Max Brun, an investor who previously ran ACV Auctions, says successful marketplaces need strong internal champions on both sides, deep leadership that can be developed internally, and a narrow focus on one thing. He cites ACV's decision to restrict the platform to a single dealer type as key to avoiding distraction and maintaining growth.
Chapters
Were there any specific kind of key learnings maybe from your operator experience that you've taken with you to now investing? I will tell you this, I, when I was an operator, I did a horrible job, not a horrible, I could have done a much better job of delegating and building the next level of leadership underneath me better. And so that's one of the things, like anything, right? The mistake you make is, you know, the mark you carry with you and you look for that more and more. So, you know, it's funny, I, even when I talked to funds and stuff about valuation policy, I was like, you shouldn't even write these up until, you know, there's a liquid value to it, right? Like these are all worthless because what people start to do is they start to say, oh my God, look at these markups, look at these markups. between, you know, pre-seed and seed, seed and A, even A and B. And I go, yeah, but like, you know, are they building in-house? We took pride in how many of our— how much of our management was homegrown in-house with an internal farm system. And so I think that's one of the biggest things I carry with me. Like, are the leaders of the company, and they might not be the founders, 'cause founders move, you know, They just happen to be there on day one, right? And a lot of them are very important, but they don't end up always staying at the top. Are they doing a great job of building out the right type of organizational structure long-term? And are they doing the things that— it takes a long time to give a leader experience. And if you don't put the time in when you're short on it, it gets very expensive and very hard to import that. Right? So I care a lot about, I tell people, assume you're growing your business like you're growing it in Buffalo. No one wants to move there. It's cold as hell, right? Like, so how are we gonna take the people we have here and be able to understand, discover what they're really amazing at and build them up to whatever is the proper place inside the organization for them? And so that's one of the things I think I accentuate. That's not just a marketplace thing. The other thing is I'd say specifically to marketplaces, I need to understand that they look at supply and demand, or if it's a 3-sided marketplace, you know, A, B, and C, however you want to look at it in a way where they've really got champions inside each one of those. And it ends up being an in-house communication. One of the biggest lumber companies in the world happens to be in Buffalo, and I've gotten close with them. It's a group called Bailey Lumber, very traditional business, wonderful guys, wonderful for the community. And as I got to know them, I was, it was really interesting. This is at the same time when we were doing ACV. I got to see how internally the employees, you know, because they, you know, they ran a brokerage, they also had a marketplace, kind of were champions for whatever they were in. And so I really want to be able to understand, has the company built a healthy culture that allows supply and demand to be, have a champion within them and really work between, on behalf of their, you know, on behalf of the fiefdom that they're in, right? And with marketplaces, I want 'em being super simple and I want 'em super tight, narrow, deep wedges. Too many times I see people saying we could do A, B, and C, and I go, I don't care. I said, we could have taken ACV and sold cattle on it. You know, we could have sold anything on it and we'd get it. You know, the entire time I was there, we wouldn't even let independent, we would not even let independent dealers sell on the system. That's how narrow we stayed. So I look for these like super narrow, deep wedges, and it doesn't even need to be the biggest market in the world. I know we'll grow and expand out of that, but that's kind of the way I think of it. Those are the things that I look for that kind of came from, 'cause if we had gotten distracted at all at ACV, we would've been dead.
