In the latest episode of the 20 minutes VC, host Harry Stebbings interviews Boris Vertz, a prominent early-stage tech investor and founding partner at Version One, who also collaborates with Andreessen Horowitz. Boris shares his journey from an entrepreneur at AbeBooks.com to becoming an investor, leveraging the proceeds from its sale to Amazon. He discusses the dynamics of marketplace models, emphasizing the importance of supply, the impact of mobile technology, and the potential of vertical marketplaces due to internet proliferation. Boris also highlights the significance of trust and safety, the rise of power sellers, and the development of an ecosystem around successful marketplaces. Additionally, the episode touches on the release of Version One's marketplace guidebook, which consolidates knowledge on building successful marketplaces. Finally, Stebbings promotes a free trial of Loyalty Bay, a SaaS tool designed to boost website conversion rates.
And before we dive into the show the other day I was chatting to a friend of mine, the awesome Tiffany Zhang at Binary Capital, and she suggested the 20 minutes VC produce written content of the best bits from each episode.
This quote introduces the idea of producing written content to complement the podcast episodes, as suggested by Tiffany Zhang from Binary Capital.
I'm so thrilled to welcome an amazing guest for today's show, Boris Vertz. Boris is one of the top tech early stage investors in North America and he's the founding partner of version one of whom I was very lucky to interview Angela tran King Yens earlier this year, episode 38, if you missed that one.
Harry Stebbings introduces Boris Wertz, highlighting his achievements and contributions to the tech industry and venture capital space.
Yeah, I mean, it was a little bit random in a certain way. I always knew I would love to become an entrepreneur, but in 99, Internet 1.0, kind of the big bubble, there was an incredible excitement around the Internet and I thought, like, I just have to be part of it.
Boris Wertz describes his initial draw to the technology industry and becoming an entrepreneur during the Internet 1.0 era, which led to the founding of his company, JustBooks.
So just the power of bringing together buyers and sellers in a relatively small market, like the hard to find books market, convinced me.
This quote explains Boris Wertz's realization of the transformative power of marketplaces, as evidenced by the success of AbeBooks in connecting buyers and sellers globally.
And why do you think then we've seen this mass reemergence now? I mean, there seems to be a marketplace for absolutely everything nowadays.
Harry Stebbings questions the reasons behind the resurgence of marketplace models in the tech industry, indicating a trend that has become widespread across various sectors.
"People felt like, okay, they had nailed kind of that area and there wasn't much potential."
This quote highlights the initial complacency in marketplace innovation, suggesting there was a period when little progress was made.
"First of all, I think people looked at vertical marketplaces, and vertical marketplace probably wasn't large enough of an idea back in 99 just because there weren't too many people on the Internet."
Boris Wertz explains that the concept of vertical marketplaces wasn't viable until the internet user base grew significantly.
"With mobile, you just have completely new use cases."
Boris Wertz discusses how mobile technology has opened up new possibilities for marketplaces, such as ease of use and accessibility.
"The whole services category hasn't really been nailed."
Boris Wertz points out that there is still untapped potential in marketplaces focused on services rather than products.
"We learn a lot...you learn quite a bit in that process."
Boris Wertz emphasizes that the process of writing and structuring content is a learning experience for them.
"We want to be as supportive as possible to entrepreneurs out there and the whole sort of ecosystem."
Boris Wertz highlights their intent to support entrepreneurs at scale through publishing their insights.
"People understand what we at version one get excited about how we think."
Boris Wertz states that the book helps entrepreneurs understand Version One Ventures' perspective and investment interests.
"It's a very concise, 50 page guide to, I would say, everything you need to know about marketplaces."
Boris Wertz describes the book as a succinct yet comprehensive resource for marketplace entrepreneurs.
"The more people are on either side of the marketplace, the more value as a marketplace can bring."
Boris Wertz explains that a greater number of participants on both sides of a marketplace increases its value.
"Is it a transactional relationship or a monogamous relationship?"
Boris Wertz highlights the importance of understanding the buyer-seller relationship dynamic in a marketplace.
"What is the kind of market you can address?"
Boris Wertz suggests considering the potential size and scope of the market when planning a marketplace.
"We get this pitched all"
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"I think very specific niche marketplaces and I think they can be great businesses." This quote emphasizes the potential for niche marketplaces to be successful businesses in their own right.
"Not every business needs to be vc fundable." This quote highlights that not all businesses require venture capital to be successful and that there are other paths to building a successful company.
"Like how do you figure out this chicken and egg problem?" This quote introduces the classic dilemma faced by marketplace startups: how to balance and grow both supply and demand.
"You usually always have to start with supply and kind of getting something onto the platform that people can buy." This quote suggests that building supply is the first critical step in solving the marketplace dilemma, as it gives buyers a reason to come to the platform.
"Try to understand what type of transactions work really well." This quote emphasizes the importance of recognizing successful transactions that can be replicated and scaled.
"Then double down on these things and trying to scale supply and demand in this subset of the marketplace." This quote suggests that once a successful transaction type or hotspot is identified, startups should concentrate their efforts on expanding those areas.
"Trust and safety becomes more important because you might attract fraudulent suppliers or buyers." This quote acknowledges the growing importance of maintaining a secure and trustworthy environment as the marketplace expands.
"How can you support these power sellers? Because ultimately they're going to provide a much more professional service or much better quality of service to your buyers." This quote recognizes the significance of power sellers in driving the marketplace's growth and the need to support them effectively.
"Mobile first, marketplaces and on-demand marketplaces are still something that we're getting excited about." This quote reveals the speaker's interest in marketplaces that prioritize mobile access and on-demand services, which are areas of continued growth and innovation.
"I think there's still a bunch of opportunity left in the on-demand space and kind of mobile first, space secondly on demand." "So there's a few of those categories that are just gigantic categories where just for the combination of a service brought to you, instead of you going to get the service and mobile, you create some real customer value."
The quotes highlight the untapped potential and customer value creation in the on-demand and mobile-first markets, with a focus on service accessibility.
"We're kind of fascinated by this whole development of decentralized marketplaces built on the blockchain super early." "But will that move out of the illegal space and actually become marketplaces where legit products and services are being sold?"
These quotes express intrigue in the development of decentralized marketplaces on blockchain technology and ponder the transition from illegal to legitimate transactions.
"I think ultimately always buy feedback from entrepreneurs. How happy are they working with us? Would they work with us again?"
The quote underlines the importance of entrepreneur satisfaction and feedback as key indicators of a VC's success.
"As much as we're excited about on demand, I think it's also a little bit overhyped." "Right now I feel like there's not a single underhyped sector."
The quotes reflect the speaker's view on the overestimation of the on-demand sector's potential and the difficulty in finding sectors that have not been excessively hyped.
"I think gross merchandise sales and take rate, I mean, gross merchandise sales being kind of the top line, kind of what is the volume you're creating for your marketplace and then take rate is what do you take out of that?"
The quote emphasizes the importance of gross merchandise sales and take rate as primary metrics for assessing the health and potential of a marketplace.
"So we invested in this company called Headout, which is a mobile first marketplace for travel experiences." "It's a pure mobile use case. I mean, you're traveling in the city, you want to go to a show, you want to have a helicopter flight, you want to visit the Empire State Building, whatever it is, and you can quickly find these attractions on your mobile phone, book them right away and kind of enjoy them."
The quotes explain the rationale behind investing in Headout, highlighting the mobile-centric approach and the gap in the market for immediate, on-the-go travel experiences.