12 Things You Can Do to Advance Your Startup While Maintaining Your Day Job


This post is by Jonathan Woahn from Startup Grind - Medium

And answering the question “When is the right time to quit”?

12 Things You Can Do to Advance Your Startup While Maintaining Your Day Job


This post is by Jonathan Woahn from Startup Grind - Medium

And answering the question “When is the right time to quit”?

On the Rise: 2019 Set a Record for New Female-Led Unicorns


This post is by Carmen Ang from Visual Capitalist

female led-unicorns

The Briefing

  • In 2019, just 9% of total VC investment dollars went to startups with at least one female founder
  • While there’s still a long way to go to narrow the gender gap in VC funding, progress is being made—last year, 21 female-led businesses achieved unicorn status, compared to just 4 in 2013

On the Rise: 2019 Set a Record for New Female-Led Unicorns

In 2019, more female-led start-ups achieved unicorn status than ever before.

A unicorn is a privately held company that’s valued at $1 billion or more. Last year, 21 new female-led companies hit that valuation mark—a 40% increase compared to 2018.

Within the last decade, the number of female-led unicorns has grown steadily:

Year (of first equity round) Unicorns with at least one female founder
2013 4
2014 8
2015 9
2016 5
2017 8
2018 15
2019 21

One of the startups to achieve unicorn status in 2019 was Away, a travel and lifestyle brand based in New York. After launching in 2016, Away made $12 million in sales in its first 12 months, and in 2019, the company closed $100 million in Series D funding.

Glossier, a direct-to-consumer beauty company, also made the new unicorn list in 2019. Like Away, the New York-based beauty brand raised $100 million in Series D funding—almost double the amount garnered in its $52 million Series C round.

There’s Still Work to Do

While it’s clear that the number of female-led unicorns is increasing, there’s still a wide gender gap in the venture capital and startup landscape.

In 2019, only 9% of VC investment dollars went to companies with at least one female founder. And this proportion of dollars to female/male co-founded companies hasn’t changed much over the years:

Year Proportion
2013 8%
2014 8%
2015 9%
2016 8%
2017 10%
2018 9%
2019 9%

Why does this gap persist? One reason could be the lack of female representation in venture capital leadership. As of 2019, less than 10% of decision-makers at U.S. venture capital firms are women.

In short—things are looking up, but there’s still a ton of progress to be made.

»Interested in learning more about female founders and the VC landscape? Read our full article on The Top Female Founder in Each Country

Where does this data come from?

Source: Crunchbase report, titled “Funding to the Female Founders”.
Notes: The analysis was based on announced funding to companies with founders associated. Crunchbase included private company fundings from seed through latestage venture; excluding private equity rounds.


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The post On the Rise: 2019 Set a Record for New Female-Led Unicorns appeared first on Visual Capitalist.

Looking for a Great Founder Community? Get Acquainted With Our Startup Members


This post is by The Startup Grind Team from Startup Grind - Medium

Back at the beginning of 2020 — what seems like a long, long time ago nowadays — the Startup Grind team was busy problem-solving.

With the world on lockdown and the startup community in need of more support than ever, it was crystal clear we needed to create something new for our community. Something that didn’t rely on in-person events (our previous standard), but could easily span across different global startup communities as needed.

And thus began the Startup Grind Virtual Membership.

Startup Grind’s Membership is a unique online space for founders to connect with other leaders and experts from around the world. It offers benefits not always accessible to early startup teams (like direct VC intros, mentorship, access to partners, and similar opportunities). In addition, it’s also a space where founders can get the extra boost of support and confidence needed as they navigate the million and one decisions ahead of them. All-in-all it’s an ideal space for startups of all types, locations, and growth stages.

As a way to highlight our members — something we love to do as an added promotion benefit of the membership!— we thought we’d introduce you to a few of our new Startup Grind members, all of who are busy building incredible new solutions, services, and companies.

Let’s meet ‘em.

1. ZumVet

“The founders of ZumVet met while working for a digital health platform and bonded over their fur babies. Despite all the innovation in the human health space, we realised that the veterinary space was being left behind.

As pet ownership rises exponentially around the world, pet owners remain lost when it comes to the health and wellness of their pets, with many serious condition going undiagnosed.

We created ZumVet as a way for pet owners to easily access the advice and care that they need, all from the comfort of their own homes.” — Athena Lee, CEO & Co-Founder

Learn more about ZumVet here!

2. Chirp Birding

“Chirp Birding is the brainchild of John and Natalie White, a husband and wife team who are passionate birders and have created this company on a shared love of wildlife and a desire to use smart technology to use to solve real problems for birders. It started with an idea on a safari holiday, and with a lot of hard work and effort they’ve created a platform that connects a community who really care about birdwatching.

As parents of two young girls (who also love birdwatching!) they are passionate about what impact Chirp can have on future generations. They see the power that the platform can have to help solve global problems like ‘Nature-Deficit Disorder’ by getting kids outside for their entertainment. They want to educate them through knowledge and observation — and have more fun doing it.” — John White, Co-founder

Learn more about Chirp Birding here!

3. FriendWithA

“One summer my wife and I were house sitting in a neighborhood about a mile away from where I grew up. In the cul-de-sac, the neighbors shared everything from tools to sports equipment. It was common sight to the riding lawn mower driving down the road to the next persons house.

This was one mile away from my mom’s house, where she did not even feel comfortable going and asking her neighbor to borrow their lawn mower when hers broke down. She would drive 25 minutes to home depot, rent a lawn mower, rush home since she was on the clock at $20/hr. By the time she returned the lawn mower she was exhausted, covered in sweat and if she was lucky, only spent $60, usually spending 4 hours with the drive and spending $80 just to mow her lawn.

I wanted to build an online platform that could replicate my cul-de-sac experience and help my mom and others find that friend with a…” — Stefan Cordova, CEO

Learn more about FriendWithA here!

4. Nomad Stays

“After travelling over 100 countries around the world and living as a digital nomad for quite a few years, I needed a better way to find an affordable, easy way to book places to stay for a few weeks at a time. So I built the better way with my partner.” — Mark Phillips, Founder

Learn more about Nomad Stays here!

5. Menu del dia APP

“Menu del dia APP started as a way to help a group of friends in Ibiza Spain easily decide where to eat. We are currently seeking investment to help us grow worldwide as we have app users in 69 countries!” — Joanne Crumlin, Sole Founder & CEO

Learn more about Menu del dia APP here!

6. The School of UX

“I came to the UK from Estonia 15 years ago in search of career prospects. Three years (and thousands of pounds in fees) later I have completed computer science degree (hooray!) and realised that sadly much of the academic curriculum wasn’t relevant to what actual industry and employers were expecting from new hires (*sigh*).

It was only thanks to my proactive freelancing and numerous side projects with fellow teammates Vitalij Kudresov and Roy Herrod (big kudos to them!) that I’ve gained experience, which significantly helped me start my career. I wondered if there are other ways.

I’ve decided to share my knowledge with aspiring designers and started The School of UX in London — bringing accessible and affordable education in User Experience design to everyone.

It’s been running for 3 years now and helped over 2000 students of different backgrounds (from lawyers to graphic designers) — who received lots of practical insights and career advice from experienced designers in under 5 days (without a need to take a loan and quit job).” — Sergei Golubev, Founder

Learn more about School of UX here!

7. Pelagic Dive Travel

“I’ve been a SCUBA Instructor for over 17 years and was looking for a scuba trip where I could see Manta Rays. I spent hours until finally I found a liveaboard dive vessel which was traveling at my dates of holiday. I tried to book, but had a reply days later it was full so had to start again. Coming from the travel industry, I thought there must be a better solution — but there wasn’t. And so I created Pelagic Dive Travel.

We offer unique search by marine species & instant booking confirmations. Our values were always to support the marine environment, but today this is our focus. We support, help create exposure & promote marine conservation organizations & initiatives in the sense that all of our dive trips have to be sustainable with a direct focus on marine conservation.” — Terry Smith, Founder

Learn more about Pelagic Dive Travel here!

8. Square Comp

“Both of us founders — Srinivasan & Sriram — have been great friends since childhood. We wanted to be aligned with the next frontier in tech and we believe VR was the right place to be. The basic idea and sense of what Virtual Reality can do excites us to the core.

Once we started working on Virtual Reality a mutual friend of ours — who happens to be in the HR space for a leading Auto Manufacturer — complained about the challenges they face with training and other up-skilling processes and the amount they’d spend on these activities. That’s when we started researching more on the industry, the pain points, and the problem that they deal with at large. That paved a way for our solution which can save more than 50% of the cost and time spent towards these training activities for the Manufacturing Companies.” — Srinivasan Yagnanarayanan, Founder

Learn more about Square Comp here!

9. Sauciest

“My founder and I have known each other as long as I’ve known my wife. He’s my brother-in-law and closest friend. The idea for Sauciest came about after listening to Mike Maples’ Starting Greatness podcast. The point that sparked it went something like this: ‘Find a problem you have to which you could find a meaningfully unique solution.’ From that comment, Sauciest was born.

Our problem was that we both eat REALLY healthily and the sub-problem there is that not all healthy food tastes great. Therefore, we found ourselves constantly in the condiments aisle trying to find something to make our nutritious food a bit more palatable while not completely wrecking the main reason that we eat that way in the first place.” — Hunter Thevis, Founder

Learn more about Sauciest here!

10. ARTSMILEY

“While I was working in an oil & gas, one of my fabricators gave me a beautiful painting as a gift. In our conversation, I found out the painting was done by him and I also learned that he quit his career as a full-time artist and become fabricator because as an artist he is earning less than $5000 USD per year. One of his main problems was he didn’t know how to showcase and market his work to gain exposure as traditional galleries were not accessible to him.

Being an art lover and collector, I felt really bad and understood his pains completely. I discussed these problems with my wife and she (being an IT specialist) suggested we build an e-commerce platform for these emerging artists. This is how Artsmiley was founded and my wife has been my co-founder on our first startup journey.” — Lurdh Allam, CEO & Co-Founder

Learn more about ARTSMILEY here!

11. iERP.ai

“Dusan and I have known each other for more than 25 years. Two years ago, we were discussing why small & medium size businesses weren’t using predictive analytics solutions to reduce their costs and increase their revenue, as we saw how big corporations were using AI to be more agile. Then the idea sparked! Let’s create a solution focused on the SMB market which can be used by anybody with ZERO AI & Datascience knowledge. It would provide actionable predictions tailor-made for each company using it.

And here we are two years later. We offer 3 pre-packaged algorithms (Sales forecasting, Discount recommendation, Predictions what consumers will purchase next, and an algorithm to assess probability that invoices will not be paid). We have 2 investors, a team of 7 people which will grow further this month. Plus, pilot customers all around the world.” — Jozef Balaz, CEO & Co-founder

Learn more about iERP.ai here!

12. Verivend

“Verivend was founded to find a better way for businesses to do business. Our experience from industry veterans spans the transportation, commodities, software-as-a-service, and B2B marketplace industries. Our goal is to provide a solution that allows businesses to realize clarity and predictability of their cashflow, grow within a trusted network of buyers and suppliers, and reduce the risks of doing business.” — Rodney Reisdorf, Co-Founder

Learn more about Verivend here!

Looking for supportive founder community? We’d love to have you join the Startup Grind Membership, which accepts applications all year-round! We’ll also throw in the first-month of membership free so you can test the waters.


Looking for a Great Founder Community? Get Acquainted With Our Startup Members was originally published in Startup Grind on Medium, where people are continuing the conversation by highlighting and responding to this story.

Student Entrepreneur Innovation on Display at EO GSEA Global Finals Competition


This post is by Entrepreneurs' Organization (EO) from Startup Grind - Medium

EO GSEA US Nationals took place at Startup Grind 2020.

“Anyone who wonders where our world is going or how we will overcome our current challenges only needs to look at ‘studentpreneurs’ to know that our world is in good hands with the next generation of leaders” says Carrie Santos, CEO of the Entrepreneurs’ Organization (EO). “Young student entrepreneurs impress us with their optimism and fearlessness in attacking the most serious issues of our day.”

The students who took part in EO’s annual Global Student Entrepreneur Awards (GSEA) are no exception. They impressed the judges right through to the Global Finals, which were held virtually for the first time in the competition’s 22-year history.

On 30 July 2020, 50 finalists from 50 countries presented their pitch to a panel of judges in hopes of winning the top prize of US$25,000 in addition to products and services to support the growth of their company.

Tackling today’s challenges with innovation and determination

While attending college or university, these students founded companies that address some of the world’s obstacles.

Check out the winners from the 2020 GSEA competition and their inspiring companies:

· The gamification of physical therapy: Global champion Harvinder Power, representing the United Kingdom, co-founded Motics. His wearable invention engages patients during physical therapy and provides actionable insight into muscle function. Power anticipates great things from the technology, including the possibility of preventing injuries.

· All-natural horse care: First runner-up Kate Madden, representing Ireland, co-founded FenuHealth. The company produces all-natural supplements to ease gastric problems — which affect the majority of sports and racing horses. Kate was just 14 when she came up with the idea for FenuHealth with her sister, Annie.

· Simple and mobile water filtration: Second runner-up Omar Negron Ocasio was inspired to create his product when his Puerto Rico village was devastated by Hurricane Maria and didn’t have access to clean water. He founded Remora Inc., a water filtration device that is easily transportable and simple to install. Ironically, Omar gave his virtual presentation during yet another tropical storm over Puerto Rico. Omar also won the People’s Choice Award for his positive, can-do attitude.

Are you a full-time student running a company? Then you’re a perfect candidate for competing in 2020/2021 GSEA! Apply now and learn more at https://gsea.org.

Water, water everywhere

With water scarcity becoming an increasingly real threat for millions of people in the world, it makes sense that a number of this year’s GSEA competitors focused their efforts on creating new ways to provide clean, drinkable water.

In addition to Ocasio’s water filtration device, here are two other water-focused innovations featured in GSEA:

· Saving water: Muhammad Ali Khursheed from Pakistan received the Lessons from the Edge Award, which recognizes his commitment to improving his community. He founded Aabshar Solutions to promote sustainable living and assure water availability. His inspiration came in the form of severe liver damage which he developed due to a lack of available fresh water to drink. The company’s Water Optimizer installs on most faucets in seconds and can lower your water use by up to 85 percent.

· Drinking water: The winner of the Global Social Impact Award, Wong Shy Kit of Malaysia, founded Luminary. This organization is focused on establishing off-grid and autonomous systems to provide clean water for rural and disaster-prone communities. It relies on a solar thermal powered device named Light2O which distills rainwater or river water into drinkable water. Kit hopes to help the 140 million people across Southeast Asia and 2.1 billion around the globe who do not have access to clean water.

Learn more about all the winners in this press release from EO.

The first-ever virtual Global Finals

Due to the Covid-19 pandemic, the 2020 GSEA Global Finals competition was streamed on Facebook Live. EO members organized special sessions for the studentpreneurs to coach them on funding and business strategy, two functional areas that will help these talented students bring their ideas to the next level. In addition, the 50 global finalists had the opportunity to connect with their peers and share their personal experiences and concerns through a collaborative learning approach.

The finalists competed via a 10-minute pre-recorded presentation. For the Global Finals, the judges included:

· Derek Anderson, CEO and cofounder of Startup Grind

· Amaresh Ramaswamy, CFO at Microsoft India R&D

· Jorge Gomez, CEO at Ikon Investment Bank

· Jason Sze, EO Chair and group managing director at The AJ Mason Group

· Dave Preston, EO Charlotte member and president at People Suite

· Lynn Anstett, EO Cincinnati member and founder of Stett Transportation

· Dave Loaney, EO Arizona member and partner at Fresh Start Funding

One of many unique aspects about GSEA is that judges rate the entrepreneurs and their ability to confront and overcome the challenges of running a company — rather than the specific company itself.

Each student who made it to the intense Global Finals competition had already won their local, regional and national competitions. These talented entrepreneurs will undoubtedly go on to positively impact the world and achieve success.

Entrepreneurs’ Organization is a high-quality support network of 14,000+ like-minded leaders across 61 countries. We help entrepreneurs achieve their full potential through the power of life-enhancing connections, shared experiences and collaborative learning.


Student Entrepreneur Innovation on Display at EO GSEA Global Finals Competition was originally published in Startup Grind on Medium, where people are continuing the conversation by highlighting and responding to this story.

Effx raises $3.9M for its DevOps monitoring platform


This post is by Frederic Lardinois from Fundings & Exits – TechCrunch

Effx, a startup that aims to give developers better insights into their microservice architectures, today announced that it has raised a $3.9 million funding round led by Kleiner Perkins and Cowboy Ventures. Other investors and angels in this round include Tokyo Black, Essence VC Fund, Jason Warner, Michael Stoppelman, Vijay Pandurangan and Miles Grimshaw.

The company’s founder and CEO, Joey Parsons, was an early employee at Rackspace and then first went to Flipboard and then Airbnb a few years ago, where he built out the company’s site reliability team.

“When I first joined Airbnb, it’s the middle of 2015, it’s already a unicorn, already a well-known entity in the industry, but they had nobody there that was really looking after cloud infrastructure and reliability there […],” he told me. The original Airbnb platform was built on Ruby on Rails and wasn’t able to scale to the demands of the growing platform anymore. “Myself and a lot of people that were really smarter than me from the team there got together and we decided at that point, ‘okay, let’s let’s break apart this monolith or monorail that we call it and break it up into microservices.’ ”

Image Credits: Effx

But microservices obviously come with their own challenges — they constantly change, after all, and those changes are reflected in different UIs — and that’s essentially where the idea for Effx came from. The idea behind the product is to give engineers a single pane of glass to get all of the information they need about the microservices that have been deployed across their organization.

Effx founder and CEO Joey Parsons

At Airbnb, Parsons’ team built out a small metastore to track what each service did, who owned it, what language it was written in and whether it was in scope for PCI or GDPR, for example. After leaving Airbnb, Parsons went to Kleiner as an entrepreneur in residence and started to work on building out this idea of bringing to more companies some of the ideas of what the team built at Airbnb. He raised a small amount of money from Kleiner to hire the initial engineering team in 2019 and then started testing the product with a first set of pilot customers earlier this year.

In its early iterations, the product relied on engineers writing YAML files, which the product could then consume, but few engineers love writing YAML files and the value in a tool like this comes from being able to automate a lot of this work. So the team built out integrations with common service orchestration platforms, including Kubernetes, but also AWS Lambda and ECS.

“What we’ve found is that most companies that have been moving towards microservices are using some combination of those platforms — maybe one, maybe two, maybe all three — to orchestrate things,” Parsons explained. “So we built really heavy integrations into those platforms to where in Kubernetes we can drop a client in there, it automatically discovers all your services, populates as much as it can into the catalog from that and then does the same thing for an AWS Lambda or ECS perspective where we consume data from those platforms and pull data in.”

Image Credits: Effx

As Parsons noted, the value here isn’t just in getting that single pane of glass, but once you have all of this information and these services’ dependencies and combine it with your CI/CD data, it also becomes a new tool for troubleshooting as it helps you see which services changed before something broke. To even better enable this, teams can add links to their runbooks, documentation and version control tools too.

Parsons tells me that the team is currently in the process of closing more pilots and hiring more engineers as it works to build out its service, add more integrations and find new ways to help its customers make use of all the data it gathers.

“As the future of what we’re building comes more into fruition, the most important thing for us right now is to really deliver on the value that our existing product delivers to our end users as a platform to build more business,” Parsons explained. “I think that in the long run, the power of this feed and getting the data that’s behind it ends up being a really interesting mode for us simply because there’s a lot of great insights that you can build for organizations based on like the patterns and the cadence of information that shows up in this feed, to help teams really understand why there’s that incident that happens every Tuesday at midnight UTC.”

Clockwise CEO Matt Martin: How we closed an $18M Series B during a pandemic


This post is by Walter Thompson from Fundings & Exits – TechCrunch

It all started with an email from a customer: “Do you know why Bain Capital Ventures is reaching out to me about Clockwise?”

That email would mark the beginning of a journey toward closing $18 million in new funding that will dramatically accelerate my company, Clockwise . It would require getting to know a partner in lockdown, long nights assembling a pitch deck and many bleary-eyed Zoom calls with some of the best VCs in the world.

Here’s how Ajay Agarwal from Bain Capital Ventures and I established trust online, how I made high-stakes decisions in extreme economic uncertainty and how we were able to turn the pandemic’s constraints into opportunities.

Let’s start at the beginning.

Building momentum: 2016 to 2020

Clockwise was founded in late fall of 2016. We realized that, as personal as time is, our schedules inside modern work environments are intertwined by a network of calendar events and attendees. People schedule meetings without considering the preferences of colleagues by simply hunting for any available “white space” (read: time to do real work). The net effect is that our most valuable resource, time, is easy to take and almost impossible to protect.

More than two years later, in June of 2019, we launched Clockwise to the public. After years of experimentation and refinement, we delivered to the world an intelligent calendar assistant that frees up your time so you can focus on what matters. Workers soon confirmed our hunch that they’re hungry for a tool that gives them more productive hours in their day. Our rapid user growth carried throughout 2019.

By January of 2020, we were on fire. Since January 1, our user base has grown by more than 90%, expanding at a clip of well over 5% week-over-week. As people sought remote tools during shelter-in-place, our rate of growth accelerated even further.

Our growth, incredible team, top-tier existing investors (Accel and Greylock) and strong cash position meant we didn’t need to raise additional capital until the fall of 2020. While COVID-19 certainly sent shock waves through the community, I was in regular communication with a few highly engaged investors who still seemed eager to invest in the future of productivity. I felt cautiously confident more capital could wait.

But, you know, best-laid plans.

Establishing trust while sheltering in place

How to Adjust to Challenging Times by Re-Evaluating Your Resources


This post is by The Startup Grind Team from Startup Grind - Medium

This article was contributed by Pablo Lascurain, one of our Startup Grind Directors from Latam. He’s an active participant of our director community and has, like so many other entrepreneurs, been feeling the effects of city-wide lockdowns. Below he shares his advice for founders on how to tackle challenging times with creativity.

The current circumstances are tough and they may get even tougher for entrepreneurs. Many of us are feeling uneasy about the unknowns. So what can entrepreneurs be doing during these uncertain times? One of the best things we can do to regain some sense of control is to look at our existing resources in new ways.

Right now, there are three main areas where you’re probably feeling major disruption:

  1. Disruption to the value of your time.
  2. Disruption to your productivity.
  3. Disruption to your business interactions.

Each of the above presents a challenge to any business, but especially to entrepreneurs who may depend on these types of resources to thrive. Rather than letting those challenges rule us, I’d like to walk through a few options for pushing through these disruptions by re-evaluating our resources to uncover opportunities. These ideas are meant specifically for entrepreneurs, but can also help non-entrepreneurs.

1. Re-Evaluate Opportunities When it Comes to Your Time.

Regardless of your profession, your time can be priced in the market. This is based on your income, revenue-generated, added value, or any other monetary metric. Because of the lock-down, my team has just hit the “Black Friday” price for our hourly rates (we internally call this the Black Friday time paradox). It’s tough. But it also means we can allocate our time to activities we usually thought about as less valuable, but in reality are transformational for companies.

As an example, here are a few things my team has done to turn our newly available time into something more valuable under the current circumstances:

  • Write the company manifesto. For us, a company Manifesto means answering questions around what makes our company special and how we do things around here. That includes defining our mission, vision, and values. Then we take it a step further by creating a Wiki or document explaining how the mission, vision, and values are lived and how they will be implemented inside our organization.
  • Document processes and build manuals. This is one of the fastest way to come up with new ideas for optimization. Write down the top 5 most common or revenue-generating processes ie. Stages, Time, Stakeholders, etc. Then evaluate those to begin pinpointing bottlenecks and efficiency opportunities, all the while documenting how you’ll attempt to improve the process in the future.
  • Create or identify your personal or company differentiator. Most companies struggle when asked: What’s your company superpower? What made or will make your company a success? Take the opportunity to really dig into these questions during this time. Hint: your company superpower is not price and it’s not delivery time. It should be super specific and super unique.

2. Re-Evaluate Opportunities When It Comes to Your Productivity.

On my team, we tend to measure productivity using external factors like sales, revenue, growth, KPI’s, etc. But in a lockdown, most of those external factors are going to be in standby for the short-term. So does this means we’re no longer productive? Not at all. In uncertainty, we evaluate new solutions! The first step to re-evaluating your opportunities when it comes to productivity is to ask yourself: “How can we measure or maintain our productivity outside of numbers?”

Here are a few ideas for things you can focus on:

  • Explore digital tools for time management. You can check out asana.com, monday.com, taskmeister.com among others. There are also some methodologies for measuring productivity, like chunking. Chunking groups together information into ideally sized pieces so they can be used effectively to produce the outcome you want without stress.
  • Define how you measure success in your life. Can you imagine choosing only one metric for measuring how successful you were in your life? It sounds a bit extreme, but it’s an amazing exercise to attach meaning to your priorities. What does success mean to you? You company? Your family? Your partner? Your starting point here should be checking out Clay Christiensen’s book: How Will You Measure Your Life?.
  • Learn a set of skills. We regularly upgrade the operating system for our smartphones or computers. When time is available, we should think of updating ourselves. This means asking yourself: “Which skills can help me evolve?” Are you a CFO? Learn about service design instead of financial reporting 2.0. Are you a CMO? Think about psychology or web development. My team likes to think that by adopting radical new skills we can also transform the way we approach our day-to-day activities.

3. Re-Evaluate Opportunities When it Comes to Your Business Interactions.

By now, I’m sure you’ve all heard about social distancing, a term applied to certain actions that are taken by Public Health officials to stop or slow down the spread of a highly contagious disease. Essentially it means avoiding physical social interaction. This, of course, disrupts how you can do (past, present, and future) business. Entrepreneurs will likely be nervous about how they will be able to get new customers and avoid losing existing ones.

Here are some actions that we’re implementing with some of our clients:

  • Start building relationships with potential clients by showing value upfront. Because of the Black Friday time paradox, our team had a lot of newly available time. And so we decided to create yearly strategies for clients and prospects, with simulations that showed the impact of working with us. This means putting a lot of hours in upfront, but also creates a mechanism that generates fidelity, curiosity, word of mouth, and keeps relationships alive.
  • Deepen existing relationships by reaching out to current customers or clients. Post-sales are one of the most forgotten or underrated areas of the sales process. Oftentimes, once your customer has gotten their product or service and paid for it, the relationship is over. Because of our overtime, my team implemented a calendar for everyone in a 500+ employees company to schedule 10-min calls with clients to understand the experience of being a client. They also took the opportunity to offer these clients 30% off their next transaction. This mechanism optimizes interactions that generate empathy, learnings, customer development, and customer satisfaction. It’s also great for word of mouth and keeps relationships alive.

As mentioned earlier, these are uncertain times and that can be unnerving. But by re-evaluating your resources you can uncover opportunities to make the best of the unknown. I hope you find these tips helpful and please feel free to leave other suggestions in the comments below.

Pablo Lascurain is a Startup Grind Chapter Director in Latam. He’s founded 7 companies, sold 4 and helped more than 200 companies solve problems, scale, and thrive. Read more by Pablo Lascurain on his Medium account.


How to Adjust to Challenging Times by Re-Evaluating Your Resources was originally published in Startup Grind on Medium, where people are continuing the conversation by highlighting and responding to this story.

How Can You Get Great Talent To Join Your Unfunded Startup?


This post is curated by Keith Teare. It was written by brett fox. The original is [linked here]

“Let’s meet for coffee,” I said to person I was recruiting. I’d done this a million times before. If I drank any more coffee, I might overdose on caffeine.

Let’s meet for coffee. Let’s meet for lunch. Let’s meet for tea. Let’s meet for whatever. That’s what you do when you’re trying to recruit people.

Picture: Depositphotos

There are no magic strategies for adding talent when you don’t have money.

So I set up the coffee with the potential engineering hire. I went through my pitch. I showed him our plan, and we started talking about how he might fit.

It was clear he wasn’t a fit. I had another coffee scheduled 45 minutes later, so we shook hands.

You should always ask for leads even if the person you’re talking to isn’t a fit.

“Hey, do you know anyone that you think might be a good fit for what we’re doing?” I asked.

“No, sorry, I don’t.” he said.

I’d lined up a couple engineers using this strategy, so I wasn’t discouraged. Onward I went to the next meeting.

You keep meeting with people and recruiting for when the time is right for them to join.

I met my next potential engineer at Starbucks. I ordered a tall nonfat decaf latte, my new mid afternoon drink of choice. This would keep me from overdosing on caffeine.

This time the results were better. Joe, the person I was talking to, really liked our story a lot, but he wasn’t ready to join us yet.

He said, “I can’t Continue reading “How Can You Get Great Talent To Join Your Unfunded Startup?”

Startup Spotlight Q&A: Evolve Energy


This post is by The Startup Grind Team from Startup Grind - Medium

Michael Lee is the CEO and Co-Founder of Evolve Energy. He’s worked in renewable energy for the past 10 years and earned his MBA from Harvard Business School. In 2018, Michael founded Evolve Energy to help consumers save on energy costs while also laying the groundwork for the energy infrastructure of the future. Evolve recently won Grind Startup of the Year award at Global 2020, an honor well-deserved by Michael and the Evolve team. Check out what Michael had to share about Evolve’s biggest moments, advice for founders, and what’s coming up next for Evolve.

— In a sentence, what does Evolve Energy do?

Evolve helps customers cut their electricity bill by 50% and decarbonize their footprint by unlocking the value of smart home products.

— What makes Evolve different in this market?

Other companies sell “fixed priced power,” which means every hour of the day is the same price. We sell wholesale power — this electricity is very cheap, but changes price every few minutes based on grid conditions. We then pair these signals with IOT-enabled products (EVs, smart thermostats, appliances, smart plugs) and optimize the timing they use electricity to align with the cheapest times.

— How did Evolve came to be? What was the problem you found and the ‘aha’ moment?

I’ve been helping build renewable energy projects for the past 10 years. I’ve seen these projects have a 70% reduction in cost over this period — but electricity prices that we all pay haven’t decreased as much. I realized the reason is that renewables create Continue reading “Startup Spotlight Q&A: Evolve Energy”

Overheard @ Evolving Enterprise 2020


This post is by GGV Capital from Stories by GGV Capital on Medium

Evolving Enterprise 2020

There’s never been a more exciting time to invest in enterprise software companies. GGV Capital has invested in more than 100 of the fastest-growing, most innovative enterprise companies in the world — and we’re continually inspired by the visionary entrepreneurs building the next billion-dollar software companies. Earlier this week, we had the great pleasure to co-host the 4th annual Evolving Enterprise conference alongside Silicon Valley Bank and Fenwick & West. The event brought together over 100 of the brightest software founders and leaders for a half-day of engaging discussions, interviews, and networking.

At Evolving Enterprise, founders and leaders from HashiCorp, Tray.io, Confluent, Workboard, and Handshake shared tactics from the trenches for successfully managing hyper-growth — from raising funding, to building go-to-market strategies, to supercharging sales, to scaling hiring. These companies have achieved remarkable success: hitting ARR of $100M or more, growing to many hundreds of employees, and raising hundreds of millions in venture financing between them.

Here are some of their tried-and-true tactics for growing your SaaS business.

Sales & Marketing

How do you build a sales-driven culture? Execution and accountability. First, define what you expect certain roles to do, then, define how you measure success in those roles, and third, figure out how to hold people accountable for meeting these goals. — Erica Schultz, President Field Operations at Confluent

Marketing is twofold: messaging and math. It’s hard to find one head of marketing who is good at both those things, so you should figure out what’s more Continue reading “Overheard @ Evolving Enterprise 2020”

Overheard @ Evolving Enterprise 2020


This post is by GGV Capital from Stories by GGV Capital on Medium

Evolving Enterprise 2020

There’s never been a more exciting time to invest in enterprise software companies. GGV Capital has invested in more than 100 of the fastest-growing, most innovative enterprise companies in the world — and we’re continually inspired by the visionary entrepreneurs building the next billion-dollar software companies. Earlier this week, we had the great pleasure to co-host the 4th annual Evolving Enterprise conference alongside Silicon Valley Bank and Fenwick & West. The event brought together over 100 of the brightest software founders and leaders for a half-day of engaging discussions, interviews, and networking.

At Evolving Enterprise, founders and leaders from HashiCorp, Tray.io, Confluent, Workboard, and Handshake shared tactics from the trenches for successfully managing hyper-growth — from raising funding, to building go-to-market strategies, to supercharging sales, to scaling hiring. These companies have achieved remarkable success: hitting ARR of $100M or more, growing to many hundreds of employees, and raising hundreds of millions in venture financing between them.

Here are some of their tried-and-true tactics for growing your SaaS business.

Sales & Marketing

How do you build a sales-driven culture? Execution and accountability. First, define what you expect certain roles to do, then, define how you measure success in those roles, and third, figure out how to hold people accountable for meeting these goals. — Erica Schultz, President Field Operations at Confluent

Marketing is twofold: messaging and math. It’s hard to find one head of marketing who is good at both those things, so you should figure out what’s more important to your company and hire for that role predominantly. Usually, for high-growth companies, it’s best to hire a messaging maven first, then beef up metrics-driven marketing, the math side, when sales are taking off. — Marc Holmes, VP of Marketing of HashiCorp

Professional services do play an important role at a software company, but it’s not just to generate a revenue stream. Professional services should deliver value to your customers and the success of the program should be measured by customer success, retention, and expansion metrics. — Erica Schultz, President Field Operations of Confluent

Erica Schultz, President, Field Operations, Confluent and Marc Holmes, Vice President, Marketing, HashiCorp

Funding

Take ownership and control of the metrics that define your business and its success. Ideally, you guide your team to them and guide investors to evaluate the business on truly material metrics. — Deidre Paknad, CEO and co-founder of WorkBoard

In the early days, we met a lot of investors who liked us but struggled with the idea, so I spent months reverse engineering the pitch process to understand the VC mindset. This helped the framing of the deck and success in seed-stage fundraising. — Rich Waldron, CEO and co-founder of Tray.io

Moderator Jeff Richards, Managing Partner, GGV Capital with Rich Waldron, CEO & co-founder, Tray.io, Garrett Lord, CEO & founder, Handshake, Deidre Paknad, CEO & co-founder, Workboard

Be methodical about who you reach out to at each VC firm. The first person you meet matters a lot because you won’t later get rerouted to someone else. I identified four or five investors I really respected and made a spreadsheet of all the deals they’d done, looking for connections in their portfolios to see how Handshake would fit in. Then I built long-term relationships with these investors, meeting them quarterly. Each time, I told them what I would accomplish and then over-achieved against those goals by the next meeting. This convinced our investors in our ability to execute. — Garret Lord, CEO and co-founder of Handshake

We were specifically looking for a VC who was a GTM expert in early rounds, then in later rounds we looked for strategic investors who could help with certain growth challenges. Late-stage money is easy to get if you’ve met benchmarks, so decide carefully who would be truly active partners at this point. — Rich Waldron, CEO and co-founder of Tray.io

Edgard Capdevielle, CEO, Nozomi Networks, Andrea Carcano, Chief Product Officer & founder, Nozomi Networks, Brian Dhatt, CTO, BigCommerce

Hiring

As a founder, I’m always trying to hire myself out of my most current role. My goal is to bring in talented people who are smarter than me. My superpowers are development, customer evangelism, and supporting our developer community. Outside of those things, I want the best people to do everything else. — Armon Dadgar, CTO and co-founder of HashiCorp

We made a conscious decision to do all hiring internally, so we hired a head of talent early on and we’ve spent zero on headhunters. We finished 2018 with 68 people and now we have 228, so it was a huge undertaking, but having one head of talent hire every person has created a real sense of cohesion across the company. — Rich Waldron, CEO and co-founder of Tray.io

Moderator Jeff Richards, Managing Partner, GGV Capital with Rich Waldron, CEO & co-founder, Tray.io, Garrett Lord, CEO & founder, Handshake, Deidre Paknad, CEO & co-founder, Workboard

For your early hires, you need to find folks who want to win. The early team must be pioneers who like to figure things out and build, and the later team will be more about execution at scale. Hire the pirates first and the navy later. — Erica Schultz, President, Field Operations of Confluent

Early marketing hires are vital for open source companies because of the complexity that happens upfront in marketing to two groups: users and choosers. While trying to define a category, you’re also trying to engage a developer ecosystem, the users, to become your evangelists, and then get the choosers, the buyers inside the companies, to come round to your point of view. Early marketing hires are the quarterbacks on your team. — Marc Holmes, VP of Marketing of HashiCorp

Glenn Solomon, Managing Partner, GGV Capital with Armon Dadgar, Co-founder and Co-CTO, HashiCorp

Challenges

Don’t expect overnight success. It took us three or four years to get 100,000 downloads and the first year we were essentially on life support. It has taken years and years to build a community of developers who became our advocates and supporters. In the first few years, Mitchell, my co-founder, did 350,000 miles a year flying around the country to meet with early advocates. Expect it to take two to three years for a software product to hit early critical mass, and you’ll only get there if you’re 100% focused on customers. — Armon Dadgar, Co-CTO and co-founder of HashiCorp

You have to change your thinking from a habit of scarcity and investing one quarter behind your proofs during the Seed and Series A stage to investing 3 quarters ahead in the Series B and C stages. Shifting gears from that scarcity mindset of trying to survive one more quarter to acceleration is hard — you have to be really intentional about it. — Deidre Paknad, CEO and co-founder of WorkBoard

Alex Choy, Director, Silicon Valley Bank, Oren Yunger, Investor, GGV Capital, Tiffany Luck, Investor, GGV Capital

We would like to thank our partners Silicon Valley Bank and Fenwick & West for helping make Evolving Enterprise possible. If you’re an entrepreneur in the enterprise space, please feel free to reach out to our investment team members Oren Yunger and Tiffany Luck. For more information about GGV Capital, visit www.ggvc.com.

Overheard @ Evolving Enterprise 2020


This post is by GGV Capital from Stories by GGV Capital on Medium

Evolving Enterprise 2020

There’s never been a more exciting time to invest in enterprise software companies. GGV Capital has invested in more than 100 of the fastest-growing, most innovative enterprise companies in the world — and we’re continually inspired by the visionary entrepreneurs building the next billion-dollar software companies. Earlier this week, we had the great pleasure to co-host the 4th annual Evolving Enterprise conference alongside Silicon Valley Bank and Fenwick & West. The event brought together over 100 of the brightest software founders and leaders for a half-day of engaging discussions, interviews, and networking.

At Evolving Enterprise, founders and leaders from HashiCorp, Tray.io, Confluent, Workboard, and Handshake shared tactics from the trenches for successfully managing hyper-growth — from raising funding, to building go-to-market strategies, to supercharging sales, to scaling hiring. These companies have achieved remarkable success: hitting ARR of $100M or more, growing to many hundreds of employees, and raising hundreds of millions in venture financing between them.

Here are some of their tried-and-true tactics for growing your SaaS business.

Sales & Marketing

How do you build a sales-driven culture? Execution and accountability. First, define what you expect certain roles to do, then, define how you measure success in those roles, and third, figure out how to hold people accountable for meeting these goals. — Erica Schultz, President Field Operations at Confluent

Marketing is twofold: messaging and math. It’s hard to find one head of marketing who is good at both those things, so you should figure out what’s more important to your company and hire for that role predominantly. Usually, for high-growth companies, it’s best to hire a messaging maven first, then beef up metrics-driven marketing, the math side, when sales are taking off. — Marc Holmes, VP of Marketing of HashiCorp

Professional services do play an important role at a software company, but it’s not just to generate a revenue stream. Professional services should deliver value to your customers and the success of the program should be measured by customer success, retention, and expansion metrics. — Erica Schultz, President Field Operations of Confluent

Erica Schultz, President, Field Operations, Confluent and Marc Holmes, Vice President, Marketing, HashiCorp

Funding

Take ownership and control of the metrics that define your business and its success. Ideally, you guide your team to them and guide investors to evaluate the business on truly material metrics. — Deidre Paknad, CEO and co-founder of WorkBoard

In the early days, we met a lot of investors who liked us but struggled with the idea, so I spent months reverse engineering the pitch process to understand the VC mindset. This helped the framing of the deck and success in seed-stage fundraising. — Rich Waldron, CEO and co-founder of Tray.io

Moderator Jeff Richards, Managing Partner, GGV Capital with Rich Waldron, CEO & co-founder, Tray.io, Garrett Lord, CEO & founder, Handshake, Deidre Paknad, CEO & co-founder, Workboard

Be methodical about who you reach out to at each VC firm. The first person you meet matters a lot because you won’t later get rerouted to someone else. I identified four or five investors I really respected and made a spreadsheet of all the deals they’d done, looking for connections in their portfolios to see how Handshake would fit in. Then I built long-term relationships with these investors, meeting them quarterly. Each time, I told them what I would accomplish and then over-achieved against those goals by the next meeting. This convinced our investors in our ability to execute. — Garret Lord, CEO and co-founder of Handshake

We were specifically looking for a VC who was a GTM expert in early rounds, then in later rounds we looked for strategic investors who could help with certain growth challenges. Late-stage money is easy to get if you’ve met benchmarks, so decide carefully who would be truly active partners at this point. — Rich Waldron, CEO and co-founder of Tray.io

Edgard Capdevielle, CEO, Nozomi Networks, Andrea Carcano, Chief Product Officer & founder, Nozomi Networks, Brian Dhatt, CTO, BigCommerce

Hiring

As a founder, I’m always trying to hire myself out of my most current role. My goal is to bring in talented people who are smarter than me. My superpowers are development, customer evangelism, and supporting our developer community. Outside of those things, I want the best people to do everything else. — Armon Dadgar, CTO and co-founder of HashiCorp

We made a conscious decision to do all hiring internally, so we hired a head of talent early on and we’ve spent zero on headhunters. We finished 2018 with 68 people and now we have 228, so it was a huge undertaking, but having one head of talent hire every person has created a real sense of cohesion across the company. — Rich Waldron, CEO and co-founder of Tray.io

Moderator Jeff Richards, Managing Partner, GGV Capital with Rich Waldron, CEO & co-founder, Tray.io, Garrett Lord, CEO & founder, Handshake, Deidre Paknad, CEO & co-founder, Workboard

For your early hires, you need to find folks who want to win. The early team must be pioneers who like to figure things out and build, and the later team will be more about execution at scale. Hire the pirates first and the navy later. — Erica Schultz, President, Field Operations of Confluent

Early marketing hires are vital for open source companies because of the complexity that happens upfront in marketing to two groups: users and choosers. While trying to define a category, you’re also trying to engage a developer ecosystem, the users, to become your evangelists, and then get the choosers, the buyers inside the companies, to come round to your point of view. Early marketing hires are the quarterbacks on your team. — Marc Holmes, VP of Marketing of HashiCorp

Glenn Solomon, Managing Partner, GGV Capital with Armon Dadgar, Co-founder and Co-CTO, HashiCorp

Challenges

Don’t expect overnight success. It took us three or four years to get 100,000 downloads and the first year we were essentially on life support. It has taken years and years to build a community of developers who became our advocates and supporters. In the first few years, Mitchell, my co-founder, did 350,000 miles a year flying around the country to meet with early advocates. Expect it to take two to three years for a software product to hit early critical mass, and you’ll only get there if you’re 100% focused on customers. — Armon Dadgar, Co-CTO and co-founder of HashiCorp

You have to change your thinking from a habit of scarcity and investing one quarter behind your proofs during the Seed and Series A stage to investing 3 quarters ahead in the Series B and C stages. Shifting gears from that scarcity mindset of trying to survive one more quarter to acceleration is hard — you have to be really intentional about it. — Deidre Paknad, CEO and co-founder of WorkBoard

Alex Choy, Director, Silicon Valley Bank, Oren Yunger, Investor, GGV Capital, Tiffany Luck, Investor, GGV Capital

We would like to thank our partners Silicon Valley Bank and Fenwick & West for helping make Evolving Enterprise possible. If you’re an entrepreneur in the enterprise space, please feel free to reach out to our investment team members Oren Yunger and Tiffany Luck. For more information about GGV Capital, visit www.ggvc.com.

Top 10 Must-Listen Startup Podcasts of 2020


This post is curated by Keith Teare. It was written by Grace Yao. The original is [linked here]

Whether you work at a startup or not, these are some of the best business podcasts out there that you can’t afford to miss.

Continue reading on The Startup »

The Cure for Entrepreneurial Loneliness


This post is by Entrepreneurs' Organization (EO) from Startup Grind - Medium

EO members at Mt. Everest Base Camp 2017
“When I could share with other entrepreneurs, without judgment, the walls came down. I was able to get perspective and insight from their experiences.”

Two experienced entrepreneurs share how to overcome the feeling of isolation that comes with launching a startup.

Ask Pramod Raheja, founder of Airgility, what the most significant oversight of his startup days was, and his answer might surprise you. Making a wrong hire? No. Mismanaging cashflow? No.

Raheja considers his biggest startup mistake to be not joining a peer group sooner.

“I didn’t understand the value I could have gained if I had joined a network of entrepreneurs early on. Had I tapped into the right network, I would’ve grown and scaled faster. I would have become a better CEO faster.”

A member of the Entrepreneurs’ Organization (EO) since 2011, Pramod says, “my network of peers has been key to my success.”

“Many times,” he adds, “I might’ve given up or gone in a different direction without trustworthy peers to bounce ideas off of and to share my sadness, frustration and even happiness with.”

Adrienne Palmer, founder of Insite and an EO member since 2000, agrees. She describes the loneliness that many entrepreneurs can relate to. “As a founder, there was no one I could really talk to about the challenges and fears that emerged. Friends often questioned why I was so obsessed with my business — why I had nothing else to talk about! Even family couldn’t truly relate. Many of them thought I was Continue reading “The Cure for Entrepreneurial Loneliness”

The Slack origin story

Let’s rewind a decade. It’s 2009. Vancouver, Canada.

Stewart Butterfield, known already for his part in building Flickr, a photo-sharing service acquired by Yahoo in 2005, decided to try his hand — again — at building a game. Flickr had been a failed attempt at a game called Game Neverending followed by a big pivot. This time, Butterfield would make it work.

To make his dreams a reality, he joined forces with Flickr’s original chief software architect Cal Henderson, as well as former Flickr employees Eric Costello and Serguei Mourachov, who like himself, had served some time at Yahoo after the acquisition. Together, they would build Tiny Speck, the company behind an artful, non-combat massively multiplayer online game.

Years later, Butterfield would pull off a pivot more massive than his last. Slack, born from the ashes of his fantastical game, would lead a shift toward online productivity tools that fundamentally

Continue reading “The Slack origin story”

Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth


This post is by bgurley from Above the Crowd

(*) Benchmark is/was an investor in companies labeled with the asterisk.

In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories. Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through the “Division of Labour”:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society.

Smith identified that when men and women specialize their skills, and also importantly “trade” with one another, the end result is a rise in productivity and standard of living for everyone. In 1817, David Ricardo published On the Principles of Political Economy and Taxation where he expanded upon Smith’s work in developing the theory of Comparative Advantage. What Ricardo proved mathematically, is that if one country has simply a comparative advantage (not even an absolute one), it still is in everyone’s best interest to embrace specialization and free trade. In the end, everyone ends up in a better place.

There are two key requirements for these mechanisms to take force. First and foremost, you need free and open trade. It is quite bizarre to see modern day politicians throw caution to the wind and ignore these fundamental tenants of economic science. Time and time again, the fact patterns show that when countries open borders and freely trade, the end result is increased economic prosperity. The second, and less discussed, requirement is for the two parties that should trade to be aware of one another’s goods or services. Unfortunately, either information asymmetry or physical distances and the resulting distribution costs can both cut against the economic advantages that would otherwise arise for all.

Fortunately, the rise of the Internet, and specifically Internet marketplace models, act as accelerants to the productivity benefits of the division of labour AND comparative advantage by reducing information asymmetry and increasing the likelihood of a perfect match with regard to the exchange of goods or services. In his 2005 book, The World Is Flat, Thomas Friedman recognizes that the Internet has the ability to create a “level playing field” for all participants, and one where geographic distances become less relevant. The core reason that Internet marketplaces are so powerful is because in connecting economic traders that would otherwise not be connected, they unlock economic wealth that otherwise would not exist. In other words, they literally create “money out of nowhere.”

Exchange of Goods Marketplaces

Any discussion of Internet marketplaces begins with the first quintessential marketplace, ebay(*). Pierre Omidyar founded AuctionWeb in September of 1995, and its rise to fame is legendary. What started as a web site to trade laser pointers and Beanie Babies (the Pez dispenser start is quite literally a legend), today enables transactions of approximately $100B per year. Over its twenty-plus year lifetime, just over one trillion dollars in goods have traded hands across eBay’s servers. These transactions, and the profits realized by the sellers, were truly “unlocked” by eBay’s matching and auction services.

In 1999, Jack Ma created Alibaba, a Chinese-based B2B marketplace for connecting small and medium enterprise with potential export opportunities. Four years later, in May of 2003, they launched Taobao Marketplace, Alibaba’s answer to eBay. By aggressively launching a free to use service, Alibaba’s Taobao quickly became the leading person-to-person trading site in China. In 2018, Taobao GMV (Gross Merchandise Value) was a staggering RMB2,689 billion, which equates to $428 billion in US dollars.

There have been many other successful goods marketplaces that have launched post eBay & Taobao — all providing a similar service of matching those who own or produce goods with a distributed set of buyers who are particularly interested in what they have to offer. In many cases, a deeper focus on a particular category or vertical allows these marketplaces to distinguish themselves from broader marketplaces like eBay.

  • In 2000, Eric Baker and Jeff Fluhr founded StubHub, a secondary ticket exchange marketplace. The company was acquired by ebay in January 2007. In its most recent quarter, StubHub’s GMV reached $1.4B, and for the entire year 2018, StubHub had GMV of $4.8B.
  • Launched in 2005, Etsy is a leading marketplaces for the exchange of vintage and handmade items. In its most recent quarter, the company processed the exchange of $923 million of sales, which equates to a $3.6B annual GMV.
  • Founded by Michael Bruno in Paris in 2001, 1stdibs(*) is the world’s largest online marketplace for luxury one-of-a-kind antiques, high-end modern furniture, vintage fashion, jewelry, and fine art. In November 2011, David Rosenblatt took over as CEO and has been scaling the company ever since. Over the past few years dealers, galleries, and makers have matched billions of dollars in merchandise to trade buyers and consumer buyers on the platform.
  • Poshmark was founded by Manish Chandra in 2011. The website, which is an exchange for new and used clothing, has been remarkably successful. Over 4 million sellers have earned over $1 billion transacting on the site.
  • Julie Wainwright founded The Real Real in 2011. The company is an online marketplace for authenticated luxury consignment. In 2017, the company reported sales of over $500 million.
  • In 2015, Eddy Lu and Daishin Sugano launched GOAT, a marketplace for the exchange of sneakers. Despite this narrow focus, the company has been remarkably successful. The estimated annual GMV of GOAT and its leading competitor Stock X is already over $1B per year (on a combined basis).

SHARING ECONOMY MARKETPLACES

With the launch of Airbnb in 2008 and Uber (*) in 2009, these two companies established a new category of marketplaces known as the “sharing economy.” Homes and automobiles are the two most expensive items that people own, and in many cases the ability to own the asset is made possible through debt — mortgages on houses and car loans or leases for automobiles. Despite this financial exposure, for many people these assets are materially underutilized. Many extra rooms and second homes are vacant most of the year, and the average car is used less than 5% of the time. Sharing economy marketplaces allow owners to “unlock” earning opportunities from these underutilized assets.

Airbnb was founded by Joe Gebbia and Brian Chesky in 2008. Today there are over 5 million Airbnb listings in 81,000 cities. Over two million people stay in an Airbnb each night. In November of this year, the company announced that it had achieved “substantially” more than $1B in revenue in the third quarter. Assuming a marketplace rake of something like 11%, this would imply gross room revenue of over $9B for the quarter — which would be $36B annualized. As the company is still growing, we can easily guess that in 2019-2020 time frame, Airbnb will be delivering around $50B per year to home-owners who were previously sitting on highly underutilized assets. This is a major “unlocking.”

When Garrett Camp and Travis Kalanick founded Uber in 2009, they hatched the industry now known as ride-sharing. Today over 3 million people around the world use their time and their underutilized automobiles to generate extra income. Without the proper technology to match people who wanted a ride with people who could provide that service, taxi and chauffeur companies were drastically underserving the potential market. As an example, we estimate that ride-sharing revenues in San Francisco are well north of 10X what taxis and black cars were providing prior to the launch of ride-sharing. These numbers will go even higher as people increasingly forgo the notion of car ownership altogether. We estimate that the global GMV for ride sharing was over $100B in 2018 (including Uber, Didi, Grab, Lyft, Yandex, etc) and still growing handsomely. Assuming a 20% rake, this equates to over $80B that went into the hands of ride-sharing drivers in a single year — and this is an industry that did not exist 10 years ago. The matching made possible with today’s GPS and Internet-enabled smart phones is a massive unlocking of wealth and value.

While it is a lesser known category, using your own backyard and home to host dog guests as an alternative to a kennel is a large and growing business. Once again, this is an asset against which the marginal cost to host a dog is near zero. By combining their time with this otherwise unused asset, dog sitters are able to offer a service that is quite compelling for consumers. Rover.com (*) in Seattle, which was founded by Greg Gottesman and Aaron Easterly in 2011, is the leading player in this market. (Benchmark is an investor in Rover through a merger with DogVacay in 2017). You may be surprised to learn that this is already a massive industry. In less than a decade since the company started, Rover has already paid out of half a billion dollars to hosts that participate on the platform.

Exchange of LABOR Marketplaces

While not as well known as the goods exchanges or sharing economy marketplaces, there is a growing and exciting increase in the number of marketplaces that help match specifically skilled labor with key opportunities to monetize their skills. The most noteworthy of these is likely Upwork(*), a company that formed from the merger of Elance and Odesk. Upwork is a global freelancing platform where businesses and independent professionals can connect and collaborate remotely. Popular categories include web developers, mobile developers, designers, writers, and accountants. In the 12 months ended June 30, 2018, the Upwork platform enabled $1.56 billion of GSV (gross services revenue) across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. These labor matches represent the exact “world is flat” reality outlined in Friedman’s book.

Other noteworthy and emerging labor marketplaces:

  • HackerOne(*) is the leading global marketplace that coordinates the world’s largest corporate “bug bounty” programs with a network of the world’s leading hackers. The company was founded in 2012 by Michiel Prins, Jobert Abma, Alex Rice and Merijn Terheggen, and today serves the needs of over 1,000 corporate bug bounty programs. On top of that, the HackerOne network of over 300,000 hackers (adding 600 more each day) has resolved over 100K confirmed vulnerabilities which resulted in over $46 million in awards to these individuals. There is an obvious network effect at work when you bring together the world’s leading programs and the world’s leading hackers on a single platform. The Fortune 500 is quickly learning that having a bug bounty program is an essential step in fighting cyber crime, and that HackerOne is the best place to host their program.
  • Wyzant is a leading Chicago-based marketplace that connects tutors with students around the country. The company was founded by Andrew Geant and Mike Weishuhn in 2005. The company has over 80,000 tutors on its platform and has paid out over $300 million to these professionals. The company started matching students with tutors for in-person sessions, but increasingly these are done “virtually” over the Internet.
  • Stitch Fix (*) is a leading provider of personalized clothing services that was founded by Katrina Lake in 2011. While the company is not primarily a marketplace, each order is hand-curated by a work-at-home “stylist” who works part-time on their own schedule from the comfort of their own home. Stitch Fix’s algorithms match the perfect stylist with each and every customer to help ensure the optimal outcome for each client. As of the end of 2018, Stitch Fix has paid out well over $100 million to their stylists.
  • Swing Education was founded in 2015 with the objective of creating a marketplace for substitute teachers. While it is still early in the company’s journey, they have already established themselves as the leader in the U.S. market. Swing is now at over 1,200 school partners and has filled over 115,000 teacher absence days. They have helped 2,000 substitute teachers get in the classroom in 2018, including 400 educators who earned permits, which Swing willingly financed. While it seems obvious in retrospect, having all substitutes on a single platform creates massive efficiency in a market where previously every single school had to keep their own list and make last minute calls when they had vacancies. And their subs just have to deal with one Swing setup process to get access to subbing opportunities at dozens of local schools and districts.
  • RigUp was founded by Xuan Yong and Mike Witte in Austin, Texas in March of 2014. RigUp is a leading labor marketplace focused on the oilfield services industry. “The company’s platform offers a large network of qualified, insured and compliant contractors and service providers across all upstream, midstream and downstream operations in every oil and gas basin, enabling companies to hire quickly, track contractor compliance, and minimize administrative work.” According to the company, GMV for 2017 was an impressive $150 million, followed by an astounding $600 million in 2018. Often, investors miss out on vertically focused companies like RigUp as they find themselves overly anxious about TAM (total available market). As you can see, that can be a big mistake.
  • VIPKid, which was founded in 2013 by Cindy Mi, is a truly amazing story. The idea is simple and simultaneously brilliant. VIPKid links students in China who want to learn English with native English speaking tutors in the United States and Canada. All sessions are done over the Internet, once again epitomizing Friedman’s very flat world. In November of 2018, the company reported having 60,000 teachers contracted to teach over 500,000 students. Many people believe the company is now well north of a US$1B run rate, which implies that around $1B will pass hands from Chinese parents to western teachers in 2019. That is quite a bit of supplemental income for U.S.-based teachers.

These vertical labor marketplaces are to LinkedIn what companies like Zillow, Expedia, and GrubHub are to Google search. Through a deeper understanding of a particular vertical, a much richer perspective on the quality and differentiation of the participants, and the enablement of transactions — you create an evolved service that has much more value to both sides of the transaction. And for those professionals participating in these markets, your reputation on the vertical service matters way more than your profile on LinkedIn.

NEW EMERGING MARKETPLACES

Having been a fortunate investor in many of the previously mentioned companies (*), Benchmark remains extremely excited about future marketplace opportunities that will unlock wealth on the Internet. Here are an example of two such companies that we have funded in the past few years.

The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to Hipcamp asking if they could list their land on Hipcamp too. Hipcamp now offers access to more than 350k campsites across public and private land, and their most active private land hosts make over $100,000 per year hosting campers. This is a pretty amazing value proposition for both land owners and campers. If you are a rural landowner, here is a way to create “money out of nowhere” with very little capital expenditures. And if you are a camper, what could be better than to camp at a unique, bespoke campsite in your favorite location.

Instawork(*) is an on-demand staffing app for gig workers (professionals) and hospitality businesses (partners). These working professionals seek economic freedom and a better life, and Instawork gives them both — an opportunity to work as much as they like, but on their own terms with regard to when and where. On the business partner side, small business owners/managers/chefs do not have access to reliable sources to help them with talent sourcing and high turnover, and products like  LinkedIn are more focused on white-collar workers. Instawork was cofounded by Sumir Meghani in San Franciso and was a member of the 2015 Y-Combinator class. 2018 was a break-out year for Instawork with 10X revenue growth and 12X growth in Professionals on the platform. The average Instawork Professional is highly engaged on the platform, and typically opens the Instawork app ten times a day. This results in 97% of gigs being matched in less than 24 hours — which is powerfully important to both sides of the network. Also noteworthy, the Professionals on Instawork average 150% of minimum wage, significantly higher than many other labor marketplaces. This higher income allows Instawork Professionals like Jose, to begin to accomplish their dreams.

The Power of These Platforms

As you can see, these numerous marketplaces are a direct extension of the productivity enhancers first uncovered by Adam Smith and David Ricardo. Free trade, specialization, and comparative advantage are all enhanced when we can increase the matching of supply and demand of goods and services as well as eliminate inefficiency and waste caused by misinformation or distance. As a result, productivity naturally improves.

Specific benefits of global internet marketplaces:

    1. Increase wealth distribution (all examples)
    2. Unlock wasted potential of assets (Uber, AirBNB, Rover, and Hipcamp)
    3. Better match of specific workers with specific opportunities (Upwork, WyzAnt, RigUp, VIPKid, Instawork)
    4. Make specific assets reachable and findable (Ebay, Etsy, 1stDibs, Poshmark, GOAT)
    5. Allow for increased specialization (Etsy, Upwork, RigUp)
    6. Enhance supplemental labor opportunities (Uber, Stitch Fix, SwingEducation, Instawork, VIPKid), where the worker is in control of when and where they work
    7. Reduces forfeiture by enhancing utilization (mortgages, car loans, etc) (Uber, AirBnb, Rover, Hipcamp)

If you are a founder who is excited about starting a new marketplace, there are two caveats that are important to remember. First, you will need to find industries where the opportunity to improve the efficiency in the ways noted above is evident. If the network does not create true economic leverage, you will find it hard to be successful. Second, for any marketplace to be successful, the conditions in that given market must be optimal for a new marketplace entrant. Please check out our previous post, All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces, for a list of factors that help distinguish a great opportunity. If after taking in these considerations you think you have found such an opportunity, we would love to talk to you about potentially partnering together. Please send us an email to unlockingwealth@benchmark.com.

(*) Benchmark either is or was an investor in companies labeled with the asterisk.

Interested in “Unlocking Wealth” Yourself?

Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth


This post is by bgurley from Above the Crowd

(*) Benchmark is/was an investor in companies labeled with the asterisk.

In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories. Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through the “Division of Labour”:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society.

Smith identified that when men and women specialize their skills, and also importantly “trade” with one another, the end result is a rise in productivity and standard of living for everyone. In 1817, David Ricardo published On the Principles of Political Economy and Taxation where he expanded upon Smith’s work in developing the theory of Comparative Advantage. What Ricardo proved mathematically, is that if one country has simply a comparative advantage (not even an absolute one), it still is in everyone’s best interest to embrace specialization and free trade. In the end, everyone ends up in a better place.

There are two key requirements for these mechanisms to take force. First and foremost, you need free and open trade. It is quite bizarre to see modern day politicians throw caution to the wind and ignore these fundamental tenants of economic science. Time and time again, the fact patterns show that when countries open borders and freely trade, the end result is increased economic prosperity. The second, and less discussed, requirement is for the two parties that should trade to be aware of one another’s goods or services. Unfortunately, either information asymmetry or physical distances and the resulting distribution costs can both cut against the economic advantages that would otherwise arise for all.

Fortunately, the rise of the Internet, and specifically Internet marketplace models, act as accelerants to the productivity benefits of the division of labour AND comparative advantage by reducing information asymmetry and increasing the likelihood of a perfect match with regard to the exchange of goods or services. In his 2005 book, The World Is Flat, Thomas Friedman recognizes that the Internet has the ability to create a “level playing field” for all participants, and one where geographic distances become less relevant. The core reason that Internet marketplaces are so powerful is because in connecting economic traders that would otherwise not be connected, they unlock economic wealth that otherwise would not exist. In other words, they literally create “money out of nowhere.”

Exchange of Goods Marketplaces

Any discussion of Internet marketplaces begins with the first quintessential marketplace, ebay(*). Pierre Omidyar founded AuctionWeb in September of 1995, and its rise to fame is legendary. What started as a web site to trade laser pointers and Beanie Babies (the Pez dispenser start is quite literally a legend), today enables transactions of approximately $100B per year. Over its twenty-plus year lifetime, just over one trillion dollars in goods have traded hands across eBay’s servers. These transactions, and the profits realized by the sellers, were truly “unlocked” by eBay’s matching and auction services.

In 1999, Jack Ma created Alibaba, a Chinese-based B2B marketplace for connecting small and medium enterprise with potential export opportunities. Four years later, in May of 2003, they launched Taobao Marketplace, Alibaba’s answer to eBay. By aggressively launching a free to use service, Alibaba’s Taobao quickly became the leading person-to-person trading site in China. In 2018, Taobao GMV (Gross Merchandise Value) was a staggering RMB2,689 billion, which equates to $428 billion in US dollars.

There have been many other successful goods marketplaces that have launched post eBay & Taobao — all providing a similar service of matching those who own or produce goods with a distributed set of buyers who are particularly interested in what they have to offer. In many cases, a deeper focus on a particular category or vertical allows these marketplaces to distinguish themselves from broader marketplaces like eBay.

  • In 2000, Eric Baker and Jeff Fluhr founded StubHub, a secondary ticket exchange marketplace. The company was acquired by ebay in January 2007. In its most recent quarter, StubHub’s GMV reached $1.4B, and for the entire year 2018, StubHub had GMV of $4.8B.
  • Launched in 2005, Etsy is a leading marketplaces for the exchange of vintage and handmade items. In its most recent quarter, the company processed the exchange of $923 million of sales, which equates to a $3.6B annual GMV.
  • Founded by Michael Bruno in Paris in 2001, 1stdibs(*) is the world’s largest online marketplace for luxury one-of-a-kind antiques, high-end modern furniture, vintage fashion, jewelry, and fine art. In November 2011, David Rosenblatt took over as CEO and has been scaling the company ever since. Over the past few years dealers, galleries, and makers have matched billions of dollars in merchandise to trade buyers and consumer buyers on the platform.
  • Poshmark was founded by Manish Chandra in 2011. The website, which is an exchange for new and used clothing, has been remarkably successful. Over 4 million sellers have earned over $1 billion transacting on the site.
  • Julie Wainwright founded The Real Real in 2011. The company is an online marketplace for authenticated luxury consignment. In 2017, the company reported sales of over $500 million.
  • In 2015, Eddy Lu and Daishin Sugano launched GOAT, a marketplace for the exchange of sneakers. Despite this narrow focus, the company has been remarkably successful. The estimated annual GMV of GOAT and its leading competitor Stock X is already over $1B per year (on a combined basis).

SHARING ECONOMY MARKETPLACES

With the launch of Airbnb in 2008 and Uber (*) in 2009, these two companies established a new category of marketplaces known as the “sharing economy.” Homes and automobiles are the two most expensive items that people own, and in many cases the ability to own the asset is made possible through debt — mortgages on houses and car loans or leases for automobiles. Despite this financial exposure, for many people these assets are materially underutilized. Many extra rooms and second homes are vacant most of the year, and the average car is used less than 5% of the time. Sharing economy marketplaces allow owners to “unlock” earning opportunities from these underutilized assets.

Airbnb was founded by Joe Gebbia and Brian Chesky in 2008. Today there are over 5 million Airbnb listings in 81,000 cities. Over two million people stay in an Airbnb each night. In November of this year, the company announced that it had achieved “substantially” more than $1B in revenue in the third quarter. Assuming a marketplace rake of something like 11%, this would imply gross room revenue of over $9B for the quarter — which would be $36B annualized. As the company is still growing, we can easily guess that in 2019-2020 time frame, Airbnb will be delivering around $50B per year to home-owners who were previously sitting on highly underutilized assets. This is a major “unlocking.”

When Garrett Camp and Travis Kalanick founded Uber in 2009, they hatched the industry now known as ride-sharing. Today over 3 million people around the world use their time and their underutilized automobiles to generate extra income. Without the proper technology to match people who wanted a ride with people who could provide that service, taxi and chauffeur companies were drastically underserving the potential market. As an example, we estimate that ride-sharing revenues in San Francisco are well north of 10X what taxis and black cars were providing prior to the launch of ride-sharing. These numbers will go even higher as people increasingly forgo the notion of car ownership altogether. We estimate that the global GMV for ride sharing was over $100B in 2018 (including Uber, Didi, Grab, Lyft, Yandex, etc) and still growing handsomely. Assuming a 20% rake, this equates to over $80B that went into the hands of ride-sharing drivers in a single year — and this is an industry that did not exist 10 years ago. The matching made possible with today’s GPS and Internet-enabled smart phones is a massive unlocking of wealth and value.

While it is a lesser known category, using your own backyard and home to host dog guests as an alternative to a kennel is a large and growing business. Once again, this is an asset against which the marginal cost to host a dog is near zero. By combining their time with this otherwise unused asset, dog sitters are able to offer a service that is quite compelling for consumers. Rover.com (*) in Seattle, which was founded by Greg Gottesman and Aaron Easterly in 2011, is the leading player in this market. (Benchmark is an investor in Rover through a merger with DogVacay in 2017). You may be surprised to learn that this is already a massive industry. In less than a decade since the company started, Rover has already paid out of half a billion dollars to hosts that participate on the platform.

Exchange of LABOR Marketplaces

While not as well known as the goods exchanges or sharing economy marketplaces, there is a growing and exciting increase in the number of marketplaces that help match specifically skilled labor with key opportunities to monetize their skills. The most noteworthy of these is likely Upwork(*), a company that formed from the merger of Elance and Odesk. Upwork is a global freelancing platform where businesses and independent professionals can connect and collaborate remotely. Popular categories include web developers, mobile developers, designers, writers, and accountants. In the 12 months ended June 30, 2018, the Upwork platform enabled $1.56 billion of GSV (gross services revenue) across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. These labor matches represent the exact “world is flat” reality outlined in Friedman’s book.

Other noteworthy and emerging labor marketplaces:

  • HackerOne(*) is the leading global marketplace that coordinates the world’s largest corporate “bug bounty” programs with a network of the world’s leading hackers. The company was founded in 2012 by Michiel Prins, Jobert Abma, Alex Rice and Merijn Terheggen, and today serves the needs of over 1,000 corporate bug bounty programs. On top of that, the HackerOne network of over 300,000 hackers (adding 600 more each day) has resolved over 100K confirmed vulnerabilities which resulted in over $46 million in awards to these individuals. There is an obvious network effect at work when you bring together the world’s leading programs and the world’s leading hackers on a single platform. The Fortune 500 is quickly learning that having a bug bounty program is an essential step in fighting cyber crime, and that HackerOne is the best place to host their program.
  • Wyzant is a leading Chicago-based marketplace that connects tutors with students around the country. The company was founded by Andrew Geant and Mike Weishuhn in 2005. The company has over 80,000 tutors on its platform and has paid out over $300 million to these professionals. The company started matching students with tutors for in-person sessions, but increasingly these are done “virtually” over the Internet.
  • Stitch Fix (*) is a leading provider of personalized clothing services that was founded by Katrina Lake in 2011. While the company is not primarily a marketplace, each order is hand-curated by a work-at-home “stylist” who works part-time on their own schedule from the comfort of their own home. Stitch Fix’s algorithms match the perfect stylist with each and every customer to help ensure the optimal outcome for each client. As of the end of 2018, Stitch Fix has paid out well over $100 million to their stylists.
  • Swing Education was founded in 2015 with the objective of creating a marketplace for substitute teachers. While it is still early in the company’s journey, they have already established themselves as the leader in the U.S. market. Swing is now at over 1,200 school partners and has filled over 115,000 teacher absence days. They have helped 2,000 substitute teachers get in the classroom in 2018, including 400 educators who earned permits, which Swing willingly financed. While it seems obvious in retrospect, having all substitutes on a single platform creates massive efficiency in a market where previously every single school had to keep their own list and make last minute calls when they had vacancies. And their subs just have to deal with one Swing setup process to get access to subbing opportunities at dozens of local schools and districts.
  • RigUp was founded by Xuan Yong and Mike Witte in Austin, Texas in March of 2014. RigUp is a leading labor marketplace focused on the oilfield services industry. “The company’s platform offers a large network of qualified, insured and compliant contractors and service providers across all upstream, midstream and downstream operations in every oil and gas basin, enabling companies to hire quickly, track contractor compliance, and minimize administrative work.” According to the company, GMV for 2017 was an impressive $150 million, followed by an astounding $600 million in 2018. Often, investors miss out on vertically focused companies like RigUp as they find themselves overly anxious about TAM (total available market). As you can see, that can be a big mistake.
  • VIPKid, which was founded in 2013 by Cindy Mi, is a truly amazing story. The idea is simple and simultaneously brilliant. VIPKid links students in China who want to learn English with native English speaking tutors in the United States and Canada. All sessions are done over the Internet, once again epitomizing Friedman’s very flat world. In November of 2018, the company reported having 60,000 teachers contracted to teach over 500,000 students. Many people believe the company is now well north of a US$1B run rate, which implies that around $1B will pass hands from Chinese parents to western teachers in 2019. That is quite a bit of supplemental income for U.S.-based teachers.

These vertical labor marketplaces are to LinkedIn what companies like Zillow, Expedia, and GrubHub are to Google search. Through a deeper understanding of a particular vertical, a much richer perspective on the quality and differentiation of the participants, and the enablement of transactions — you create an evolved service that has much more value to both sides of the transaction. And for those professionals participating in these markets, your reputation on the vertical service matters way more than your profile on LinkedIn.

NEW EMERGING MARKETPLACES

Having been a fortunate investor in many of the previously mentioned companies (*), Benchmark remains extremely excited about future marketplace opportunities that will unlock wealth on the Internet. Here are an example of two such companies that we have funded in the past few years.

The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to Hipcamp asking if they could list their land on Hipcamp too. Hipcamp now offers access to more than 350k campsites across public and private land, and their most active private land hosts make over $100,000 per year hosting campers. This is a pretty amazing value proposition for both land owners and campers. If you are a rural landowner, here is a way to create “money out of nowhere” with very little capital expenditures. And if you are a camper, what could be better than to camp at a unique, bespoke campsite in your favorite location.

Instawork(*) is an on-demand staffing app for gig workers (professionals) and hospitality businesses (partners). These working professionals seek economic freedom and a better life, and Instawork gives them both — an opportunity to work as much as they like, but on their own terms with regard to when and where. On the business partner side, small business owners/managers/chefs do not have access to reliable sources to help them with talent sourcing and high turnover, and products like  LinkedIn are more focused on white-collar workers. Instawork was cofounded by Sumir Meghani in San Franciso and was a member of the 2015 Y-Combinator class. 2018 was a break-out year for Instawork with 10X revenue growth and 12X growth in Professionals on the platform. The average Instawork Professional is highly engaged on the platform, and typically opens the Instawork app ten times a day. This results in 97% of gigs being matched in less than 24 hours — which is powerfully important to both sides of the network. Also noteworthy, the Professionals on Instawork average 150% of minimum wage, significantly higher than many other labor marketplaces. This higher income allows Instawork Professionals like Jose, to begin to accomplish their dreams.

The Power of These Platforms

As you can see, these numerous marketplaces are a direct extension of the productivity enhancers first uncovered by Adam Smith and David Ricardo. Free trade, specialization, and comparative advantage are all enhanced when we can increase the matching of supply and demand of goods and services as well as eliminate inefficiency and waste caused by misinformation or distance. As a result, productivity naturally improves.

Specific benefits of global internet marketplaces:

    1. Increase wealth distribution (all examples)
    2. Unlock wasted potential of assets (Uber, AirBNB, Rover, and Hipcamp)
    3. Better match of specific workers with specific opportunities (Upwork, WyzAnt, RigUp, VIPKid, Instawork)
    4. Make specific assets reachable and findable (Ebay, Etsy, 1stDibs, Poshmark, GOAT)
    5. Allow for increased specialization (Etsy, Upwork, RigUp)
    6. Enhance supplemental labor opportunities (Uber, Stitch Fix, SwingEducation, Instawork, VIPKid), where the worker is in control of when and where they work
    7. Reduces forfeiture by enhancing utilization (mortgages, car loans, etc) (Uber, AirBnb, Rover, Hipcamp)

If you are a founder who is excited about starting a new marketplace, there are two caveats that are important to remember. First, you will need to find industries where the opportunity to improve the efficiency in the ways noted above is evident. If the network does not create true economic leverage, you will find it hard to be successful. Second, for any marketplace to be successful, the conditions in that given market must be optimal for a new marketplace entrant. Please check out our previous post, All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces, for a list of factors that help distinguish a great opportunity. If after taking in these considerations you think you have found such an opportunity, we would love to talk to you about potentially partnering together. Please send us an email to unlockingwealth@benchmark.com.

(*) Benchmark either is or was an investor in companies labeled with the asterisk.

Interested in “Unlocking Wealth” Yourself?

Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth


This post is by bgurley from Above the Crowd

(*) Benchmark is/was an investor in companies labeled with the asterisk.

In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories. Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through the “Division of Labour”:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society.

Smith identified that when men and women specialize their skills, and also importantly “trade” with one another, the end result is a rise in productivity and standard of living for everyone. In 1817, David Ricardo published On the Principles of Political Economy and Taxation where he expanded upon Smith’s work in developing the theory of Comparative Advantage. What Ricardo proved mathematically, is that if one country has simply a comparative advantage (not even an absolute one), it still is in everyone’s best interest to embrace specialization and free trade. In the end, everyone ends up in a better place.

There are two key requirements for these mechanisms to take force. First and foremost, you need free and open trade. It is quite bizarre to see modern day politicians throw caution to the wind and ignore these fundamental tenants of economic science. Time and time again, the fact patterns show that when countries open borders and freely trade, the end result is increased economic prosperity. The second, and less discussed, requirement is for the two parties that should trade to be aware of one another’s goods or services. Unfortunately, either information asymmetry or physical distances and the resulting distribution costs can both cut against the economic advantages that would otherwise arise for all.

Fortunately, the rise of the Internet, and specifically Internet marketplace models, act as accelerants to the productivity benefits of the division of labour AND comparative advantage by reducing information asymmetry and increasing the likelihood of a perfect match with regard to the exchange of goods or services. In his 2005 book, The World Is Flat, Thomas Friedman recognizes that the Internet has the ability to create a “level playing field” for all participants, and one where geographic distances become less relevant. The core reason that Internet marketplaces are so powerful is because in connecting economic traders that would otherwise not be connected, they unlock economic wealth that otherwise would not exist. In other words, they literally create “money out of nowhere.”

Exchange of Goods Marketplaces

Any discussion of Internet marketplaces begins with the first quintessential marketplace, ebay(*). Pierre Omidyar founded AuctionWeb in September of 1995, and its rise to fame is legendary. What started as a web site to trade laser pointers and Beanie Babies (the Pez dispenser start is quite literally a legend), today enables transactions of approximately $100B per year. Over its twenty-plus year lifetime, just over one trillion dollars in goods have traded hands across eBay’s servers. These transactions, and the profits realized by the sellers, were truly “unlocked” by eBay’s matching and auction services.

In 1999, Jack Ma created Alibaba, a Chinese-based B2B marketplace for connecting small and medium enterprise with potential export opportunities. Four years later, in May of 2003, they launched Taobao Marketplace, Alibaba’s answer to eBay. By aggressively launching a free to use service, Alibaba’s Taobao quickly became the leading person-to-person trading site in China. In 2018, Taobao GMV (Gross Merchandise Value) was a staggering RMB2,689 billion, which equates to $428 billion in US dollars.

There have been many other successful goods marketplaces that have launched post eBay & Taobao — all providing a similar service of matching those who own or produce goods with a distributed set of buyers who are particularly interested in what they have to offer. In many cases, a deeper focus on a particular category or vertical allows these marketplaces to distinguish themselves from broader marketplaces like eBay.

  • In 2000, Eric Baker and Jeff Fluhr founded StubHub, a secondary ticket exchange marketplace. The company was acquired by ebay in January 2007. In its most recent quarter, StubHub’s GMV reached $1.4B, and for the entire year 2018, StubHub had GMV of $4.8B.
  • Launched in 2005, Etsy is a leading marketplaces for the exchange of vintage and handmade items. In its most recent quarter, the company processed the exchange of $923 million of sales, which equates to a $3.6B annual GMV.
  • Founded by Michael Bruno in Paris in 2001, 1stdibs(*) is the world’s largest online marketplace for luxury one-of-a-kind antiques, high-end modern furniture, vintage fashion, jewelry, and fine art. In November 2011, David Rosenblatt took over as CEO and has been scaling the company ever since. Over the past few years dealers, galleries, and makers have matched billions of dollars in merchandise to trade buyers and consumer buyers on the platform.
  • Poshmark was founded by Manish Chandra in 2011. The website, which is an exchange for new and used clothing, has been remarkably successful. Over 4 million sellers have earned over $1 billion transacting on the site.
  • Julie Wainwright founded The Real Real in 2011. The company is an online marketplace for authenticated luxury consignment. In 2017, the company reported sales of over $500 million.
  • In 2015, Eddy Lu and Daishin Sugano launched GOAT, a marketplace for the exchange of sneakers. Despite this narrow focus, the company has been remarkably successful. The estimated annual GMV of GOAT and its leading competitor Stock X is already over $1B per year (on a combined basis).

SHARING ECONOMY MARKETPLACES

With the launch of Airbnb in 2008 and Uber (*) in 2009, these two companies established a new category of marketplaces known as the “sharing economy.” Homes and automobiles are the two most expensive items that people own, and in many cases the ability to own the asset is made possible through debt — mortgages on houses and car loans or leases for automobiles. Despite this financial exposure, for many people these assets are materially underutilized. Many extra rooms and second homes are vacant most of the year, and the average car is used less than 5% of the time. Sharing economy marketplaces allow owners to “unlock” earning opportunities from these underutilized assets.

Airbnb was founded by Joe Gebbia and Brian Chesky in 2008. Today there are over 5 million Airbnb listings in 81,000 cities. Over two million people stay in an Airbnb each night. In November of this year, the company announced that it had achieved “substantially” more than $1B in revenue in the third quarter. Assuming a marketplace rake of something like 11%, this would imply gross room revenue of over $9B for the quarter — which would be $36B annualized. As the company is still growing, we can easily guess that in 2019-2020 time frame, Airbnb will be delivering around $50B per year to home-owners who were previously sitting on highly underutilized assets. This is a major “unlocking.”

When Garrett Camp and Travis Kalanick founded Uber in 2009, they hatched the industry now known as ride-sharing. Today over 3 million people around the world use their time and their underutilized automobiles to generate extra income. Without the proper technology to match people who wanted a ride with people who could provide that service, taxi and chauffeur companies were drastically underserving the potential market. As an example, we estimate that ride-sharing revenues in San Francisco are well north of 10X what taxis and black cars were providing prior to the launch of ride-sharing. These numbers will go even higher as people increasingly forgo the notion of car ownership altogether. We estimate that the global GMV for ride sharing was over $100B in 2018 (including Uber, Didi, Grab, Lyft, Yandex, etc) and still growing handsomely. Assuming a 20% rake, this equates to over $80B that went into the hands of ride-sharing drivers in a single year — and this is an industry that did not exist 10 years ago. The matching made possible with today’s GPS and Internet-enabled smart phones is a massive unlocking of wealth and value.

While it is a lesser known category, using your own backyard and home to host dog guests as an alternative to a kennel is a large and growing business. Once again, this is an asset against which the marginal cost to host a dog is near zero. By combining their time with this otherwise unused asset, dog sitters are able to offer a service that is quite compelling for consumers. Rover.com (*) in Seattle, which was founded by Greg Gottesman and Aaron Easterly in 2011, is the leading player in this market. (Benchmark is an investor in Rover through a merger with DogVacay in 2017). You may be surprised to learn that this is already a massive industry. In less than a decade since the company started, Rover has already paid out of half a billion dollars to hosts that participate on the platform.

Exchange of LABOR Marketplaces

While not as well known as the goods exchanges or sharing economy marketplaces, there is a growing and exciting increase in the number of marketplaces that help match specifically skilled labor with key opportunities to monetize their skills. The most noteworthy of these is likely Upwork(*), a company that formed from the merger of Elance and Odesk. Upwork is a global freelancing platform where businesses and independent professionals can connect and collaborate remotely. Popular categories include web developers, mobile developers, designers, writers, and accountants. In the 12 months ended June 30, 2018, the Upwork platform enabled $1.56 billion of GSV (gross services revenue) across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. These labor matches represent the exact “world is flat” reality outlined in Friedman’s book.

Other noteworthy and emerging labor marketplaces:

  • HackerOne(*) is the leading global marketplace that coordinates the world’s largest corporate “bug bounty” programs with a network of the world’s leading hackers. The company was founded in 2012 by Michiel Prins, Jobert Abma, Alex Rice and Merijn Terheggen, and today serves the needs of over 1,000 corporate bug bounty programs. On top of that, the HackerOne network of over 300,000 hackers (adding 600 more each day) has resolved over 100K confirmed vulnerabilities which resulted in over $46 million in awards to these individuals. There is an obvious network effect at work when you bring together the world’s leading programs and the world’s leading hackers on a single platform. The Fortune 500 is quickly learning that having a bug bounty program is an essential step in fighting cyber crime, and that HackerOne is the best place to host their program.
  • Wyzant is a leading Chicago-based marketplace that connects tutors with students around the country. The company was founded by Andrew Geant and Mike Weishuhn in 2005. The company has over 80,000 tutors on its platform and has paid out over $300 million to these professionals. The company started matching students with tutors for in-person sessions, but increasingly these are done “virtually” over the Internet.
  • Stitch Fix (*) is a leading provider of personalized clothing services that was founded by Katrina Lake in 2011. While the company is not primarily a marketplace, each order is hand-curated by a work-at-home “stylist” who works part-time on their own schedule from the comfort of their own home. Stitch Fix’s algorithms match the perfect stylist with each and every customer to help ensure the optimal outcome for each client. As of the end of 2018, Stitch Fix has paid out well over $100 million to their stylists.
  • Swing Education was founded in 2015 with the objective of creating a marketplace for substitute teachers. While it is still early in the company’s journey, they have already established themselves as the leader in the U.S. market. Swing is now at over 1,200 school partners and has filled over 115,000 teacher absence days. They have helped 2,000 substitute teachers get in the classroom in 2018, including 400 educators who earned permits, which Swing willingly financed. While it seems obvious in retrospect, having all substitutes on a single platform creates massive efficiency in a market where previously every single school had to keep their own list and make last minute calls when they had vacancies. And their subs just have to deal with one Swing setup process to get access to subbing opportunities at dozens of local schools and districts.
  • RigUp was founded by Xuan Yong and Mike Witte in Austin, Texas in March of 2014. RigUp is a leading labor marketplace focused on the oilfield services industry. “The company’s platform offers a large network of qualified, insured and compliant contractors and service providers across all upstream, midstream and downstream operations in every oil and gas basin, enabling companies to hire quickly, track contractor compliance, and minimize administrative work.” According to the company, GMV for 2017 was an impressive $150 million, followed by an astounding $600 million in 2018. Often, investors miss out on vertically focused companies like RigUp as they find themselves overly anxious about TAM (total available market). As you can see, that can be a big mistake.
  • VIPKid, which was founded in 2013 by Cindy Mi, is a truly amazing story. The idea is simple and simultaneously brilliant. VIPKid links students in China who want to learn English with native English speaking tutors in the United States and Canada. All sessions are done over the Internet, once again epitomizing Friedman’s very flat world. In November of 2018, the company reported having 60,000 teachers contracted to teach over 500,000 students. Many people believe the company is now well north of a US$1B run rate, which implies that around $1B will pass hands from Chinese parents to western teachers in 2019. That is quite a bit of supplemental income for U.S.-based teachers.

These vertical labor marketplaces are to LinkedIn what companies like Zillow, Expedia, and GrubHub are to Google search. Through a deeper understanding of a particular vertical, a much richer perspective on the quality and differentiation of the participants, and the enablement of transactions — you create an evolved service that has much more value to both sides of the transaction. And for those professionals participating in these markets, your reputation on the vertical service matters way more than your profile on LinkedIn.

NEW EMERGING MARKETPLACES

Having been a fortunate investor in many of the previously mentioned companies (*), Benchmark remains extremely excited about future marketplace opportunities that will unlock wealth on the Internet. Here are an example of two such companies that we have funded in the past few years.

The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to Hipcamp asking if they could list their land on Hipcamp too. Hipcamp now offers access to more than 350k campsites across public and private land, and their most active private land hosts make over $100,000 per year hosting campers. This is a pretty amazing value proposition for both land owners and campers. If you are a rural landowner, here is a way to create “money out of nowhere” with very little capital expenditures. And if you are a camper, what could be better than to camp at a unique, bespoke campsite in your favorite location.

Instawork(*) is an on-demand staffing app for gig workers (professionals) and hospitality businesses (partners). These working professionals seek economic freedom and a better life, and Instawork gives them both — an opportunity to work as much as they like, but on their own terms with regard to when and where. On the business partner side, small business owners/managers/chefs do not have access to reliable sources to help them with talent sourcing and high turnover, and products like  LinkedIn are more focused on white-collar workers. Instawork was cofounded by Sumir Meghani in San Franciso and was a member of the 2015 Y-Combinator class. 2018 was a break-out year for Instawork with 10X revenue growth and 12X growth in Professionals on the platform. The average Instawork Professional is highly engaged on the platform, and typically opens the Instawork app ten times a day. This results in 97% of gigs being matched in less than 24 hours — which is powerfully important to both sides of the network. Also noteworthy, the Professionals on Instawork average 150% of minimum wage, significantly higher than many other labor marketplaces. This higher income allows Instawork Professionals like Jose, to begin to accomplish their dreams.

The Power of These Platforms

As you can see, these numerous marketplaces are a direct extension of the productivity enhancers first uncovered by Adam Smith and David Ricardo. Free trade, specialization, and comparative advantage are all enhanced when we can increase the matching of supply and demand of goods and services as well as eliminate inefficiency and waste caused by misinformation or distance. As a result, productivity naturally improves.

Specific benefits of global internet marketplaces:

    1. Increase wealth distribution (all examples)
    2. Unlock wasted potential of assets (Uber, AirBNB, Rover, and Hipcamp)
    3. Better match of specific workers with specific opportunities (Upwork, WyzAnt, RigUp, VIPKid, Instawork)
    4. Make specific assets reachable and findable (Ebay, Etsy, 1stDibs, Poshmark, GOAT)
    5. Allow for increased specialization (Etsy, Upwork, RigUp)
    6. Enhance supplemental labor opportunities (Uber, Stitch Fix, SwingEducation, Instawork, VIPKid), where the worker is in control of when and where they work
    7. Reduces forfeiture by enhancing utilization (mortgages, car loans, etc) (Uber, AirBnb, Rover, Hipcamp)

If you are a founder who is excited about starting a new marketplace, there are two caveats that are important to remember. First, you will need to find industries where the opportunity to improve the efficiency in the ways noted above is evident. If the network does not create true economic leverage, you will find it hard to be successful. Second, for any marketplace to be successful, the conditions in that given market must be optimal for a new marketplace entrant. Please check out our previous post, All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces, for a list of factors that help distinguish a great opportunity. If after taking in these considerations you think you have found such an opportunity, we would love to talk to you about potentially partnering together. Please send us an email to unlockingwealth@benchmark.com.

(*) Benchmark either is or was an investor in companies labeled with the asterisk.

Interested in “Unlocking Wealth” Yourself?

Money Out of Nowhere: How Internet Marketplaces Unlock Economic Wealth


This post is by bgurley from Above the Crowd

(*) Benchmark is/was an investor in companies labeled with the asterisk.

In 1776, Adam Smith released his magnum opus, An Inquiry into the Nature and Causes of the Wealth of Nations, in which he outlined his fundamental economic theories. Front and center in the book — in fact in Book 1, Chapter 1 — is his realization of the productivity improvements made possible through the “Division of Labour”:

It is the great multiplication of the production of all the different arts, in consequence of the division of labour, which occasions, in a well-governed society, that universal opulence which extends itself to the lowest ranks of the people. Every workman has a great quantity of his own work to dispose of beyond what he himself has occasion for; and every other workman being exactly in the same situation, he is enabled to exchange a great quantity of his own goods for a great quantity, or, what comes to the same thing, for the price of a great quantity of theirs. He supplies them abundantly with what they have occasion for, and they accommodate him as amply with what he has occasion for, and a general plenty diffuses itself through all the different ranks of society.

Smith identified that when men and women specialize their skills, and also importantly “trade” with one another, the end result is a rise in productivity and standard of living for everyone. In 1817, David Ricardo published On the Principles of Political Economy and Taxation where he expanded upon Smith’s work in developing the theory of Comparative Advantage. What Ricardo proved mathematically, is that if one country has simply a comparative advantage (not even an absolute one), it still is in everyone’s best interest to embrace specialization and free trade. In the end, everyone ends up in a better place.

There are two key requirements for these mechanisms to take force. First and foremost, you need free and open trade. It is quite bizarre to see modern day politicians throw caution to the wind and ignore these fundamental tenants of economic science. Time and time again, the fact patterns show that when countries open borders and freely trade, the end result is increased economic prosperity. The second, and less discussed, requirement is for the two parties that should trade to be aware of one another’s goods or services. Unfortunately, either information asymmetry or physical distances and the resulting distribution costs can both cut against the economic advantages that would otherwise arise for all.

Fortunately, the rise of the Internet, and specifically Internet marketplace models, act as accelerants to the productivity benefits of the division of labour AND comparative advantage by reducing information asymmetry and increasing the likelihood of a perfect match with regard to the exchange of goods or services. In his 2005 book, The World Is Flat, Thomas Friedman recognizes that the Internet has the ability to create a “level playing field” for all participants, and one where geographic distances become less relevant. The core reason that Internet marketplaces are so powerful is because in connecting economic traders that would otherwise not be connected, they unlock economic wealth that otherwise would not exist. In other words, they literally create “money out of nowhere.”

Exchange of Goods Marketplaces

Any discussion of Internet marketplaces begins with the first quintessential marketplace, ebay(*). Pierre Omidyar founded AuctionWeb in September of 1995, and its rise to fame is legendary. What started as a web site to trade laser pointers and Beanie Babies (the Pez dispenser start is quite literally a legend), today enables transactions of approximately $100B per year. Over its twenty-plus year lifetime, just over one trillion dollars in goods have traded hands across eBay’s servers. These transactions, and the profits realized by the sellers, were truly “unlocked” by eBay’s matching and auction services.

In 1999, Jack Ma created Alibaba, a Chinese-based B2B marketplace for connecting small and medium enterprise with potential export opportunities. Four years later, in May of 2003, they launched Taobao Marketplace, Alibaba’s answer to eBay. By aggressively launching a free to use service, Alibaba’s Taobao quickly became the leading person-to-person trading site in China. In 2018, Taobao GMV (Gross Merchandise Value) was a staggering RMB2,689 billion, which equates to $428 billion in US dollars.

There have been many other successful goods marketplaces that have launched post eBay & Taobao — all providing a similar service of matching those who own or produce goods with a distributed set of buyers who are particularly interested in what they have to offer. In many cases, a deeper focus on a particular category or vertical allows these marketplaces to distinguish themselves from broader marketplaces like eBay.

  • In 2000, Eric Baker and Jeff Fluhr founded StubHub, a secondary ticket exchange marketplace. The company was acquired by ebay in January 2007. In its most recent quarter, StubHub’s GMV reached $1.4B, and for the entire year 2018, StubHub had GMV of $4.8B.
  • Launched in 2005, Etsy is a leading marketplaces for the exchange of vintage and handmade items. In its most recent quarter, the company processed the exchange of $923 million of sales, which equates to a $3.6B annual GMV.
  • Founded by Michael Bruno in Paris in 2001, 1stdibs(*) is the world’s largest online marketplace for luxury one-of-a-kind antiques, high-end modern furniture, vintage fashion, jewelry, and fine art. In November 2011, David Rosenblatt took over as CEO and has been scaling the company ever since. Over the past few years dealers, galleries, and makers have matched billions of dollars in merchandise to trade buyers and consumer buyers on the platform.
  • Poshmark was founded by Manish Chandra in 2011. The website, which is an exchange for new and used clothing, has been remarkably successful. Over 4 million sellers have earned over $1 billion transacting on the site.
  • Julie Wainwright founded The Real Real in 2011. The company is an online marketplace for authenticated luxury consignment. In 2017, the company reported sales of over $500 million.
  • In 2015, Eddy Lu and Daishin Sugano launched GOAT, a marketplace for the exchange of sneakers. Despite this narrow focus, the company has been remarkably successful. The estimated annual GMV of GOAT and its leading competitor Stock X is already over $1B per year (on a combined basis).

SHARING ECONOMY MARKETPLACES

With the launch of Airbnb in 2008 and Uber (*) in 2009, these two companies established a new category of marketplaces known as the “sharing economy.” Homes and automobiles are the two most expensive items that people own, and in many cases the ability to own the asset is made possible through debt — mortgages on houses and car loans or leases for automobiles. Despite this financial exposure, for many people these assets are materially underutilized. Many extra rooms and second homes are vacant most of the year, and the average car is used less than 5% of the time. Sharing economy marketplaces allow owners to “unlock” earning opportunities from these underutilized assets.

Airbnb was founded by Joe Gebbia and Brian Chesky in 2008. Today there are over 5 million Airbnb listings in 81,000 cities. Over two million people stay in an Airbnb each night. In November of this year, the company announced that it had achieved “substantially” more than $1B in revenue in the third quarter. Assuming a marketplace rake of something like 11%, this would imply gross room revenue of over $9B for the quarter — which would be $36B annualized. As the company is still growing, we can easily guess that in 2019-2020 time frame, Airbnb will be delivering around $50B per year to home-owners who were previously sitting on highly underutilized assets. This is a major “unlocking.”

When Garrett Camp and Travis Kalanick founded Uber in 2009, they hatched the industry now known as ride-sharing. Today over 3 million people around the world use their time and their underutilized automobiles to generate extra income. Without the proper technology to match people who wanted a ride with people who could provide that service, taxi and chauffeur companies were drastically underserving the potential market. As an example, we estimate that ride-sharing revenues in San Francisco are well north of 10X what taxis and black cars were providing prior to the launch of ride-sharing. These numbers will go even higher as people increasingly forgo the notion of car ownership altogether. We estimate that the global GMV for ride sharing was over $100B in 2018 (including Uber, Didi, Grab, Lyft, Yandex, etc) and still growing handsomely. Assuming a 20% rake, this equates to over $80B that went into the hands of ride-sharing drivers in a single year — and this is an industry that did not exist 10 years ago. The matching made possible with today’s GPS and Internet-enabled smart phones is a massive unlocking of wealth and value.

While it is a lesser known category, using your own backyard and home to host dog guests as an alternative to a kennel is a large and growing business. Once again, this is an asset against which the marginal cost to host a dog is near zero. By combining their time with this otherwise unused asset, dog sitters are able to offer a service that is quite compelling for consumers. Rover.com (*) in Seattle, which was founded by Greg Gottesman and Aaron Easterly in 2011, is the leading player in this market. (Benchmark is an investor in Rover through a merger with DogVacay in 2017). You may be surprised to learn that this is already a massive industry. In less than a decade since the company started, Rover has already paid out of half a billion dollars to hosts that participate on the platform.

Exchange of LABOR Marketplaces

While not as well known as the goods exchanges or sharing economy marketplaces, there is a growing and exciting increase in the number of marketplaces that help match specifically skilled labor with key opportunities to monetize their skills. The most noteworthy of these is likely Upwork(*), a company that formed from the merger of Elance and Odesk. Upwork is a global freelancing platform where businesses and independent professionals can connect and collaborate remotely. Popular categories include web developers, mobile developers, designers, writers, and accountants. In the 12 months ended June 30, 2018, the Upwork platform enabled $1.56 billion of GSV (gross services revenue) across 2.0 million projects between approximately 375,000 freelancers and 475,000 clients in over 180 countries. These labor matches represent the exact “world is flat” reality outlined in Friedman’s book.

Other noteworthy and emerging labor marketplaces:

  • HackerOne(*) is the leading global marketplace that coordinates the world’s largest corporate “bug bounty” programs with a network of the world’s leading hackers. The company was founded in 2012 by Michiel Prins, Jobert Abma, Alex Rice and Merijn Terheggen, and today serves the needs of over 1,000 corporate bug bounty programs. On top of that, the HackerOne network of over 300,000 hackers (adding 600 more each day) has resolved over 100K confirmed vulnerabilities which resulted in over $46 million in awards to these individuals. There is an obvious network effect at work when you bring together the world’s leading programs and the world’s leading hackers on a single platform. The Fortune 500 is quickly learning that having a bug bounty program is an essential step in fighting cyber crime, and that HackerOne is the best place to host their program.
  • Wyzant is a leading Chicago-based marketplace that connects tutors with students around the country. The company was founded by Andrew Geant and Mike Weishuhn in 2005. The company has over 80,000 tutors on its platform and has paid out over $300 million to these professionals. The company started matching students with tutors for in-person sessions, but increasingly these are done “virtually” over the Internet.
  • Stitch Fix (*) is a leading provider of personalized clothing services that was founded by Katrina Lake in 2011. While the company is not primarily a marketplace, each order is hand-curated by a work-at-home “stylist” who works part-time on their own schedule from the comfort of their own home. Stitch Fix’s algorithms match the perfect stylist with each and every customer to help ensure the optimal outcome for each client. As of the end of 2018, Stitch Fix has paid out well over $100 million to their stylists.
  • Swing Education was founded in 2015 with the objective of creating a marketplace for substitute teachers. While it is still early in the company’s journey, they have already established themselves as the leader in the U.S. market. Swing is now at over 1,200 school partners and has filled over 115,000 teacher absence days. They have helped 2,000 substitute teachers get in the classroom in 2018, including 400 educators who earned permits, which Swing willingly financed. While it seems obvious in retrospect, having all substitutes on a single platform creates massive efficiency in a market where previously every single school had to keep their own list and make last minute calls when they had vacancies. And their subs just have to deal with one Swing setup process to get access to subbing opportunities at dozens of local schools and districts.
  • RigUp was founded by Xuan Yong and Mike Witte in Austin, Texas in March of 2014. RigUp is a leading labor marketplace focused on the oilfield services industry. “The company’s platform offers a large network of qualified, insured and compliant contractors and service providers across all upstream, midstream and downstream operations in every oil and gas basin, enabling companies to hire quickly, track contractor compliance, and minimize administrative work.” According to the company, GMV for 2017 was an impressive $150 million, followed by an astounding $600 million in 2018. Often, investors miss out on vertically focused companies like RigUp as they find themselves overly anxious about TAM (total available market). As you can see, that can be a big mistake.
  • VIPKid, which was founded in 2013 by Cindy Mi, is a truly amazing story. The idea is simple and simultaneously brilliant. VIPKid links students in China who want to learn English with native English speaking tutors in the United States and Canada. All sessions are done over the Internet, once again epitomizing Friedman’s very flat world. In November of 2018, the company reported having 60,000 teachers contracted to teach over 500,000 students. Many people believe the company is now well north of a US$1B run rate, which implies that around $1B will pass hands from Chinese parents to western teachers in 2019. That is quite a bit of supplemental income for U.S.-based teachers.

These vertical labor marketplaces are to LinkedIn what companies like Zillow, Expedia, and GrubHub are to Google search. Through a deeper understanding of a particular vertical, a much richer perspective on the quality and differentiation of the participants, and the enablement of transactions — you create an evolved service that has much more value to both sides of the transaction. And for those professionals participating in these markets, your reputation on the vertical service matters way more than your profile on LinkedIn.

NEW EMERGING MARKETPLACES

Having been a fortunate investor in many of the previously mentioned companies (*), Benchmark remains extremely excited about future marketplace opportunities that will unlock wealth on the Internet. Here are an example of two such companies that we have funded in the past few years.

The New York Times describes Hipcamp as “The Sharing Economy Visits the Backcountry.” Hipcamp(*) was founded in 2013 by Alyssa Ravasio as an engine to search across the dozens and dozens of State and National park websites for campsite availability. As Hipcamp gained traction with campers, landowners with land near many of the National and State parks started to reach out to Hipcamp asking if they could list their land on Hipcamp too. Hipcamp now offers access to more than 350k campsites across public and private land, and their most active private land hosts make over $100,000 per year hosting campers. This is a pretty amazing value proposition for both land owners and campers. If you are a rural landowner, here is a way to create “money out of nowhere” with very little capital expenditures. And if you are a camper, what could be better than to camp at a unique, bespoke campsite in your favorite location.

Instawork(*) is an on-demand staffing app for gig workers (professionals) and hospitality businesses (partners). These working professionals seek economic freedom and a better life, and Instawork gives them both — an opportunity to work as much as they like, but on their own terms with regard to when and where. On the business partner side, small business owners/managers/chefs do not have access to reliable sources to help them with talent sourcing and high turnover, and products like  LinkedIn are more focused on white-collar workers. Instawork was cofounded by Sumir Meghani in San Franciso and was a member of the 2015 Y-Combinator class. 2018 was a break-out year for Instawork with 10X revenue growth and 12X growth in Professionals on the platform. The average Instawork Professional is highly engaged on the platform, and typically opens the Instawork app ten times a day. This results in 97% of gigs being matched in less than 24 hours — which is powerfully important to both sides of the network. Also noteworthy, the Professionals on Instawork average 150% of minimum wage, significantly higher than many other labor marketplaces. This higher income allows Instawork Professionals like Jose, to begin to accomplish their dreams.

The Power of These Platforms

As you can see, these numerous marketplaces are a direct extension of the productivity enhancers first uncovered by Adam Smith and David Ricardo. Free trade, specialization, and comparative advantage are all enhanced when we can increase the matching of supply and demand of goods and services as well as eliminate inefficiency and waste caused by misinformation or distance. As a result, productivity naturally improves.

Specific benefits of global internet marketplaces:

    1. Increase wealth distribution (all examples)
    2. Unlock wasted potential of assets (Uber, AirBNB, Rover, and Hipcamp)
    3. Better match of specific workers with specific opportunities (Upwork, WyzAnt, RigUp, VIPKid, Instawork)
    4. Make specific assets reachable and findable (Ebay, Etsy, 1stDibs, Poshmark, GOAT)
    5. Allow for increased specialization (Etsy, Upwork, RigUp)
    6. Enhance supplemental labor opportunities (Uber, Stitch Fix, SwingEducation, Instawork, VIPKid), where the worker is in control of when and where they work
    7. Reduces forfeiture by enhancing utilization (mortgages, car loans, etc) (Uber, AirBnb, Rover, Hipcamp)

If you are a founder who is excited about starting a new marketplace, there are two caveats that are important to remember. First, you will need to find industries where the opportunity to improve the efficiency in the ways noted above is evident. If the network does not create true economic leverage, you will find it hard to be successful. Second, for any marketplace to be successful, the conditions in that given market must be optimal for a new marketplace entrant. Please check out our previous post, All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces, for a list of factors that help distinguish a great opportunity. If after taking in these considerations you think you have found such an opportunity, we would love to talk to you about potentially partnering together. Please send us an email to unlockingwealth@benchmark.com.

(*) Benchmark either is or was an investor in companies labeled with the asterisk.

Interested in “Unlocking Wealth” Yourself?