Marketplace Investor Insights With Andrew Blachman From Marketplace Capital | EM Group Chat #213

Welcome back to Everything Marketplaces, where we talk about founders and leaders on some of today's top marketplaces. So this is episode 213, which is a group chat that we just had with Andrew Blackman, who's my partner in Marketplace Capital. Marketplace Capital is an early-stage venture fund that we backed over 30 marketplaces so far, including Solace, Palm Street, Teach Me To, Bear Street, and more. So it was a great chat with Andrew. We went back to his key learnings as a marketplace operator. He shared about Marketplace Capital as our venture fund, what we look for in marketplaces when investing. We discussed the current state of fundraising, lots of topics like the importance of distribution, Defensibility in the age of AI. Andrew shared lots of tips for founders, and 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 Andrew, I realized it's been a few years since you're a past group chat. It's also before we formally launched Marketplace Capital. Yes, this is a long overdue, and it's great to have you join us here today. We have a lot that we're going to dive into with your marketplace operator investor experience and a few topics. I thought it'd be great if we could start off by briefly sharing our background for those that are newer to the community and might not know.

Yeah, I think I've met some of the folks I see joining. My background is mostly as a marketplace operator, you know, like all of you. I built a few marketplaces in my career, some with a lot of success, some with less success. And so I learned lessons on both sides. And then about, I'd say, 4 years ago now, 3 and a half, 4 years ago, Mike and I met and decided to launch this fund called Marketplace Capital. But as an operator, the biggest success I had is I built a ticketing business called GetMeIn, which is like a secondary ticket marketplace in the UK and Europe. We grew that and then I sold it to Ticketmaster and then ended up running Ticketmaster's international resale marketplaces and sort of just learned a ton about marketplaces, network effects, fell in love with the category and then ended up angel investing in a bunch of other marketplaces as a result. So I ended up angel investing in probably about 20 different marketplaces over a decade. And so then came back to the US, thought this marketplace stuff was really easy, launched another one, didn't have as much success, got pretty big, but didn't have as much success. And then, yeah, again, I just had the— we had this thesis that marketplaces, when they work, they really, really work, but that they're super hard to build. And so if you had a fund connected to a community that could help you spot breakout companies early and then support them as they scaled, you would outperform. So that's, that's kind of what we're doing.

It's a great background. Of course, you know, it would be fun to talk about Marketplace Capital a little bit, but I did want to, you know, go back to your, you know, your operator experience, you know. So what are some of your key marketplace learnings from, you know, your operator days that you find yourself sharing with marketplace founders?

Yeah, sure. So I think the biggest one and kind of talk about this all the time, and it's actually, it's, it's interesting because it's becoming more in vogue across every category. But the biggest thing that I always talk about is distribution being the key thing in any marketplace and really any business today. And I've experienced it myself where when you have a distribution advantage, you're either early into some new paradigm, whether it be search or mobile or AI or whatever it is where you have a distribution advantage, that is what creates a lot of winners. You're able to get out there and get scale where others can't. Or if there isn't some new paradigm happening, if you yourself have some new distribution or interesting distribution angle that lets you acquire either supply or demand or both very efficiently as you grow, that's the biggest thing that I learned. So my first business that I mentioned, the ticketing business, we were really, really early in the SEO game and we just owned SEO and we crushed SEO for every sort of venue, artist, team across Europe. And so, you know, an event would go on sale and we'd already own the top position in Google. I mean, some of the events hated us because of that. So there's a whole like downside to that. But that was a huge advantage for us. That game is obviously very, very hard to play today, but that game, you know, 20 years ago was one you can win at and we won at that game and we were acquiring demand for essentially zero when our competitors were paying a lot for paid search and paying a lot to compete. So that was one thing that we did that set us apart. And yeah, so that's like the biggest learning I had when I came to the US and we launched Top Hatter, which is a live auction business. We actually got pretty big. Unit economics worked. We were doing it at our peak over $400 million of GMV and we were profitable. But it was always a performance marketing-driven business, and that had its own challenges, mainly that when the economics work, it's fantastic, but when the economics turn, you don't have anywhere else to go. And that's sort of where we found ourselves and one of the reasons why they didn't have a great outcome. So for me, like the number one thing is distribution, distribution, distribution, really trying to understand what the advantage that you have there is. That's the biggest thing I learned. As an operator. Yeah. And then also like on the fundraising side, this is a little bit more controversial, but in my experience, a lot of companies that I meet, a lot of startups that we talk to don't necessarily need to go down the venture path to have success. And that was something I learned firsthand as well. The secondary ticket marketplace in Europe, partly because we had this distribution advantage, we never raised a lot of capital. We raised $3 million total. I mean, that was only when we were, and it was working and we raised money to scale. Whereas my, the live auction business, we ended up raising close to $40 million, which at the time was a lot of money. Now today, maybe it's not a lot of money. That was a lot of money. And that very much restricted our outcomes as individuals and as a company. And so one of the sort of biggest lessons that I try to talk to founders about is whether VC, the VC game is the right game or not for what you're trying to build. And I think especially now today in an age of AI, where you can get so much done with so little, it's even more relevant.

That's going to be really helpful. Probably discuss in a little bit more detail here later on. You know, I did want to shift over to talking about Marketplace Capital in a bit more detail. So could you maybe show, you know, a brief overview for everyone for Marketplace Capital and then, you know, what you or we look for in marketplaces when we invest?

Just for everyone that's not aware, Marketplace Capital is an early-stage fund that focuses, you know, obviously you guessed it, on marketplaces. But actually a little bit, we have a little bit of a more broad view than marketplaces that everyone in this chat might be familiar with. We sort of consider marketplaces sort of any business where the value is in making these connections and the value is in collaboration, not necessarily serving one customer directly. So that's kind of an academic way of thinking about it, but it's more than just like the eBays and Airbnbs and Ubers of the world, although those are certainly marketplaces and that's where we know a lot. But it's a fund focused on marketplaces. We— it's a relatively small fund. It's a $10 million fund. We invest pre-seed and seed stage checks between $100,000 and $250,000. So relatively small checks. We don't lead rounds, we invest alongside a lead, but we think we have the most value to add, especially for kind of marketplace businesses because of the community and because of our own experiences. And so yeah, that's the fund. We are in our 3rd year. It's going great. We're actually about to kick off, well, we're kicking off fundraising for fund 2. So we're excited about performance of Fund 1 and excited about Fund 2. We've invested in 36 companies, I think, so far. And yeah, super excited about it. What we look for is kind of exactly what I was mentioning earlier. We look for distribution advantages. You know, one of the reasons everyone— we love marketplaces and everyone loves marketplaces is when they work, they really, really work. And you get, if you get scale and liquidity, and you become like the trusted place where people come to and you have a reputation layer and reviews and all these things, they're very defensible and sometimes they're very hard to kill. And so that's what we love about them. Like, they're, that's great, but they're also incredibly hard to grow, as everyone knows, because you've got at least 2 sides, maybe sometimes more that you've got to grow at the same time. And so we look for a distribution advantage to get there and then a clear moat once you're there. And this, the super interesting thing is, especially today, you know, in the age of AI, we think it kind of applies to every business really is like distribution is, is as hard as it's ever been and you want to have moats when you get there. Product and things like, you know, software development, coding, that stuff is becoming much, much easier and much more kind of abundant. So that's what we look for. We look for distribution advantages and we look for long-term moats and great founders, of course.

Oh, definitely. And, you know, I did want to spend some time talking about AI because, of course, you know, we've entered the new era for marketplaces with AI. You know, like as a starting point, you know, where are we at today and are you seeing AI impact on marketplaces at the earlier stages?

I don't think I have anything like super insightful to offer here. I think that obviously AI is everywhere. I'm sure everyone here is using it every day in everything they do. And if you're not, you know, you have to be like, it's just, it's just everywhere and you have to figure out how it gives you an advantage. I think from a marketplace perspective, there's a few like very clear things. I think the biggest one actually is more just Probably the most obvious one is that operating is so much cheaper. And so if you think about marketplaces relative to other businesses, like keeping costs, keeping operating costs low is probably more important in a marketplace where you have a take rate. You don't have the same margins as someone offering the service directly. You have to fulfill the transaction, but then provide customer support and everything else you need to do. So being able to do that efficiently and more cheaply than you could have 5 years ago is a huge advantage for marketplaces in particular. So that's the biggest thing is just, it makes a lot of these categories that may have been previously too hard or too expensive to serve viable. And so that's super cool. But then there's also some very specific things that couldn't have existed before AI. There's like new kinds of supply that you can access because you can use agents to go and get supply and go back and forth and create create experiences that couldn't exist before. We look a lot for that. There's also demand changes where you can have, you can think differently about personalization, about how users can look for things and you can reimagine search. And so there's a lot of stuff happening there. But I think the fundamental thing is just building is cheaper, operating is cheaper, and that opens up more categories to be able to be built, even like You know, it's a classic, like we had a whole era, yeah, maybe 10 to 5 or 10 years ago where it was like SaaS-enabled marketplaces. You know, you build some kind of sticky tool and then you use that to access the supply and then the supply stays there and you build a marketplace around it. We saw a lot of those pitches. Some of them worked, some of them didn't. Today, like that's almost like table stakes. You can build it so quickly. You can like create that perfect software experience for your customer, and especially if they're paying for something else, you can give them something for free because you're going to make money on the, on the, you know, on the, on the GMV or the take rate. I think it's just super powerful. So I think it's not really specific to marketplaces, but I think just the idea of everything becoming much, much cheaper to build is super exciting for, for founders. Certainly.

And then something else that, you know, you and I are always discussing and then of course, you know, with, with founders in some meetings is like the, the importance of the why now. So, you know, of course, you know, AI is enabling, you know, some of these marketplaces that were previously, you know, too complex or kind of costly, as you mentioned. So is there maybe an example of this? And, you know, feel free to share some from the portfolio of, you know, the why now that help highlight this.

Yeah, I mean, there's a lot and there's some that we have invested in, but then others that we like want to find and want to see. But like one good example from the portfolio, which is actually a new company we invested in that that we haven't talked a lot about, this company called Regig, which is a marketplace for SMB M&A transactions essentially. And this is a classic category that was tried, has been tried over and over again. And everybody talks about how there's all these businesses out there, they're going to have to trade hands and there should be a more efficient marketplace rather than these brokers and agents that are taking a huge cut and trying to find buyers and sellers and just there's no chance that you're actually being totally efficient in finding all the buyers or all the sellers in that particular area. But that's been tried so many times and it's very hard nut to crack. I think what's so exciting about Regig is that they're using AI to enable that because essentially these broker processes are very manual and very kind of labor intensive historically. Lots of analysis, lots of trying to take disparate data that looks different from every buyer and seller and try to kind of conform it. And then also when you talk, when you actually talk about a transaction, how do you make it easy for that buyer to take over that seller's business? That's a huge friction point where a lot of these marketplace supremacies didn't even think about that. But if you can use AI to actually make that process also simpler and you're essentially buying a business with a manual and a, and a, and a, you know, how-to book about how to run it. I just think that that's a great category, which is enormous, right? It's like Couldn't be a bigger category of marketplace. No one's won it yet. It's totally wide open for different people to try to attack, and AI makes it very possible. So we have one bet there. There's lots of other companies that we've seen. I just think it's a great category that wouldn't have been possible and that we know wasn't possible before AI. You had these marketplaces, but it tended to be like bottom feeder buyers and not that great companies on the sell side either. And now it doesn't have to be. That's one. There's also like, I don't know if you guys have seen like the, you know, Y Combinator does this thing of like they call tar pit ideas or like ideas that just everybody gets attracted to that don't work. Why it's called a tar pit. It's like where the dinosaurs get stuck and die. One thing I think is kind of cool is to like revisit some of those ideas because there's a reason that they were attractive. Some of them are attractive for like the wrong reason. Like founders want to be in something sexy, but there's a lot of those businesses that are Pretty interesting, I think, that for whatever reason couldn't have worked before, but maybe could today. And I don't know which ones they are, but I love the idea of revisiting these ideas of seeing when the technologies change to catch up to allow you to do something different that you couldn't have done before. Like one category that I really like, and we haven't made a direct bet in this category yet, but one category I really like is home services. There's actually a company that raised money a couple weeks ago called Casa, which raised like a $27 million round. I like that business. There's a bunch of others. And the idea is that if you can use AI to actually create a lot of these experiences that were typically very cumbersome around home services and hard to find the exact right vendor, hard to describe what the problem is, just put a lot of the work on the buyer or the seller. You can create, you can reimagine these marketplaces to be like very frictionless. And Casa is a great example where If you own a home, you have a bunch of stuff that needs to get fixed. It can be done very, very easily for you with a network of suppliers. I really like those kind of ideas of revisiting things that have been tried in the past. That category, obviously there are a lot of marketplaces. There's Yelp, there's Angie's List, there's all these things out there, but they're horrible experiences for both the buyer and the seller, relatively speaking to what we're used to in other categories. I love that stuff. And then there's other, other categories that really haven't been cracked before that I think now can be things in legal, things in education, healthcare, all kinds of stuff. That's why we're excited. That's why we're raising funds too.

Great examples. You know, so I wanted to talk about another topic, which I know you have a, you know, a good kind of take on, you know, with— and I think it's very timely now with it being easier to build product with AI. So something that typically kind of comes up here is a tendency to, you know, kind of try to differentiate with, you know, you know, more features, you know, better design, etc., for founders. You know, how do you think about, you know, the role that a product plays for marketplaces?

Even before AI, now it's more obvious in the age of AI, but even before AI, I don't think product or product was very rarely like the differentiator for a successful marketplace. Not never, but very rarely. And so a lot of founders spend a lot of their time on product because it's where you assume that you need to differentiate and you need to make a better kind of mousetrap. And to a certain extent, obviously the product needs to be good, it needs to work and it needs to fulfill the needs of both the buyers and the sellers. But my experience has been that it's usually not what makes you win or lose. What makes you win or lose again is the distribution and the liquidity that you're able to drive. And like, you know, the classic example of some of these like really old marketplaces that still drive so much transaction volume just because that's where people go. They go to where the buyers are and they go to where the sellers are. And so think of a classic example like Craigslist or something, which is like the old type product. Like they will not build anything new. It's still a huge, huge business. And obviously there's like, that's like an ancient example. There's even more recent examples. But yeah, so I don't think product has ever been the real differentiator. There is always like counterexamples to that where some product experience is better so that it attracts the supply or attracts the demand in a unique way. I've been an investor in a couple of companies that capitalize on like mobile, for example, to create a better mobile experience before anyone else could really think about mobile. But in general, I think that was more of a distribution play where it's like, how do you leverage those platforms to get into, in front of more buyers and sellers rather than the product itself being the differentiator? And especially now, I think the world has caught up to that where it's like, anybody can over a weekend vibe code a product. And now all these SaaS companies are like, oh, well, what's our defensibility? This is what in the marketplace world we've been talking about forever. And so it's kind of fun and interesting to see the world catch up to that. And it's great that it's so easy to build stuff or easier than ever before to build stuff. But I wouldn't look at your product and think that that's what's going to be the differentiator for you winning or losing. That's at least my opinion.

That's going to be super helpful. So it always comes up and especially on our office hours. So, and, you know, that's a kind of great lead-in to the point as far as, you know, defensibility. So, so I guess like, how do you think about defensibility and maybe, you know, even sharing from like the, I would say like the fund kind of perspective of, you know, how we think about defensibility in the age of AI?

I think this is, you know, more of what, what I was talking about before. I think the defensibility of marketplaces is is clear. Like if you are the place where buyers want to come because the sellers are there and sellers want to come because the buyers are there and you have a layer of trust and reputation that you're able to build and a data advantage, like those are the things that make companies defensible. And that's what everybody in the age of AI is looking for. So it's, I think it's good news for marketplaces actually. Like it's a category that in general has been I would say out of favor or unpopular to invest in over the last decade. And that's probably, that's one of the things we like actually. We like to invest where it's unpopular because it's better for us as investors. But I think that that's coming around a little bit because again, these dynamics of liquidity, of defensibility are key. And everyone's asking the same question when they look at a startup today, which is, okay, what happens? Like, can't AI just replicate this and put you out of business? And I think that the idea of the value being in the relationships, the value being in the coordination, I think is really more true than ever. Yeah. So that's what I would point to about defensibility. And I can describe some specific examples of things that we have invested in, or I've invested in. Like one is actually an angel investment that's not in the fund, but I was an angel investor in a company called For travel, and they built this like really interesting distribution angle, which is all about individuals becoming travel advisors and distributing travel or selling travel to their networks and to their friends. And they've been able to spin that up and get thousands of different people selling this stuff. And they create, so it's both, they have a distribution advantage and they also have like this liquidity advantage too, because if you come on there and you want to find an expert in anything, like they have that expert, it's a human. They're also using a lot of AI to help those humans do their jobs because that stuff was impossible 10 years ago for— well, not impossible, very difficult for people to become travel agents 10 years ago. You had to figure out like the technology platform didn't exist. Now it's like super easy for you to do bookings and it becomes like your expertise that these users have and the relationships that they have. So they've built like a distribution advantage and then this liquidity that's allowed them to really scale. And so we love that. Another company that we're investors in is a company called Tin Can, which is not a pure marketplace, but it's like a network. I don't know if you guys have kids, or those of you that have kids have probably heard about this. It's the landline phone for kids. It's like old school technology. People were sick of their kids being on smartphones, so it's a landline phone. All it does is let you call other friends within the network. And we love this founding team, and they actually started building a different product and pivoted to this, but it's It's very much a network effect marketplace business with a ton of defensibility because the tin cans, they basically, if you have kids, you know that they'll have friends and it doesn't work unless their other friends are on it. And then suddenly you're in like the whole school, the whole class, the whole school, the whole city, the whole neighborhood, and that thing has just taken off and it's very difficult for someone else to compete with them once they get to that scale. And so, yeah, super excited about those 2 examples of Kind of defensible marketplaces.

Yeah.

Tin Can's a great example of the, you know, going back to the analog network effects, right?

Yeah, it's, it's, it's great. And our kids are addicted to it.

So I want to spend a little bit of time, you know, talking about fundraising because I think right now, you know, founders are feeling like there's kind of like AI and then everything else. So I thought it'd be helpful maybe if you can share a little bit more about, you know, how AI is impacting fundraising right now, maybe at the earlier, like pre-seed and seed stages.

The one thing that has definitely changed is the benchmarks of what you're expected to achieve. And it's not just because like a lot of investors have some anecdote of an AI business that's 10xing every year and they want that. I mean, that's a little bit of it. There's a little bit of that like, you know, FOMO related to that dynamic. But a lot of it is just that you can get so much more done with less so that a lot of people that used to invest at pre-seed and seed are now seeing companies that have traction, like real traction at pre-seed. It's like, do they even need money? Who knows? Like, so I think that the bar has been raised is what I would say. And I think, Mike, you put together a report that had benchmarks around what marketplaces are expected to achieve today versus what it was in previous eras. And it just keeps on moving, keeps on getting— not just marketplaces, but businesses in general, but it applies to marketplaces. The bar is just higher and higher. And so that's the one thing I would say from a fundraising perspective is that you're expected to, even when you go to raise your Your seed round, it's not like it was before where you could have some proof points and a thesis. You have to have real revenue, I think, at the seed stage. And certainly at Series A, it used to be like, oh, if you're at $1 million ARR, you're ready for Series A. That's not true anymore. And you need to show that you have a clear path to scale. But there's a lot of money out there still. And so there are opportunities to To invest for sure.

No, definitely. Yeah, I'll make sure I share a link in the chat here for the, for the, the guiding benchmarks for everyone so they can reference it. And, you know, on that note, we are going to get to the group Q&A because I promised our founders we'd save time for it. But, you know, right before we do, you know, what would be your top tips for founders starting marketplaces today?

You know, aside from the top tip that I mentioned earlier, like deciding whether you want to raise money or not, like if you are going to— I think I'm assuming you mean like tips around fundraising and tips around raising capital. But my first tip is like, figure out, do you need to raise capital? If you don't need to, get as far as you can Without raising capital, validate it for yourself and validate it for investors as well. And so the worst thing that can happen again is not that you raise money for— not that you don't raise money. The worst thing that could happen is that you raise money when you probably shouldn't have, because then you're stuck in that business for a long time and you've got to— it's just, it's a different paradigm once you raise capital from outside sources. So that's my first kind of tip is like really think about that. Like honestly, think about that. Look yourself in the mirror. If someone comes along and offers you $10 million for this business today, would you sell it? If the answer is yes, then you don't want to raise venture capital. So I just think about those things and I think it's important to personally come to grips with what you want to do. And then in terms of like, if you decide you are going to raise capital, like what makes a company fundable or not, I think A couple of things around the AI in particular, I think, and this, someone else, another investor told me this, and I kind of like the paradigm, but if you think about your business and you imagine every time OpenAI or Anthropic drops a new model, are you excited or are you worried about what's going to be in it? If you're excited about it, that's great. If you're worried about what's going to be in it, that's a really bad sign, right? And so it seems pretty obvious, but if you think about that, dynamic, it actually, you can look at businesses and evaluate them that way and say like, oh, actually it's a new model and it's going to make this thing possible and it's going to enable this, which is going to be better. I think that's a really good way of thinking about it is, are you excited? Are you scared about the things that are coming? That's one tip. Make sure you're excited. And if you're scared, find a different, you know, it could be a good business, but it might not be a venture-oriented business.

Yeah.

And then I think the other thing I would say, like, well, I've talked a lot about distribution. I think that from a fundraising perspective, like tips on fundraising, like one thing that we see a lot of is, and we know in our own experience, like getting that lead investor, getting that early believer is like more important than anything. So it's almost like better to talk, I would say you also need to talk to everyone early. I think once you have a lead, everything becomes much, much simpler, but without a lead, things are really, really hard. So I would very much focus on the lead investor and very much focus on trying to find that true believer early. I mean, this is kind of trite advice, so I don't know if it's helpful or not, but I just, I see a lot of people that like just try to cobble things together and take a little bit of money here, a little bit of money there. I just think that that's a very, very difficult path. Again, it may be— I'm not saying any path is wrong. It's just that's a harder path. That's like, that's like hard mode. And so if you can find a way to make it easier on you, I would, I would focus on that.

Those are going to be really helpful tips. I did want to expand on that note as far as, you know, requiring a lead. Right. So could you maybe share a little bit more about that? That's something that, you know, founders commonly ask, which is like, you know, why we look for a lead.

Anyone who's been like an angel investor for a long time and like done a bunch of these deals where It's not clear who's the lead. It's like maybe there's like a SAFE with a bunch of different investors that have put in a little bit of money. It's the classic thing that happens with like YC companies that come out and like there's not really a lead, but they just cobble it together. Sometimes there is, a lot of times there is, but sometimes there isn't. We know those companies don't do as well as the ones that have a single person or a single fund backing them. It doesn't always matter who that fund person is. It doesn't have to be like a top-tier, well-known Sequoia, Andreessen Horowitz, not to be that initially, but there needs to be someone that is in your court because inevitably things go wrong and you want someone that's going to be there to help when the chips are down and take ownership and help you see yourself through things. At least that's the experience as an investor we've seen. So it's become like something where we almost, we very rarely would look at any deal where there wasn't a lead or there You know, there wasn't a clear plan to get a lead because we think it's, it's, it's that important in terms of like, you know, whether a company ends up being successful or not. And that's maybe a little bit contrary. Not everybody thinks that, but that's how— that's been my experience of looking at like the, you know, 60 deals I've done in my life. It's like a very clear delineation between those that have leads and those that don't.

Certainly. So you and I could go on for quite some time here. So I want to make sure we can get to the group Q&A and we're going to do so. So if you had a question, feel free to use the Zoom raise hands so that way we can, we can call on you to come on. But I wanted to go ahead and ask a question that was sent in advance to kind of help kick things off. And it was around, you know, ticketing and events marketplaces. So of course, you have some awesome experience, you know, building in that space. So what do you think are some of the most common mistakes that founders make that are building in, you know, ticketing and events?

It's actually an interesting question. I hadn't thought about it like that before. Most common mistakes. But, you know, the ticketing category is one that I— it's actually interesting as a been in it for so long, but I actually think there's still opportunity there. And I think, I guess one way, one thing I have seen in terms of a mistake, I've seen a lot of companies going after the same segments really, like going after this idea that there is like, you know, high demand for certain events and that that's what you want to— I also, let me rephrase this a little bit differently. I think that one mistake people make is going where it's like very crowded and that's like these high-demand events that are easy to sell and that anybody can sell and you're going to provide a slightly better experience to sell them. I think that that's really hard. I think one of the things that we like to see, and I know that we haven't made a lot of investments in ticketing either, but one thing that people don't know about ticketing is that over 50% Or close to 50% of live event tickets never get sold. And so there's a much bigger problem on like the discovery end of things than on the fulfillment of high-demand event end of things. So that's like one thing. I think that if you can, if you have an angle where you can actually fulfill demand that didn't exist and be additive for the supply side, that is really, really important. I think the other, I mean, there's a lot of misunderstanding of ticketing, so I could talk a lot about that, but I think people tend to look at ticketing as a monopoly category. They think about the Ticketmasters and the Live Nations. I think ticketing, the venue or the artist has a natural monopoly. So it's very hard to compete with that because it's like, that's who you're going to see. And if they're not partnering with you, it's difficult to compete. But I think again, finding some kind of a distribution advantage. In ticketing, like anything else, is key. And so yeah, I don't know if this is really answer to the question. I haven't thought about ticketing marketplaces specifically in a while. I think that I'm an investor in SeatGeek. Hopefully they'll go public next year or this year. Their differentiator was all about mobile, actually, and they kind of leverage this better mobile experience distribution through the app stores now. They are a primary ticketing company competing with Ticketmaster and signing NFL teams and other professional sports leagues. And so they're becoming a primary player in the space. So I think that their observation is that in the end, people just want tickets. They don't care if it's primary market or secondary market. So they're trying to be both at once.

This is going to be helpful also too. I'll include a link to your previous post on the importance of distribution that covers examples for ticketing marketplaces. So, hey, Ignacio, I saw you raise your hand. Do you want to jump on here?

I guess like a second adventure for me in the marketplace universe. And my previous adventure was actually during a timeframe that you had referenced earlier, which is in 2013 through 2019. So back then we had different advice that we were getting about product and how expensive you make a product, right? So we look at the Asian markets, we see super apps running left, right, and center. And then we look in like out here or stateside and then in Europe, more focused on what's your core focus on the product. So when we talk about different products, we always say like, okay, here's the core product, focus on this, don't leave that product alone. Everything else is a distraction. But that I feel like was more of a strategy decision. I'm sorry, a finance decision disguised as a strategy decision, because now we have so much access to build, right? We could build so fast now. Before we didn't, it required Human resources that require funding. I'm really curious about how you see it now.

There may not be a straightforward answer to it because I think there is an argument in some cases that the variety of features may be the use case itself. That's why people are coming to something. I suppose there might be an argument. You have to prove it out that that's what users are looking for and the more they're coming and they're hopping between different experiences, Maybe it's hard for me to visualize exactly what that means. I think the one example I can think of is just like categories in a marketplace. So it's not like product feature set, but like the decision to move into different categories or to take on lots of categories at once or to take on lots of geographies. That I think is clearer where it's like much easier to prove that you can really execute on one. Because again, the hard work is not building the platform. The hard work is getting the critical mass of supply and demand. So one good example that we invested in is a company called Palm Street. Started off as actually called Plant Story. It was like an identification app for plants. You know, you take your phone and you scan a plant, it would say like, that's a whatever. That's how they built up a large audience of users using identification. Then they launched a marketplace for live plants. And when we first looked at it, I'm like, wait a minute, how big can this be? That sounds like tiny, like this is really silly. And it's like 4 years later, they're still dominated by live plants and they're doing millions of GMV every month. And it's a great business and they are planning to go into other categories. They've launched a few other categories. Like their long-term vision is essentially to be That kind of Etsy meets Whatnot, sort of like the live shopping for all of these like home categories that you would typically find on Etsy or geared more towards women than men. And they started with plants, but plants is just, their focus on plants made them really great. Like if you wanted to find whatever exotic plant you were looking for, like they had it and they had it live at that moment that you were on. Like getting that critical mass was really, really hard. So I think about the focus more in that kind of way than in product stuff. Like maybe they launched a bunch of products. I actually don't know what the feature set was. Like maybe they had to have different formats or whatever that they could do now easier with AI than they could have done pre-AI. But when I think about the category and like the reason that people are going there, owning that niche was really key for them, not just because it made them successful, but because it was like way easier to do. If you're just focusing on like one thing like that, you can get the best supply in the world and you can start training buyers that that's where they want to go for that supply. And then it's easier to sell them the next category that you launch. Whereas if you're thin, you spread thin, it's much, much harder.

There's actually a related question, so I want to jump in here and ask, and, you know, related to product release. And it was, you know, of course, like AI is, you know, making it easier to build. So how do you think this kind of impacts, you know, the technical kind of like needs and capabilities for founders and maybe even evaluating it from the investor kind of point of view?

That's a great question. I actually don't know how everyone else looks at this. I mean, I personally am not technical. Yeah, I did engineering in college, but ever since then I've not like— I never learned to write. I was not technical. And I've always been kind of jealous of people that were technical. They could build things and they could get things out quickly and They could iterate and I'd have like an idea, but, you know, ideas are easy to come by and I couldn't execute on it without anyone's help. I mean, that's different today. So you can, I don't know, I kind of think that you don't need to have a technical co-founder at all today. I think there's a benefit to having co-founders, generally speaking. I think that like, you know, this is a tough path to go down and going down alone is really hard. And so you want to have someone in the foxhole with you if you were. But I think that, yeah, you don't need to be technical anymore, which is like the most exciting thing ever. And I wouldn't have said that even like 2 years ago or maybe a year ago, but I've just seen some of the products that people have built that I know are not technical. And it's not to say that you just like can live code everything like really quickly. You have to like learn these tools and get good at them and figure out when something is like MVP versus when it can scale. But I do think that you can build with the tools that are out there today. If you have unique access to supply or demand, or you have some unique perspective on the market that you can build, you don't need a technical co-founder anymore. It's like a huge thing that's changed.

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

My question basically is, our bigger picture is to simplify cross-border shipping of heavy goods. Think of automobiles and machineries. However, to make our positioning clear, so we are looking at, should we focus on, will it be better to focus on a niche in terms of fundraising stories and then show how you intend to expand to other categories?

The niche approach makes a lot of sense. You want to paint a bigger picture, of course, again, you know, venture investors need to know that there's a potential for a really big outcome. It'd be nice if like even that niche of automotive is big enough. It's probably pretty big. I don't, I haven't done the math, I don't know. But I think that that's a very kind of well-known strategy and positioning. You're like, here's the wedge into something much bigger. I think the harder thing is to say we're attacking this bigger market and we don't know what the wedge is. Like that's not going to work. But if you have a niche or a wedge that you're focused on, and then a story about how that expands, I think that I would double down on that and I would just make sure that the data from the niche is really compelling. I think that, you know, there's some investors that get really hung up on market size, but I think if you— a lot of these markets are much bigger than people assume, even the niche markets. And then if you can own that niche, it becomes much easier to then expand. from there into other things. So I think that's a smart strategy, own that one niche and paint a bigger picture in the narratives.

So I want to ask one last question that was shared, and it was around mentioning that you're based in San Francisco. So how important is a location and how would you advise founders to think about location and where they're based?

There's something to be said for working in an environment where everyone's trying to build and And it's expected and it's encouraged and risk-taking. So I think that, I don't know if you're, if you don't have constraints, most people have constraints, but if you don't have constraints and you can go anywhere, I think there's nowhere better to be than the Bay Area, especially if you're building around AI. Like, it's just like, so there's just such a concentration of things happening here. I think it's great. That said, it's certainly not like required. And especially if you're in a marketplace focusing on a different market. Like, yeah, I was in the UK and we built a ticketing marketplace there precisely because there was less competition and we were able to grow and own that market at the same time that like StubHub and other competitors were already pretty big in the US. So there's advantages to being in other places, but there's certainly an energy and a critical mass here. It is. That is pretty awesome.

Well, cool. So we're out of time, but, you know, really appreciate taking time to join us for the follow-up group chat. So it was, you know, fun to, you know, go back to some of your early operator learnings, you know, talk about the fund more and then some of the different topics that we had and appreciate also answering some of the questions during the group Q&A. So I wanted to ask my, my usual closing question, though, and that's— and I'll slightly reframe it this time, which is if you could go right back to, you know, before 2026 and we really entered this new era for marketplaces with AI, what would you tell yourself about marketplaces?

I don't think a lot has changed. With AI marketplaces. I think the marketplaces have always been like really, really hard. And there's, you know, there was a lot of temptation over the last cycle to go for things that were less hard. You know, it's like easier to build a SaaS tool and get, you know, a couple hundred or 1,000 users and have this great business with a huge multiple. And a lot of people, a lot of talent went that way and a lot of people like gave up on marketplaces because they were so hard. to build relative to other categories. And I think it's exciting that the kind of the world is coming around again now where it's actually, you know, that's where the value is. The hard things create large value and easy things are not lasting. And so I would like probably remind myself of that, that, you know, even though there's all these people building in SaaS, building these tools that actually, you know, there's this technology coming that's going to make them Indefensible. But even then, you're just competing in this race that doesn't get easier. The thing about marketplaces that's fantastic is as hard as they are, as you grow, they get easier. And you can feel it when you're running a marketplace that's working, that it gets easier. And it's pretty exciting when that happens. And if it's not getting easier for you, it's probably a sign that you don't have real marketplace effects taking place and you might want to like tweak things or pivot into, into a different, a different use case.

Encouraging and great kind of parting advice for us all here. So I'm also too, I'm glad we really spent a lot of time, you know, I would say, you know, focus on the importance of distribution and because, you know, distribution and AR are 2 key themes for the community this year. So this will be really helpful. And, you know, last but not least, time for a quick plug. Where can we all keep up and follow along with you?

obsessedwithmarketplaces.com is the actual Nice long domain, but it's pretty clear. So you can follow us there and you can submit deals there as well. That's the best place to stay in touch. Or you can always find me on LinkedIn as well. Just search for me and reach out. I'm happy to connect with anyone.

Awesome. We really appreciate it. This is fun to have you join us again for the follow-up group chat. And yeah, thanks everyone for the great questions and I'll see you in the community.