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One key strategy for driving growth in marketplaces is through product enhancements and additional use cases that reduce friction and improve the user experience. For example, eBay introduced fixed price formats alongside auctions to cater to different audience preferences and product types, which accelerated growth. Enhancements like integrated payments, as seen in PayPal's acquisition of Billpoint, also played a significant role in reducing friction and improving the user experience. These layers of growth require constant innovation and a focus on addressing user needs and preferences.
While horizontal marketplaces like eBay have a wide range of products and categories, there is always the risk of being hollowed out by specialized vertical marketplaces. These specialized marketplaces focus on a specific vertical or category and tailor the user experience and offering to the unique attributes of that vertical. Examples like GOAT and StockX in sneaker and streetwear marketplaces showcase the success of vertical approaches. By providing a more targeted experience and addressing specific user needs, these vertical marketplaces can gain a competitive edge and capture significant market share within their niche.
There are several industry segments that still present untapped opportunities for marketplaces. In the rental market, for example, there is a need for an improved platform that offers a better user experience and addresses the friction users currently face. Blue-collar job markets also lack effective online platforms, providing the potential for a marketplace to connect job seekers and employers within this segment. Similarly, the service sector, including home services, presents an opportunity for a more efficient and convenient marketplace to match consumers with service providers. These segments are still waiting for disruptive marketplaces to emerge and revolutionize their respective industries.
Pinterest offers a unique example of a marketplace that experienced its own layers of growth. Like many successful marketplaces, Pinterest had to iterate and experiment to find its product-market fit. Innovation and persistence were key as the company explored different functionalities, user communities, and influencer strategies. Through dedicated efforts and the willingness to adapt, Pinterest successfully transitioned from a phase of uncertainty to a beloved platform with a strong user base. This journey underscores the importance of perseverance and continuous refinement in building a successful marketplace.
Andreesen Horowitz differentiates itself in the venture capital industry by adopting a distinct approach. Inspired by the talent agency model pioneered by CAA in Hollywood, Andreesen Horowitz focuses on assembling a team of experts who serve as resources for the startups in their portfolio. Rather than relying solely on individual partners, the firm leverages collective expertise across various domains and specializations to provide more comprehensive support to its portfolio companies. This approach fosters a stronger relationship between the firm and the talent, enhancing the value and assistance offered beyond just financial backing.
The podcast episode discusses the significance of networks and founders in driving innovation and building successful businesses. The hosts highlight the importance of having guidance and networks for early-stage entrepreneurs. They emphasize the value of connecting with experienced founders who can offer introductions and support. The episode also highlights the role of old operating people in early-stage companies and the systematic development of networks to assist founders. The hosts affirm that this model has created significant value for entrepreneurs and is supported by prominent entrepreneurs in the industry.
The podcast episode explores the establishment and integration of firm culture. The hosts specifically mention the example of one founder who created a firm culture early on and successfully integrated it into the day-to-day operations of the firm. The culture emphasizes doing first-class business in a first-class way, playing to win, valuing diversity, and respecting the entrepreneurial process. The hosts discuss the positive impact of this culture, including a consistent user experience and a sense of teamwork and commitment among team members. They also highlight their individual strengths and highlight the importance of teamwork in achieving success.
My guest today is Jeff Jordan, General Partner at Andreessen Horowitz. Jeff has one of the most interesting set of experiences of guests that I’ve had on the show. As an operator, he has been the General Manager of eBay.com, President of PayPal, and CEO of OpenTable. As an investor, he was one of the first General Partners at a16z and sits on the board of Airbnb, Instacart, Pinterest, and other notable firms. Given his vast experience, he is the firm’s go-to-expert on all things marketplaces, which is the common thread in our conversation. Please enjoy this great discussion with Jeff Jordan.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Lemon.io. The team at Lemon.io has built a network of Eastern European developers ready to pair with fast-growing startups. We have faced challenges hiring engineering talent for various projects - and Lemon.io offered developers for one-off projects, developers for full start to finish product development, or developers that could be add-ons to the existing team. Check out lemon.io/patrick to learn more.
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Invest Like the Best is a property of Colossus, LLC. For more episodes of Invest Like the Best, visit joincolossus.com/episodes.
Past guests include Tobi Lutke, Kevin Systrom, Mike Krieger, John Collison, Kat Cole, Marc Andreessen, Matthew Ball, Bill Gurley, Anu Hariharan, Ben Thompson, and many more.
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Show Notes
[00:02:48] - The notion of perfect competition in marketplaces
[00:04:31] - How to build a marketplace while thinking about perfect competition
[00:05:32] - Promoting price discovery at eBay
[00:06:52] - Features of a marketplace he focuses on
[00:08:38] - Best way to do lead generation
[00:10:20] - Red flags for marketplace businesses
[00:11:00] - Major business lessons learned while at Disney
[00:12:10] - Learning to be an operator while at eBay; Leaving It All on the Field
[00:14:45] - How he got hired at OpenTable
[00:16:22] - Taking OpenTable public and being its first public company CEO
[00:17:44] - What they did well in financing OpenTable
[00:18:54] - Communications between company leaders and its investors
[00:19:45] - Going from operator to investor
[00:22:08] - Lessons from the early years of becoming an investor and pricing companies
[00:24:12] - Power of network effects on a startup
[00:26:56] - Healthy tensions inside of a network
[00:29:23] - When the supply side is the more difficult part of the equation
[00:33:30] - The importance of being a perpetual learner as a founder
[00:35:36] - When he starts focusing on unit economics and margin profile in a new marketplace
[00:37:45] - Increasing convenience for a buyer as a business strategy
[00:42:14] - Categories that could use better marketplace solutions
[00:44:36] - Layers of growth inside a business
[00:50:26] - Lessons with the unique business model of Pinterest
[00:52:03] - Unique aspects of the Andreessen Horowitz business model
[00:55:54] - Finding and recruiting talented general partner investors
[00:57:37] - The morning basketball game and community strengthening
[01:01:36] - Defining great mentor relationships
[01:04:54] - Kindest thing anyone has done for him
[01:06:05] - Lessons from his parents
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