Sarah Tavel of Benchmark joins Nick on a special Crisis Coverage installment to discuss Consumer Marketplace Investing; Why Aggregate GMV is a Red Herring; and Minimum Viable Happiness as the Key to Market Leadership. In this episode, we cover:
- Background and path to venture?
- Quick overview of the thesis and your focus at Benchmark
- What are your thoughts on platform VC?
- What tactics or approaches do you use in the process of “scaling your founder”?
- You sit on the board of some companies, such as HipCamp, that have been greatly affected by the pandemic — What are some of the creative responses you’ve seen from portfolio companies?
- Is there anything fundamental to Marketplace businesses that you think will shift as a result of the crisis and changes in consumer behavior?
- In the food delivery space, we recently witnessed DoorDash unseating the larger incumbent: GrubHub, with the greatest market share. DoorDash started after PostMates and years after Grubhub… how’d they do it?
- Do you currently see or do you predict more situations where a startup capturing more supply will lead to displacement of a large tech company as market share leader?… if so, in what markets?
- Recently, you published a series of newsletters talking about the hierarchy of marketplaces… first off, what are the three phases that you’ve outlined here?
- Why is a push to aggregate GMV across many markets, less important than dominance in one market?
- What is Minimum Viable Liquidity?
- How do you define/measure happiness?
- At what levels do you know you’ve reached MVL or MVH?
- Level 2 of your Marketplace framework… Can you talk about what it means for a marketplace to “tip” and how do marketplace based businesses achieve this?
- Is there something specific that happens w/ the metrics of a businesses that show that the marketplace is tipping?
- Do different stages of fundraising map to these phases?
- The third phase you refer to is the ‘Outrun’ phase… walk us through the main focus areas in this phase.
- Homogeneity of the buy-side as a negative… can you expand on this?
- How does your evaluation of a marketplace based business differ whether it’s a b2b company or a b2c company, if at all?
- Let’s say you are approached to invest in a Consumer Marketplace company with $10M in GMV, a 25% take rate, and 20% MoM growth for the last 6 months.
- Catch is you can only ask for 3 data points to make your decision.
- What 3 questions do you ask for?