Brennan discusses how Patch built an API-first B2B marketplace, including strategies to solve the cold-start problem by pre-selling roadmap features, onboarding both supply and demand sides, and compressing sales cycles from months to weeks as the product matured.
Yeah, so I'm really interested in the kind of API-first approach. I think you're actually one of the first founders to join us that has an API kind of first marketplace. So, you know, getting a little bit more specific into that, you know, like, can you walk us through the steps to starting, you know, Patch and then how it's maybe evolved?
Yeah, absolutely. So for us, because, so, you know, there's this classic, like, Andrew Chen, he talks about this idea of the cold start problem and common problem to have with marketplaces, which side do you focus on first? So what we actually focused on at Patch was essentially because sales cycles are so long with infrastructure companies specifically. So you don't get like the immediate, like B2C consumer activation where someone signs on and maybe can transact on the same day. You typically have to integrate with something, right? So there's code that needs to be written. And so as a result, you can actually— what we actually did is we pre-sold a lot of what was on Patch. And so we're like, this is like what maybe our 3 to 6 month roadmap is. We actually don't have any of it, but we're gonna pre-sell that kind of those capabilities to help people understand where we're heading. And, you know, if this is something they do or don't want, based on that feedback, we were able to course correct a little bit. You know, it's better to get feedback before we build something than after. It's a lot easier to get on the right track. And while we were doing that, we were onboarding supply. Where suppliers, it was actually a lot faster to onboard. So we would say, hey, we have, you know, Palm or Persephone or X, Y, and Z company onboarding on Patch. They're gonna be on like 2 or 3 months. So you need to make a decision in 2 or 3 months whether or not you want to get access to this demand or not. And that becomes a very tangible and easy to have conversation because they're not like betting on you and wondering, oh, is the demand going to come or not? And so we got in a lot of situations where people were, suppliers specifically would get on Patch. and start and kind of actually get their first couple of sales within the first month or 2, because again, we kind of had this integration piece in place and we could kind of— it was almost, it was actually a pretty interesting orchestration experiment where it's like, okay, it's like this company's 6 months out, they want that supplier who's 1 month out. Okay, like that matchup is gonna make sense. And we kind of thread the needle a couple times there where then eventually you kind of hit that critical mass. And now we're at the situation where the supply and demand on each side is balanced out and we're not Having to do that dance anymore.
So, you know, maybe what are some unique challenges with the kind of API-first approach that you maybe didn't, you know, see in the very beginning?
Totally. So, I mean, I think, I mean, definitely a unique challenge with API-first marketplaces definitely is the lead time required to get someone live. So I think that was probably predictable. That being said, it still is a unique challenge you have to kind of balance. Now, because of that, because we're both B2B and API-first, which they tend to be mostly— that tends to be like, they tend to coincide with each other— we're able to put a little bit more attention per customer getting onboarded. And so we're really able to make sure, like, as they activate on the platform, they have a really good experience because we don't need, you know, 10 million users of Patch to be really successful. We actually probably only need, you know, 1,000 to 10,000 users. We look again, we're looking at the structure of business versus a, versus a market, like a true B2C marketplace. And as a result, you know, you're going to have maybe 1,000 customers with an ACV between $100,000 to $1 million. And it's like, so you really actually only have 1,000 people you need to make sure, or 1,000 parties, you need to make sure to have a really, really remarkable experience. That being said, that results in typically a longer lead time. And so when you're, you know, you have 18 months of runway and it takes— the sales cycle is 6 months, that's pretty problematic. And so we've spent a lot of time compressing that sales cycle where, you know, it used to like from start to finish take 4 or 5 months to get something done. Now we're actually at the 4 to 5 week mark, which is a lot more palatable. It's a lot easier to predict new people coming on the platform. And that really just comes from maturation of the product and the sales team.
