🚨 A16Z MARKETPLACE 100: 2021 🚨

Our list of the largest & fastest-growing consumer marketplace startups (via 2nd Measure)

- companies/categories that dominated 2020
- new companies & emerging trends
- biggest movers
- last year's surprising impact

a16z.com/marketplace-10…

1/X The biggest marketplace of 2020 was **really** big

The top 5 companies accounted for over 80% of observed GMV.

Guess who was over 70% of it?? 🤯

2/x

Social + 🍔 = 🤩
Social + 💵 = 🤩
Social + 💪🏽 = 🤩
Social + 🎶 = 🤩
Social + 🎮 = 🤩
Social + 🛍 = 🤩
Social + 🏘 = 🤩
Social + __ = 🤩

The best product in a category is one with real community & social interaction

I call them social+ products

More👇
a16z.com/2020/12/07/soc… 2/ Any product that is intrinsically social & community-driven has an asymmetric advantage over every competitor.

Call it the Law of Social+ Preeminence.

You can see this play out from gaming to shopping to music to fitness to money to media.

Latest essay w/ @jeff_jordan on Great Re-Hiring & Unbundling LinkedIn

"Deep" Jobs Platforms & How to Build Them

In wake of COVID, deep jobs platforms will play a key role in getting people back to work as soon as possible in the best job possible

👇

a16z.com/2020/09/23/dee… "Deep" jobs platforms go beyond just job matching or an online resume.

They layer in new features -- from training to vetting to community to workflow tools to financial services -- that make it easier for candidates and companies to find the best opportunities.

Good post by @sarahdrinkwater on the misconceptions of community building. Worth a read.

To re-phrase Jeff Bezos: their misunderstandings are your opportunity

Key points for me 👇

medium.com/@SarahDrinkwat… "Best communities tend to bring together people around a shared identity, practice or belief."

💯💯💯 This is why community is so closely related to unbundling FB/Reddit and the verticalization of social networks

The impact of COVID-19 on labor markets is both stunning and heartbreaking.

Coming out of this, we're going to need new ways to help people find work. 16M+ new unemployment claims in the last 3 weeks. That's a 30 sigma event. via @nytimes

0/ Not all marketplaces are created equal … but they can all be successful 

I deconstructed the Marketplace 100 by order frequency and order value👇

Turns out there is more than one formula for building a successful marketplace 

a16z.com/2020/02/20/mar… 1/ 4 segments in top 100 marketplaces:

Holy Grails: ⬆️ frequency, ⬆️ order value @amazon
Everyday Necessities: ⬆️ frequency, ⬇️ order value @snackpass_
Occasional Splurges: ⬇️ frequency, ⬆️ order value @breather @Airbnb
Fits and Starts: ⬇️ frequency, ⬇️ order value @SpotHero

We react against unintended consequences & blind spots of previous generations. Nothing catalyzes energy quite like it. It’s core to product/zeitgeist thesis

It’s why generational companies built in 2020’s will be reaction against those from 2010’s

Theory on 2010s vs 2020s👇 2/ If the 2010s were about the demand side, the 2020s will be about the supply side.

Making it easier for people to uplevel skills and find great jobs. Differentiating the supply rather than commoditizing it.

1/ Fascinating to hear all the things that seem to have PZF.

Interesting snapshot of what people care about as we head into the 2020s.

Top PZF candidates from my conversations:
- ISAs
- Future of social / Community-as-a-service
- *Real* jobs and professional networks
- Sleep 2/ ISAs: This is the biggest one I heard. It has held PZF for while now, but clearly it’s still really resonating. Motivated by insane student debt crisis + anger at a lot of institutions that aren’t serving their students well. Energy seems to be congregating around ISAs.

Big, under-appreciated factor in startup success:

what I call product zeitgeist fit (PZF)

It’s when the product you’re building is resonating with the mood of the times.

Presentation from a16z summit (and thread) 👇

a16z.com/2019/12/09/pro… Most startups don’t die because they don’t get their tech to work or the competition out executes them.

They fail to launch because of indifference. Nobody cares. Not potential customers, employees, investors or the media.

It death by a thousand shrugs 🤷‍♂️🤷‍♀️

Broad horizontal tech platforms eventually all get unbundled.

Knowing which categories are ripe for unbundling is like a cheat code for startup success.

New post with @jeff_jordan on what’s happening now and the next great unbundling.

tl;dr 👇

a16z.com/2019/09/11/pla… ... but , as always, first please note that none of the following should be taken as investment advice. See a16z.com/disclosures for more info...

1/ Wrote a post about how when you're chasing network effects, hidden networks are hidden advantages.

You get to start the race before anyone knows it's happening.

Does your company have a hidden network?

The four types of hidden networks👇 2/ Slow Networks usually have long product loops or an infrequent cadence. It takes years for the network effects to show, but when they do they're 💯

1/ If I were starting another company today I’d probably build something around social networks.

I think we’re at an inflection point with the legacy platforms, but still lots of open space for upstarts to figure out what’s next.

Rationale for why and thoughts on how 👇 2/ ...but first, please note that none of the following should be taken as investment advice. see a16z.com/disclosures for more info. OK, back to the thread...

1/ As founder I prioritized meeting investors who would jam with me on product. I thought they "got us." I wanted to work with them for 10+ years.

I was totally wrong.

Should have prioritized ones that asked the frustrating, hard, uncomfortable questions.

Here's why 👇 2/ When I'd meet someone who grokked Frank (our startup) I'd walk out super energized. I thought we'd found our sympatico partners! I imagined every board meeting, investor update and phone call being like that.

So @pmarca was a few mins late to a meeting with a founder this morning. Rules are rules. Who should we donate his fine to? @pmarca Lots of great ideas. @humanutility and @GirlsWhoCode were the runaway winners so $$$ was donated to both.

1/ For top CPG categories

1923-1983: 20/25 brands held #1 position in their category the *entire* time

1983-Present: Only 4/25 kept the #1 position

Implication?

Brand has never been more valuable for upstarts. Never been less valuable for incumbents.

Thread 👇 2/ Contrary to popular opinion, I think focusing on brand early in the life of your company is valuable.

Defining what your brand stands for and, these days, *who it stands with* is an easy way to cut through the noise and attract users who will spread the word.

Are network effects dead?

No - but they’re more dynamic than ever.

New post with @ljin18 on how to think about network effects as the pace of innovation continues to accelerate.

tl:dl thread 👇

a16z.com/2018/12/13/net… Three key questions that can help founders understand, predict and manage their network effects in today's high paced environment:

1/ Theory: esports is to traditional sports as ecommerce is to brick & mortar retail.

3 similarities. 1 difference.

Thread 👇 2/ Similarity 1: In ecommerce and esports, some people overvalue(d) the in-person experience.

Customer acquisition costs are tricky.

Prioritize them too early and you limit how great a product you can build.

Prioritize them too late and limit how great a business you can build. Obviously the best ones have all organic growth and never have to focus on it. You probably will. Few are that good / lucky.

1/ Been thinking about Amazon recently. One of its big advantages is psychological. Lots of people are simply afraid to compete with them. It fuels a fear flywheel that clears out the competition. I think the brave and crafty will use it as an opportunity. Judo-amazonomics? 2/ When Amazon enters a space (or even glances at it), people run for the sidelines. Founders pivot, investors stall, established players spin up “innovation” teams to deal with the looming threat.

1/ Hypothesis: early test for founders on whether you’re building something interesting is if people are trying to affiliate with your project. Call it the t-shirt theory 2/ If people are excited to wear a t-shirt with your logo, you’re building something that resonates. Keep going

1/ If you’re a founder you’ve probably heard someone say “oh, I’ve seen this idea before - it didn’t work” or “isn’t this just like that other thing that person/company X tried?” 2/ As a founder, I heard this dozens of times. It’s likely to come from investors, but you hear it from other founders, potential employees, advisors, customers, even family members. Like it or not, pattern matching is strong.