Jordan: Startups must separate experimental marketing budgets from core spend
Jeff Jordan · a16z GP Jeff Jordan: The Ultimate Guide to Two-Sided Marketplaces | 20VC #966 · 20VC with Harry Stebbings · Jan 16, 2023 · at 38:16
Jeff Jordan is a General Partner at a16z. He outlines a operational framework for how startups should budget for testing new customer acquisition channels like TikTok, Pinterest, and Snap.
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“I love the companies that have a, they segregate an experimental budget from their core, core acquisition budget, just to, because if you bundle them together, it, It's a barrier against experimentation. If you're constantly optimizing Google and Facebook, but you're trying TikTok and Pinterest and, you know, Snap from Insta from a different budget, it's, it promotes that, you know, channel diversity attempt.”
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“Early on, I was a big proponent of that e-commerce was going to clean the clock of the department stores. I got the thesis half right. Share did shift. No one could make money other than Amazon because of there's just no defensibility, no barriers to entry.”
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“I am reluctant to invest in companies that, that require heavy paid marketing to build their audience.”
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“That's not a categorical rule, because TikTok buys users at monstrous scale. But, you know, Google really didn't buy many users, Facebook didn't buy many users, you know, tick, tick, tick, tick.”
Jordan: a16z Avoided Fast Commerce, Viewing It as a Kozmo Redo
“We didn't make a bet in in fast commerce. That's one word that some of us internet veterans remember Cosmo and, you know, our concern was it's Cosmo redo redo without anything really new. On top of it. So we did not place a bet in that in that sector.”
Jordan: Demand Is the Primary Strategic Side in Two-Sided Marketplaces
“I have a belief that the demand side is, you know, kind of the, is the more, more strategic side because suppliers typically will go wherever the demand is. And so for me, keeping a healthy demand Bucket, you know, is what your suppliers are looking for.”