Max Brun discusses how early-stage marketplaces scale. The conversation covers building atomic networks, choosing between expanding to new geographies or adding services, and using GMV curves across multiple cities to prove a model works before raising more capital.
Chapters
So this is a good kind of segue into, you know, assuming that, you know, it's an early stage kind of marketplace that you, you know, you do, you know, have that like kind of initial atomic network, you know, one of the next kind of like things to think of, you know, that a lot of us here think about is, you know, as far as potentially layering on new use cases, services, or expanding, you know, locations, right, as far as geographies. So how do you kind of think, you know, when you're chatting with like early stage marketplaces, do you kind of help them think through this?
Yeah, I think it depends on what you're trying to do. I think that there is a world where you have decided that your core thing is working. And if your core business is working and you've been able to build an atomic network, then the question is, okay, well, how well can you build a second one or a third one or a fourth one? And what's certainly easier is to take the atomic network that you've built in one place, whether that's, again, that's one campus or one city or one team, and to just build a second copy of it. And you're really just copying and pasting. I think that is itself hard enough, but that is relatively easy compared to layering on an additional service or product. That tends to be— you're taking on real market risk by doing that because you just don't know if that's to be possible or not. And so I think, you know, the usually kind of from a staging standpoint, what I would say is the seed round is really for getting your initial product to market. Your Series A, where usually what we are finding is we're usually doing them between $3 to $5 million in gross revenue in GMB. And when we do the Series A around that, Typically, they're maybe only in one market. They might be in a market and a half or something like that, but we don't expect them to be in 3 markets or 5 markets or 10 markets or whatever. And they're raising something in the realm of kind of like $10 million plus or minus. What we find in the Series B though, once we get into like kind of a growth stage, if it's, you know, if it becomes kind of more of a stretch, it becomes like a $20 million raise, $25 million raise. then you're really expecting, okay, the copy and paste machine is really working. And not only do we see this company in multiple cities or multiple teams or multiple campuses or however way you want to cut it, but also they're able to replicate this very consistently. And so one of the things I'll often ask for is some kind of a GMV on the y-axis, And then the x-axis is time. And then you have multiple lines, each one is its own city or each one is its own team. And what you want to see is that every single one of these new networks that's being up and running is working better and better than before, is one of the things you start looking for. And so oftentimes, to finish off your question, it really just depends on the timing of all these things. And I think I tend to be very realistic about what you can accomplish early. And so early on, I tend to not push for too many new products or too many new geographies, because as long as you— if the market is big enough, you should be able to take an individual vertical, whether that's again a city or campus or whatever, and you should be able to show that that individual atomic network is worth Hopefully tens of millions of dollars, because if you're copying and pasting a bunch of those, you're going to eventually run out. And you want to make sure that each atomic network is valuable enough on its own so that when you replicate it 300 times, you're able to get something where the GMB is in the billions or tens of billions.
