The Exchanges

Q Not at all, but I'd love to kick off. For maybe those that didn't listen to the earlier episode, how did you make your way into VC and come to found version one?

A So I started as an entrepreneur in, uh, 99 internet one point oh, build a marketplace for use for out of print books. We built that up Over the years, and then sold it to Amazon in 2008, and I thought it was a great time to look at the other side of the business and looking at investing. So I did a few years of angel investment, worked with a few VCs like Unisquare Ventures and First One Capital, and then raised my first fund in 2012. We're now investing out of a thirty five million dollar early stage fund called Version One Ventures. We focus on companies that leverage network effects to build strong and defensible businesses. And just recently, we really started focusing a lot on crypto.

AI assessment note: “I did a few years of angel investment... then raised my first fund in 2012.”

Q And you saw the internet bubble of 99. I sadly can't remember it. So how does it compare to the internet bubble of 99 with this hype?

A Yeah, it's kind of something I'm always trying to think about in terms of historical context. Right. And I think there's on the one hand side, technology wise, we feel like it's 95. It's kind of around the emergence of the Netscape browser, which at the time was kind of the first time that, you know, kind of the masses could really use the Internet. And that's really feels we're around that in terms of technology. At the same time, in terms of financial markets, it feels like we're already, you know, kind of much further along. When you think Internet bubble kind of burst in March, 2000 at the time, it was about a four trillion dollar market cap. With cryptocurrencies, we're now currently at about five hundred billion. So there's still some room to go, but it feels like we're already definitely further along into the financial markets than we were in 95, given the state of the technology.

AI assessment note: “technology wise, we feel like it's 95... in terms of financial markets”

Q Not at all, but I'd love to kick off. For maybe those that didn't listen to the earlier episode, how did you make your way into VC and come to found version one?

A So I started as an entrepreneur in, uh, 99 internet one point oh, build a marketplace for use for out of print books. We built that up Over the years, and then sold it to Amazon in 2008, and I thought it was a great time to look at the other side of the business and looking at investing. So I did a few years of angel investment, worked with a few VCs like Unisquare Ventures and First One Capital, and then raised my first fund in 2012. We're now investing out of a thirty five million dollar early stage fund called Version One Ventures. We focus on companies that leverage network effects to build strong and defensible businesses. And just recently, we really started focusing a lot on crypto.

AI assessment note: “So I did a few years of angel investment... and then raised my first fund in 2012.”

Q Now, I'm really curious, um, and I'd love to get the ball rolling today by learning how you got into the technology industry, and then later made your transition into the world of VC. Can you tell us a bit about that?

A Yeah, I mean, it, it was a little bit random in a, in a certain way. I, I always knew I would, would love to become an entrepreneur, but in 99, um, you know, internet, one point, oh, kind of the big bubble, um, there was an incredible excitement around the internet, and I thought, like, I just have to be part of it, so I, I started a company with a, with a, with a few, um, um, friends called Just Books, which was an online marketplace for hard-to-find books, and, um, Um, we started that company, raised some money, built it to, uh, to Europe's market leader, and then sold it in 2002, two years later, to, uh, our competitor in, uh, in Canada called A-Books. Uh, and then consequently I joined A-Books as chief operating officer and continued a few more years there until we sold it to Amazon. So that was kind of my entrepreneurial career in technology that happened almost overnight and then lasted for eight years until we sold, um, that, that company to, to Amazon. So after that, I felt like, you know, I wanted to, to figure out if I was also a good investor, and, uh, tried angel investing for a few years, basically took my proceeds that I made from the Amazon sale, and invested in about 35, um, internet and mobile companies, and started to develop a really good investment thesis, uh, had some early wins, some early exits, and, uh, then decided to do it professionally, and, and rais…

AI assessment note: “tried angel investing for a few years... then decided to do it professionally”

Q Now, I'm really curious, um, and I'd love to get the ball rolling today by learning how you got into the technology industry, and then later made your transition into the world of VC. Can you tell us a bit about that?

A Yeah, I mean, it, it was a little bit random in a, in a certain way. I, I always knew I would, would love to become an entrepreneur, but in 99, um, you know, internet, one point, oh, kind of the big bubble, um, there was an incredible excitement around the internet, and I thought, like, I just have to be part of it, so I, I started a company with a, with a, with a few, um, um, friends called Just Books, which was an online marketplace for hard-to-find books, and, um, Um, we started that company, raised some money, built it to, uh, to Europe's market leader, and then sold it in 2002, two years later, to, uh, our competitor in, uh, in Canada called A-Books. Uh, and then consequently I joined A-Books as chief operating officer and continued a few more years there until we sold it to Amazon. So that was kind of my entrepreneurial career in technology that happened almost overnight and then lasted for eight years until we sold, um, that, that company to, to Amazon. So after that, I felt like, you know, I wanted to, to figure out if I was also a good investor, and, uh, tried angel investing for a few years, basically took my proceeds that I made from the Amazon sale, and invested in about 35, um, internet and mobile companies, and started to develop a really good investment thesis, uh, had some early wins, some early exits, and, uh, then decided to do it professionally, and, and rais…

AI assessment note: “I started a company with a, with a, with a few, um, friends called Just Books”

Q And you saw the internet bubble of 99. I sadly can't remember it. So how does it compare to the internet bubble of 99 with this hype?

A Yeah, it's kind of something I'm always trying to think about in terms of historical context. Right. And I think there's on the one hand side, technology wise, we feel like it's 95. It's kind of around the emergence of the Netscape browser, which at the time was kind of the first time that, you know, kind of the masses could really use the Internet. And that's really feels we're around that in terms of technology. At the same time, in terms of financial markets, it feels like we're already, you know, kind of much further along. When you think Internet bubble kind of burst in March, 2000 at the time, it was about a four trillion dollar market cap. With cryptocurrencies, we're now currently at about five hundred billion. So there's still some room to go, but it feels like we're already definitely further along into the financial markets than we were in 95, given the state of the technology.

AI assessment note: “technology wise, we feel like it's 95... in terms of financial markets, it feels”

Q brand. I do want to finish though, before we dive into a quick fire, on kind of the meta level of finance And speak about the LP class and maybe a traditionally conservative LP class. How do you think about them entering the volatile kind of climate that is crypto? When, why, how, and kind of your thoughts around their entry and whether it will come in the coming years?

A Yeah, I think that the general tendency right now seems to be super interesting. I want to learn more and want to understand how I can participate. Having said that, in, in Crypto only funds. I think what I'm hearing is most of the money has come so far from family offices and high net worth, sometimes from other VCs that wanted to learn. So for example, we invest in Polychain and Metastable. At the same time, I think there's a bunch of institutional capital that are sitting at the sidelines and thinking about how to get involved in crypto. For them, probably being part of kind of what I would call mixed funds. So, you know, internet and crypto funds like version one, Andreessen Horowitz, USV, It's probably easier to wrap the head around right now, but I'm pretty sure that at some stage, you know, as the, the sector evolves, matures, perhaps we get going to get less volatility. I think people will start really pouring more money into it.

AI assessment note: “there's a bunch of institutional capital that are sitting at the sidelines”

Q And kind of moving kind of one layer deeper, despite the hype and continuous suggestions of the bubble, you said to me before that this wave of decentralized platforms will be the biggest disruptor to hit VC in over a decade. So tell me, why do we think this, and what's kind of driving that thinking?

A Yeah, I think it's really three factors that are coming to The first one, I think right now, I think everybody or a lot of people are convinced that decentralized platforms have a different business model Different technology. And I think that's just a new mental model of thinking around how to invest in that space and kind of the core idea is like a lot of the value will accrue at the protocol level and will be monetized through a token business model, right? I think the second thing is there's suddenly tremendous amount of competitions. We talked about ICOs and, you know, billions of dollars have been raised before most early stage technology investment was negotiated in private rounds. Through sophisticated investors, only very few angels and private individuals participate in that. Now suddenly this is opening up through ICOs, and in theory, every single person could invest in these token projects very early on. So there's suddenly a tremendous global platform for raising money for startups, and that's certainly a new competition for these VCs. And then last but not least, I think there's a bunch of administrative things that are changing. You know, today we bought Stock in private companies and got a stock certificate for it. Now we suddenly have a private key of a token, which is, you know, very different to, to store, to manage. I said there are much more risk involved. …

AI assessment note: “I think it's really three factors that are coming to The first one”

Q And why do you think that we've seen this mass reemergence now? I mean, there seems to be a marketplace for, for absolutely everything nowadays. So why do you think that's suddenly come about, Probably since about 2010.

A Yeah, I think there's, there's a few, few, few reasons for that. I mean, eBay was kind of the first real big marketplace, uh, launched over 20 years ago. And, uh, you know, I think for the longest period of time, there wasn't a lot of innovation. Like, people felt like, okay, they had nailed, um, nailed kind of that, that, that area. And there wasn't much, much potential. I think, um, three, three things really happened, um, in, in the last, um, five years, roughly. Uh, first of all, I think people looked at, uh, vertical marketplaces and, you know, and vertical marketplace probably wasn't, wasn't large enough of an idea back in 99, just because there weren't too many, too many people on the internet. Today, when you have like billions of people on the internet, a vertical marketplace can suddenly, um, Become very attractive. Right. And, and so, you know, there's this famous chart of looking at all the, the Greg's categories and seeing like how people have basically built vertical marketplaces around it. StubHub is, is a classic example around tickets. Right. Um, but many other, uh, many other marketplaces that have, have built that. I think the second thing that, uh, has really, um, unlocked tremendous marketplace potential is mobile. Um, with mobile, you just have completely new use cases. So we invested in a company called Baratia, which is a mobile first, uh, marketplace fo…

AI assessment note: “I think there's, there's a few, few, few reasons for that.”

Q And you, you discussed there the, the fragmentation of demand and supply, and it seems a real chicken and egg problem in the marketplace sector. So, um, In the early days, what should startups focus on? Demand or supply? And then once they've got that, how do they go about addressing it?

A Yeah, I mean, that's really kind of the, the, the core element and the core challenge of any marketplace. Like, how do you figure out this chicken and egg problem? And it often takes a long time to get it going, right? And the beauty is, once you figure it out, and kind of the network effect starts, it's almost unstoppable, right? And you create something that is very Very defensible. So the right answer, it kind of, it depends on the marketplace and the kind of the, the, the, the structure of, uh, the marketplace, but ultimately you usually always have to start with supply and kind of getting something onto the platform that key people can buy. You know, otherwise there's just, just nothing there. And there's, there's different strategies to do that depending on the vertical, you know, either going after very unique inventory that nobody has really, Gone for, like, think about Airbnb that kind of opened up the whole market of apartments from, from, from individuals or kind of rooms from individuals that, you know, had never been on the market, um, to kind of paying for inventory. You know, Uber has done a very good job whenever they launch a, a city to initially pay their, their, their drivers to kind of Uh, drive around idle just to have inventory and, and be, be quick to pick up the next passenger once there's an order coming in.

AI assessment note: “ultimately you usually always have to start with supply”

Q And why do you think that we've seen this mass reemergence now? I mean, there seems to be a marketplace for, for absolutely everything nowadays. So why do you think that's suddenly come about, Probably since about 2010.

A Yeah, I think there's, there's a few, few, few reasons for that. I mean, eBay was kind of the first real big marketplace, uh, launched over 20 years ago. And, uh, you know, I think for the longest period of time, there wasn't a lot of innovation. Like, people felt like, okay, they had nailed, um, nailed kind of that, that, that area. And there wasn't much, much potential. I think, um, three, three things really happened, um, in, in the last, um, five years, roughly. Uh, first of all, I think people looked at, uh, vertical marketplaces and, you know, and vertical marketplace probably wasn't, wasn't large enough of an idea back in 99, just because there weren't too many, too many people on the internet. Today, when you have like billions of people on the internet, a vertical marketplace can suddenly, um, Become very attractive. Right. And, and so, you know, there's this famous chart of looking at all the, the Greg's categories and seeing like how people have basically built vertical marketplaces around it. StubHub is, is a classic example around tickets. Right. Um, but many other, uh, many other marketplaces that have, have built that. I think the second thing that, uh, has really, um, unlocked tremendous marketplace potential is mobile. Um, with mobile, you just have completely new use cases. So we invested in a company called Baratia, which is a mobile first, uh, marketplace fo…

AI assessment note: “I think three things really happened... First of all... vertical marketplaces... second... mobile”

Q And we mentioned entrepreneurs there, and so talking about marketplaces and entrepreneurs, for an entrepreneur looking to move into the marketplace sector, how do they select the right market if they're still in the ideation phase? Is, are there any essential components they should consider?

A Yeah, I mean, there's a few articles, um, written about kind of attractiveness of marketplaces, and I mean, reality is that you're never going to meet all of the criteria, but, so some of the most important criteria that we always feel, um, should be met is, first of all, kind of fragmentation of supply and demand, right? Um, the whole idea, like, the more people are on either side of the marketplace, the more value as a marketplace can, can bring. If there's only 10, 10, 10 companies, or 10 people sitting on each side, they can coordinate themselves pretty, pretty nicely. Very different story if, if it's, uh, if it's 1010 of thousands, and millions, right? Um, I, I think the second thing is, kind of, what is the underlying relationship, um, of buyers and, and sellers? And sometimes, buyers and suppliers, they, they prefer what we call a monogamous relationship, kind of, staying with one provider. Like, think about a doctor, um, Um, think about often a, a, a cleaning lady, um, uh, cleaning personnel. Like once you found somebody that does a great job, you, um, you don't want to necessarily go to somebody new the next time, um, you, you, um, um, you, you need of that service. Very different to a cab driver and kind of Uber. Like you couldn't care less who's driving you from A to B as long as they, they, they do safely. Right. Um, So is it a transactional relationship or a monoga…

AI assessment note: “some of the most important criteria that we always feel, um, should be met is”

Q And you, you discussed there the, the fragmentation of demand and supply, and it seems a real chicken and egg problem in the marketplace sector. So, um, In the early days, what should startups focus on? Demand or supply? And then once they've got that, how do they go about addressing it?

A Yeah, I mean, that's really kind of the, the, the core element and the core challenge of any marketplace. Like, how do you figure out this chicken and egg problem? And it often takes a long time to get it going, right? And the beauty is, once you figure it out, and kind of the network effect starts, it's almost unstoppable, right? And you create something that is very Very defensible. So the right answer, it kind of, it depends on the marketplace and the kind of the, the, the, the structure of, uh, the marketplace, but ultimately you usually always have to start with supply and kind of getting something onto the platform that key people can buy. You know, otherwise there's just, just nothing there. And there's, there's different strategies to do that depending on the vertical, you know, either going after very unique inventory that nobody has really, Gone for, like, think about Airbnb that kind of opened up the whole market of apartments from, from, from individuals or kind of rooms from individuals that, you know, had never been on the market, um, to kind of paying for inventory. You know, Uber has done a very good job whenever they launch a, a city to initially pay their, their, their drivers to kind of Uh, drive around idle just to have inventory and, and be, be quick to pick up the next passenger once there's an order coming in.

AI assessment note: “ultimately you usually always have to start with supply and kind of getting something onto”

Q so Boris, before the show, we were talking about the benefits of the show and kind of all the knowledge that I gained from interviewing great people. I'd love your advice. For me, being at the very beginning of the learning curve on crypto, what would you advise me in really getting to grips with just the fundamentals? What advice would you have in just scaling that initial learning curve?

A I think a few things. I mean, first of all, there's a few key resources that I would really Get into. And, you know, certainly starting with Satoshi's white paper on Bitcoin, but a bunch of others. I think secondly, there's interesting enough to have been tremendous amount of telegram groups that have popped up over the last, you know, 12 months where investors and entrepreneurs and other supporters of the ecosystems are exchanging views and ideas. And then last but not least, I think important to just start investing. Whenever Was to make a couple of smaller bets to really get the, your hands dirty. Theory is one thing, but then actually having an investment and working with entrepreneurs on a daily basis is the other.

AI assessment note: “starting with Satoshi's white paper on Bitcoin, but a bunch of others.”

Q brand. I do want to finish though, before we dive into a quick fire, on kind of the meta level of finance And speak about the LP class and maybe a traditionally conservative LP class. How do you think about them entering the volatile kind of climate that is crypto? When, why, how, and kind of your thoughts around their entry and whether it will come in the coming years?

A Yeah, I think that the general tendency right now seems to be super interesting. I want to learn more and want to understand how I can participate. Having said that, in, in Crypto only funds. I think what I'm hearing is most of the money has come so far from family offices and high net worth, sometimes from other VCs that wanted to learn. So for example, we invest in Polychain and Metastable. At the same time, I think there's a bunch of institutional capital that are sitting at the sidelines and thinking about how to get involved in crypto. For them, probably being part of kind of what I would call mixed funds. So, you know, internet and crypto funds like version one, Andreessen Horowitz, USV, It's probably easier to wrap the head around right now, but I'm pretty sure that at some stage, you know, as the, the sector evolves, matures, perhaps we get going to get less volatility. I think people will start really pouring more money into it.

AI assessment note: “For them, probably being part of kind of what I would call mixed funds”

Q And kind of moving kind of one layer deeper, despite the hype and continuous suggestions of the bubble, you said to me before that this wave of decentralized platforms will be the biggest disruptor to hit VC in over a decade. So tell me, why do we think this, and what's kind of driving that thinking?

A Yeah, I think it's really three factors that are coming to The first one, I think right now, I think everybody or a lot of people are convinced that decentralized platforms have a different business model Different technology. And I think that's just a new mental model of thinking around how to invest in that space and kind of the core idea is like a lot of the value will accrue at the protocol level and will be monetized through a token business model, right? I think the second thing is there's suddenly tremendous amount of competitions. We talked about ICOs and, you know, billions of dollars have been raised before most early stage technology investment was negotiated in private rounds. Through sophisticated investors, only very few angels and private individuals participate in that. Now suddenly this is opening up through ICOs, and in theory, every single person could invest in these token projects very early on. So there's suddenly a tremendous global platform for raising money for startups, and that's certainly a new competition for these VCs. And then last but not least, I think there's a bunch of administrative things that are changing. You know, today we bought Stock in private companies and got a stock certificate for it. Now we suddenly have a private key of a token, which is, you know, very different to, to store, to manage. I said there are much more risk involved. …

AI assessment note: “I think it's really three factors that are coming to”

Q you mentioned there about being further along with financial markets. There's a huge amount of smart money in the industry. There's also a lot of maybe, maybe dumb money, people that don't have sometimes the knowledge to invest in this space quite so well. I'm intrigued with the sheer quantum of people that might get burnt. Could this harm the space more broadly for the long term, do you think?

A Yes and no. I think, first of all, unfortunately, the characteristic of every single technology bubble or every single bubble, right, that there is dumb money being attracted and people getting hurt in the process. And, you know, overall, I hope, you know, we've seen that now around the SEC and ICOs, that they get tougher on it and really making sure that the scammers and the really bad projects are kind of locked out of the market. Having said that, I think it's also an opportunity for a lot of people to To make money, to invest in something they really care about. And we've seen a bunch of stories of people that have done very well, believing very early on in this kind of new tech cycle.

AI assessment note: “Yes and no. I think, first of all, unfortunately, the characteristic of every single”

Q Can I ask, what do you make of the Telegram ICO?

A It's really interesting to look at that. I mean, first of all, Telegram is an incredible platform. It already has a bunch of crypto enthusiasts. Which we discussed before. I think the biggest question will be, and that's, I think, a question that is relevant for many projects, is what is more important? Kind of native crypto approaches, right? And so building a protocol, a platform that grounds up with crypto in mind, or a proven ability to ship product at scale, right? And so the Telegram team has done an incredible job of, at the second one, right? So now the question is, will they succeed at the first one? Kind of, Of incorporating crypto into an existing platform, is that even possible, or do you have to really build it from the ground up? And I think that's an open question, but it's great to see, you know, a platform at scale trying this and figuring it out, but they certainly have had a lot of financial interest in the ICO, and will probably raise up to two billion or so.

AI assessment note: “they certainly have had a lot of financial interest in the ICO”

Q And then the other question I have is, with such a radical reshaping of thinking, is it possible for VCs to maintain their specialities in SaaS or marketplaces and the kind of broad spectrum that we already invest, whilst also diving into this new world that is quite literally so different?

A Yeah, I think it's a good question. It's something we have been thinking about at version one quite a bit. I mean, for us, the answer to that question was, we were built around network effect. And, you know, the blockchain and crypto has tremendous network effects. So we feel like it's a continuation of investment themes, you know, from social platforms and marketplaces to smart SaaS built around data network effects to crypto. But I think it's a, it's a fair question. Can you really maintain very different investment focus areas? I would say that the real advantage of having had investing experience in more traditional internet models is Everything that comes along with company building and what we said before, kind of helping entrepreneurs through tough phases, I think that's not going to go away in crypto, but clearly the vertically focused crypto funds have a certain advantage of having like a hundred percent, 10% attention on that space.

AI assessment note: “we feel like it's a continuation of investment themes”

Q so Boris, before the show, we were talking about the benefits of the show and kind of all the knowledge that I gained from interviewing great people. I'd love your advice. For me, being at the very beginning of the learning curve on crypto, what would you advise me in really getting to grips with just the fundamentals? What advice would you have in just scaling that initial learning curve?

A I think a few things. I mean, first of all, there's a few key resources that I would really Get into. And, you know, certainly starting with Satoshi's white paper on Bitcoin, but a bunch of others. I think secondly, there's interesting enough to have been tremendous amount of telegram groups that have popped up over the last, you know, 12 months where investors and entrepreneurs and other supporters of the ecosystems are exchanging views and ideas. And then last but not least, I think important to just start investing. Whenever Was to make a couple of smaller bets to really get the, your hands dirty. Theory is one thing, but then actually having an investment and working with entrepreneurs on a daily basis is the other.

AI assessment note: “first of all, there's a few key resources that I would really Get into.”

Q you mentioned there about being further along with financial markets. There's a huge amount of smart money in the industry. There's also a lot of maybe, maybe dumb money, people that don't have sometimes the knowledge to invest in this space quite so well. I'm intrigued with the sheer quantum of people that might get burnt. Could this harm the space more broadly for the long term, do you think?

A Yes and no. I think, first of all, unfortunately, the characteristic of every single technology bubble or every single bubble, right, that there is dumb money being attracted and people getting hurt in the process. And, you know, overall, I hope, you know, we've seen that now around the SEC and ICOs, that they get tougher on it and really making sure that the scammers and the really bad projects are kind of locked out of the market. Having said that, I think it's also an opportunity for a lot of people to To make money, to invest in something they really care about. And we've seen a bunch of stories of people that have done very well, believing very early on in this kind of new tech cycle.

AI assessment note: “Yes and no. I think, first of all, unfortunately, the characteristic of every single technology bubble”

Q And then the other question I have is, with such a radical reshaping of thinking, is it possible for VCs to maintain their specialities in SaaS or marketplaces and the kind of broad spectrum that we already invest, whilst also diving into this new world that is quite literally so different?

A Yeah, I think it's a good question. It's something we have been thinking about at version one quite a bit. I mean, for us, the answer to that question was, we were built around network effect. And, you know, the blockchain and crypto has tremendous network effects. So we feel like it's a continuation of investment themes, you know, from social platforms and marketplaces to smart SaaS built around data network effects to crypto. But I think it's a, it's a fair question. Can you really maintain very different investment focus areas? I would say that the real advantage of having had investing experience in more traditional internet models is Everything that comes along with company building and what we said before, kind of helping entrepreneurs through tough phases, I think that's not going to go away in crypto, but clearly the vertically focused crypto funds have a certain advantage of having like a hundred percent, 10% attention on that space.

AI assessment note: “for us, the answer to that question was, we were built around network effect”

Q Can I ask, what do you make of the Telegram ICO?

A It's really interesting to look at that. I mean, first of all, Telegram is an incredible platform. It already has a bunch of crypto enthusiasts. Which we discussed before. I think the biggest question will be, and that's, I think, a question that is relevant for many projects, is what is more important? Kind of native crypto approaches, right? And so building a protocol, a platform that grounds up with crypto in mind, or a proven ability to ship product at scale, right? And so the Telegram team has done an incredible job of, at the second one, right? So now the question is, will they succeed at the first one? Kind of, Of incorporating crypto into an existing platform, is that even possible, or do you have to really build it from the ground up? And I think that's an open question, but it's great to see, you know, a platform at scale trying this and figuring it out, but they certainly have had a lot of financial interest in the ICO, and will probably raise up to two billion or so.

AI assessment note: “they certainly have had a lot of financial interest in the ICO”

Q Guide to Marketplaces. Absolutely fantastic book, by the way, everyone, and you can find the links in the show notes and on the description and on the site at www.thetwentyminutevc.com. It's a must-read. But talking about the book now, what What was the objective in writing the book, and what did you feel the, the general public needed to know that maybe wasn't already so well spelt out to them?

A Yeah, first of all, thanks, thanks for the praise. Uh, we've, we've got tremendous amount of, of great feedback from around the world, and we're a little bit surprised how far the book has already traveled in, in, in the last two weeks. Um, you know, when, when we put out content, uh, either in the form of blog posts or, or kind of a book like that, we're always thinking about three things. The first one is by, by writing content and thinking through a specific question that we have in our head. Um, We learn a lot. Um, and you know, sometimes you might have a pretty imprecise idea about something in your head, and then you start writing and structuring the, the article, and it turns out, um, that you learn quite a bit in, in, in that process. So, so from that point of view, partly we learn through these, this, this process. The second one is, we want to be as supportive as possible to, to entrepreneurs out there, and, and, and the whole sort of ecosystem, and, and partly we do that by, by, uh, providing help and, Support one-to-one to our entrepreneurs, our own portfolio companies, but, but also entrepreneurs outside, but that's, that's not always scalable. So to publish our content and what we learn in a certain way is, is always a way to, um, try to reach as many entrepreneurs as possible. And last but not least, I think we, we like to, um, we like to make sure that people un…

AI assessment note: “when we put out content... we're always thinking about three things.”

Q And we mentioned entrepreneurs there, and so talking about marketplaces and entrepreneurs, for an entrepreneur looking to move into the marketplace sector, how do they select the right market if they're still in the ideation phase? Is, are there any essential components they should consider?

A Yeah, I mean, there's a few articles, um, written about kind of attractiveness of marketplaces, and I mean, reality is that you're never going to meet all of the criteria, but, so some of the most important criteria that we always feel, um, should be met is, first of all, kind of fragmentation of supply and demand, right? Um, the whole idea, like, the more people are on either side of the marketplace, the more value as a marketplace can, can bring. If there's only 10, 10, 10 companies, or 10 people sitting on each side, they can coordinate themselves pretty, pretty nicely. Very different story if, if it's, uh, if it's 1010 of thousands, and millions, right? Um, I, I think the second thing is, kind of, what is the underlying relationship, um, of buyers and, and sellers? And sometimes, buyers and suppliers, they, they prefer what we call a monogamous relationship, kind of, staying with one provider. Like, think about a doctor, um, Um, think about often a, a, a cleaning lady, um, uh, cleaning personnel. Like once you found somebody that does a great job, you, um, you don't want to necessarily go to somebody new the next time, um, you, you, um, um, you, you need of that service. Very different to a cab driver and kind of Uber. Like you couldn't care less who's driving you from A to B as long as they, they, they do safely. Right. Um, So is it a transactional relationship or a monoga…

AI assessment note: “some of the most important criteria that we always feel, um, should be met”

Q Guide to Marketplaces. Absolutely fantastic book, by the way, everyone, and you can find the links in the show notes and on the description and on the site at www.thetwentyminutevc.com. It's a must-read. But talking about the book now, what What was the objective in writing the book, and what did you feel the, the general public needed to know that maybe wasn't already so well spelt out to them?

A Yeah, first of all, thanks, thanks for the praise. Uh, we've, we've got tremendous amount of, of great feedback from around the world, and we're a little bit surprised how far the book has already traveled in, in, in the last two weeks. Um, you know, when, when we put out content, uh, either in the form of blog posts or, or kind of a book like that, we're always thinking about three things. The first one is by, by writing content and thinking through a specific question that we have in our head. Um, We learn a lot. Um, and you know, sometimes you might have a pretty imprecise idea about something in your head, and then you start writing and structuring the, the article, and it turns out, um, that you learn quite a bit in, in, in that process. So, so from that point of view, partly we learn through these, this, this process. The second one is, we want to be as supportive as possible to, to entrepreneurs out there, and, and, and the whole sort of ecosystem, and, and partly we do that by, by, uh, providing help and, Support one-to-one to our entrepreneurs, our own portfolio companies, but, but also entrepreneurs outside, but that's, that's not always scalable. So to publish our content and what we learn in a certain way is, is always a way to, um, try to reach as many entrepreneurs as possible. And last but not least, I think we, we like to, um, we like to make sure that people un…

AI assessment note: “when we put out content... we're always thinking about three things.”

Q So now we've addressed the chicken and egg problem, and we're growing our hypothetical startup here, um, what would you say are the core, kind of, required elements of scaling a startup that's in the marketplace, vertical, obviously, from those initial users? How do we take it to the next level?

A Yeah, so, so, I mean, it's kind of what I would call the good problems to have, um, and, uh, you know, not a lot of marketplaces even get to that point, um, but, you know, once you get to that point, um, we're, we're always thinking about a few things. The first one is, you see that with every marketplace, uh, once you scale, once you get media attention, kind of trust and safety becomes more important, because there's, uh, you might attract fraudulent, uh, suppliers or buyers, and, And suddenly that whole, um, aspect of trust and safety in a marketplace becomes, becomes important. The second thing is, you see in almost every marketplace that they, they, they usually start out on the supply side with very small sellers, hobby sellers, or people that only put a little bit of their inventory onto the marketplace. Over time, like, most of the development and the scale of the marketplace is driven by power sellers. So the, the people that have basically built A business around it. Uh, you see that are now happening on Airbnb where people aggregate apartments and kind of almost are kind of managing dozens of apartments and, and become like professional sellers. So how can you support these power sellers? Because ultimately they're going to provide a much more professional service or much, much better quality of, of service to, to your buyers. Um, and how can you scale it up? And the…

AI assessment note: “once you get to that point, um, we're, we're always thinking about a few things.”

Q So now we've addressed the chicken and egg problem, and we're growing our hypothetical startup here, um, what would you say are the core, kind of, required elements of scaling a startup that's in the marketplace, vertical, obviously, from those initial users? How do we take it to the next level?

A Yeah, so, so, I mean, it's kind of what I would call the good problems to have, um, and, uh, you know, not a lot of marketplaces even get to that point, um, but, you know, once you get to that point, um, we're, we're always thinking about a few things. The first one is, you see that with every marketplace, uh, once you scale, once you get media attention, kind of trust and safety becomes more important, because there's, uh, you might attract fraudulent, uh, suppliers or buyers, and, And suddenly that whole, um, aspect of trust and safety in a marketplace becomes, becomes important. The second thing is, you see in almost every marketplace that they, they, they usually start out on the supply side with very small sellers, hobby sellers, or people that only put a little bit of their inventory onto the marketplace. Over time, like, most of the development and the scale of the marketplace is driven by power sellers. So the, the people that have basically built A business around it. Uh, you see that are now happening on Airbnb where people aggregate apartments and kind of almost are kind of managing dozens of apartments and, and become like professional sellers. So how can you support these power sellers? Because ultimately they're going to provide a much more professional service or much, much better quality of, of service to, to your buyers. Um, and how can you scale it up? And the…

AI assessment note: “we're always thinking about a few things. The first one is... trust and safety”

Q And I'd love to delve back into that operational side, uh, of your career, and ask you, what did you see in marketplaces then, in 1999, that, you know, obviously marketplaces are huge now, but back in 1999 maybe not so prevalent, so what did you see, uh, and why do you think then we've seen this mass re-emergence of the marketplace model now?

A Yeah, I think the, the, the one thing where I always kind of got astonished by the power of marketplace is when I heard personal stories of our customers at a books, right? There were people that were looking for a book that they had read in their childhood or, um, that were covering a specific topic that they were interested in for years and years, going from book fair to book fair, going from one antiquarian bookseller to another, um, Always kind of trying to, to scout through these, um, you know, local inventories that were limited. And they found eight books, and suddenly they had a hundred million books, uh, at their fingertips. Like, they could browse through local inventories across the world. And in most, most of the time, they found the book they had been looking for, for such a long time. So just the power of bringing together buyers and sellers in, in a relatively small market, like the, the hard to find books market, Right. Um, it could convince me, and like, like, when you get these, these passionate customer stories almost on a daily basis where people thank you for creating a box and, and, uh, being part of the company, then, uh, you suddenly realize, uh, in, in a very personal way how powerful marketplaces are.

AI assessment note: “just the power of bringing together buyers and sellers in, in a relatively small market”

Q So focus on supply. Then when you're addressing that, how do you know then how much to have? I mean, like, is, is that a tough problem that comes about?

A Yeah, I mean, it's, you, you continuously trying to evaluate kind of, do you have, you know, where does supply in relation to, um, Um, demand stand, right? So, so one of the things we always, uh, concept we're thinking about is, is hotspots. So when you look at the marketplace and you, you see the first transactions happening between, um, buyers and sellers, like try to understand what type of transactions work really well, right? Sometimes it could be, uh, around when you, when you think about a product marketplace around a certain price point or in a certain vertical or a certain kind of buyer and supplier and trying to figure out, like, What does work really, really well? Because I mean, you're going to have a lot of noise in the marketplace, a lot of random transactions that are not really repeatable, but what are the things that are working well? And then double down on these things and trying to scale supply and demand in this subset of the marketplace. And sometimes there's, there's a few hotspots, not only one, one hotspot, but it might be three or four that work really, really well. And then double down on these things and kind of try to accelerate the development in this area.

AI assessment note: “evaluate kind of, do you have, you know, where does supply in relation to demand stand”