Investor in 1000+ Marketplaces: Fabrice Grinda (FJ Labs) on 2025 Trends for B2B and B2C Marketplaces

Fabian Tausch:
[0:00] Welcome to a new episode of the Unicorn Bakery. Today we will have a look into marketplaces and the lookout for 2025 because the year is accelerating and everything is getting back on track and everybody is working again. And so therefore I decided to bring on Fabrice Grindag. And Fabrice is probably the best person to talk about marketplaces after doing 1,192 unique investments with FJ Labs so far. And FJ Labs 3 is a fund coming to an end, preparing fj4 i i call it fj4 now because it's quicker but end of like more than or like 355 exits to be precise including partial exits probably one of the most i call it ridiculous and it's probably not the right word but ridiculous stories that i've heard over the last years and one of the most unique personas even when there's a large team behind it as well that i got to know so therefore i thought fabrice we will have to talk marketplaces today and i'm super happy to have you on the show again thank.

Fabrice Grinda:
[0:57] You for having me

Fabian Tausch:
[0:58] So you've been a founder yourself now you're investing how are you assessing like knowing both perspectives how are you assessing a year which time frames are you looking at when you're making decisions and building theses theses so we're i.

Fabrice Grinda:
[1:14] Would say a bottoms-up type fund meaning we we don't have pre-existing portfolio construction where we're like oh we want to invest in that in many companies and this has to be the thesis. I think it's more, if we meet founders we like, we invest. If we don't, we don't. And in years like 21, where we felt everything was overvalued, we invested in fewer companies. And then years like 23 or 24, where the markets were, except in AI, more depressed, we were investing like crazy because we felt the opportunity was great. And the thesis is similar. We have perspective, we see the trends and how companies are evolving. And as we see trends evolve because new founders are coming up with new models and approaches we evolve our thesis over time and we've seen marketplaces start with these double commit models then become like more vertical verticalized so they were horizontal marketplaces and vertical marketplaces then they're managed marketplaces and then we have the marketplace pick type marketplaces i'm going to detail what these are and there are definitely many more trends happening now in 2025 and we're still at the very beginning shockingly enough of the marketplace revolution so

Fabian Tausch:
[2:20] What's the sentiment for 2025. And to dive into that, when you look back at 2024, what was the... Look back sentiment for 2024 and then the lookout for 2025 based on that yeah so.

Fabrice Grinda:
[2:34] Let me talk about the the sentiment writ large in the venture category so 21 of course was a bubbly year where everything was frothy and everything was overvalued and as rates went up because venture is a is a risk asset there was massive retrenching and and venture essentially has been in a recession and even depression, if not a cold winter for the last few years. So 23 and 24, we have total venture investing that is down like 66 to 75% peak to trough. Now, of course, maybe the peak was overvalued in 21, but it's massively retrenching with lower number of investments, lower check sizes, and essentially no exits and no liquidity that was obtained. And so that said, it's been a tale of two cities. There's been the venture as a whole, which has been like this deep depression. There's been AI that's been extraordinarily hot and frothy and bubbly and continues to be that. So I actually thought if I look back at 24, I expected that the deep tech recession would continue and it has continued. Rates remained high. The liquidity opportunities remained limited.

Fabrice Grinda:
[3:41] M&A was limited partly because the companies were not flush with cash outside of AI and because M&A has been mostly stifled by the regulatory regimes. The SEC, FTC, FCC, etc. have essentially limited a lot of M&A. So large companies were not buying other companies, and the IPO markets have been closed. So there's been no liquidity. Many LPs felt overexposed to venture. So venture as a whole has been in the doldrums in general, except in AI. In AI, many people saw the extraordinary growth of open AI. They felt they'd miss the boat, and they basically weren't all in, all AI all the time, not really understanding necessarily what they were investing in and differentiating the amazing products that are not so amazing, often investing in what I would consider to be tools that are okay, but like co-pilots or whatever, but they're not really differentiated. They're not differentiated data sets, differentiated LLMs, no viable business model and worst of all, crazy valuation. So I think there is a day of reckoning to be coming at some point in the AI investing space, even though AI will transform our world. But no, it's been frothy and AI, doldrums everywhere else. Now in 25,

Fabrice Grinda:
[4:50] The macro has been pretty good, actually. We have lowered inflation, full employment, and the economic growth and productivity growth has been pretty good. Now, as I look forward to 2025, I suspect that'll be more of the same. The macro is, we're no longer in a macro-driven environment. We're in a slightly lower rate environment, which is a bit more benign. And the general fundamentals remain pretty good between reasonably low inflation, high employment, low unemployment, and pretty good productivity growth. I'm hoping, it is a hope, that the M&A markets and the IPO markets start reopening and that we start finally seeing exits of the very best companies in the portfolio. I think it will start in 25 and will continue into 26 and hopefully accelerate in 26 and 27. And as a result, I suspect that the venture market would large or start coming out of the doldrums outside of AI in 2025. And so I'm actually more bullish than I've been on the venture market for 25 and 26 than I was in the past. And yeah, I'll pause here.

Fabian Tausch:
[5:56] Do exits have to happen first before the venture market starts to accelerate again? Or do you say because of the anticipation that this will happen in 25, 26, or 27, like whenever the exact date will be, everybody is more likely, and also LP is more likely to invest money in funds again. So what's the dynamic here?

Fabrice Grinda:
[6:17] I think it's a bit of both. Obviously, as exits happen, the LPs get liquidity and they're more willing to rewrite checks into venture funds. But in general, because other asset classes, especially the public markets, have done rather well, there is some level of liquidity and rates are starting to fall. So I suspect that even absent the early indications of exits, there will be more of an increasing appetite for venture and venture investments in 25 relative to 23 and 24. Obviously, it would accelerate to be very much helped by exits, but if they don't happen just yet, I think it's probably okay.

Fabian Tausch:
[6:55] I recently did a quick episode with Kevin Hartz, who you might know as well, and Kevin said there is no incentive to go public at the moment, and that's what we're talking about. And he also says there won't be any time soon. And I'm like, why at first, like, why is there no, and do you agree is I think the first question. And the second question is, what needs to change that IPO markets become more attractive again for the good companies that you're also mentioning, saying, hey, the best companies that we have in the portfolios are currently not exited and not IPO'd. So what needs to change?

Fabrice Grinda:
[7:30] Well, there are different reasons why people don't want to go public. First of all, if we are the very best companies in the portfolio and you're compounding very rapidly, there's no reason for you to go public, right? If you're SpaceX or Stripe, and you already have access to liquidity through secondary markets and investors are throwing capital at you, regardless of the fact that you're already worth hundreds of billions in the case of SpaceX... Then delaying the IPO probably makes sense, especially since you don't want to deal with having all the downsides of being public, having all the information out there, dealing with Section 404 and SOX compliance and all the regulatory regime and the pain that goes from being public. And so, you know, I think we indirectly invested in SpaceX in like 2007, you know, and it's been 18, it's been whatever, 17 years and they're still, we're 18 years at this point, and they're still not public and not going public anytime soon. and that's okay. There are companies that can't really go public because they raise money at 21 at very high prices. And today, the public markets would actually be at lower valuations than the private brands. And so for them, going public is unappealing unless they actually need the capital and they're cut out of the private markets. But frankly, they maybe are not the best candidates. But there's this intermediate step of companies that I think are ready to go public.

Fabrice Grinda:
[8:49] They're somewhat reasonably priced relative to the last round and going public would be a liquidity event for their investors, founders, and LPs. And also they're late enough in the game that actually going, there's no, they're already a series G right now. And so maybe there's no more capital in the private markets that really makes sense. And for those, I do think going public makes sense. And there's companies like ShipBob or Flexport or Klarna, and they will, I think, go public at some point in 25 or 26. By that said, the universe of companies for which going public makes sense is more limited. Now, is there a way to make it less onerous to go public in terms of both costs and oversight? Maybe.

Fabrice Grinda:
[9:32] It's painful enough that it doesn't make sense to go public unless you're worth like $5 billion plus. Otherwise, you don't have liquidity, you don't have endless coverage. And that used to be very different. I think Microsoft went public at a $260 million market cap. If you're worth $360 million today, you can't afford to go public. It costs you several million a year to be public, and you'd have no coverage and no liquidity. And so do we want to bring this down again? Maybe, in which case it requires a pretty profound regime, regulatory regime change, which I don't see in the cards. And so I suspect that the threshold for going public, at least in the US, will remain pretty high. And it's okay. I think is meant to be a kind of a protection for public market investors and the general public when they're buying socks and they don't buy bad companies. Though it does mean it probably cuts them off about high growth companies where most of the high growth happens in the private markets. And then once they're no longer a high growth, they go public. So it kind of sucks if you're a public market investor because it means most of the value accrues to people like me on the private side. It is what it is from a structural perspective.

Fabian Tausch:
[10:38] What does this whole dynamic mean for people like you running funds that typically run on a 10 plus 2 basis, so 10 years of an investment horizon, can be adjusted a bit and extended? But seeing all these dynamics shifting the life cycles of a company until a liquidity event happens to the future, how does this change the venture industry?

Fabrice Grinda:
[11:05] The duration from investment to exit has increased dramatically. It's kept increasing over the last 20 years. And yes, today, if you invest in the seed, you probably, for the very best companies, are going to go beyond the 12-year, the 10 plus 2. And you'll have to get letters from your LPAs to extend even further. It actually probably makes sense that's said to do it because they're compounding aggressively and you don't want to exit too early in any of these. The problem from a venture industry perspective is because the DPIs have been reasonably low, so the distributed capital, how much exit we've been getting on the way up, that delta between when you raise a fund and when you get the capital, there may be a three-fund lag. We are at fund four now that we're about to raise in Q1 of 25%.

Fabrice Grinda:
[11:56] Our fund one is now fully distributed, meaning we've returned 1x the capital. So in a way, the fund one exits, and we're at the top decile of DPI. And so most funds, probably, there's a four, five, six fund lag between investment and exit, which is a massive negative cash flow. What it means for people like us, though, the reason we've been able to, in a way, get away with it with high DPI is because we write small checks. We've been getting a lot of exits through secondaries. And so the secondary markets have actually been exploded. So one of the bigger trends in venture is there are more and more secondaries, both in companies, but actually in funds. There are new investors that are buying full-on positions or LP positions from other LPs, especially in the late-stage funds or funds that have been deployed for 10 years or 12 years or whatever, and people are tired and they just want exits. And you also have people buying positions in the GPs of the fund. So secondary funds are becoming bigger and bigger. And secondary marketplaces like Forge, Equities, InsurancePost, NASDAQ, private markets are becoming larger and larger as people are pursuing liquidity. So that's a mega trend. And by investing right now, I think in secondary funds makes a lot of sense because the liquidity is coming at a premium. And so both you can buy positions of companies at good discounts, but you could also buy positions in good funds at very big, like 40, 50, 60% discounts to NAV by people who want liquidity.

Fabian Tausch:
[13:26] In which way does this affect how I as a founder should figure out who as an investor I want to take on board?

Fabrice Grinda:
[13:34] In general, first of all, picking an ambassador is like a marriage, right? They're your lead ambassador. They're on your board. You're going to be with them forever. So pick someone who likes you, understands what you're doing, and has your back, and is going to stick with you in good times and bad times. From the VC's capital structure perspective, I pick VCs who basically are long-term investors. And whether or not they exit in 5 years, 10 years, or 15 years, in a way, it doesn't matter to them. And therefore, you're not going to be pushed into an earlier exit than you would like. And of course, the people that have been around forever, who have infinite long-term capital, are probably the best bets for that. Benchmark, Sequoia, the people that are the brand names that have long-term committed capital to their funds, they are not giving in a hurry to exit. And in fact, they've transformed their funds from just private funds to public-private funds where they can hold public securities forever. You know, that's why Sequoia is not an IRA. But does this matter that much? I think in general, not really. Most VCs will, they will figure out their own capital structure independently and they let the founders meet, right? Like at the end of the day, the last thing you want to do is force a company to sell too early as it's compounding. And so I wouldn't worry that much. And by the way, we at FJ, the reason our DPI's are high is because we own 2-3% of the companies. We can go and get secondaries. In fact, a lot of VCs ask us, hey, do you mind selling part of your position? We want a bit more ownership of the upruns. And so the founders ask us actually, if we'd be willing to sell.

Fabrice Grinda:
[15:02] But if you're a lead VC and you have 20% of the company and you're on the board, you can't do a secondary. Because if you try to sell, it's a negative signal. Oh, what do they know about the company that we don't? And so it kills the company. And so that approach doesn't really work for lead VCs. They need to wait until the IPO. In fact, they cannot even sell post-lockup because they own so much of the company. They sold the price would collapse. And so for lead VCs, they're going to be locked up for a long time. It's only people like us that have small percentages that can sell on the way up. I don't think it changes that much for a founder, honestly. Just pick the person that has your back and that has capital to follow. Now, the one thing that I think matters more is, does the VC, can they keep supporting you into the seed, the A, the B, the C, etc? Because we're in a world where outside of AI, capital has been harder to come by. And so you want to be seeds with deep enough pockets that they can do the other round. So I wouldn't worry about that at the precedence seed, because whereas the seed funds are seed funds, they're not going to do your A, they don't have enough capital. But once you get to the A funds, a lot of funds are crossover and they'll do A and B, etc. So think of a left lane. They'll do the A, the B, the C, etc. Or Andreessen or Sequoia. The only exception to that are like dedicated A funds that are amazing, like Benchmark. Even though they won't have the capital necessarily to lead your B, it's okay. I'd still take them. They're amazing.

Fabian Tausch:
[16:23] In 2024, you did 100 first-time investments with FJ Labs in companies. And therefore, you looked at thousands of them, especially marketplaces. So therefore, what trends are you currently identifying and seeing and looking out for when you're evaluating new businesses? What are the things that are coming up more and more right now where you think, hey, 2025 might be a chance and have a good hit on this trend for marketplaces?

Fabrice Grinda:
[16:52] I'll separate. So first of all, we invested by 1% of the deals we see. So for 100 investments, we saw 10,000 deals or losses. But of course, many of these are out of scope, you know, our development, et cetera. So we didn't take, we take calls of 300 calls, deals we get a week, we take calls with 50. And then we invest in three. So that's the kind of 1%. So we only took calls with like one fifth of those or so. So maybe 2,000. Now, I'll break down the trends into two buckets. One is megatrends, which we're seeing as a general category. And then, like, why not things that are interesting that could form the basis of a larger trend? So let me explain the difference between the two. The big megatrend that we're seeing as a category is the B2B marketplaces and the digitization of B2B supply chains is becoming a massive trend. So if you think of your consumer life, you can order food on DoorDash or Uber Eats and you get it back in like 15 minutes. You can order groceries on Instacart. You can order on Amazon. You get everything between a day and two days or even the same day sometimes.

Fabrice Grinda:
[18:07] You can book an Airbnb. You can get an Uber in five minutes. You can get a hotel on Booking.com. In your consumer life, digitization has happened in a very massive, meaningful way, and software is already eating the world.

Fabrice Grinda:
[18:25] In the B2E world, though, that's not true. And that's not true neither at the large enterprise nor at the SMBs, right? Like, so, and I'll give the two examples separately. The large enterprise, like, if you want to buy petrochemicals, there's no, like, catalog available of what's available. So I'm not even saying Amazon, where you have one by now. I'm saying a list, just a list of what's available. Then there's no connectivity to the factory to understand manufacturing capacity and delays. There's no online ordering. There's no online payment. there's no tracking and there's no financing. And this needs to happen in every industry and every vertical and every category. Right now, we're like sub 5% and usually sub 1% penetration on all of these. And when I think of these types of inputs, and I mean inputs writ large, like auto parts, construction, chemicals, energy, but it could also be like finished goods. None of that has been digitized. Number two, if you think of the life of your little SMB owner, like a little mom-and-pop shop owner. So imagine you own a restaurant. The people that own restaurants, what do they like to do? They like to cook. They like to chit-chat with the customers. And yet, what is the job that they end up having to do today? They need to create a website. They need to go to answer comments on Google and Yelp and TripAdvisor. They need to get a POS. They need to do accounting. They need to manage their inventory.

Fabrice Grinda:
[19:42] They need to do payroll. They need to negotiate Uber and DoorDash. And so SMB digitization, dude, all the work that these SMB guys don't like to do is a mega trend as well. And I'll give you a few examples. In SMB, we invested in Slice, which helps pizzeria owners manage all their back office. They now have 20,000 pizzerias on the platform, over a billion in sales, very profitable. We have Freshia, which does the same thing for barbershops. Sense that does the same thing for laundromats or dry cleaning companies. We have one that does it for spas and general yoga studios, et cetera, cold moments, et cetera. So this we're vertifizing. On the input side, we're in Nodi for petrochemicals. In Germany, we're in a company called ShootFlix, which is a three-sided marketplace in order to get gravel.

Fabrice Grinda:
[20:33] We're in Material Bank, I mean, in many others. And the other three trends, I would say, in the B2B are moving supply chains out of China. I guess the general trend I would call French shoring, especially into India. So for instance, If you're a czar in H&M and you want to buy apparel and you want to buy in India, the thing is in India, there's thousands of little mom-and-pop manufacturers. And what do these mom-and-pop manufacturers want to do? They just want to manufacture. They don't know how to enter an RFQ. They don't know how to do invoicing, prototyping, etc. So a marketplace like Ziad will do all that for them. So we've invested in all these marketplaces to help move supply chains out of China, mostly into India, but obviously also in Mexico, Vietnam, Philippines, Indonesia, et cetera.

Fabrice Grinda:
[21:18] Number four, there are a big lot of labor marketplaces. They're emerging to support this rise of B2B. And so we're in WorkRise, which is a marketplace for all services workers. We're in Job and Talent for Blue Collar workers in Europe. We're in Trusted Health for nurses.

Fabrice Grinda:
[21:39] And then last but not least, actually two more, Recommerce. Of course, e-commerce is very big right now in consumer, and it's actually coming to the B2B world, both for a combination of getting lower costs and also for green reasons. So we're an investor company called Ghost, which allows you to buy excess inventory. So you're a little store, and you can buy clothing at a 90% discount from excess inventory from the bigger brands, and then you can sell it. And historically, that didn't exist because it was impossible for these stores to buy a million units. But now you can buy like 10k orders and make it work it allows but not at least the infrastructure that supports all this so payments infrastructure like stripe or rapid automation robot robotization infrastructure so formic which helps people automate or figure which is robots in factories replacing human labors and they're in bmw in germany replacing like 250k of machinists with like a 90k year robot that works 20 hours a day and then there's like shipping companies like Flexport, ShipBob, Shippo, and even cross-border companies that we invest in, like Portless. So all those are like the major megatrends in B2B. Now, beyond these trends in B2B,

Fabrice Grinda:
[22:50] We're seeing a few interesting companies that are doing things that suggest that there's more to happen. So the big other trends in marketplace, let's say, cross-border commerce is finally becoming a reality. So think of Vinted. The reason Vinted became so successful in so many countries, they actually... Back in the day when you had classifieds like eBay, Klein & Zagen, Klein & Zagen only has listings in Germany. And Le Boncoin only has listings in France. And you're not shipping across countries, etc. But Vinted basically translates the listings, translates the chats between the users as integrated shipping cross-border and integrate payments cross-border, such that they've created for the first time the true pan-European marketplace. They've created a marketplace in Europe that kind of makes Europe look like the US. And it's fully integrated, one language, one currency, one everything, but actually is happening for real. It's absolutely easy to use. I love it. Yeah, and they're crushing it, right? Like there are like 6 billion in GMB.

Fabrice Grinda:
[23:47] I think they're massively profitable in the UK and Europe. Huge. And this is happening in other categories. So we're investors in a company called Ovoco, which is a Lithuanian car parts marketplace, getting sourcing car parts in Eastern Europe, like in Poland and Lithuania, etc. And they're selling in places like France. Absolutely crushing it as well. So cross-border is becoming a reality, especially in Europe. Europe is finally starting to look like the US. Next big trend is live commerce. Now, in China, on Taobao, which is like the eBay of China, if you want, 25% of the sales are from live video streaming. In the US, this has only happened in one category, which is collectibles. There's a company called WhatNot that we're non-investors in. They just raised like a $5 billion valuation.

Fabrice Grinda:
[24:32] But for collectibles, it kind of made sense. But it's now happening in other verticals. So we're investors in a company called Palm Street. And it's basically prosumers in little stores selling rare plants. And they're doing two streams per week they sell about ten thousand dollars worth of plants per month the women they're buying these are spending about 1800 every six months and it's beautiful because people are telling the story of where the plant comes from or you take care of it etc and it creates a rich experience so live video shopping is coming to the west finally and this company is absolutely crushing it so i can imagine other categories now they were themselves expanding in other categories, the iron crystals and rare pottery, etc. Then we're seeing the creation of new verticals. We're in a French company called Alpaga and they're creating...

Fabrice Grinda:
[25:21] They're a B2B restaurant equipment marketplace. And what's interesting is it used to be that if you're a restaurant, you would buy new equipment. The restaurant would go under very often. And then they change cuisine, et cetera. They have this equipment. They can't sell it because it's a pain in the neck. You can't ship it. And it's harder to install. So what they did is they built a network of service providers, shippers, and installers. And now the marketplace works. And they've seeded it with like a supply from like their hotels, hotel kitchens like Marriott, etc. And so adding a service layer in existing categories can create a marketplace from scratch. So we're seeing it as well in things like, I guess, greenification is a big megatrend where everyone wants to green their houses. But historically, if you want to green your house, you go to a place like Thumbtack, you need to hire, you get contractors, they quote you and we're installing a heat pump. It's very complicated. you need to manage like 20 bids and then you typically get screwed where investors are a company called tetra and basically take a few photos of like what your system is and they're like this is the provider this is the price and they do it for you and same thing they've added a service layer to an otherwise to a marketplace selling you're installing heat efficiency or energy efficiency and they're crushing it so i guess adding services to to make transactions Actions that were complex, simple, is another big trend. And I guess I'll give you a few more trends. New business models are emerging. We're investors in a company in France called La Bourse Olive, which is a book marketplace.

Fabrice Grinda:
[26:49] And what's unique here is they take 90% of the commission of the sale of the book. And you're like, why would someone be willing to give away 90% of the commission? And it's because instead of being working on maximizing the price, they're maximizing efficiency. If you're a new parent, you have a lot of books. and at the end of the day, you don't have the room for them. So you could sell them one by one on Amazon, but it's a pain in the neck. You need to scan it, list it, it sells, you need to ship it. Here, you'd basically put all the books in a box, you ship it to them, you're done. And you get a 10% credit to buy other books. And in basically a year, they become the leading used book seller in France with a 90% take rate. So amazing economics, amazing business, focusing on the convenience play. So again, we're seeing new trends or ways of attacking existing categories by adding new approaches and convenience. AI is starting to come, and I'll give you two examples of AI, and then I'll stop there in the trends.

Fabrice Grinda:
[27:46] AI, obviously everyone's using AI to do customer care, and everyone's using AI to improve programmer productivity. In marketplaces, where we're seeing the most use of AI is on redefining the listing process, right? So if you want to sell on eBay, you need to take a phone. You take a bunch of photos you write a title you write a description you select a category you enter a price and then you wait a week or two and then it and then it sells

Fabrice Grinda:
[28:13] The new model is there's a company we invest in the US called Hero Stuff. You take a few photos and you create a video where you describe the product. And with AI, they convert your description into the full listing. And they actually pick the price, the category, the title, the description. They create a 15-second TikTok video that you can venture in your socials. And they list it on eBay, Facebook Marketplace, etc. Called Hero Stuff. and we're seeing existing incumbents using their data to reinvent the listing process as well. So we're investors at a marketplace called Rebag in handbags. And what they've done is they've created this AI called Claire because they have all the data. You take a few photos and they tell you, okay, this bag is real. Is this model from this year in this condition will sell for this price? Poof, you click and it's sold. Like one minute you sold your bag because they will buy for you at the price of the market, which is amazing. And so we're seeing new trends in AI being used to improve marketplace efficiency. So yeah, a lot of amazing, exciting trends. And yeah, I expect these to be the beginning and more at these to expand. So live commerce will come to other categories. Cross-border will exist beyond these two examples I gave. New business models where maybe you can take higher take rate by adding services there and focusing on convenience will come to the fore.

Fabrice Grinda:
[29:36] And adding services will unlock new categories where historically it was too painful to transact. And so those are the big trends outside of the B2B marketplace trend, which as I described is a mega trend. And we're at day zero. So it'll take 10 years for all these to play out.

Fabian Tausch:
[29:52] A lot of things happening at once. So one thing that you touched on is that everybody's using also AI to enhance programming and here and there. How does the increased productivity that AI delivers to company building here and enhances product building and everything else, how do you build defensibility as a marketplace when the delivery of the product itself and the first MVP and having everything set up, how does the dynamic of building defensibility change due to the AI?

Fabrice Grinda:
[30:31] There's been a megatrend over the last 25 years of costs for building companies, barriers for entry declining. When I built my first company, I needed to get Oracle databases and Microsoft web servers. I needed to build my own data center. There was no AWS, but there was also no Rackspace. And then we got open source, MySQL... And php then then we got then we get cloud computing and you could use aws and and and now with the new ai revolution you're getting no code low code and or ai assisted code where the cost of launching a startup is cheaper and lower than it's ever been that said building the tech platform has really never been the barren entry in marketplaces the product itself is easy to replicate you can and in fact most of our marketplaces often launch on shopify the the consumer on the consumer if you're a consumer facing marketplace the buy side of the marketplace you might as well use shopify they have all the tools it's cheap it's easy they you can embed like everything you need from like tracking attribution testing like everything is kind of there it's responsive you can get a mobile app pretty easily so that has always been kind of commodity it's

Fabian Tausch:
[31:44] Funny i never thought about that but that's that makes sense.

Fabrice Grinda:
[31:46] Yeah so when you launch a marketplace there is no moat the product is the moat is actually liquidity it's your execution it's getting buyers and sellers it's having high nps it's matching them effectively it's creating the flywheel wherever more buyers bring to more sellers and more sellers brings more buyers it's the brand you built that's the moat it's the actual execution the product itself is not a moat in any way, shape, or form, because it's replicable. And this is becoming true in every vertical, basically, where any product is replicable. It's your execution that is the most. That's why ideas have some value, but not that much value. It's really the execution that has all the value.

Fabian Tausch:
[32:25] So how would you say what's necessary to, and I think you touched many of the topics already, but I would love to bring them together again, to build the brand that becomes number one, to build the mode of the supply and demand side and really become the number one marketplace in the industry that I'm in?

Fabrice Grinda:
[32:45] You need to delight your customers. And so I would start at the very beginning by typically going to the supply. And I would take the very, and the reason you go to the supply is they're financially motivated to be on the platform. So you go to the very best supply and you tell them, look, we're launching a new marketplace. We don't have many customers yet, but we're free to be on it. Would you be interested in listing? Everyone will say yes. So actually, the big mistake you can make is go to too much supply. You actually only take very limited supply. Then you test a bunch of marketing channels. It could be a sales team, it could be Google, it could be Tech Talk, it doesn't matter. And you bring them demand and you match them.

Fabrice Grinda:
[33:21] And you want to basically, depending on the category, if you're a used good marketplace, you want the probability of the item selling to be at least 25%. If you're a services marketplace, you want to represent at least 25% of the revenues of the supply. But you want to delight them. And you want the NPS to be very high on both the supply and the demand side, usually by having some level of management and service layer that makes sure that they're both very happy. Once you've done that, and they're happy, and your NPS is high, and the sellers and buyers are happy, you add a few more sellers, and then you add a few more buyers, and you keep scaling in parallel. And usually, that kind of launches the flywheel, where all of a sudden, you get network effects, where ever more buyers bring in, where sellers bring in, where sellers bring in, where more buyers. And you know you have the flywheel when your CAC starts declining. Many of these so-called marketplaces are not marketplaces because what happens is they spend a lot of money buying the sellers and the buyers. The more they scale, the more their CAC increases. It means they have no network effects. It means something's not fundamentally working. And I want the union economics to be very good. But the general idea that you delight your first customers and you keep building for them, make sure that they're happy, applies not just to marketplaces, but frankly, every startup. Now, the way you start in marketplaces may vary depending on the marketplace you're in. Maybe you need to be in one zip code, but maybe you're a national product, right? So how you go about it

Fabrice Grinda:
[34:45] The first, obviously, if you're in a service category, you probably need to be hyper-local. If you're selling used goods, maybe not, especially if they can be shippable. So it really depends. But the focus and delighting your customers and making sure that they're seeing their sellers, they're seeing demand. And if they're buyers, that they see enough of what they want that they can transact here.

Fabian Tausch:
[35:06] When I'm starting a marketplace today, what is likely the first hurdle that I will encounter?

Fabrice Grinda:
[35:14] Whether it's today or 20 years ago, the first hurdle that you encounter is the chicken and egg problem is I have this wonderful site, wonderful user experience, but I have nothing. I have no buyers and I have no sellers. Which one do I start with? And my recommendation in 99% of the cases is to start with the sellers because they're motivated financially to be on the platform. If they are there, they will make money. But I would, as I said, highly curated, go to the very best ones that are going to be engaged, that are happy to test it, that will be replying to the request from the buyers and make them happy. Fair.

Fabian Tausch:
[35:48] In regard of the time, I think that's a very sharp, very dense lookout episode with a lot of trends that you can dive deeper into when you're thinking about them being like, that makes sense. I can pick some ideas from here and use it for my own marketplace business and build on top of that because I can look into different industries. So and i know you did a marketplace trend episode on your own podcast as well i will link it down below so therefore if anyone can't get enough from you so therefore i link your linkedin and of course fj labs and and your podcast there are many more episodes that you should listen to all for example like the outsourcing one that i that i really enjoyed so fabrice it's been such a pleasure thanks for sharing all your insights and thoughts on marketplaces in 2025 and looking forward to catching up soon.

Fabrice Grinda:
[36:37] Thank you for having me.