Starting & Scaling Treet As A Resale Platform For Brands With Jake Disraeli | EM Group Chat #188

Welcome back to Everything Marketplaces, where we talk about founders and leaders from some of today's top marketplaces. So this is episode 188, which is a really great group chat that we just had with Jake Disraeli, who's the co-founder and CEO of Treat. Treat is a platform that makes it easy for brands to launch resale programs. Treat is used by over 150 brands, and they've also raised over $18 million in capital from top investors like First Round Capital. So this is a great chat with Jake where we went back to the founding story and first steps to starting Treat. Got to learn how they started working with their first brands, how Treat evolved and scaled. We did a deep dive into it as a platform that's powering resale programs for brands today. Got to learn about their growth. We discussed topics like challenges building in resale. Jake shared some of his key fundraising learnings after raising over $18 million capital from top investors. We also had a great group Q&A. I really enjoyed this conversation and you're going to find it a great watch to the end. So Jake, I mentioned it to you right before we started recording, but Treat has come up a few times in the community more recently. So I'm really excited to have you join us here today to share more about it. I want to start off by saying huge thanks for taking the time to do so in advance. We have a lot that we're going to dive into with Treat, but I thought it'd be great if we could start off by sharing your background for those here that might not know you.

Yeah, sure. Hey everybody, I'm Jake Disraeli, co-founder and CEO of Treat. I've been in the e-commerce sort of sustainability and startup space for most of my career, like the past 15 years or so. I've started different D2C brands, all built on Shopify that incorporated items that can be recycled or made from recycled material. And then I went on to run the launch and sales team at Indiegogo, the largest global crowdfunding marketplace, for about 4 years before starting Trete. And so my passion really lies in this intersection between sustainability and impact. And e-commerce and helping entrepreneurs. And so even before I started launching DTC brands, I was running like the innovation programs at the university level, kind of have been really like largely obsessed and interested in helping companies and entrepreneurs and small businesses launch their, launch their, their businesses and grow their companies. And Tre is kind of an amalgamation of those things. We are a marketplace, obviously, it's why we're here, but we also work with over 200 fashion brands, helping them grow their businesses through resale and secondhand clothing, which we'll, we'll dive into a lot, I'm sure.

Yeah, that's a really great background on that. Thanks for sharing with us on that. And I guess, you know, to go back to the very beginning, you know, what was the founding story for Treat Now? What were the first steps that you took to start it?

Yeah.

So I left my job at Indiegogo to actually start what was going to be a D2C, a D2C brand, like menswear company that would incorporate circularity from the beginning. So it was going to be a D2C brand initially, and we were going to be a tech-first, circular-first menswear brand that was, that would eventually morph into what Treep became. We kind of decided that it was a much more scalable concept, and we can make a bigger impact both financially and globally by being the platform to launch hundreds and eventually thousands of brands onto a circular sort of platform versus, versus building everything at once, which would have been incredibly challenging and, and potentially not as big of an impact from being like a D2C arm. So we, we set out to— that was like the first big pivot and we started talking to brands. And so we started talking to brands for the course of like 4 months before we wrote a line of code. We got about 6 brands to sign a letter of intent with us that says, hey, like if you build this thing, it helps us capture our resale market in this way and it does what you say it does, we will launch with you. They basically signed a non-binding letter of intent and that was enough to make us go like full steam ahead in the business. So we started building and then we leveraged those non-binding documents to get into Techstars. And that was like our first sort of initial seed funding, or I guess pre-pre-seed funding to get the business off the ground and start building from there. So that was like the original Sort of concept, how we went from like D to C to platform, and then obviously a lot has has shifted and grown from there.

Yeah, certainly. We'll probably get into it, but that's really interesting to hear. So I guess you know with those first kind of few brands, you know what was that like initial? I guess like what were some of the problems that were helping solve for them? And you know what was that initial kind of like platform experience like for them?

So I guess just like talking about the business for a second, back in 2020 was when we were originally coming up with the concept. There were only a handful of like brands, the largest brands in the world like Patagonia, Arc'teryx, North Face that were doing anything in resale. They had built resale programs with actually one of our competitors, Trove, that focuses on like enterprise-grade resale, resale software and resale programs that were like really resource-intensive, very expensive, very labor-intensive, low margins, wasn't very profitable for the brands, all these things. And we, we We saw the writing on the wall and we said, hey, like this is just kind of obvious. It feels like a no-brainer that every brand would want to do this as resale is accelerating at this insane pace. So the secondhand fashion movement is growing like 20 times faster than retail. It's a monster trend on top of sustainability headwinds and brands wanting to be more sustainable, but it's hard to be more sustainable and just like change your supply chain. And so not to mention like they're looking for ways to grow. So it was like, Can we do these 3 things for them? Help them capture a trend that their customers are doing at an accelerating rate? Can we help them be more sustainable in a way that doesn't break the bank? And can we help them grow their business and grow customer lifetime value and grow revenue? So those are kind of like the trifecta of things that we're solving for the brands. And initially we thought it was really like our first brands were sustainable brands. We thought that sustainability brands would be the, like the core ICP. We were pretty wrong. I thought that brands would actually mostly want to jump into resale for sustainability reasons. That's like our whole ethos, like keeping items out of landfill. But what we learned pretty quickly was that while sustainability is a nice to have, it is very rarely the reason why brands are jumping into resale as like the number 1, number 2, or even number 3 reason. It really comes down to revenue, lifetime value, finding new customers, all these other things that make it much stickier. Especially at a time where everyone's budget constraints, they're looking for— I mean, like everyone's cutting costs right now, especially with like tariff uncertainty and things like that. And so we like changed our messaging and we adapted the business model even, even further to like to help brands solve other issues more than sustainability.

That's great to learn more about. So we'll probably get into how you actually scaled up working with brands a little bit. Yeah, a little bit later here. But, but I guess, you know, with those like, you know, early brands when they were launching, you know, what all went to like them actually kind of launching the resale, their resale marketplaces and what were some, I guess, like, you know, how do they kind of solve that cold start problem?

So really interesting. We are the beneficiaries of building a market. So we basically like we're like marketplace in a box, right? We, we, we're like marketplace resale marketplace software. But there We get the benefit of being able to supply demand before the sites actually launch. And so what we've built is a way that brands can do a callout for listings. And so like many of you know, I'm sure by now you don't want to launch a marketplace with no, with nothing on it. It's a terrible look. And we've, we run the data actually to know, to tell performance based on how many listings are live at launch according to how big the brand is. So we, we know more or less where we need to get a brand in terms of the amount of listing, like clothing item listings to go live before they actually start promoting the site for sale. So what we do is we close the shop section and we open the sell section and we even have a series of emails that the brands basically click go and we send branded emails to all of their customers that say, hey, we're launching this new resale site. If you list your item before X date, we will give you more, a higher percent of sale when that item sells. And the way that it works is customers, it's basically like a white-labeled eBay where customers can list items from their order history with the brand. They can get cash or credit back to the brand. And so this credit piece is huge. They can get 100% of the selling price as credit back to the brand. And during this period, we do like a promo. We say, hey, like you've got 110% or 115% to make sure that we have as many listings live as possible. We also found that the brands wanted to list items. So pretty quickly we realized that brand-owned inventory was going to be a big deal. And so we even eventually built a full feature and a product line around helping brands list their own second-quality inventory, returned inventory, excess, off-price, all the stuff that the brands don't want to sell on their main site. They're using their resale sites to To to sell through that inventory, and so with all this stuff, it's basically like seeding the marketplace. And then the best launches also seed the idea with their customers in terms of building hype in advance of the launch, warming up their audience, teasing up that they're launching this thing soon, and there's through social media, through emails, etc. And then of course, the launch itself is really important. And so making sure that that the launch goes out and gets a bunch of eyeballs across their homepage. Their different newsletter channels, social, etc.

That's cool to hear about how you initially kind of seed the marketplace. And I can imagine you have like a probably like a launch playbook that you've created for the brands as well.

Exactly. Yeah, we have a full kind of go-to-market launch deck and like a checklist that we go through with every brand. Obviously not every brand follows it and the brands that don't, don't do as well. That's been a really challenging part about this business is even if a brand has a lot of potential, if they have so many things going on, if they don't give it a lot of attention at first or at all, over time that the marketplace does suffer. And so we've had to build in more flywheel things with our own marketing so that we do more. And so we're trying to take over as much, like as much off the brand's plates as possible by sending these automated emails. We do a ton of like post-purchase emails for brands' customers. So like, let's say you bought this jacket from a brand, 6 months later you might get a branded email from us That says, hey, I hope you're loving your jacket. If at any point in time you're ready to resell, here's how much credit you can get for it. And we have all these sorts of sort of become like our flywheel marketing efforts to make sure that these programs grow over time and don't stagnate if the brands don't promote them or give them much love.

Yeah, that's, that's really, really great to hear about. You're mentioning a lot of different topics that always come up in the community of founders thinking about, is this something that we should do for our customers typically on the supply side, right, as a marketplace?

Yeah, it's so important. And I would say like we're continuously supply constrained. For us, our demand is pretty high. We have like a 75% sell-through rate across all of our sites and listings, which is, yeah, it's pretty high for a market for this type of marketplace. And so it's all about getting more and more listings and figuring out the ways that we can, we can do that.

And then what about as far as like on the demand side for the customers? What is the experience like, you know, when they, when they shop and, you know, purchase through OutStreet?

Yeah, well, so basically the, how it works is if you go to one of our brand sites, take like Girlfriend Collective or Hudson Jeans or one of these, these sites and you go to their main site, they'll have a button on their header or in their like hamburger icon on their menu that says resale, or maybe they brand it like girlfriend to girlfriend. You click it and then it opens up a branded resale website that's us powering it on the back end. And it looks and feels like the brand at the same time. It's totally customizable. And as they scroll down, they— there, it's a shopping experience that looks and feels like a firsthand experience. So we pull in stock imagery from the brands so that it doesn't feel like you're shopping from like a discount sales rack at, you know, at Ross or something like that. It feels very elevated for the brand. So what we've noticed is that especially on sites like Poshmark and Depop, etc., the listings that, that sell through the most have stock photos. And seller imagery. And so we create this like beautiful shopping experience that has stock images and size guides and descriptions, all this stuff that we pull in from the brand's main site to make the most elevated secondhand shopping experience that feels firsthand. And then brand customers can even get notified when certain items that they want are listed for sale so they can sign up for notifications for like an exact SKU, which they can't do on any other Broad resale marketplace, so they can set up. I want this jacket in olive, this season, like this, this size, etc. And then we go out and we we part of our automated emails. We can like go out and find that item with when it's in customers' closets. So that's about like that's kind of buyer seller matching, but it feels like very like I don't know feels very like branded. And then we have AI components kind of built throughout the site as well. And so. When customers are browsing, if they've shopped before, everybody sees a different feed in terms of what we're trying to curate for those customers. We have recommended listings, we have personalized emails that go out based on the customer's user behavior and their shopping behavior and what's in their closets. So that's all in service of obviously like push connecting our supply with the demand and the users that are signing up.

Yeah, definitely sounds like lots of functionality is, you know, it's evolved, I'm sure, since the early days.

Yeah, none of this was in the early iteration in our MVP site. It was just very, very no-frills.

Yeah. So a related topic to that is, you know, kind of, I would say, like prioritizing, you know, customer feedback in your roadmap. And so I'm sure you get like a lot of requests for like, you know, various kind of integrations with different, you know, tools and services that brands use. So, you know, how have you thought about kind of balancing that?

Yeah, we get a lot of requests from users and brands and a lot of noise from like potential brands. And so like we get RFPs all the time from these giant companies that say we want to do resale. For us over time, and I'd say we're not perfect, but it's just like trying to focus as much as possible. And so it's really, it's sort of 2 things. One is like focus and blinders. We, we have our mission and we've been distracted by building shiny objects in the past. But one of the filters that we have is like, is this immediately applicable for all of our brands or most of our brands? Is this a feature that has been broadly requested? And will this be something that is used many, many times over? We've, we've said no to a lot of brands when they've reached out about building their resale programs because it would deviate from our product roadmap so vastly. And they would be building features that are not immediately applicable for other brands. And so we've gotten better at that. I would say it's still really distracting and it's still very hard to say no to some of those. And sometimes we say yes and when we kind of mess up, but there's a lot of power in saying no to these, to those things. And then we're getting better at tracking feedback just internally. And so now we have, we have more streamlined ways for our sales NCS teams to add feedback into a certain channel, and then we can track it back to specific brands. And so now we can go into specific features and see which brands are asking for that. And then once we get to a certain threshold, we can build that thing. And then of course, we have our initial users of that new feature that we can build case studies around and actually help promote.

Yeah. And then I guess on the note, as far as like, you know, when it comes to brands and kind of scaling that up, you know, how have you approached kind of scaling up the brand side?

Yeah, it's, it's not rocket science. I mean, we're like a, it's like a buzzword, YouTube, like a SaaS-enabled marketplace, but we're like a SaaS business at the same. So like we suffer from like, we have to sell like a SaaS business and build like a marketplace, like all these marketplaces. And so we're really like B2B SaaS from a sales selling motion. And so we obviously, we have inbound. So when we launch a site, if it's a big enough, cool enough brand, then other brands will come inbound. It's like, hey, I saw so-and-so is doing it. And so probably like 60% of our brands that we launch are some way, in some way, shape, or form, like coming from marketing or inbound leads. And then we also have an outbound sales team. We have a number of BDRs, AEs that are doing outreach, that are closing brands that have quotas. And then we have things that are like tried and true working. Like one of the biggest things that works for us from B2B selling motion is events. Like we'll probably do 2 events every single month at the very least. We host dinners, we go to events, we, we host, we're hosting a bonsai and beer happy hour in LA. We do puppy yoga. We do like these fun things to try to get brands involved. And it actually ends up being a pretty affordable way to get brand, more brands signed up. It costs us like $100 or $200 per plate or whatever that is. And if we get 10 brands on, on That's like $2,000 or so. If we get one brand signed, that more than covers our budget for that one event, you know, 10 times over. And so those are the types of things we're doing. We're like always testing marketing messaging and marketing things. I would say like the biggest caveat with this is like, I still feel like we're very early and we are very early and we have so much more to prove and we're like always testing and iterating and trying to figure it out. I would say that we haven't figured out our like scalable repeatable marketing sort of flow. And that's, that's like one of the biggest things that we're trying to do. We're technically a Series A company. We've raised a few rounds of funding to get to Series B. We really need to show faster growth and show that we've really like locked in some of these mechanisms that have shorter payback periods and things like that.

Certainly, I guess in my head now, so I think it's gonna be relatable to a lot of the B2C and B2B marketplace founders. And then as far as, you know, on the note, as far as like growth and kind of expansion, you know, potentially in the future, do you see as far as, you know, expanding like the different kind of like types of brands, you know, that you treat? Yeah. Yeah.

So the way that we've thought about expanding is we have like product line and then we have countries and then the types of, types of categories. And so we started with peer-to-peer resale that was like just customers buying and selling to and from each other. And then we added brand direct. I mentioned that earlier, like this excess inventory stuff. We built in product features for that. And then we learned that customers— there's a whole swath of customers that don't want to sell peer-to-peer. They're just like, we call them convenience seekers, but really like they're lazy. And I'm actually in that crowd too. I just want to send my stuff in and get some credit for it. I don't really want to wait for it to sell and like take pictures and do all that. And so we built in a full trade-in model that allows customers to send in items to our network of 3PLs. So we built a global network of 3PLs where customers can send their items into. And those, those 3 like specialized 3PLs, third-party logistics centers, like fulfillment centers are receiving the items, verifying them, listing for sale and doing the fulfillment. They're also doing a lot of other cool stuff. Like the other new line that we built in right after this is returns. And so this is the thing I'm probably most excited about from like a business line standpoint. We were about to launch with 2 larger brands. that are fully integrated into their returns business. And so if you can imagine, brands get like 20% of their items typically are returned, especially in apparel, and 10 to 20% of those items cannot be like sold as, as new back on the brand's main site. And so there are billions of items that are this like second quality item that's like perfectly sellable, but not like mint, mint, mint condition. And so what we're building in is I— the item goes to the return warehouse in their software. They have grading and condition grading, and if they grade it anything less than perfect, it automatically gets listed to their resale site. And then it's built in with fulfillment with, with their own kind of management software for fulfillment. And so that's going to be really cool. I think there's so much potential there.

Yeah. Yeah. So it sounds like there's lots of, lots of moving pieces and, you know, so much opportunity as far as, you know, when it comes to what you're building with that, with Trete. You know, what is the team like today?

We are about 34, mostly in San Francisco. We have a small office in, in New York and we do our support out of the Philippines. So still, you know, I would say like still very much a small and mighty team. We're not really trying to grow that much. I think we grew a lot on our go-to-market side. We have 8 people on our sales team and so we're kind of growing into our size right now and trying to like prove ROI on these, these investments that we've made.

Awesome. And then another topic, and we'll get into that group Q&A here in a little bit, but I wanted to discuss is, you know, some of the different trends that you're seeing as far as like in fashion and commerce. So, you know, if we kind of like zoom out, you know, what are some just like, you know, bigger trends that you're seeing right now?

Well, I'd be remiss if I didn't mention tariffs just as it affects our business, which it really does in positive ways and very negative ways. And so we are pretty confused right now what's gonna take the cake, but we're listening and we're adapting already and we're trying to get ahead of things. And so, I mean, with tariffs comes potentially higher prices and there's all this research and articles about with higher prices and inflation, resale increases and the rate at which people are buying resale and discounted items goes up, which is cool. So maybe our sites will sell more and they'll be able to, if they have to raise prices elsewhere, they'll be able to like still maintain lower prices in the resale market and find those customers. The bummer is all of these brands in our pipeline are frantically trying to figure out what to do and, and are sometimes just like, can't do anything else. We're focused on core and, and pausing their conversations with us. So that's affecting our business negatively. Meanwhile, we're trying to be proactive to, to, we're actually rethinking our entire pricing model to make it free for brands to sign up, no out-of-pocket fees, no setup fees. And then we would take a very small percentage, which right now we take about a 10% cut on everything. We would take a much smaller percentage to cover like credit card processing and then earn based on the upspend when customers spend their credit on the brand's main site. Just an example of how we're trying to like go work with the trends and we're trying to listen to what, where the brand's fears are and what's happening right now and adapt our business accordingly. And then, and then there's a lot of regulation as well that's, that's positive that will in the next couple of years positively affect our business in the EU, California, Washington, New York, all these fashion acts that are essentially like responsibility acts that are going to force brands to take more accountability for their items post-purchase. And we fall like squarely in that, in that realm of helping brands do take-back programs and resale and helping them reduce their taxes and fees on what's going to be like eco-modulated fees, which is fancy for like weighted fees depending on how sustainable the brands are and how much they're able to like take control of their goods post-purchase.

It's definitely interesting to see, you know, the role that the resale marketplaces can, can play.

Yeah. Yeah, we can. I mean, fortunately, we're so small right now still that we can adapt pretty quickly and we can experiment and we're running experiments all the time to see what's going to stick. And then we obviously invest more in those things that work.

Yeah. Cool. We're going to get into the group Q&A, but right before we do, so you've raised, I believe, a little bit over $18 million from some pretty awesome investors. So, you know, what has the fundraising journey been like and what are your key fundraising learnings?

It's kind of a big question because I think it just really depends on who you are, what you're building, what round you're raising, etc. We raised our first round in 2021 when the markets were very different. People were clamoring to get into our round and we had to say no to a lot of investors. That was the best fundraising experience ever. I was like, this is easy. Like, It wasn't easy, but like it was, it was so much easier than it became. And then we raised our next round in 2022 and then the following round at the end of 2023 in our Series A. And they just got like progressively harder and harder as the markets shifted to be a lot more investor-friendly. And so back in 2021, we were, and still mostly today, the pre-seed round is largely just about team, vision and like initial proof points, like very, very initial. And you can raise a pre-seed round. And then things get progressively harder, right? So when we raised our last Series A, it was largely about proving like our payback periods for our sales team, looking at our P&L and our margins and like our cohort analysis and like the beginnings of a scalable sales strategy and things like that. So I mean, that's super broad. I don't know, Mike, how detailed you want to get. I can get into more detail there about like, I mean, tips and things like that, but—

It might actually be helpful to share like a few tips for those at like the early stages. So maybe like the kind of pre-seed stages.

Yeah. So, well, I mean, for me it was, I was fortunate enough to have an amazing co-founder. And so like really building out your team and selling your team is so important. And for actually in every round, I think of it as like points you're getting. If you don't have points in something, then you need to like get as many points as possible in the other things. And so if you don't have, if you don't have a co-founder and you don't have like this amazing built-out team, then you need to make up for those points in the idea itself, in the market, in your expertise in somewhere. to balance it out. And so like with our last round, we didn't really have enough points in like the revenue bucket. We were a little shy of where like really strong Series A founders were raising. And so we had to push and get as many points as possible in our like pipeline and in our growth for the last 12 months and where we expect that to grow. And so those are the things that we'd emphasize. And I also have a differing belief than a lot of founders about fundraising when it comes to like building relationships with, with investors. And it depends on your ability to come out the gate fully formed and build an investor pipeline list. But my advice is actually usually build it, build an investor CRM of like 70 investors that you think are perfect for your startup at your stage, in your category, in your geography, etc. And there's so many ways to do that. I mean, PitchBook and Crunchbase and all these tools and just looking at the investors of all of your competitors and then finding ways to get warm intros to those people when it becomes time. But I actually don't believe in having many conversations before you fundraise. Like, I think it's a big distraction. I think it can do more harm than good because all the investors want is they want to track you and they want to track your growth. And they want to like, they want to be first, your first call when you actually go in and fundraise. And so they have their agenda, which I think is very imbalanced with the, with the, the founder's agenda. And so if you say, hey, we're going to 3x this year, like that's our growth, we're at this GMV right now, like this is our market. And then they— and then a year later you talk to them and you don't hit those goals, but you still grew a lot and you can still really tell a great story. It only does you damage than having that first conversation. Not to mention, you're not really ready to answer these hard-hitting questions about competitors and market and things like that then versus when you come out fully formed, you've practiced, you got your pitch down, you know how to answer those questions. And you can build momentum very quickly. And so like, it's all about that pre-planning though. You want to be during the fundraise, you want to be as fast as possible, as tight as possible to build FOMO and momentum. So that it, it, you can say you can create these made-up deadlines with confidence and say, hey, we're making a decision in 2 weeks. If you want in, this is how it's gonna go. And then it puts you way more in the driver's seat.

Those are gonna be super helpful tips. So I appreciate sharing with us on that.

Yeah, of course.

Cool. We're getting into the Q&A. Hey, Dimitri, do you want to come on?

Yeah, thanks, Mike. Jake, this is what you're building is super exciting. I have many questions. Hard to pick just one. So I'm gonna kind of ask this question about sort of network effects. And I'm a former eBay guy. And so eBay, right, this global marketplace, and there's these huge network effects that there's lots of people on the other side. And then in your kind of product experience, the brands are sort of siloed. So they're, and that seems like that's something that they would value very much because they don't want their products next to competitors. But from a customer side, that's like a, sounds like a more challenging search experience because if I just need like a pair of jeans, Like I would kind of have to go, you know, brand by brand possibly. Can you help me kind of how, like what sort of how you think about that and why this is sort of a worthwhile trade-off for what you built?

So in regards to the customer experience, the end customer experience, we really compete more with like thinking about how brands are shopping direct from brands. So like through going to their Shopify site, And so if you know what brand you're shopping from, then it's a better shopping experience than trying to shop from them on Poshmark. So like for us, we're not really competing against a customer going to Poshmark and typing in denim pants. It's really like, I love Boyish Jeans. That's like my brand. And so I'm gonna go to that brand and nowhere else online will have a better secondhand shopping experience than going to Boyish Jeans secondhand website. And we actually, we've dipped our toe in the water a few times about like, should we build a cross-brand site? So we do have one single backend experience across all of our brands and we could do that. And we actually even have a landing page called treat.shop that has all of our brands listed. It's very elementary. It's not really built for customers. It's kind of just like our billboard. And we've tested a lot, like, are we ready to build this, like, cross-brand marketplace? And then, but it comes back to focus right now. Like, our focus will never have this big broad experience if we don't build lots of individual marketplaces from brands very quickly in this very competitive space. We didn't talk about competition, but like, this branded resale space has become a space since we started, and there's a lot of competition there. And so It's about where we can get the biggest bang for our buck right now. And even if we want to do this broader marketplace, it's a different business. It's a D2C marketplace business that takes a different marketing arm, more resources. But it's not to say that we won't do it. I actually think it's a really cool idea and we get a lot of data from Brit customers about what's in their closet, what they're selling. We even know how many customers are buying across from our brands right now. on their main site and the resale site. So eventually I think there's some really cool stuff that we can do with this sort of like co-selling, whether it's a brand, whether it's a unified marketplace across all of our brands or it's just like a curated recommendations marketing email sequence or it's like a post-purchase page or things like that that can like recommend future products and future brands.

Awesome.

Cool. Hey, Erica, do you wanna come on? Sure.

So I'm super curious, Jake, about like different verticals as far is like exploring, um, selling outside of fashion. Um, do you have any kind of tips or, or kind of, you know, ideas that you, um, are deliberating right now about exploring other verticals outside of just like apparel? Yeah, yeah, totally. Um, so apparel for us was the obvious choice to focus on and still is for the, for the foreseeable near future because of the growth in secondhand fashion. It's just like, that's where there's so much growth. But it's not where we only play. We also do, we launched a ceramics marketplace that does really well called Heath Ceramics. We work in bedding, not like peer-to-peer, but like we do a trade-in, we do a returns program in bedding and some other home goods. We work in jewelry a little bit. And for us, some of the decision factor is like, can this thing ship at an affordable price to shipping ratio? that makes sense. And, and also like big bulky items, we don't want to get in the space of like in-person trade-ins or trying to figure out how to do these like crazy big items, at least for the foreseeable future. So that's a little bit of how we think about it. I think toys is really interesting. We've had a bunch of conversations with Mattel about doing like American Girl doll resale marketplace and like collectibles are pretty cool. I think we could do more more in jewelry, um, and, uh, and potentially even like electronics. Um, but I say all these things knowing that apparel, there's just like still so much growth for, and we probably won't like deviate our product so much to accommodate other categories versus like our product is this right now. It will work great in these verticals, but especially apparel. And so that's where we're going to focus right now.

Awesome. are great questions. Hey, Dimitri, do you want to come back on?

Yeah, I'm really fascinated by kind of the, the ISO experience that you've built, which is something that a lot of, you know, there's a lot of graves of people trying to do that along the way. And kind of the conventional explanation why ISO is hard is that if a buyer is searching for something, the seller goes out, finds it, procures it, invests some effort, and then the buyer like tries to weasel out of that transaction. He says, oh, it's not exactly as described, or, you my demand maybe for this item has evaporated. And kind of another explanation, maybe like the ISO buyers are lazy. You see this a lot on Craigslist, right? Somebody's like, I'm searching for this and there's like 6 examples right below. And so people just don't want to interact with those folks because it gets like adverse selection. How did you overcome those issues? Or if those aren't the main blockers, what do you think is kind of the biggest thing that blocks these sites?

I wouldn't say that. I would say that the stakes are a lot lower for our ISO. It's in our ISO items that get listed have the highest conversion. I mean, it's funny, like we, I don't know if we've identified them as issues. We're just trying to get as many items listed. And so it's a great, it's a great question. It might be even a little bit of an area that we need to investigate more into. But essentially, the customers are able to find, as I mentioned, like their exact SKU and, and, and, and say, and add that as an ISO. And then we do go out and we send automated emails to some customers that have that in their closet to get it listed. And the conversion on those items is pretty high. I think it's high enough to where we haven't flagged it as an issue. And the other thing that we do is when If let's say no seller ends up listing that item, we still notify that end customer that signed up for that ASIO when that item gets listed overall. So it's been, it's been pretty good. Actually, I think our biggest issue is we want to tell more people about the ASIO. Like we want, we want more and more. We want to put it in more places throughout the selling shopping experience to, to get more, more and more listings signed up on that list.

Yeah. Uh, I mean, eBay had this capacity to, you could save a search, right? And then you'd get alerted and they used to sell that data through Terapeak to people. And I think they've since shut down that loophole, unfortunately.

I mean, the brands love that data too. And so like the other thing that we're sitting on is just like all this data we're not selling, we're just like giving it to the brand. Like, hey, this is what people are signing up to be notified. Um, and brands are starting to, I just posted about this yesterday on LinkedIn. They are starting to notice what brands are really popular on the resale site and what— what, like 3 years ago, something is trending again. They would not normally have access to any of that data on eBay or Poshmark, but now they have access. Like all these flower dresses that we produced 3 years ago are all of a sudden having a moment again. Let's build that concept into our future product line and help inform product development. So we have a few brands that are doing that. I always thought that that was gonna be more popular and cooler for brands than it has become, but some brands are leveraging that data in cool ways.

Thank you.

Cool. Hey, Erica, do you wanna come back on? We'll get in on one last question.

Sure. Just like a super, I guess, like question of the moment is how are founders using AI? And so I'd be super curious to know how you're leveraging AI to either support the brands that are on the platform or also like your customers or at any point in the kind of selling journey. So I mentioned a bit of what we're doing for the end users in terms of like curating products. I think that's the obvious one within, within resale. It's like what all of these resale founders are talking about. Curation is one of the biggest problems, especially with like broad resale marketplaces, is like finding the item you're looking for. And so I know ThredUp's been a pretty good— been pretty good about like putting in and weave into their search, like you could be like a summer dress for whatever, like trying to get very specific. We do have AI in our search, but it's not sophisticated to the point of like typing in a personality and like curating things like that. I think I'm most excited about something we're building on the AI front for item detection, actually. And so in the listing flow, because we have all of the brands' stock photos and all of their product data, we can tell even if you put like a black t-shirt on, on a, on a background and take a picture, we're getting really good at being able to detect what that item is. And then we can be like, is this the item that you are trying to sell? And we can pull in all the product photos that way. And then we're also doing a bunch on like customer support side of things and testing that. We're pretty close to determining a partner that's going to help us on the support side. And then, and then internally, like we're just, I mean, if our team isn't using an AI system for like an hour or 2 of their, of their day, something's not right. And so we've, we, and, but it doesn't always work out. We're like, we're always interested in testing. We, I would say one of the biggest mistakes we made was actually like we got rid of our outreach team for the most part and we invest in like AI outreach for sales. And we heard these stories of B2B SaaS founders in our space targeting like our brands, having all this success hiring these like AI companies that would come in and build AI systems for scalable outreach to, to our brands. And we tried that and like failed, utterly failed. We wasted like tens of thousands of dollars. It was not fun. And then we had to rebuild our sales motion from that. And now it's— now what we're doing is kind of a combination of everything. We have these Clay tables internally. We use AI to help populate some of our data and Clay for scraping information across resale sites and the brand sites and what tools they're using. And then we leverage all this data in pseudo-manual outreach with our SDR team so that they can use this data in their sequences, in their personalized outreach versus investing, like, investing 100% in AI and depending on that fully.

Awesome. That was a great last question. We appreciate it. And, you know, way to kind of wrap up the chat. That actually leads to so many more questions I would have, but I know we're out of time here. So, you know, really appreciate, you know, taking the time to join us here, Jake. This is awesome to hear. You know, little bit more about, you know, Treat, what you're building and, you know, the huge opportunity that, that's ahead as well. And then I actually had one last question for you before we wrap things up, and that's my usual closing question, which is if you could go right back to before you started Treat, you know, what would you tell yourself about marketplaces?

For us, it took us a long time to find our ICP brands where it just worked. And marketplaces don't just work. And even if you have all of the components and the features and the flywheel effects and all of this software built in, it's not just going to work in every situation. And sometimes it's just not going to work and it's hard to describe what's going to happen. And so I would tell myself to let go of trying to fight that upfront and embrace it and try to find the places where it does work and invest more and more into those brands, into that. And it took us a long time to, to, to own up to that. And what we've done recently is actually we built an entire account scoring model where we rate every brand in our book of business, in our pipeline, a scale of like 0 to 100 based on like dozens of factors of what we think a successful resale site will be versus saying, oh, they have a million site visits, they're a huge brand, resale is gonna work for them. Sometimes it doesn't. And so we've gotten really good at, at, at instead of pushing it to make it work, we're like under— understanding the factors and we're still like building features obviously to help make it work, but we're more so embracing that it's not always gonna be perfect, but we should try to discover the right places where it's gonna be the best fit.

Yeah, that's gonna be a great parting advice. It's definitely a humbling experience as well, right?

Yeah, yeah, yeah. It's been a journey.

Yeah. Well, cool. Well, well, last but not least, time for a quick plug. Where can we keep up with you at? And follow along?

I think LinkedIn is where I'm most active. Feel free to connect with me there if you guys ever want to chat or have other questions. Would love to also learn about what you guys are building and help any way I can. Kind of mentioned the caveat early on. I'm not like, we haven't sold this business for $100, $200 million. We're still building. We're still like very much in the thick of it. So if you just want to go back and forth on problems we're having or you're having and get some other feedback. Um, just let me know.