Evolution of Marketplaces and High-Value Transactions Online

Boris Wertz, the founding partner at Version One Ventures, a VC firm that invests in marketplaces and other startups, joins CJ to discuss the evolution and dynamics of marketplace models. Boris sheds light on his early years as a founder and operator at AbeBooks, and what he learned from selling the platform to Amazon during the dot-com boom. He explains the benefits of focusing on a niche instead of going too broad, how he solved the chicken and egg problem, and what it means to be a long-tail model operator. He and CJ discuss where we are today in the development life cycle of marketplaces and why having the mindshare of the buyer is more important than owning the underlying supply. Hear how the financial profiles of marketplace models differ from typical SaaS models, the importance of understanding where demand and supply match in what Boris refers to as a “hotspot”, and what metric is more important than the take rate and the average selling price. 

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FOLLOW US ON X:

@cjgustafson222 (CJ)

@bwertz (Boris)

Version One Ventures’ Guide to Marketplaces https://versionone.vc/marketplaces-guide-ed3/ 

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TIMESTAMPS:(00:00) Preview and Intro

(02:33) Sponsor - NetSuite | Maxio

(06:55) Winning in a Niche and Not Going Too Broad

(09:32) AbeBooks and the Chicken and Egg Problem

(11:22) Data Standardization and Abebooks’ Competitive Moat

(12:37) Buying Your Own Inventory and Doing Things That Don't Scale

(15:01) What It Means to Operate a Long-tail Model 

(17:28) Sponsor - Leapfin | Mercury

(19:27) Having the Mindshare of the Buyer Versus Owning the Supply

(23:35) The Shift From Products to Services in Marketplaces

(29:30) Where We Are Today in the Development Life Cycle of Marketplaces

(31:59) The Main Catalyst Driving the New Wave of Marketplaces

(33:25) Understanding Product Market Fit and Liquidity Ratios

(37:33) Financial Profiles of Marketplace Models Versus Typical SaaS Models

(43:46) The Importance of the Take Rate Metric in Marketplaces

(46:30) Why Frequency of Transactions Trumps Take Rate and Average Selling Price

(49:51) Boris’s Hit Rate in Returns on Early-stage Venture Investing

(50:56) The Most Important Question Boris Asks Pitching Founders

(51:22) Cracking the Chicken and Egg Problem

(53:09) Wrap