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Anand Sanwal Profile picture
@asanwal
Sep 19, 2021 • 21 tweets • 11 min read • Read on X
B2B marketplaces are going to be big

$2.3B invested in them since 2019

But there is not a ton written about them

So here's a summary of my favorite articles, podcasts & principles on B2B marketplaces

🧵
2/ This by the team @BessemerVP is a great starting point

They discuss

1. What's changed that makes B2B marketplaces possible today
2. The qualities of successful B2B marketplaces
3. B2B marketplace models esp for high-friction goods

bvp.com/atlas/b2b-mark…
3/ This by @onecaseman is particularly relevant to many B2B marketplaces

He digs into into 4 strategies for how to thrive in low frequency marketplaces.

Examples are more consumer but the principles likely hold for B2B

caseyaccidental.com/low-frequency-…
4/ Here is a quick way to think about frequency vs average order value (AOV)

The examples here are more consumer but again, within B2B, we're seeing a diversity of marketplaces along this spectrum

Varies by good, industry Image
5/ @BoweryCapital has done a number of great conversations with B2B marketplace investors and operators and you can see the index of those here

bowerycap.com/blog/insights/…

I'll highlight a couple I particularly liked
6/ This convo with AJ Rohde of @thomabravo is a good one

AJ is firmly in the camp for B2B marketplaces that the demand side is what you have to ‘tip’ first stating “you get a lot more done when the demand side (OEMs) blesses you.”

bowerycap.com/blog/insights/…
7/ This w/ @fabricegrinda is also good

Versus AJ, Fabrice believes B2B startups "lock in your supply by offering biz a free SaaS tool to incorporate into their workflows & manage their teams”

Clearly, there is no formula for B2B marketplaces

bowerycap.com/blog/insights/…
8/ "Magical Growth Loops" by @lennysan is excellent [paywall]

He covers:

Supply driving demand
Demand driving supply
Demand driving demand
Supply driving supply

Again, bit more consumer focused but highlights likes of Faire showing relevance to B2B

lennysnewsletter.com/p/magical-grow…
9/ No thread on marketplaces would be complete without @bgurley's thinking

More consumer focused but here's some of the greatest hits IMO

10 factors to consider when evaluating a marketplace is 🔥
abovethecrowd.com/2012/11/13/all…
10/ For B2B marketplaces, a couple of pts in it are particularly relevant

#3 Where the technology offering greatly enhances the user experience
#9 Being part of the payment flow is superior to not being a part of the payment flow.
11/ We are seeing an incredible diversity in B2B marketplaces right now

And they're starting to attack more complex, highly variable "SKUs" and higher consideration B2B buying decisions Image
12/ This evolution in B2B marketplaces we're seeing from low variability SKUs to more highly variable SKUs is very analogous to what we've observed in consumer-focused marketplaces Image
13/ This by @jbreinlinger which is from 7 years ago on what type of marketplace are you is very enlightening

Given AOV and complexity of B2B purchases, it would seem most will be double commit but not always

acrowdedspace.com/post/957422754…
14/ Here is a graphic to explain and highlight the differences between a buyer vs supplier picks vs a double commit marketplace Image
15/ Another gem by @bgurley on @patrick_oshag podcast

He covers

- liquidity quality in a marketplace
- network effects and capturing those

And my favorite, why you want demand-side promiscuity in a marketplace

podcasts.apple.com/us/podcast/inv…
16/ Bowery metrics to evaluate both buy and sell side liquidity

"Liquidity is simply how easily and quickly buyers and sellers can find each other in the marketplace. A2-sided B2B marketplace should track both seller & buyer liquidity"

bowerycap.com/blog/insights/…
17/ A simple view on 2 dominant strategies to get to marketplace liquidity

Either by focusing on geography or category

Almost universal agreement that B2B marketplaces should start narrow, get liquidity and then expand

Niche down FTW! Image
18/ I've got ~30 more podcasts and articles to go through by the likes of @peteflint of @NFX, @jeff_jordan & @andrewchen of @a16z as well as more from likes of @jbreinlinger, @lennysan and @onecaseman so will continue to add to this

In the meantime, 2 things

First, a question Image
19/ The answer is (a) 10.1%

This per a 2018 study by the @InternetAssn Image
20/ If we assume covid accelerated that by 2-3x, it still means 70-80% of the economy remains offline

This spells massive opportunity for B2B marketplaces

More resources to be added

Any resources on B2B marketplaces you really love? Image
21/ this by @JamesCurrier @NFX is 💯

Learnings:

- in B2B mkts w/ brokers, help them do jobs better

- don’t fear managed marketplace to create liquidity

- network fx is goal but may embed a SaaS tool into the workflow of demand or supply-side

nfx.com/post/24-ways-b…

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More from @asanwal

Anand Sanwal Profile picture
Jan 5
🦄🔫🩸

A thread compiling my analyses on dead or injured unicorns Image
Convoy

logistics startup
valuation: $3.6B
raised: $1B

Olive AI

health automation / revenue cycle management
valuation: $4B
raised: $859M

status: dead

Read 8 tweets
Anand Sanwal Profile picture
Sep 17, 2023
Airtable is probably worth less than the total equity funding it has raised

I'm not talking about the $11.7B valuation it raised at in December 2021

I'm talking about it being worth less than the ~$1.4B+ in financing it has raised

Here's the math/data

Airtable is on track for $150M of ARR in 2023

Per @CBinsights, it was doing $115M in 2021

That's 14%'ish growth per annum

We'll come back to growth in a second

But for right now, that puts Airtable's forward price/revenue multiple at 78x ($11.7B valuation / $150M ARR)

Now, let's compare that price/revenue multiple with publicly traded peers in the broader project mgmt and collaboration space, specifically:

Monday: 12.63x
Asana: 6.61x
SmartSheet: 7.98x

Note: these are not forward multiples but trailing multiples for these companies. And so on a forward basis, the multiples are likely lower

But for the sake of simplicity and to give Airtable the benefit of the higher multiple, we'll use those comps

This would put Airtable's valuation in the neighborhood of

$991 million to $1.89B

Ouch.

That's a 84-92% valuation discount vs that $11.7B val in 2021

Here is where folks will typically argue that the above doesn't consider Airtable's growth

The logic is that Airtable is growing quicker than peers and hence will grow into that valuation and so should command a premium valuation multiple

And therein lies the problem

Once we layer in growth, the picture for Airtable gets worse

Here's YoY revenue growth for the comps

Monday: 68.5%
Asana: 44.6%
SmartSheet: 39.2%

As a reminder, Airtable's growth is ~14%

And here's their trailing revenues:

Monday: $624.8M
Asana: $606.5M
SmartSheet: $711.9M

Airtable: $150M (forward ARR)

So it's public peers are 4x to 5x larger in terms terms of revenue

And they're growing 2.5x to 4.5x faster

Add in a further discount for illiquidity given Airtable is private, the valuation is prob south of $991 million

Asana has the lowest price/revenue multiple of the bunch at 6.61x which is how we arrive at the $991M

Asana is also growing at almost 3x the rate of Airtable off revenue that is 4x larger

It's not hard to imagine that this brings down the multiple of Airtable to 3 to 5x which would equate to a valation of

$450M to $750M

That'd be a discount of 93-96% vs that Dec 2021 valuation

The company is cutting costs and repositioning for profitability which makes sense in this market but given the current likely valuation, all investors after the March 2018 Series B are likely underwater

They're also talking about a future IPO but getting back to anywhere close to that $11.7B valuation would require reigniting massive growth and making that price:revenue to growth ratio look more appealing

As always, if you believe any of my assumptions in the above are incorrect, please comment and I'll update the analysis if the additional context dramatically changes the results





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If you want to go deep on the space, we analyzed @airtable & peers as well as products in the space in Jan 2023

The numbers have evolved a bit but the storyline remains the same.

The massive Airtable equity funding tally was something that caught our eye then as well
If you're a fan of math, you might also like this analysis of Flexport's valuation



#factsoverfeelings
Read 5 tweets
Anand Sanwal Profile picture
May 6, 2023
Bragging about headcount was 1 of the most corrosive trends in startup land over the last many years

I was guilty of it too

Somehow larger growing headcount became a positive signal of success for companies

When in reality, it may more often than not be a negative signal
If you look at articles about unicorns, you'd rarely see revenue figures but you'd see founders/CEOs bragging about taking the team to 800 by year-end

Fundraising and headcount became 2 false proxies for success

But what are the real negatives of more headcount?
It may be symptomatic of or lead to ("may" is important here)

- indicate lack of focus
- belief that scale comes from ppl not systems
- a lack of focus on culture
- a non-performance driven culture
- execs motivated by empire-building
- excess complexity & slower velocity
Read 5 tweets
Anand Sanwal Profile picture
May 5, 2023
1/ Attn: If you're in corp dev or with a financial sponsor/PE

This is an amazing time to look for non-core assets within larger cos that they want/need to divest

Today, we saw Shopify unload 2 recent acquisitions to focus on the core

cbinsights.com/research/shopi… Image
2/ @Shopify sold @DeliverrInc to @flexport

Exactly 1 year ago, they bought it for $2.1B

They divested to Flexport for 13% of the co's equity

Based on Flexport's last valuation of $8B, that's a $1.04B valuation

That's a 50% haircut vs 1 year ago

app.cbinsights.com/profiles/c/pPe… Image
3/ Walmart is another example of a co divesting non-core assets

They just divested Bonobos at a loss

Before that they'd divested:

* ModCloth
* Shoes(dot)com
* Moosejaw
* Bare Necessities
* ELOQUII

cbinsights.com/research/walma…
Read 5 tweets
Anand Sanwal Profile picture
Apr 9, 2023
The intense drama about SVB has died down

But the implications on the pvt markets will be felt in coming weeks & months

They will be big for VCs, PE and startups

We’ll dig into what the data says here

First stop - Let’s dig into how debt was being used to prop up valuations
2/ In their Q1’23 update, SVB had a telling line

“Clients continue to opt for debt over raising equity at pressured valuations”

This actually explains quite a bit about private market valuations Image
3/ This was a perplexing pvt market phenomenon

That private market valuations were still holding up even though public market tech valuations had dropped dramatically

And the availability of this debt allowed startups to avoid taking “pressured valuations”
Read 20 tweets
Anand Sanwal Profile picture
Mar 3, 2023
We bootstrapped @cbinsights by first building a totally different business

It involved hedge funds, too big too fail banks and $100,000 PDFs

For nerds interested in data and information services businesses, you might enjoy this
First, some backstory

My 1st day of freedom from big co employment was Jan 1, 2008

In retrospect, this was comically bad timing given the Great Financial Crisis was abt to happen

But I had no idea
Initially, the idea was to do consulting abt a book I’d written on “Corporate Portfolio Management”

We’d lined up some interested clients and were in the contract process

Had $1M of consulting gigs lined up

Then the mkt tanked

The 1 whale we had was a too big too fail bank
Read 20 tweets

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