hire their first GM in that region to set up Farfetch Japan. So those are kind of like the tactical things we can do. I mean, the other things that we can do, I mean, we've seen so many marketplace businesses, sometimes the best best thing we can do is just provide advice and help with blind spots. But I will say, I mean, fundamentally, you know, fundamentally we don't run businesses ourselves. We try to, we really try to trust the founders that we partner with to run the businesses. And so we will help where we're asked to help, but we certainly will not you know, we won't get in the way. We won't, you know, run the business for the founders that we partner with. And I don't think the founders that we partner with want that.

That's a great question. Thanks. Hey, Amanda, do you want to come on? So you sent me a message.

Yes.

Do you see more of an appetite for like a managed marketplace or SaaS-enabled marketplace or some of these like subtypes that are more hands-on or hands-off?

Yeah, I mean, I think, I think, you know, we've seen success in both, both types of marketplaces. And again, like, I think there are merits and challenges to both, and it really depends on the category. It depends on the sector. We're very open to look, I mean, in fact, our team is looking at both a managed marketplace right now and sort of more of a software-enabled marketplace. I think, you know, I think actually the more complex the marketplace, The more, I mean, it's sort of obvious, right? The more opportunity there is and the more risk there is, right? And so, you know, on a managed market, you know, if there's a, you know, I think that's something we tend to think about a little bit too is, you know, this is a really hard marketplace, but if they get it right, it could be a really, really massive outcome. So I don't, You know, it's a hard question to answer because we tend to look at both. We are super opportunistic, but we're quite flexible in what it is that we're looking at at any given time.

Great question. Thanks, Samantha. Hey, Jay, I actually had a somewhat related question that a founder posted in the community in advance, and it was on the competitive nature of marketplaces. And, you know, some funds kind of like picking a winner when it comes to like an opportunity. And it's somewhat related as far as, you know, there might be multiple kind of players in the space and, you know, taking kind of different strategies or kind of, I would say, you know, approaches kind of tackling that opportunity. So, you know, how do you think about, I would say, like picking a winner in the competitive nature of markets?

Yeah, I mean, this is one of the hardest things, right? And this is what separates really good venture capitalists from the not so good ones. I think in the long sort of arc of time is this question of picking, right? It's quite challenging. And, you know, it's true. I mean, over my career, one of the interesting things I've noticed is that oftentimes a lot of founders tend to kind of cluster around similar ideas. And so at the early sort of innings of a particular marketplace in a sector, you get actually a lot of innovation, right? You get a lot of teams working on something fairly similar. And so For an investor, you have to be able to pick, and it's worthwhile thinking about as a founder too, right? An investor that you're talking to might be looking at a category, right? And so how do you stand out? The only thing I could say, Mike, is that it's all in the execution, right? And I think it's sort of like I said earlier, the proof's in the pudding when you look at the data, right? There's, you know, I was talking to a founder the other day who was trying to figure out whether they have a very close competitor. They were trying to figure out whether they should, you know, spend more time on LinkedIn, you know, being a LinkedIn influencer trying to do a lot of press, trying to really, you know, become more in the zeitgeist so that they can compete with this other competitor who's doing a little more of that. And my advice to them was just focus on the product because the product will win at the end of the day. It always does. If you provide a better platform for your end customer, That will go much further than any marketing, any LinkedIn, any tweeting that you can do. And I really believe that. And over a long enough time horizon, I think that is true. And so my sense is that the way an investor picks and the way that I pick is I look at the data. And I spend time with the founder and I try to sort of balance that 35,000-foot perspective with that 1-inch perspective and make a decision based on and triangulate what I'm hearing at both of those levels.

That's great. So I'm glad you mentioned, you know, as far as execution and not posting on LinkedIn instead of me having to say that. So something that comes up quite a bit here in the community. So Well, cool. Hey, uh, Dimitri, do you, uh, do you want to come on?

I have a question, uh, about Playbook, uh, and kind of one of the most interesting things I've seen them do is this revenue sharing agree— uh, kind of arrangement that they had to incentivize trainers to bring in their existing customers to the platform. So if you're a trainer, you bring a new customer on, um, you get a share of the revenue from the other trainers. And I was curious kind of how, you know, this came about. Well, like what are some of the other things they were considering and how this was chosen? Or maybe if you've seen successful tactics for, you know, supply bringing on demand or demand bringing on supply at other marketplaces, maybe if you can kind of talk about how to do best to accomplish that.

Yeah, I mean, without sharing, you know, maybe the specifics about, about About Playbook, I will say that that was, you know, I mentioned sort of how capital efficiently they were able to kind of get to scale in the early days. And certainly part of it was this unique aspect of their business where their supply side acquires their demand side. Basically for free to Playbook, right? I mean, they acquire the supply that costs them, you know, time, which is a real cost. And then the demand side is kind of acquired organically through the creators themselves. They're really, really beautiful way to grow. And actually, I mean, that's one of the, I mean, that is one of, I mean, that's, as many of you know, I mean, that's one of the tactics of successful marketplace businesses, right? Is through supply, right? You know, rope up as much supply as you can, the best supply, the most unique supply, have things that nobody else has. Which acquires the demand. And so Playbook was able to do that very effectively. And then I think to your point, Demetri, they did utilize this model that had not, was not completely novel. I mean, Spotify sort of pioneered this concept of the shared earnings pool, right? So So, you know, artists make money on Spotify when you listen to them, but there's also a pool concept. And so that was the same for Playbook as well. And again, without going too much into it, it hasn't been without sort of hiccups, I think. I think some creators are reluctant to share with other creators. They feel like if they're acquiring users to a platform, those users should be theirs. They don't love the idea of those users jumping to another creator, right? And decreasing their earnings over time. And there's a lot of experimentation and nuance that that company had to kind of go through to figure it out. But I will say that the unlock for them, and so something to consider for all of you is just utilize that supply side to really acquire the demand. It was the same thing with The RealReal, right? I mean, The RealReal in the early days, I remember Julie Wainwright, The founder there, you know, struggling. And that business has always struggled with supply. But in the early days in particular, she had to go and, you know, she partnered with celebrity stylists in LA. You know, I remember walking through The RealReal warehouse and walking through racks and there were labels. One said Paula Abdul, right? Because it was Paula Abdul's closet. It was a way to use unique supply to acquire demand. So I don't know if that, I don't know if that directly answers your question, but that's, those are some thoughts.

Awesome. Hey, Justin, do you want to come on?

Thanks, Mike. And thanks, Jed, for sharing all of your experiences around this. My name's Justin. I run a volleyball game/event marketplace. Curious about your points around retention. So when you're talking to founders, how do you typically like them to present that information? Are there certain time periods you look for? Are there certain cohorts? I assume you probably like it around payment retention. So yeah, I'm just curious how you typically go about that.

We've developed a pretty standardized approach at Headline that we like to use, which we've now open sourced. So you can also use it yourself if you go to deepdive.headline.com. A little plug for Deep Dive, which is a product that we build internally. We have a team of almost 20 full-time engineers here that build products for us. So To answer your question, Justin, so there are different, you know, kind of work backwards. You mentioned transaction retention. You know, we love to look at transaction retention if you have transaction retention, right? Some marketplaces actually aren't, you know, revenue generating yet or the revenue's really nascent, But there's a lot of activity that's going on on the marketplace that we can extrapolate from. And we're more than happy to do that. In fact, we think that activity and engagement with a platform actually in the early days matters almost more than revenue. And so if there's activity, so say you're a booking, I don't know what kind of volleyball I don't know what marketplace you are, Justin, but say there's a lot of booking happening on your marketplace, right? But no revenue. We'll look at activity. We will look at how often your hosts are making new games for people to sign up to, or we'll look at how often your players are discovering games. And we'll take all of that data in, in a raw transaction file. And we'll create, we'll cohortize it because that's a more digestible way to look at retention. So we'll look at, you know, I'll just make up an example for, I guess, based on Justin, what you shared, maybe it's by month that your volleyball players joined the platform, right? So we'll cohortize it by month that they joined and then we'll look at how frequently they're engaging with the platform and we'll work with founders to determine an activity metric or an engagement metric that makes sense for your specific marketplace. And that metric should be, what is the core unit of value that your customer is getting from the marketplace? And that's the metric we'll use. We'll take that raw data, we'll cohortize it, and then we'll just run a cohort retention analysis. And we're looking again for that flat line Or, you know, or better of activity. And so I would encourage you, I mean, we released Deep Dive a couple months ago and you can go in there and input your own data. Headline does not have access to it. That's yours. It's private to you. If you want to share it with us, you're welcome to, but you can run the kind of analysis that we would run when we are evaluating a company.

Yeah, I'll make sure I include a link to it here and share it. So I'm sure that'd be super helpful. So cool. So we have time for one last question, I think. Hey, Michael, do you want to come on?

Thanks, Mike. Hi, Jed. Thank you so much for Sharing your thoughts with the community here, and I'm definitely going to check out Deep Dive.

I—

maybe that will answer my question, but I wanted to follow up on your repeatability, and I thought it was interesting you said that you look for that. It could be on the demand side, or maybe it's on the supply side. So I get— are you saying it doesn't need to be— you don't need to see repeatability on both sides?

You would be—

Like, I know every case is unique, but it could all, it could be maybe just on one side of the marketplace. And then with that, sometimes marketplaces cast an initial wide net on like, say, the supply side and you'll have repeatability, but it might be like, let's say 100 out of 1,000. Would you rather see repeatability like 50 out of 100? Like, do you look at the percent? I guess that's sort of like an add-on question.

Yeah. So let me start with your first question. I think it might answer the second question. The answer, Michael, is it really depends. And, you know, typically in a marketplace business, we'll work with the founder to understand the model such that we know how to pivot the business, if that makes sense. So for example, let's take Etsy for example, right? It's a marketplace everybody's familiar with. You know, with, you know, a marketplace like Etsy, you know, consumers might come to Etsy once a year, maybe less, buy something. Maybe they'll come back multiple times. Maybe there's a subset of end customers that come multiple times a year and buy lots of things, but looking at it from a consumer retention perspective probably isn't the best way to look at Etsy. The best way to look at Etsy is on the seller side, right? It's pivoting that business on seller retention and understanding over time, do sellers retain and do they actually sell more and more and more over time, right? And so that's how we pivot retention in a marketplace like that. And so we'd be much more concerned with the seller retention and we'd weight seller retention much more heavily than consumer retention. And if there's consumer retention, fantastic, right? And obviously that helps, but we would care much more about seller retention in a business like that.

Okay. Yeah, that makes sense.

Thank you. Awesome. Great last question. Yeah, thanks. Thanks for trying to walk us through that, Jet. So I know with marketplaces, it's always, it depends, right? So definitely, I appreciate taking the time to join us here today. And I know we bounced around a little bit, but covered quite a bit here. And I know it was super helpful for founders. So we definitely appreciate it. You know, I actually had one last question for you before we wrap things up. And that's, if you could go right back to before you joined Headline, you know, what would you tell yourself about marketplaces specifically?

I think I would've probably, I don't know what I would've told myself. I would've been surprised knowing what I know now, how beautifully complex these business models are, right? I mean, they are, they have the potential, they are the most interesting and exciting business models, I think, for venture capitalists. I think they will continue to be that way. And we didn't even touch on AI and I feel a little neglectful that I didn't, but particularly with AI, I think they're going to become even more interesting. Again, sort of what I said at the beginning, the internet was made to connect people and that's what these business models do. And, but what I've learned is how complex they are. And for a VC, it's the most exciting thing because complexity equals risk, which equals upside. And that's what we're here to do is partner with founders that create the biggest companies in the world. And we are comfortable taking risk early. And so I think I would've probably been surprised by how complex they are and also how much impact they can have on people's lives.

Yeah, no, that's great. It's going to be great kind of parting advice for us here as well. And I'm sure we'll have to do a follow-up at some point just discussing discussing AI, because that could be a whole conversation in itself. So then last but not least, yeah, time for a quick plug. Where can we keep up with you at?

You can find me on Twitter, LinkedIn, and jet@headline.com.

Awesome. Well, I'll include all the links here in the recap post and the recording. So you'll definitely have a lot of marketplace founders and teams coming your way. So thanks everyone for the great questions. And thanks again, Jet. We appreciate it.