Pete Flint tells Ashling from Nu that paid ads get expensive fast as you scale on mature platforms. Instead, find young, underpriced channels where competition is still low. Pair any paid spend with strong retention and multiple growth levers.
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I'm Ashling, founder of Nu. It's a clothing platform where clothes are your currency. I actually used Studio when I was looking at places in the States, so it's quite good. My question is around the emphasis on organic growth in marketplaces. As a fashion company, there's kind of a lot of competitiveness in the market. We need to put ourselves forward on the consumer side against brands who do a lot of paid marketing. But I kind of find that when you're building a marketplace, there's almost like a bias towards not spending on paid marketing. So I'd just be interested to hear what you think about how marketplaces can grow best, especially when kind of viral growth is something that can almost be paid for these days.
Yeah, good question. I think, you know, I think it's a valid strategy, paid marketing. But I think you have to proceed with caution. Because it's generally on— I mean, the way that all the auction-based algorithms work is the more you want to spend, the more expensive it gets at scale. So there's a danger that you get hooked on something that doesn't have volume advantages, it has volume disadvantages. And so it can be, it can be dangerous. But it also can be expensive to get going. You know, that said, there are countless examples where people have used paid marketing to build liquidity and scale very efficiently. And more often than not, they've done it by leveraging underpriced platforms. So, you know, there are countless examples back, you know, 15 years ago when Google was getting going, it was like their auction marketplace was fairly illiquid. So smart people would come in, eBay and Amazon were excellent at this, they would just go in and sort of, and be a large participant in the marketplace and actually find really cheap really cheap inventory and, and acquire traffic that way. You know, similarly, in Facebook, 2009, 2010, a bunch of companies just went, okay, we're going to triple down on Facebook. And then, you know, similarly, now I'm sure there's a bunch of channels which like you can look at, say like, this is a fast-growing, relatively immature ad platform, they're looking for advertisers to come in. I can go after this. And, and the, you know, I think back, if you look back at sort of growth channels, you know, there was from paid marketing, there was, you know, Google, and then Facebook, and now Instagram. And, and now the proliferation of channels can be massive, whether it's social media channels. And I suspect some of them are mispriced. As well. So if you're really savvy, you can get in. And so I would just be, you know, the caveats in going after paid marketing is one is just like, set a really high bar on your sort of on your return on investment. Don't put all your eggs in paid basket, paid basket. Think about other channels. Really have an aggressive point of view on retention, like how can you use this and retain users. So that's— but it's, you know, and then also just be— probably avoid the more mature channels, but be a little bit, you know, because your volume is not going to be necessarily massive, but think about how you could be What are some of the new channels that perhaps are less sophisticated in their algorithms, um, and their market participants that are mispricing it, that you can get real, really great deals?
