255. Launching Canada’s #1 Local Classifieds Site, Kijiji, The Flourishing Canadian Tech Ecosystem, and What to Look for in Early-stage Marketplace Startups (Janet Bannister)

Janet Bannister

Janet Bannister of Real Ventures joins Nick to discuss Launching Canada’s #1 Local Classifieds Site, Kijiji, The Flourishing Canadian Tech Ecosystem, and What to Look for in Early-stage Marketplace Startups. In this episode, we cover:

  • Walk us through your background and path to VC
  • What’s the thesis at Real Ventures?
  • Tell us about your time at Kijiji
  • You became the Managing Partner at Real Ventures  a few months before the pandemic.  What timing to take on the MP role!
  • You’ve talked about how it’s just as important to focus on founder development as it is to focus on business strategy and growth… in what areas do you find that founders need the most development help?
  • Largely speaking, what stats or trends across Canada lead you to believe that it will have a booming tech economy over the next decade?
  • What city gets most of your attention and what city/region is under-the-radar but shouldn’t be?
  • What are the top 3 things you’re looking for in a marketplace startup?
  • come for tool stay for marketplace… vice-versa?
  • Balanced scorecard
  • Let’s say you are approached to invest in a Consumer Marketplace company with $5M in GMV, a 30% 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

Guest Links:

Transcribed with AI

Intro 0:02
Welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran, and this is the full ratchet.

Nick Moran 0:18
Janet Bannister joins us today from Toronto, Canada. She is a managing partner at Real Ventures, an early stage VC investing in emerging Canadian tech ecosystems. Prior to real ventures, she worked on transforming eBay to a mainstream marketplace and launching and growing Kijiji into one of the most visited websites in Canada. Welcome to the show.

Speaker 2 0:38
Thanks so much for having me, Nick. It is great to be here. It’s

Nick Moran 0:42
a pleasure. Can you talk us through you know, your version of your background and your path to venture?

Speaker 2 0:46
Yes, absolutely. So, um, I guess I started my business exposure when I was 15 years old, I decided to start my own business. So that was, as I said, my first business experience when I was 15 years old, I started a muffin business. And I lived in Toronto at the time and used to get up at one o’clock in the morning, and bake 15 to 20 dozen muffins and deliver them up and down Young Street to a bunch of stores. So that was sort of my first experience, learned how to, you know, do a business plan, do financial statements, etc. And then had a few other entrepreneurial adventures throughout university. Following graduation, I joined Procter and Gamble is a great experience in terms of in brand management, really learning a lot about how brands are built a lot about consumer marketing, terrific experience. And after that, though, after about four years there, I decided to move on, I joined McKinsey. Again, another really formative experience in my early career, worked on several different industries and different functions, learned a lot about how to sort of dissect a problem and think through things. A great strategic thinking skill set, that was terrific. And then I decided that I wanted to do something more entrepreneurial. This was in 1999. And I decided that I wanted to move to the US, I wanted to move to Silicon Valley, and join a rapidly growing startup. And at that point, you know, I knew nobody in Silicon Valley, I had no tech experience to speak to. And I had no work visa or green card or anything that would let me move to the US. But I decided to not let that stop me. So I actually looked at, I looked online and found sort of a list of the top venture capital firms that existed in Silicon Valley. And I went through each of them and looked at the partners and tried to find somebody that would relate to me. And one of the firm’s was, was benchmark. And one of the partners at the time was Bob Cagle, who had a background in consumer packaged goods and management consulting. So I thought, Okay, here’s my target. Here’s somebody who may relate to me. And so I proceeded to phone him and email him about every two or three days, for a couple of weeks, until finally his assistant got back to me and said, Hey, Bob has got all your messages, and he has nothing for you. But I chatted with her and told her a little, a little bit about my background. And finally, she said, Well, I tell you what, next time you’re in the valley, you let me know. And I’ll arrange a meeting with Bob. Great. Wow. And yeah, so two weeks later, I called her up and I said, Hey, I’m gonna be in the valley next week. Do you think we could get that meeting with Bob? So I got my meeting, meeting with Bob. And then I thought, okay, now I better learn something about this guy who I’m going to meet. And I found out that amongst other things, he had put the original money into eBay. So I went and met with him. We had a great meeting. And he said, you know, Janet, you’ve got to join eBay. So he introduced me to Meg Whitman, who I met while I was there, she was, at that point, leading eBay and met her and as I said, one thing led to another I ended up moving to the valley, joined eBay, and it was a wonderful time of being here in a hypergrowth time at eBay. So that really was sort of how I got my start in technology. Amazing.

Nick Moran 4:44
And so did you move back to Canada before founding TGG then

Speaker 2 4:49
yes, yes. So base so I spent so at eBay, as it was great experience when I joined eBay was primarily a collectible site. And I was respond Both for non collectibles categories such as clothing, Home and Garden, jewelry, books, etc. And after several years in the valley, I then decided that I wanted to move back to Canada, Canada. My husband and I are both Canadians, and we wanted to raise your family there. So I talked to the folks at eBay and said, hey, you know, I would really like to move back to Canada. And here’s why. And they said, Okay, great. If that’s what you want to do, we’ll support you. So they came back, they said, look, let’s figure out what’s available in Canada. And we’ll come back to you. And they said, well, the only role that we had then to come back and said, hey, the only role that we have available in Canada is head of product. So responsible for the ebay.ca website, which is sort of like, it doesn’t seem quite as exciting as what I was doing in the US. But I guess if that’s my ticket home, you know, I’ll take it in. I’ll figure out what I do when I get there. So I ended up moving back, actually moved from California to Canada, in January, and people were like, did you know it snowed in Canada? Like, why would you move from California to Canada, in the middle of winter? But anyways, so I moved. And now was, and again, I can get into it if you want but basically at eBay had the realization that in piano, given the dynamics of the market, that a classified site would be more successful in Canada than the traditional marketplace. eBay business. Oh, interesting. Yeah, what was in? Well, when I looked at Obis, I started looking at the eBay metrics, and realize that in Canada, so in Canada, eBay was doing very well at getting visitors to the site. In fact, it was one of the highest countries around the world for eBay in terms of getting users to the site. So like the online penetration, however, once users got to the site to conversion from visitors to actually do anything on the site, and Canada, that number, it was half that of every other country in the world. Interesting. And so started, well, it was a bunch of things. As I said, this was not just an eBay issue, this was a more macro issue. Canadians spend a ton of time online but are reluctant to actually purchase. It was a several factors. One is you say the trust factor, interestingly enough catalog shopping, which have you thinking about really sort of a bit of a precursor to online shopping was much more developed in the US than in Canada. Right. So so that was part of it. The other issue was that the selection of products and the free shipping that’s available in the US was not, it’s just not the same in Canada. Oh, interesting. So the core value proposition of buying something online in canada at that time? It was not, it was not as great. I mean, I remember looking at Zappos at the time, was Apple’s had free shipping for shoes, right. Free shipping both ways. We shipping to buy shoes, free shipping to return it. In Canada, it costs $10 each way for shipping. Wow. Right. So that’s just one one small example. But that was, you know, mirrored throughout the throughout the throughout the country.

Nick Moran 8:22
Interesting. So you started this platform, which was, what somewhere in between Craigslist and eBay, it was a localized version of commerce, peer to peer.

Speaker 2 8:32
Yeah, yeah. So So basically, it was a project within eBay. And I know that none of the executives thought that this would work in Canada, but I was pretty passionate about it. And yeah, it was basically it was severe, similar to Craigslist. And in fact, a lot of the executives thought, oh, it will never work in Canada, because Craigslist is already there. So it was it’s very similar to Craigslist. I mean, the user interface was a bit more friendly. But what we did, which we think worked well is I said, okay, yeah, we might have a nicer user interface and things like that. But fundamentally, when we launch, we are not going to have the same number of listings as Craigslist. So on the core value proposition of, did I sell what I’m listing or did I find what I’m looking for, so whether your seller or buyer, Kijiji will not deliver as well on that core value proposition as Craigslist does. And therefore, if we want to be successful with Kijiji in Canada, we cannot compete with Craigslist and looking at who was on Craigslist. I did, you know, dug into it and found Hey, the people who own Craigslist are primarily male, young, like in their 20s who are using it for housing. A lot of personals was very well developed and categories like that. And so I thought, okay, we need to go after other categories, we need to target people who have no idea what Craigslist is. And so after, you know, thinking through a bunch of different options for that, I settled on new parents, I thought, okay, new parents, that’s a great target. Because first of all, you think about new parents, you either have enough, maybe buy a new car, maybe they bought her dog, they have to, they’re going through all sorts of clothing, the equipment in terms of the new bikes, hockey equipment, everything every year. And so we went after targeted those people. And so the core value proposition it was very similar to Craigslist, right, local free classifieds. But instead of competing with Craigslist, we were competing with garage sales. We were competing against newspaper ads. And we were competing against just having the stuff sit around in your garage. And that enabled us to be very successful. And what we did, particularly in the early years, is we didn’t take market share from Craigslist, we just significantly grew the size of the market.

Nick Moran 11:06
I assume you had to focus on your your supply side and build that up first and get, I guess, existing parent parents that are trying to unload a bunch of this stuff on the new parents on the platform so that, you know, there was a draw for users. Is that fair? Yes.

Speaker 2 11:24
I mean, it’s interesting around marketplaces and the whole old question, how do you build up the supply and the demand? And what do you do first, and my philosophy on that is, it’s not a matter of, hey, you got to build supply, and then you get the demand, I think that you need to do them in the same time, particularly in a category like online consumer classifieds. If somebody’s listing, let’s say a stroller for sale, I mean, they want they expect listings that week, you can sort of go now some marketplaces are more forgiving, but you can sort of say, Hey, we’re gonna build up the supply for two months, and then we’ll go and get the demand. And so the way I viewed it is, it’s all about making the individuals happy with their user experience. So if I’m, let’s continue the parenting example. If I put a kid’s bike that five year old kids bike on the site, because my son has outgrown it, well, then we as Kijiji, we need to make sure that there’s a buyer for that bike. And so it’s about growing supply and demand in lockstep. And thinking about it at a great, very granular, granular level to say, in what city in what category specifically what is on this site? And this, like, how do I get buyers to buy what’s on that site? And so the way we did that, was we would buy every day, we I mean, we really had very little money in terms of marketing budget, but more money we did use, we targeted it to say, Okay, what items are on the site? Is it as I said, we would change this every single day? What items are on the site? Okay, now, it let’s say it can continue the example in Toronto, there’s a kid’s bike for sale. Okay, now we need to go out and buy a keyword to drive a consumer who’s going to buy that kid’s bike? Wow. Right. And so I mean, I’m sort of taking it down to the micro level, obviously, it would be at a higher scale. But the concept of looking at the leaf level of the category, every city, within the leaf level, every day, how is that balance of supply and demand? And then where there is more supply than demand, get out and get more consumers there? And were there? Yeah, go ahead. Did

Nick Moran 13:44
you build city by city as well, to get the critical mass within certain GS? We

Speaker 2 13:48
started, we just launched it in Quebec, initially in Montreal and Quebec City. And then we expanded it to more cities. I think there were another eight cities after that, and then more cities, and again, we would look at where was their demand? Where were we getting inquiries? And then that would help to drive how we expand it. And

Nick Moran 14:09
could users from the beginning post any product they wanted? Or were you sort of restrictive in the categories that you allowed?

Speaker 2 14:17
No, we had pretty well a big category on the site, I mean, we would be under certain things like guns, you know, explicit categories, things like that, but it was it was very open. One of the things that we did was we took a page from the eBay book that we had learned, which was, you know, you sort of It’s like planting a lot of seeds and see what blooms and then when something blooms, you give that a lot of fertilizer and sunshine and water. And so there were definitely a few surprises. So for instance, the pets category, which you know, particularly in these times when pet ownership is is skywalk get in because of COVID. You know, that was never sort of on our radar screen is potentially a big category. And yet it took off. And so then when it took off, we said, okay, great, like here we have some traction. So now there’s obviously demand here. There’s supply here, we have a hit. And so now let’s double down on those categories.

Nick Moran 15:21
Again. You mentioned Meg Whitman before I just saw the news yesterday, the disheartening news that Kwibi shut down. I don’t know if you’re still in touch with her, but would be curious to hear your thoughts on, you know, what, what didn’t work in that business?

Speaker 2 15:37
Yeah, you know, it’s fascinating the amount of money that they raised? I know, I have been following that. I mean, they say that part of it is due to COVID. Because their whole platform and their value proposition was based on consuming content on the go. And then certainly people were not going anywhere, right. But I think that there are some really good learnings that come out of it. And I think, you know, going back to be careful how much you know, the fundamentals, like, Hey, be careful, don’t just go out and spend a bunch of money and then see if consumers will, will use the product. But growing the business in lockstep. And, you know, sometimes, and I think what’s interesting, I mean, certainly, I have a word of respect for Meg Whitman, and all of the other people who were involved in that just from what they’ve accomplished before, before this venture. But I have found in my own experience, that sometimes you get in entrepreneur who is either has a track record of success, or, you know, he’s overconfidence, or is almost able to raise money too easily. And you can lose that fundamental discipline of, okay, like, let’s be very careful, let’s make sure it works. Let’s put a bit of money, let’s make sure works, and then go now, I will recognize that this business was not really a business that you could do that in an easy way. But again, I think that it is a warning sign that you know, it building a business is hard, and nobody is immune to failure. Yeah.

Nick Moran 17:27
100%, and I do want to get back to real ventures, and then talk a bit more about marketplaces. But fast forward a bit, you know, 2014, you joined real ventures, and congratulations, you know, you you ascend to the MP role, right, as the pandemic lands on your plate. So I’m sure that that was interesting. But yeah, can you tell us a bit about real and in the thesis?

Speaker 2 17:50
Absolutely. Absolutely. So we’ll ventures was founded in 2007. And our focus is on investing in early stage Canadian based companies. And our thesis really is a couple of is grounded on a couple of things. First of all, we believe in the Canadian ecosystem. And we believe that Canada is a great place to start and grow a business. And why is that? Why do we believe that a couple of things, first of all, World, world class technical talent, particularly in AI, Montreal, and Toronto are globally recognized for that, in University of Waterloo is, which is about an hour from Toronto recognized around the world for the quality of their engineers. And, you know, really, as I said, I could talk more about that, but great tech talent. The other thing that we are finding more recently, frankly, is just strong, visionary founders. And I think one of the things that has helped to propel that is Shopify, which is probably our biggest, most recent tech success story. And so that’s what and I’ll come back and talk a little bit more about that. And then the other thing is just a growing investment capital. So from 2015 to 2019, the amount of venture capital that went into Canadian firms grew 2.7x, which is faster than both the US and the global markets. And what we’re seeing now in Canada is, I mean, I believe that ecosystems are, it’s a virtuous circle, right? It’s like you’ve got this standard network effects, where success begets success, where the more success you have, then you have repeated entrepreneurs that come into the market or even talent at all levels have been through it again, and then you have success and then you attract more talent. And we are definitely seeing that and I can say, you know, I’ve now been in real ventures for over six years, and the amount of interest from into National investors in Canada has grown significantly, and the quality of the companies that are being founded and being grown in Canada is multiple is, you know, several X several times greater then, you know, then even three or four years ago. So, you know, yes,

Nick Moran 20:21
it’s great government support as well, like, I’m amazed at the shred credits and everything else that early stage founders are able to secure. Absolutely,

Speaker 2 20:30
it’s great government support, I mean, in the form of tax credits in terms of incubators and accelerators. But in terms of tax credits, for instance, you know, that speaks to another point, which is the cost of building a company. So within Toronto, which, frankly, is the most expensive city in Canada, but if you look at the cost of building a company in Toronto, everything like to like to building that company in San Francisco, your cost in Toronto was going to be one half of that in San Francisco, again, like for like in terms of the talent and number of people, etc. So, overall, we’re very bullish on Canada. Secondly, it’s early stage within Canada, and why early stage. First of all, you know, we love early stage, we love for having that foundational relationship with the entrepreneurs, and really helping them. But we also see a unique white space in Canada early stage, because what we are seeing is that these international investors, particularly from the US, but also elsewhere, are coming into Canada, but they’re coming in at the series A and beyond. Because they say we’re not gonna We’re not necessarily going to do seed stage in Canada. You know, we’re too far away, we don’t really understand the market, we don’t know enough of the talent, etc. But if you have a Canadian investor that helps them get to Series A, they then have more milestones and the investors are coming in. Yep.

Nick Moran 21:58
Quite similar in the Midwest

Speaker 2 22:01
of the US. Exactly. Yeah, exactly. And so therefore, focusing on early stage, we believe that we can see outsized returns, because there is we can get in where the valuations at the early stage are not the overheated valuations that we see elsewhere in North America. And yet, when they get to the series and beyond, they now have access to a global talent global, so a global venture capital pool, and so they benefit from those evaluations. Yep, yep. 100. In a nutshell, you know, that’s our focus, we’re fairly abroad in terms of the types of companies that we invest in. Definitely geared more towards business to business. But we have within our portfolio, we have some AI, we have some chip companies, we have a lot of vertical SAS, we have marketplaces, some health tech, like digital health, a FinTech companies. So really, fairly broad. We, I mean, we don’t get into, like anything like sciences related, just because that’s not our focus area. But as I said, fairly broad, so generalist that at the seed stage, yeah. generalist at seed stage in Canada. And

Nick Moran 23:15
in do you guys lead? Do you co invest? Yep.

Speaker 2 23:18
So our model is to lead. And where we really dig in and roll up our sleeves is to help the companies get from seed to Series A. So from before we invest, we have a very specific plan with the founder in terms of okay, what are the milestones you’re going to need to achieve before you get to Series A, how much runway do you need? And, you know, as I said, from doing this since 2007, we have and we also run our own accelerator as well, we’re partnered with TechStars, to bring TechStars to Canada. So you know, we’re fairly, have a fairly deep skill set good playbook in terms of helping companies get from C to Series A, and making sure that they do that. And then we have a very large solid network of venture capital firms who like to lead the Series A, which are a series a rounds in our companies, who have co invested in with us in the past. Yeah, out

Nick Moran 24:14
of curiosity, you know, we focus a lot on sort of the path from seed day for, you know, the middle of the country in the US. And I’d be curious to hear what do you think is the biggest blind spot that founders have that you noticed most often, you know, when you’re trying to help them map out the path to Series A, you know, the area that maybe they need the most coaching?

Speaker 2 24:37
So, I mean, two things, one, umbrella Chromat. And then one more specific in terms of an umbrella comment. I mean, I love entrepreneurs. They tend to be very optimistic, though.

Nick Moran 24:51
Very often.

Speaker 2 24:55
Sometimes they have a plan and it’s like, yes, you were gonna do this and, and then we’re gonna Do this and it’s like, okay, well, what happens if it doesn’t work right? The first time out of the gate? So I think that reality is like, Okay, well, we need a bit more buffer. And we need to be ready. And, and then frankly, managing that emotional journey when they, you know, when things don’t necessarily go the way that they had thought, sure. And so, but as I said, sort of overall umbrella, just, you know, making helping them realize it’s not going to go quite as smoothly as you think. So let’s be prepared. And when the unfortunate does happen, it’s okay, you know, like, this is fun is part of the journey, let’s figure it out. And let’s double down and let’s figure out how we’re going to grow the business. That was the umbrella, I think in terms of the specific area, I find the go to market and sales strategy is something that a lot of founders generally are generally speaking underestimate. And I think a lot of it is because in the stereotypical, you know, two co founders, you’ve got one person is technical, one person takes on the role of CEO. And we talk, you know, a lot of the times companies will have founder driven sales. But when you get into sales, and particularly enterprise sales, like it, there’s an there’s a real science there in terms of how to do enterprise sales. Well, it’s not something that somebody can go and do. They’ve never done it before, but they know the product and they can pitch it, it’s like, well, it’s not actually that easy, right? To do enterprise sales. Well, you need to understand there’s a real, as I said, almost a science to it, you’ve got to understand all the different players and how to block and tackle and things like that. So I find, you know, as I said, enterprise sales, but also go to market in general, whether if that’s if it’s more consumer facing really figuring out the marketing approach. I think, too many times, at the early stage, founders think about is my product needed, what’s unique, they get really excited about, you know, their technology, and who’s going to buy it, and why this is going to be a great fit. And it’s like, Well, okay, that’s good. But we need to now get that and get the product into the hands of consumers and get them paying or our customers and get them paying for it. Yes, I couldn’t

Nick Moran 27:24
agree with you more. I mean, especially with you know, now product lead growth becoming so popular, so there’s, you know, some top down some bottom up all the playbooks required for your internals, externals, STRS, account executives, customer success, I mean, it’s, there is very much a, a science to this, it’s not just, Hey, let’s let’s launch this product, and it should be easy to sell. And your point, your general point about optimism, it’s kind of funny, when, when the black swan memo came out, we sent out an email to our entire portfolio and kind of very concisely just suggested Hey, guys, this is gonna be and gals, this is gonna be really tough time, you should start thinking about, you know, controlling costs and expenses and whatnot. My most optimistic founder, called me immediately, he’s like, are you okay? Is everything all right? He’s like, this is gonna be nothing, this is just gonna be a blip. And I’m like, So and so just be ready. Because it’s going to be something. Yes, yeah. Yeah. A lot of yeah, a lot of founders just don’t see the, the pessimistic case. You know, I imagine you guys are based in Toronto. So I imagine you have a lot of focus there. What city outside of Toronto in Canada gets the most amount of attention from Venture dollars. And what city or region do you think is most under the radar? But shouldn’t be? Yeah,

Speaker 2 28:46
that’s a great question. So the city after Toronto that gets the most investment dollars is Montreal, we have an office, but we have offices, both in Montreal and Toronto. And you know, as interesting is that Montreal is ahead of Vancouver, if you look at the stats, even though the population of Vancouver is higher. And I think that’s driven by a couple of things, including the the overall ecosystem is just more developed in Montreal, the government of Quebec has invested heavily in recognize the need to have a strong tech ecosystem. There’s more support groups within Montreal for entrepreneurs. The other thing is, Montreal has outstanding technical talent. Yoshua Bengio teachers there. He’s one of the founding fathers of AI and there’s other great technical and engineering schools in Montreal. So that would be sort of to answer your question the second city in terms of areas that are under the radar. You know, there’s, I think there’s a couple of interesting companies coming out from took The middle of the country. So I’m thinking Winnipeg, Saskatoon. That area, skip the dishes, which you may have heard of, that came out of that area. And there’s a couple of other strong companies that are starting to get starting to get some traction in that area. But it’s often overlooked.

Nick Moran 30:20
Is there a university there?

Speaker 2 30:23
There are some universities, I think that what’s attractive is and like, for instance, the skip the dishes, a founders who I know, would say this, that it’s sort of the prairie mentality of working hard working, resource driven, you know, yeah, hard, working, resourceful, and sort of roll up your sleeves and don’t give up. I think that dad is really the one of the fundamentals that’s driving it driving a lot of the success that we see in that area. I

Nick Moran 30:58
love that mentality. Yeah, going back to marketplaces for a minute, you do a lot of marketplace investing. What, at the seed stage, you know, what are maybe the top three things that that you’re looking for, in a marketplace startup, at these very early stages? Yeah.

Speaker 2 31:19
So I think at the fundament, again, it just sort of depends on where the where the company is. But I look at what I sometimes talk about is the kernel of something. And so when I’m looking at a marketplace, I don’t frankly care how many unique visitors you have and how many sellers you have, and how much even how much GMV you’re doing. It’s much more about is there their kernel. And so what I mean by that is, what percentage of users who come to the site or listing an item of those items that are listed, what percentage are sold of the people who come to the site to buy something, what percentage of those buy an item, right? Like, what is your flow through? And it’s really looking at this initial, I mean, I guess you could call it initial product market fit, but it’s it does your marketplace, have some liquidity or seller’s needs being met, or buyers needs being met. And to me, that’s much more important, because and you have to look at that on a very granular level. Because otherwise, it’s easy to sort of disguise successes as a marketplace, if you’re spending money, or somehow you’ve you know, getting a lot of traffic, and you could have 1000s of buyers and 1000s of sellers. And by chance they could be buying some things in between. But if 80 or 90% of your buyers come and leave without buying something, and a high percentage of your sellers are not selling what they’re listing, you don’t have the fundamentals in place. So you don’t have that kernel that’s going to propel you to build a big marketplace. So that’s one of the core things that I look at. The other thing that I look at is okay, what is you know, basically, what is the market size? How big can this be? And thinking about? Okay, where’s this going to go? So for instance, if you think about eBay, it started as a as a classifieds marketplace. And then it got into other other categories. So it’s like, okay, how big can this be? And is the current market where it’s going to end up? And we need to understand what is that mark? You know, how big is that market? How attractive is that market? How come? You know, what’s the competitive next like, and then on? Or is this Hey, this is just a toehold. And then you’re gonna get liquidity you can establish there and then go into other categories. So it’s really Hey, what is the long term plan for this business? And then the other thing I look at is, okay, what is going to be key to success? Is this really an execution play? Or is this a technology driven play? And so marketplaces can have technology as their core, their core, and other marketplaces, really, you look at it, and it’s like, okay, the technology. Yeah, it’s good. And you need to continue developing the technology. But it’s it’s not rocket science in terms of what the technology is. And it really comes down to execution. And in that case, then so much is okay, are these scrappy founders mean? In any case, obviously, it goes without saying the founders are important, and team is absolutely critical. But you always need it’s like, okay, well, what are the key skill sets and if it’s an execution play, and it’s simply Okay, these guys are the first ones out there. They’ve got to go and they’ve got to go fast and they’ve got to win this market before anybody else. Then I would put a lot of emphasis on what is their track record and can they be scrappy, and can they grow quickly? Because if you’re in a race to achieve market dominants you can’t make you don’t have a lot of room to make mistakes.

Nick Moran 35:06
You mentioned benchmark before. And I think sort of one of the cliches about marketplaces came out of benchmark about how you kind of come for the tool and you stay for the marketplace. Is that? Is that something that you’ve invested around in the past? And I guess my follow on question is, I’m starting to see the reverse. In some instances, I’m starting to see some founders with pitches, like come for the marketplace stay for the tool. So like, you know, could be enterprise SAS workflow too, and that tool, and they have some sort of quoting or a marketplace. thing on the front end. So yeah, thoughts on on either of those?

Speaker 2 35:43
Yeah, absolutely. I mean, we have one company called partner stack. And it is it in this theme, in terms of what they have is they have a SaaS platform. But then layered on top of that is a marketplace. And specifically, what they do is they enable companies to run their software to enable companies to very quickly start a partner program. So for instance, they work with Intuit, to enable Intuit to sell through accountants and have the accountants earn your own revenue. So that really a soup to nuts, you know, turnkey system, if you are a software company and want to sell through partners, whether those partners be you know, as I said, accountants or web developers, or marketing agencies, etc. And so that’s great. But then where the real power is, is they have this marketplace element, where, for instance, you know, continuing the example of an accountant, they might come on, and Intuit brings them onto the marketplace, so that these accountants can sell Intuit software and get paid. And then they’re on there and they say, Oh, hey, here is a time and attendance, scheduling that I can also offer to my clients and get money. And so what they’re finding is every partner on the platform ends up we selling four to five different programs. And so for a partner for a company that signs up, hey, they might get that SAS platform, but more but more importantly, they can get up to 50 or 60% more revenue through their partner channel, because it’s not just the partners that they can attract. It’s also other partners. And so what I love about that model is you don’t need to worry about the the chicken in the egg that you often have about talking about marketplaces, because you have a SASS platform that in and of itself is extremely valuable. But there’s a marketplace component layered on top of that, which brings even more value. And that’s a company that’s doing extremely well. And they didn’t need to worry about this chicken in the egg. They just were able to sell this as a software platform. But now they’re getting these network effects and the value proposition that they’re able to offer and their competitive moat is growing very quickly.

Nick Moran 38:09
What a flywheel. Janet, what do you know, you need to get better at,

Speaker 2 38:14
oh, that’s easy. I need to get better at saying no to request for my time. I think particularly since becoming the managing partner plus managing my portfolio. It’s it’s, it’s just tough. And frankly, like, I love my work, I absolutely love it. I love meeting with entrepreneurs, I love meeting with other folks of all different types, because it’s always a learning opportunity. But I need to say know, a little bit more often. Any

Nick Moran 38:42
final words of advice or encouragement for the founders or investors out there?

Speaker 2 38:47
Um, so I would just say for investors, you know, I think this is the best job in the world. But I think it comes with a huge amount of responsibility for us all to be our best selves, for the sake of the entrepreneurs. And so that’s what I would say in terms of founders, I would say you guys are awesome. I love what I do. I say to people every day, my inspiration is my founders. You know, when you mentioned, Nick, becoming the managing partner right before COVID happened. And a lot of people I knew would reach out and say, Oh, my gosh, Janet, how are you doing this? You’re the managing partner one month, managing partner one month before COVID hits. And I was like, You know what I look at my founders, they are not sitting around complaining. They are heads down. We’re going to figure this out. We’re going to survive. We’re going to make the hard decisions. We’re going to pivot we’re going to do what we need to do. And I said, How can I not be absolutely inspired and motivated when I get to work with those sorts of people every day? That’s great.

Nick Moran 39:52
And then finally, what’s the best way for listeners to connect with you and follow real ventures?

Speaker 2 39:57
Oh, fantastic. So you can follow me on Twitter. It’s my Twitter is Jay e banister with two NBA nn is t er, feel free to reach out our website is we’ll ventures.com Feel free, you can go there and follow us on social you can send if you want to get in touch with me, you can send an email through that, or I’ll give you my email address. It’s Janet. So Jay at wheel ventures.com. And we’d love to hear from anybody.

Nick Moran 40:28
You know, thank you so much for the time today. Thanks for all you’ve done for Canada, you know, since you started and all you continue to do now at real ventures really appreciate the time.

Unknown Speaker 40:38
Thank you so much, Nick.

Speaker 3 40:45
That will wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us