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a16zThe Marketplace 100: A Glimpse Into the Future of Commerce
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CHAPTERS
- 0:00 – 4:21
Why a16z Is Obsessed with Marketplaces
Steph Smith opens with the Marketplace 100 and asks why marketplaces still matter. Connie Chan explains that they offer outsized returns because of defensibility and network effects, using Craigslist and Airbnb as examples.
- •The fourth edition of the Marketplace 100 ranks top private marketplaces by GMV
- •a16z's marketplace focus traces partly to partner Jeff Jordan's operating experience at eBay and OpenTable
- •Marketplaces have a strong theory of defensibility: the larger they get, the harder they are to disrupt
- •Network effects make a platform more valuable to everyone as it grows
- •Craigslist still works because of its liquidity despite a bare-bones design
- 4:21 – 7:07
How the Marketplace 100 Is Measured
Olivia Moore explains that the list ranks companies by gross merchandise value among more than 12,000 companies reviewed. She also describes the other metrics investors watch and the anonymized credit card data behind the estimates.
- •Sample size expanded threefold to more than 12,000 companies
- •GMV for 2022 is the top-line ranking metric, though it lags other indicators
- •Investors also look at supply and demand growth, listing-to-sale conversion, and retention
- •Data comes from Consumer Edge, which aggregates anonymized credit card transactions
- •A sample of a couple million consumers is used to estimate US-wide activity
- 7:07 – 8:56
Newcomers and Search vs. Discovery Shopping
The panel discusses the 34 newcomers, including RockAuto in the top 10. Connie Chan distinguishes search-based marketplaces, where inventory volume matters most, from browsing-based ones, which need better UX.
- •34 newcomers made the list, with six in the top 20 and one in the top 10
- •RockAuto, a bootstrapped family car-parts business, looks like Craigslist but ranks highly
- •For specific-item purchases, inventory volume and price matter more than listing polish
- •Browsing-based marketplaces must invest in UX and surface items to match taste
- 8:56 – 12:59
Shopping as Entertainment: Video, Whatnot, and Temu
Zach Cohen and Connie Chan describe Whatnot turning shopping into entertainment, and video as a new format for marketplaces. They then look at Temu's growth, personalization, and gamification.
- •Whatnot makes shopping more of an entertainment product than a transaction
- •Video, whether short, pre-recorded, or live, gives buyers more conviction and delight
- •Temu's growth was catalyzed by paid ads, with strong repeat purchases in the credit card data
- •Temu uses personalization and gamification, such as coupons and games
- •Connie Chan expects more commerce players to replicate TikTok-style personalization because it increases conversion
- 12:59 – 17:50
Curated Marketplaces and Trust and Safety
Zach Cohen outlines three waves of marketplaces, culminating in curation as the core product. Connie Chan ties curation to trust and safety, contrasting Temu's warehouse model with Wish, and Olivia Moore notes that curation brings new suppliers online.
- •Wave one prioritized quantity and supply; wave two added tiered curation like Uber Black and Airbnb Plus
- •Newer marketplaces such as Locale, Sense, and Good Dog make curation the product itself
- •Trust and safety must be built in from day one to counter buyer and seller fraud
- •Temu's warehouses give it baseline quality control, unlike Wish's direct factory shipping
- •Curated platforms attract high-end brands and merchants that avoid Amazon or DoorDash
- 17:50 – 20:44
Does Temu Really Build Trust?
Zach Cohen asks whether Temu's appeal is trust or just low prices. Connie Chan and Olivia Moore argue trust comes after purchase and show up in repeat rates, while Steph Smith adds that trust includes the marketplace making things right.
- •Zach Cohen questions whether low prices cause consumers to bypass trust
- •Connie Chan says trust comes after the fact, since oversight raises the odds items match their listing
- •Olivia Moore says Temu's repeat order rate is about five times higher than Wish's after month six
- •Low prices mean some hits among many items keep buyers satisfied
- •Steph Smith notes trust also means refunds, replacements, and reviews
- 20:44 – 24:01
Mental Health Marketplaces and Untapped Supply
The panel covers four mental health companies on the list that help consumers match with therapists who take insurance. They then discuss how marketplaces unlock new supply and where categories like home services remain unsolved.
- •Four mental health companies appeared, two of them newcomers, all matching consumers with in-network therapists
- •Appointments cost $10 to $30 with insurance versus $100 to $200 out of pocket
- •Marketplaces help therapists get credentialed and join group practices
- •Airbnb is cited as an example of a marketplace creating brand-new supply
- •Home services lacks a dominant marketplace because of low repeat rates and acquisition costs
- 24:01 – 26:54
Disintermediation and How Marketplaces Prevent It
Connie Chan raises disintermediation, and Olivia Moore calls it the elephant in the room. The panel says marketplaces keep users by delivering value to both sides, citing Wyzant and Peak.
- •Disintermediation means transacting off-platform after finding a match
- •Providing enough value to both sides keeps them on the platform
- •Olivia Moore's tutor example shows a seller protecting her status on Wyzant
- •Buyer services include fast shipping, trust and safety, and discovery; seller services can include financing
- •Peak provides vertical software to offline suppliers, and scale reduces the risk
- 26:54 – 31:01
Transient vs. Foundational Trends: Video and Ticketing
Steph Smith asks which trends are short-term and which are foundational. Connie Chan and Olivia Moore see video as lasting, while Zach Cohen sees ticketing's growth as tied to pent-up demand and delayed shows.
- •Connie Chan expects video to permeate all marketplaces, including reviews and tours
- •Olivia Moore expects sellers who see TikTok and Reels engagement to push platforms toward video
- •Ticketing stayed above 2021 levels due to pent-up demand and shows pushed into 2022
- •Monthly data show ticketing slowing in the second half of 2022
- •Ticket consumers are loyal to price, though Dice grew through discovery
- 31:01 – 36:26
Social Platforms and Others Entering Commerce
The panel discusses why large social platforms are moving into marketplaces. They cite user knowledge, mind share, and shifting social graphs, and note that Amazon-style opening to third-party sellers expands supply.
- •Commerce layers boost advertising engines because suppliers buy ads
- •Platforms like TikTok and Facebook know user preferences and hold traffic and mind share
- •Olivia Moore describes the multi-step process of buying from TikTok today
- •Connie Chan thinks users will accept shopping intent anywhere if recommendations are good
- •Instagram usage has become interest-based and creator-driven, favoring native marketplaces
- 36:26 – 41:37
Sleeper Categories and AI in Marketplaces
Olivia Moore names categories poised to break out, such as home services, automotive purchases, and blue-collar jobs. The panel then discusses AI on both the demand and supply sides, and the rise of marketplace infrastructure tools.
- •Sleeper categories include home services, car purchases, and a LinkedIn-and-Indeed-style platform for blue collar jobs
- •On the demand side, Temu and DoorDash use personalized recommendation algorithms
- •On the supply side, marketplaces like Turo can build AI tools for small-business suppliers
- •AI can power travel itineraries and contextual search
- •Marketplace infrastructure companies cover ads, reviews, ranking, returns, and shipping, enabling asset-light marketplaces
- 41:37 – 44:47
Standing Out in a Competitive Landscape
Steph Smith asks how founders can stand out when marketplaces are easier to create. Connie Chan says new unique supply, better pricing, or a better experience is needed, and Olivia Moore uses sneaker marketplaces to show hidden seller-side trust gaps.
- •Connie Chan says a new marketplace needs unique supply, better pricing, or a much better experience
- •Existing marketplaces are sticky, as Craigslist shows
- •Olivia Moore studied early Reddit posts about StockX to see why sneaker buyers left eBay
- •Sellers were being ripped off by buyers disputing charges, so trust and safety was needed on both sides
- •One side of an existing platform may be secretly unhappy and willing to switch
- 44:47 – 46:57
Closing Thoughts and What's Next
Connie Chan congratulates the companies on the list and stresses how hard it is to build a marketplace. She also announces an upcoming podcast series and newsletter on marketplaces.
- •Building a marketplace is hard because supply and demand must both be catalyzed
- •Finding product market fit and getting the flywheel going takes a long time
- •Once the flywheel works, staying power is great and expansion potential is large
- •a16z plans a short podcast series on marketplaces they respect
- •A marketplace newsletter will launch shortly
