Dan Hockenmaier: belief

Transcript context

…So I want to transition a bit to talking about marketplaces. I honestly can't think of anyone that's worked on more marketplace companies than you. Maybe Jeff Jordan at a16z who's invested in Airbnb and worked at eBay and OpenTable and these companies. But I feel you have so much insight into how to grow and run a marketplace and so I'm really excited to dig in to stuff here. My first question, just why are you excited about marketplaces? What gets you continuously interested in working on marketplaces and why are they such interesting and good businesses? Why is a marketplace a good business? The first thing is it's like a perfect fit for the venture model, which is why everybody's so interested in them, right? They're very hard to get started, super capital intensive to get started, but once they're rolling, they're very hard to stop. You get this kind of compounding defensibility and gains that makes them very hard to stop. And, as a result, as a marketplace grows, you see these crazy things in the metrics which you don't see for most other businesses. So typically, as you acquire more and more customers, you're acquiring the marginally good fit customer over time and your CACs go up, your LTVs go down, it gets harder and harder. Marketplace is actually the inverse. The supply liquidity is improving, the experience is improving. So often actually as you see later cohorts in marketplaces, CAC goes down, LTV goes up. You see this crazy inversion where the business gets better and better over time. And so that's I think one of the reasons they're such great businesses. I think to your question on why they're fun to work on, I think everything is just harder. Every question is more complex and so that's made them I think really fun to work on for me. And that's interesting coming back to your first point about marketplaces are hard to start, but once they're started they become cheaper to grow and you build moats and work effects. It feels like you as a advisor and person that works on marketplaces, the same thing happens. The fact that you've worked at so many marketplaces makes it more interesting and fun I imagine because you've seen so much of this and so many people haven't experienced this, and so there's almost a Dan Hockenmaier network effect.…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.