Founders and speed: finding and funding scalable marketplaces - Jeroen Arts (Speedinvest)

Please note: The transcript is automated, meaning that there will be mistakes.
Jeroen Arts: One mistake I keep revolting against is the mistake of premature internationalization. What I've seen over the last seven years happen quite often internationalization way too early. Usually, frankly, advised by investors saying, hey, why are you not in a different country? You should go in a different country? You should go in another country because there's people building stuff in that other country.

While they're still very early in their own journey and actually haven't quite figured out their home market. Welcome to TwoSided, the marketplace place podcast brought to you by Sharetribe.

Sjoerd Handgraaf: Hello, and welcome. I am Sjoerd, CMO at Sharetribe, and I am your host. Welcome to episode number five of season three of TwoSided where, once again, a reminder, this season, we interview marketplace investors to see what they are looking for, what they are seeing in the market, and also where they think the future is going. And this is perhaps a good bridge to my guest of today because I'm talking today to Jeroen Arts of Speedinvest. And I'm saying this is a good bridge because as you'll hear in the interview, Jeroen gives a great caveat to his advice and I think maybe something that we could take as caveat for this entire season.

Namely, VCs are terrible predictors of the future. Those are his words, not mine. And there might be a bit rough, but let's say that they're not that much better than the average person. Of course, the difference is and why we're talking to them is that they have a lot more data. So, for example, Speed Invest sees, I think, even says thousands of ideas and slide decks per year.

So, you know, they do have a lot more things that they could take into account when they start predicting the future. Maybe Maybe something else about this episode, more so than in the previous episodes, that we talk a lot about, founders. So, Yudhir, first of all, has been the founder himself of a marketplace called Deskbookers. But by now, we also has, many years of experience in investing and working with, portfolio companies and founders. And so throughout the conversation, he mentioned some of the qualities that he started to appreciate and some of the good decisions or good patterns that he's seen, and also maybe some of the patterns that are less successful.

So for example, one thing that I really liked is what he called the clock speed in founders. And this is something that he has started to appreciate over the last couple of years. So so the power of speed in decision making, how quickly can founders make decisions and adapt to change in the early days? Another thing is why market focus is more important than premature internationalization. So Jeroen, I think, also mentioned that this is sometimes driven a little bit by an investor push, but trying to scale too quickly into multiple regions can really backfire for many early stage marketplace founders.

Finally, one last point is about certain trends driving marketplace innovation. So Yaron's quite excited about certain opportunities and some things that I didn't really know about. Well, for example, he mentioned health as an industry, but also, you know, sort of a macroeconomic thing, namely new consumer behavior that Gen z is having where he sees massive opportunity. All in all, I think an episode full of practical advice, really, really useful for founders. I had a great time talking to you, Rune.

Maybe actually quick disclaimer that, you know, we're both Dutch from The Netherlands, originally. Both also have a name that is pretty much impossible to pronounce in any other language. But, you know, be prepared. There might be some Dutch accent plan going on, although I do think we did pretty well. But like I said, I really enjoyed this episode.

I hope you will enjoy this episode too. Lots of practical advice for founders. So let's go. Here is my conversation with Rune Aerts of Speedinvest. Hi, Arun.

Welcome to the podcast.

Jeroen Arts: Thank you very much. Thanks for having me.

Sjoerd Handgraaf: Yeah. Really nice of you to make the time to be here. I know you just, told me before we started recording end of year, lots of things, to do, existing portfolio work, new deals, hitting the quarterly goals. Before we go into all of that, could you tell the audience a little bit about, what did you do before you became a a marketplace investor?

Jeroen Arts: Sure. Yeah. So I'm I'm Jeroen. I'm, originally from, The Netherlands. It's also a name that only works in The Netherlands somehow, so it makes it quite complicated to work in a very international setting.

Sjoerd Handgraaf: Say no more. Say no more.

Jeroen Arts: Exactly. So I think I started, into the marketplace space roughly, twelve years ago. Had, like, quite a traditional upbringing and started international economics. I was done then kind of, like, on the verge of, okay, what am I gonna do after this university? I think most of my colleagues actually went into the the the usual.

Right? They were or or they went for, like, a government role or they went for, consulting. Some went down to the research part. I tried to explore the research part a little bit, but I realized, okay, that's a very boring thing, so I don't wanna do that. I actually found my way working in in sports in, in track and field.

So I was an international athletes representative, basically working with Oh, wow. Olympic level, athletes. So it was actually pretty cool because at the end of the day, I was we were scouting for talent and then trying to support them throughout their career. And in a way, there's some similarities with the work that we're doing today. At least I Yeah.

Sjoerd Handgraaf: Totally. To believe

Jeroen Arts: that there's there's some similarity there. So at the same time, during that time, together with one of my best friends, I started a company called Deskbookers, which was ultimately a SaaS enabled marketplace where you could grant work and meeting space on hourly basis. So, and the the main thesis behind it was we saw a future where people would actually not always work from the same place, but, actually, people would have the option to choose whether they want to work from the office, whether they want to work from home, or they want to work from a a third party workplace. And with that marketplace, we were actually offering that third party workplace solution. So

Sjoerd Handgraaf: Okay.

Jeroen Arts: Good idea, difficult business, and and and proved to be very, very hard to scale, but, yeah, that was back in, 02/2012 approximately when we started that. We also raised some money for that, later on. So that was kind of my way into the the venture seat.

Sjoerd Handgraaf: Yeah. Alright. I didn't know. I mean, we met a couple of times. Just a disclaimer for the listener.

I mean, the the best book, first of all, I think that's an interesting idea and also a little bit like it feels like ahead of the curve kind of, like, coming. Of course, there were some things, but I think, like, loads of these things we have especially seen, like, after the after the COVID or during the COVID thing that the remote's more more, yeah. That's interesting. Maybe that is, maybe that's straight. I'm gonna use the Olympic thing as a sort of, setup for my next question.

How do you evaluate marketplaces? And I think that for a lot of investors, like, the founder or the team is an important component. And maybe taking that sort of, like, high performance, like, kind of obsessiveness that you you you need, as an Olympic athlete as well as a founder. So maybe you can talk a little bit about, first of all, of course, I'd like to get eventually the answer about how do you evaluate marketplace, etcetera. But but maybe first, we can start on a founder level.

Like, what what are you looking for?

Jeroen Arts: Yeah. So maybe maybe for just to make the full picture of where I am today. So I obviously work now for Yeah.

Sjoerd Handgraaf: Absolutely. Yeah. Sorry.

Jeroen Arts: Speed invest, we're, like, early stage pan European pre seed and seed fund. And then within Speed Invest, we actually have different investment teams that have that focus on particular verticals, and then I'm responsible for our marketplace and consumer team. So, basically all everything I do on a day to day basis is investing in marketplace and consumer businesses. And I've been doing that over the past seven years. I joined later on in '17 when we start to build these specialized investment teams.

So, you know, I think there's some interesting parallels between kinda like working in sports and, and and work in venture from the sense that at the end of the day, it's a people's business. Right? So whether you work with a professional athlete or whether you work with, with a company as an investor, I think there's ultimately people that are working every day very hard to build a successful business. So especially also for us, given that we are a pre seed and seed investor, we also lean in very, very early. And sometimes there's actual revenue, but in many cases, there's no revenue yet.

So it's kinda pretraction. In some cases, it's kinda pre product. In some cases, pretty much pre everything, and it's basically just a team. Right? So that's also why for me as an investor, the the the the number one, two, and three reason I wanna invest in a company always around the team.

Right? I think Yeah. You know, there's obviously a lot of things that you wanna see in those kind of founder founder qualities. But I think one that I start to appreciate much more, I think, over the past, twelve to twenty four months is simply kind of the clock speed that a founder brings to the business. So their kinda their ability to make decisions and to move forward, I think that's a really good indicator for how how this part as a portfolio company, will go moving forward.

Sjoerd Handgraaf: Yeah. Yeah. Yeah. Okay. That's interesting.

So, like, do you mean, like, clock speed just like sort of the the the time they make to, you know, their ability to make decisions fast and, like, with whatever information is available? Because, of course, you know, information is always incomplete, especially in a startup level.

Jeroen Arts: Totally.

Sjoerd Handgraaf: Ah, that's interesting. Yeah. Yeah. I haven't heard of the one before. Yeah.

Jeroen Arts: I think I think that's really underappreciated quality. And, you know, the reality, of course, is when we make an investment, we always have to believe that this will be a unicorn. Right? I mean, that's a we're we're, like, investing in in venture. Right?

So we we believe in the power law. Power law is what what drives our ultimate performance. So we always believe that this can be like an outlier company when we invest. At the same time, when it doesn't work out that way, you always start to look, okay. What are the main reasons for it not working out?

And I think in some cases, it can be market. Right? You might be simply too early in the market or the the I know the offering wasn't clear enough for people to really understand it or the time, yeah, the time was not quite there to be. At the same time, I think most companies feel because of ultimately poor execution. Right?

And the ultimate execution starts at the founder level. So, ideally, you wanna have founders that kinda, like, you know, have the determination, but also the willingness to make kind of, like, bold bets early on in the journey of a start up and simply not overthink every decision because you usually don't really have the time. Right? I think the the biggest constraint you have as a as a as a as a founder is simply time and resources or cash, basically. And, yeah, in within the time frame that you're given, you need to make a ton of decisions and you wanna move very quickly, I think.

That's, I think, a very important quality I see in the in the successful cases. You know?

Sjoerd Handgraaf: Yeah. Yeah. No. I can totally I I now when you mentioned it, it makes a lot of sense. Like like you said, like, as a start up, basically, I think also internally at ShareDrop, we've we've used in the past.

It's better now, but, like, there have been times in the past where it's like, essentially, we're just dying. Like and it's just about, like like, the runway. If you look at the runway, the start up, which is which is a sort of common common framework for startups to estimate their lifetime between funding rounds especially that, like, you're twenty four months away from dying, so you cannot actually overthink things. Makes makes a lot of sense. Coming back to some of these things that you said.

So you you mentioned that you work at Speed Invest in these sort of verticals. Is a marketplace truly a vertical? Is it like, like a is it a marketplace model? Is that an actual horizontal in itself? And also when you said about, you know, sometimes an idea is too close to a market.

So so my question is going to be, like, are there any markets right now that you feel or maybe, like, already maybe we're jumping a little bit ahead, but I I need some natural connection for me. Like, are there any markets that you see opportunity and that you get excited if you get if you get a deck and you know it's going to be in a particular space or like, yeah. I've been waiting for this or we can see this.

Jeroen Arts: Yeah. I mean, I think the caveat is I think VCs are terrible predictors of the future. Right? So it's not like we have, like, this crystal ball and we know exactly how the the world kinda, like, will look like in five years. The beauty, of course, of the work that we do is that we are very close to innovation, but we're still we're still a little bit of, like, lagging.

We're a little bit lagging on what's actually happening. Right? Because the the founders are out there. They're trying to build new things and on us to to really evaluate, okay. Is this something that we are keen on, and is this something that's kinda, like, hot and happening?

So we're always a little bit late to the game, but there's definitely a couple of areas that we're particularly excited about. Right? So I think the one area where I'm kinda, like, trying to lean in and, I would worry it's not gonna be pure AI. Right? I think there's a lot of opportunity around AI, but I think, I think the one thing I find particularly interesting is the the generational shift that we're seeing where now the the younger consumer, let's say, Gen z.

So everybody was, like Mhmm. Roughly between 15 and early twenties. That generation, becomes way more important now, as they mature. Right? They have more money to spend.

So they become a a more important share of the wallet these days. What we see is that the way this segment is actually transacting is very different to previous generations. Right? Previous generations, my generation, my parent generation, they're not digitally native. We don't really look for a lot of, like, social, evidence before we decide on a purchase.

But this this young generation is, like, fully digitally native. Right? They've been grown up online. They're looking at what their friends are buying, also very open in sharing about what the best things are that they like. So they're very, strong advocates typically for the stuff that they buy.

And I think what's really interesting that both on the consumer side, of course, they become more important as they mature and actually start to earn money. But, also, they they make their way to the workflow. So this will also, I think, drive a lot of innovation, not just on the b to c side, but actually also on the b to b side where

Sjoerd Handgraaf: Mhmm.

Jeroen Arts: Let's say the traditional fifty plus year, entrepreneur is slowly moving out of the organization and will actually be replaced with younger managers who are actually way more, digitally affluent. So I think that's a really interesting shift that we're seeing. I think there's there's probably a lot of innovation being built around that.

Sjoerd Handgraaf: Yes. So should I then think about, for example, because this is like I'm 43. I'm not digitally native, but, you know, like, there are times where I feel old, times where I feel young. When I feel old is when I see things, for example, like, what's not, like this marketplace, or is this social selling where where someone is, like, live selling a thing. So is that one of the things you were talking about that, like, for example, we're going to see, like, b to b, you know, industrial material sales through, a YouTube channel or something?

Like, I mean, I'm I'm obviously oversimplifying it here and exaggerating a bit, but but that's the kind of things you're talking

Jeroen Arts: about. I'm I'm obviously not ruling it out. I mean, I'm also, like, 40. Right? So I look at these videos, and I I cringe.

Right? I'm like, oh god. Would I would I be willing to do that? But the younger generation is broadcasting basically the whole day. You know?

And so it's a so it's a very different way how they what their what the kind of their stances in the world and how they transact. So I think that brings innovation. And and from that innovation, we will see new startups actually building something that seems more appealing to this younger generation, I think. So that's, like, one big theme that I think is is really interesting to to explore in which we're also trying to actively, invest in that speed invest.

Sjoerd Handgraaf: Yeah. Taking a couple steps back, so you said earlier when we talked about, like, did you look at the team and and you mentioned that, of course, that you you're so early sometimes with Speed Invest that there is not a lot of indicator. So what do you look for then? You already described the team, but then how do you evaluate the actual business idea? How do you what what are the success metrics that you're looking at or the sign of potential metrics, like, for a marketplace?

Jeroen Arts: The answer would always be it depends. Right? So it depends a little bit on where the stage is at. Yeah. Yeah.

If they have a product in the market, then there's obviously some transactions to look at. And then from those transactions, you can kind of derive, okay, is this a marketplace that seems to be working? The beauty of a marketplace business is that it's essentially very simple. Right? You you bring supply and demand together, and if you're able to facilitate transactions between them, at least you have a kernel of of of something.

You know? There's there's a basis to to build on. It doesn't necessarily mean that you can build, like, a big business out of it. But in these, it seems that you have some sort of problem solution fit. And then the question becomes more, how can we get from this problem solution fit to product market fit?

Where where where product market fit is much more around okay. Can we actually acquire customers at scale at an affordable price? Are they staying with us? Do we see that they there's a strong retention in the product? And are the unit economics of the transaction that we're doing?

Are those, like, profitable, or is that is a part of profitability? So the way how we assess a business really depends, I think, on what stage it actually is. And we probably have a bit of a split of 30 to 40% companies being very, very early. Frankly, founders have preproduct. Yeah.

Preproduct. Maybe they have built some sort of MVP. They they probably they're already able to articulate kind of what they want to build. That might change, you know, because it's it's so early. Right?

So it would not be unusual to see a pivot there. Then there's probably another third or so that that is somewhat, like, very early. So there's some early evidence. There's some early metrics that you can maybe look at. And then the other 30% or third, I would roughly classify as more like late seed, especially, like, when we go a little bit more into consumer territory.

We try to look a little bit more deeply into the marketplace, see what transaction happening. We have a bit of a pattern because you have maybe, I don't know, six to twelve months of data. And And there, it's much more like, okay. Is this going to work or not? Right?

So it really depends on on what stage we're investing in. My personal philosophy, I think, would be maybe interesting to share is in industries where I see already a lot of companies being built, I prefer to be a little bit later because it's it's just very hard to pick a winner in that kind of space. Yeah. However, if it's more like a blue ocean kind of opportunity and you see there's a lot of thing in different b two b sectors where there's frankly still a lot of room for new marketplaces to pop up. I'm very happy and very com comfortable in actually investing pretty much pre everything.

Yeah. So that's, very simple framework I I I personally use.

Sjoerd Handgraaf: Yeah. Yeah. Could you give an example if possible of, like, an industry where you feel like, okay. This is still or, like, I don't know. It's it's not maybe one particular industry, but let's say somewhere in the matrix where where there is still, a blue chip, like, where you're like, you know, maybe using an example that you can share that's, like, not too recent, but reason enough that you're comfortable sharing it.

That's like, okay. Here, of course, you do the due diligence, you meet the team, etcetera, but then you're feeling, okay. I had a good feel, like, I had a good feeling about this one from the beginning because of, like, I see the opportunity.

Jeroen Arts: Yeah. I think the one thing I would say is that it it keeps surprising me even after seven years and probably I mean, we see roughly

Sjoerd Handgraaf: Okay.

Jeroen Arts: 2,000 companies a year. Right? So let's say over those seven years, we had a bit of a growth on the on the deal flow side as well, but we probably have assessed, north of 10,000 companies just in marketplaces and customer. Right? So so we see a lot.

Yeah. And still, I get to be surprised many times when I figured out, hey. There's an interesting more new marketplace, developing. Right? I think the beauty of our marketplace is typically also kind of, like, creates a whole new economic system.

Every year, there's a number of deals that I see. I'm like, hey. Wow. I I I would never have imagined the marketplace here. I think one investment that we recently did is in a company called RowClub, and RowClub stands for remote operator club.

Sjoerd Handgraaf: Okay.

Jeroen Arts: I think it's a good example because it's actually in the health space, and health is a quite a regulated business typically. So so that's where typically still a lot of, like, blue ocean is for people to build something. And because it's, you know, it's a bit of a hairy topic. People don't necessarily wanna do all the hard work to to build something in a highly regulated business. And this this team is basically building, I would say, SaaS enabled marketplace where Mhmm.

They allow technicians to operate MRI machines remotely. So if if you're familiar with, like, an MRI machine, you ever went to an MRI machine Yeah. You always see that Yeah.

Sjoerd Handgraaf: I played football. I've torn my ACL. So I've been there. Yeah.

Jeroen Arts: Yeah. Then you you typically need a number of people kinda like in the room or close by that actually operate the machines. Yeah. You need to have these people on-site. Right?

And there's this, this one on one relationship between a technician on-site and the machine that being operated. What's RowClub does? RowClub stands for remote operator club. They actually build like a hardware in combination with software that allows clinics to operate these, MRI machines remotely. So no longer you need to have someone in the room, you actually just connect to the RowClub platform, and you're able to operate this machine, purely remote.

And what then RowClub does is that on top of this, let's say, hardware software stack, they actually build, like, a marketplace where you can hire those technician on a very flexible basis. Right? So Okay. I would never envision this myself. No.

Just just happen to fall onto our desk, and we kinda, like, fell in love with it. And it's one of those examples where if you go to many, like, regulated businesses like health care, like law, like, etcetera, I think there's still a lot of room for people to come up with very creative ways how marketplaces could be beneficial to build something of value. Yeah?

Sjoerd Handgraaf: Yeah. That's amazing. Yeah. I mean, I fully echo that sentiment. Right?

Like, I try not to put too much here to put in each episode, but I think it's shared with us well. Like, we have now, like, 1,200 plus customers, like, live, but we've had thousands over the years. And, indeed, there's still, like, ideas. There there's ideas that are like, oh, I've seen that. But then also, like, also, surprisingly regularly, you're like, woah.

I I did not think that that this would work, or I had no idea that that that market was so big, for example. Yeah. Yeah. That's a fantastic example. And I guess also, like, from a investor point of view, yeah, some of these industries or areas are, like, less, you know, less appealing because of the regulation.

But to me, that immediately sort of echoed back as, like, well, that's also kind of an additional mode. Right? Like, that is it it will be also less likely to be competed out of the market just because it's just not so attractive. Like

Jeroen Arts: Yeah. I think, like, in the investor space, you can make sort of, like, contrarian bets a little bit. And the question is if this is, like, one of those contrarian bets, but I think especially if you look at where people are investing today, I think most of the money is going to AI and climate. Because if you look at the numbers, that that's where the money goes. Right?

Yeah. However, that doesn't mean that there is not opportunity in all the other spaces. Right?

Sjoerd Handgraaf: So

Jeroen Arts: Yeah. No. We we have a benefit because as you mentioned before, we are not our marketplace team is not quite a vertical. Right? We're obviously much more horizontal.

Right? And we're just in business model, ultimately what that we are focused on. So we get to see many different industries. We can therefore also pick very, very broadly, which we're also actively actively doing. It sometimes helps to not just follow the herd and and invest in the next AI deal, and, or the next climate deal even though that all those those also sectors, I think, are, like, super interesting.

So, yeah, we have different teams that are pursuing those kind of deals.

Sjoerd Handgraaf: Yeah. What are some of the things where you're like, oh, this is, we've already talked about, like, what are the green lights? Like, what what are what are the red flags where you're like, oh, this is I think this is not going to work. Or, like, what is a mistake? Maybe maybe this I'm just trying to say in a very original way.

Like, what are common mistakes that you see early stage marketplace founders make?

Jeroen Arts: Yeah. I think one one mistake I, I keep revolting against is, is the mistake of, like, premature internationalization, which I think is very much a topic, that's top of mind. Or internationalization is very much a top of top of mind for marketplace founders, particularly in Europe because we are such a fragmented piece of land here that is split up in all different countries with all the different nuances. And Yeah. What I've seen over the last seven years happen quite often is that people building marketplaces that had quite a strong local component were actually planning on internationalization way too early.

Usually, frankly, advised by investors saying, hey. Why are you not in a different country? You should go in another country because there's people building stuff in that other country. While they're still very early in their own journey and actually haven't quite figured out their home market. This just really amplifies all the problems that you're already having because you're starting to spread your resources across different geos.

You're only increasing the complexity of your organization that you're building. You're you're spending all your money now, not just in one market, but in two markets. All the while, you really haven't figured out your first market. Right? So Yeah.

I think it's bad for many reasons, but I think one particular reason that I think is also very bad about this, if you think about potentially exiting exiting a business, you also wanna make sure that you actually are of value when someone tries to buy you. So if you have, like, a tiny little bit of penetration in one country and a tiny bit in one other country, you're just not a very meaningful business. So you your idea, you wanna go very deep in one country. Show that it really works and actually did from then start to go to another country. So I think that's that's one common pitfall I see, especially, like, first time founders make when they're poorly advised by investors.

Yeah. Always have to chuckle a little bit about that one.

Sjoerd Handgraaf: Yeah. Yeah. Just because, like, to be honest, like, that is not a surprise. Like, every I think, like, now we've done two seasons of this podcast is going to be deferred. And I think every time when I do the sort of summary, that's, like, like, start small.

Like, honestly, like, whether that is, like, you you give the geo geographical vector. But similarly for categories. Right? Like, if you if you add on if you start expanding your your marketplace category, like but I'm super happy that you say it because, like, I I really feel that, like, you know, if I would go out tomorrow, like, this would be the one advice, like, honestly, because, like, it is so it is so important that that, like you said, like, like, you haven't figured out all your problems. You haven't figured out your your known unknowns, let alone your unknown unknowns.

So it becomes like a compounding error over time, like, if you keep on adding either two once or another or so.

Jeroen Arts: I've been a founder myself as well. So and I think as a founder

Sjoerd Handgraaf: Uh-huh.

Jeroen Arts: You have to walk this tightrope between, on the one hand, having focus in your business. Right? And I think you do that best by actually focusing on a niche, making sure that that that niche, whatever, that's a product category or a country or region is

Sjoerd Handgraaf: Yeah. Or both.

Jeroen Arts: To make yeah. Or both or to kinda make that work. At the same time, from a, let's say, a fundraising point of view, and if you are to pursue, like, a, adventure game, you also need to Yeah. Show a big enough thumb. Right?

So you you need to be able to pitch the big story while still focusing on the small story and getting that small story to to work first. Right? So it's it's also not necessarily very easy, but I think sometimes founders mix these two content up a little bit. And I think we have to show a big thumb, so we should go after that straightaway. And I don't think that's always the the right strategy.

I mean, it might be for some business, but for many businesses, actually, it's not.

Sjoerd Handgraaf: Yeah. And I think the GL also very much depends, of course, like, on the type of marketplace. Right? Like, if you are some kind of local marketplace where where both sides need to be in the same space or or the product and the buyer need to be in the same space, it's, of course, a different thing. But but still, I think, like, indeed, like, it's it's good to hear.

Or it's good to well, it's not good to hear. It's kind of sad to hear that this is still a problem, but but this is really I feel, like, the number one problem for most market like, early stage marketplace entrepreneurs.

Jeroen Arts: I think I wanna say, like, founders are the real rock stars. Right? So I think, you know, investors can do

Sjoerd Handgraaf: all kinds

Jeroen Arts: of things, but it's really about the founders and kinda their ability to kinda, like, build the next big thing. And what I would encourage founders, though, was that I see a lot, like, very talented founders, but they end up, in my view, pursuing too small of an opportunity. Right? They're they're they're fishing in this in in a too small pond. It also makes sense if if you are going to dedicate sixty, eighty plus hours a week to this idea and you committed yourself for next five to seven years, you wanna make sure you commit yourself to solve the biggest problem.

Of course, that biggest problem might be very personal. So it might be for you. This is the biggest problem I wanna solve, and that's for where I wanna do it. But I also see quite often great founders in my view pursuing a very small, not so interesting category. I think that's, that's, of course, a very personal choice from the founder, and I totally respect that.

But sometimes you're like, ah, this founder will be so great if it will be if we will be starting a different business.

Sjoerd Handgraaf: We sort of already touched on some of the areas once, but maybe in the not so much in the industry, but have you seen interesting developments, let's say, in the marketplace model? So not so much like, oh, this is a interesting area or this is a thing about, like, ways of monetizing, find like, have you seen you know, you said you've been seven years looking at these. So and anything that you feel like, okay. This is really, this has been an interesting development or a development that has sort of already concluded, but that is, because I think a lot of the advice on the on the net out there is already outdated. Right?

Like like like like so yeah.

Jeroen Arts: Yeah. I think I think I think it's always hard to stay original, to be very honest. But I think if you take a step back and look at how have marketplaces developed as sort of like a business model over the past, I don't know, twenty plus years. Right? Ever since kinda Yeah.

EBay and Amazon were founded in, like, '95, '90 '7, some somewhere around that time. And where we are today, I think we obviously saw a shift away from, like, purely horizontal to much more vertical. I think that's one very big transition that I think will actually also accelerate in in the next year, and I'll I'll tell you why. The level of involvement of the marketplace in making that transaction happen has gone from very small role where initially, it was like a listing and, you know, this is a listing, connect to each other, figure it out, to, hey. We're also gonna handle the payment.

We're gonna handle logistics. We're gonna handle insurance. So, also, the, yeah, the amount of value that the marketplace brings in order to make that transaction happen, has increased quite dramatically. And you went from, like, highly unmanaged marketplace to very managed marketplace. Right?

So I think that will persist. And I think, actually, here, AI is also gonna be a bit of a driver because the reality with AI is that this will, I think, allow founders to spin up more complex products, and operate these kinda like platforms also, while spending way less money than they did before. Right? Because they can use AI to re automate a lot of the interactions. They can make the matching between supply and amount easier.

You can you can create way better, search to to actually take away all the friction around making decision between, okay, what should I actually purchase from this marketplace. But also, like, the Yeah. The for a funnel to build a company, also here, you can see that AI will really be a big lever to drive down the cost of running that marketplace. So that, in essence, will make sure that founders will pursue, I think, even smaller verticals and probably also more complex products. So I I I see the path from, like, a horizontal unmanaged marketplace to, verticalized managed marketplace only kinda, like, continue.

I think that's that's gonna be quite quite interesting. Yeah. It depends out.

Sjoerd Handgraaf: Yeah. That that makes sense. And do you feel that, you would draw a graph, like, where on the one factor you have, like, sort of involvement in a transaction and then also sort of the amount that you can monetize on it. Right? Like, it would go sort of, like, perfectly 45 degrees up.

Does it also sort of give rise that, like, coming to the venture based outcome that that the market doesn't actually need to be as big as you're just able to can get like, you can get a lot more revenue per transaction. Right? So you need less market. Is that is am I am I drawing that conclusion, or you think that is that is a oversimplification?

Jeroen Arts: I think that might be right, but I'm also not sure. I I think, in essence, the I think the whole AI boom is already overlaying a lot of, like, interesting thought around, okay, how how does the venture capital model? Does it actually still work? Right? Do companies actually still need also that much money in later stages?

Are they not gonna be profitable actually way earlier? Right? So, the the way I think about that problem is much more around, okay, what does it mean for us as an early stage investor rather than

Sjoerd Handgraaf: Mhmm.

Jeroen Arts: Can the outcome be smaller. And for venture capital to work, we still need outlier returns. So

Sjoerd Handgraaf: Yeah. Yeah. Yeah.

Jeroen Arts: We we still wanna have that hundred x or the 50 x and not that three or four x because it's simply a very different model. Right? So we will always shoot for these bigger outcomes. The question is how can we get to this bigger outcomes and how much capital do some of our portfolio companies need to actually get to that level? And they and then this is where it gets really interesting.

And, I don't have the answer here, but, there's at least some concern from my side that maybe, companies actually need way less money, which means that probably, most funds will actually go a little bit earlier because they wanna be part of the journey already early on. I mean, that's that's just very early thinking on on that topic. Yeah. Yeah.

Sjoerd Handgraaf: That makes a lot of sense. Yeah. I think I think we see that also, you know, last time, I'm gonna insert chat up in here, but, like, I think that this is one of the we just recently did this, survey of all our customers who like, how much funding did they use and or how much funding were they able to raise because there's often this concern that, like, no code or or sort of, like, hired services like, like ours are are not venture compatible. And also surprising, like, I think it was 66,000,000 from the customers that they've raised together, but then when we sort of look through them, I think a lot of them actually have a little bit. I think maybe I'm projecting, but I feel are sort of echoing what you're saying.

They're like, well, they don't actually need that much because the tech is just a lot more affordable. They can show revenue early on, so they have a much better sort of negotiation at the table. There's also less risk for the venture capital fund because you have just more data to go by. So makes a lot of sense what you're saying. Thanks a lot for the insight.

If people would like to contact you, pitch to you, where should they go?

Jeroen Arts: That's a very good question. Obviously, you can, go to speedevents.com where people can pitch, directly on the website as well. They can, of course, reach me on on LinkedIn is where I'm most active. And what I didn't mention before, I'm also the host of the marketplace conference, like an annual conference that we do for marketplace, founders. So, yeah, we would, of course, also love to see people, there.

Yeah?

Sjoerd Handgraaf: Absolutely. Yeah. I I can totally recommend that I've been there, I think, almost every year, maybe every year since it's been, at least the Berlin edition. San Francisco, I think, is the other one, is is usually a little bit too far out of my out of my on my regular day. But, yeah.

No. A %. Every time, it is super useful for any marketplace founder. It's a fantastic conference, especially Europe to go to, and I'd imagine The US One is the same. I think there's no other like it.

I appreciate this too. Thanks a lot for your time, and until next time. Thank you for listening to Two Sided, the marketplace podcast. If you enjoyed this episode, don't forget to subscribe. And if you really liked it, please give us a rating or a review on Spotify, Apple Podcasts, or wherever find podcasts are downloaded.

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