Dan Hockenmaier: prediction

Transcript context

…Coming back to Faire, so Faire is one of the maybe few really successful B2B marketplaces and it's always felt like there's this gap in B2B marketplaces. You always feel like there should be many more. Like why are there so many consumer marketplaces but so few B2B, and I'm curious what's your take there. Do you think there's a rising trend to B2B marketplaces? Do you think this is always going to be a smaller collection? What's your feeling? So I do think we'll see more of them. Part of the reason we've seen fewer is there are fewer potential founders who understand B2B problems because most of them are consumers and so the consumer use cases are more obvious. So if you take Faire, for example, when I met the founders, which is probably five years ago now, I immediately understood what they were talking about, but only because I had run an e-commerce business in the past and I had the experience of dealing with a hundred suppliers and line sheets and PDFs going back and forth and pricing not being right and just how painful it is to be a retail buyer. And they had a solution which was much better and that clicked. But had I had the same conversation five or 10 years ago with the team at Convoy like I don't know anything about trucking, I probably wouldn't have understood why that business was going to work. And so I think there's partly that. Just the discovery process takes longer for that reason. But I think the reason we won't see a huge explosion in this area is that B2B also comes with something else, which is much lower fragmentation in many cases and you need fragmentation for a good marketplace. The more concentrated either side of your market is, the more leverage they have, the less likely they are to need you and the less likely they are to be willing to pay a high commission. You made that point to me once when we were talking about marketplaces years ago, and that's so stuck with me that when evaluating marketplaces in B2B especially, usually the reason it's not going to work is just it's not fragmented enough. And just to double click there, can you explain what that means? What does fragmentation mean in a marketplace context? And then are there any examples of really low fragmentation of this will never work as a marketplace? And then here it's really high and this is why it's working?…

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