Marketplace Memo #1
1M Uber rides at the same time, Amazon selling cars, GM slashing Cruise, Service Titan scared of marketplaces and more!
Hi, it’s Colin from Take Rate. Welcome! I started this newsletter to share startup and marketplace advice for operators by operators. Content is best shared with others, so feel free to share, and if you have any questions, leave them in the comments below!
Welcome to the first edition of the Marketplace Memo. My goal is to share curated news, content, and stories I am seeing related to marketplaces with a splash of color from me. Please enjoy and share with others!
The Highlight of the Week
Not too bad for a company that ~15 years ago was hailing a few black cars in San Francisco. Now, it is moving the entire population concurrently. This is why I love consumer marketplaces so much, they have the potential to touch everyone in the world and create entirely new economies.
News
“You can buy your next Hyundai car on Amazon in these 48 US cities” - It was only a matter of time before Amazon expanded into this vertical but it is interesting to see how they do it and navigate dealership laws. The big question is if they will ever get into used autos. Link
“Cruise’s robotaxi service will likely shut down as GM pulls its funding” - We continue to see the shrinking of the potential supply side of the robotaxi marketplace with fewer competitors. Whoever can survive and make the technology/unit economics work will have a winner take most market at this point. The co-founder of Cruise has some choice words on the matter. Link
“E-commerce marketplace platform Mirakl acquires ad optimization startup Adspert” - Marketplace-in-a-box solutions are becoming more prevalent and expanding into advertising is a natural extension. Link
“ThredUp fashion marketplace offloads its European business, Remix” - Acquisitions are hard, and being public is also hard. The decline in the European business is probably weighing on the overall company performance, and this appears to be a situation where the parts are worth more separately than together if they can grow. ThredUp has done some cool things with AI and its marketplace. Link
Service Titan S-1 - Whether real or not the executive team at Service Titan listed “increased prevalence of marketplaces for contractors” as a risk factor. I am not sure I fully understand the risk here unless they are talking about marketplaces that build SaaS to compete or they don’t get paid for transactions that occur through third parties. My question is, why haven’t they built a marketplace to preempt this? Link
“Factors that adversely affect the trades industry, including industry consolidation, the increased prevalence of marketplaces for contractors, supply chain issues and labor shortages, could also adversely affect the demand for our platform and, as a result, our business, financial condition and results of operations.
We derive substantially all of our revenue from sales to trades businesses and transactions processed by such businesses. As a result, macroeconomic factors that negatively impact the trades industry, including industry consolidation, increased consumer reliance on online marketplaces connecting consumers to contractors, supply chain challenges, labor shortages and a lack of demand by consumers for the services provided by the trades, could also adversely affect our business, financial condition and results of operations.
Consolidation of trades businesses into larger industry participants within the trades has accelerated in recent years, and this trend could continue. We have in the past suffered, and may continue to suffer, reductions in subscriptions or non-renewal of customer subscriptions due to industry consolidation. We may not be able to expand sales of our subscriptions, Pro and FinTech products to existing or new customers enough to counteract any negative impact of industry consolidation on our business. New companies that result from such consolidation may decide to develop their own internal solutions or work with alternative providers. As these companies consolidate, competition to provide solutions and services will become more intense and establishing relationships with large industry participants will become more important. Additionally, these industry participants may also try to use their market power to negotiate price reductions for our subscriptions. If consolidation of our larger customers occurs, these consolidated companies may represent a larger percentage of business for us and, as a result, we are likely to rely more significantly on revenue from such consolidated companies to continue to achieve growth.
Fundraising
Leland announces a $14M Series A led by Forerunner Ventures, with participation from GSV, inVest Ventures, FJ Labs, Contrary, Peterson Ventures, and GSB Backers. Leland is a coaching marketplace matching people to coaches to allow them to get into school, build their careers, or take a test. Link
Fello announces a $7.3M Seed from Glen Tullman’s 62Ventures, The Capital Factory Fellowship Fund, Katalyst Capital, and Offline Ventures. This brings the total funding raised this year to $10.4M. Fello is a peer-to-peer support marketplace that allows you to talk to someone who has been through it vs. a therapist. Link
yhangry announces a $1M Seed Round, with participation from Michael Seibel and previously went through Y-Combinator. yhangry is a marketplace for hiring private chefs in the UK. Link
AlGooru announces a $4M pre-Series A round led by Constructor Capital, with participation from Hub71, angel investors, and family offices. This is a mix of debt and equity. AlGooru is a marketplace for connecting students and on-demand tutors in the Middle East. Link
Cravd announces $750K Pre-Seed with participation from Marketplace Capital and ODF. Cravd is a marketplace to bring healthy and affordable home cooked meals to more families. Link
Did I miss one? Email colin@yonder.vc with the subject line “Fundraising Announcement” to be included.
Reads
“How an App Selling Secondhand Clothes Went From Near Collapse to Worth $5 Billion” - Vinted article on the WSJ which is a timely read with the ThreadUp article. Link (Pay Wall)
“Sri Batchu is Not Your Classic Marketer” - A quick read about Sri Batchu’s philosophies and work to put TheRealReal back on the profitable growth path. Sri is the current CMO at TheRealReal and previously at Openstore, Ramp, Instacart, and Opendoor. One thing he says that I wholeheartedly agree with when it comes to finding growth channels:
“Building that repeatable growth is a lot more important than the kind of Road to El Dorado of trying to find the one magic channel that really works.”
Growth is about stacking tactics that are working to compound growth systematically. Always avoid ephemeral growth or what I call “sugar-high growth” that is short-lived and eventually ends in a crash. Link
“The Leaky Bucket Theory of Network Effects” - Another banger essay from Dan Hockenmaier about understanding the strength of network effects. When I think of strong network effects I think of something so powerful that it compels a certain behavior. For example, the sheer scale of Amazon’s demand aggregation has the supply side building their businesses around Amazon. If your network effects only slightly compel behavior they are weak but if they necessitate it they are strong.
“Marketplaces, Brokers and Storefronts” - Rick Zullo lays out Equal Venture’s take on what they call the “3 types of transaction facilitators.”
“Our Source of Truth on Marketplaces” - This is an amazing deep dive by the Forerunner team on marketplaces. It is a 10/10 presentation that you should read and it has so many takeaways. I strongly believe we are entering the next wave of generational marketplaces and they won’t look anything like the past ones. The trick is going to be understanding the new surface areas where they will form. Plus I got a nice little quote on Slide 19! Link
“Go-To-Market Moves for a Marketplace” - This post from Interplay’s Caroline Elliott covers why GMV might be misleading at first with marketplaces because starting within a niche is usually a dominant strategy. Investors need to see the forest through the trees if they can. Link
“The Marketplace+ Model” - Alright, this is a bit of self-promotion, but this is a fun interview with Armory Square Ventures on what I call the Marketplace+ Model. This subject warrants a full post of its own, but in the meantime, give this a read.
Jobs
Coming soon…
Want to see your job listed here? Be sure to email colin@yonder.vc with the subject line “Job Posting” to be included.
Thanks for reading!
That is a wrap for the week! As always, please feel free to email me at colin@yonder.vc with any feedback or news that I missed. Hot tips are always welcome. Please don’t forget to subscribe and please follow me on X and LinkedIn for other great marketplace content.
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About Me:
Colin is a marketplace geek. He is also the General Partner of Yonder a pre-seed marketplace fund investing in marketplaces that create new economies. He is a long-time advisor to marketplaces helping them with product, growth, monetization, liquidity optimization, and strategy. Previously he was the CPO/CRO at Outdoorsy and worked at Tripping.com, Ancestry.com, Justanswer, and the Federal Reserve.
Thanks Colin! Really interesting read, I've already recommended it to a couple of marketplace founders
Amazing run down of what matters. Thanks for the insights and link to the forerunner marketplace recap. Solid read