Posts from marketplaces

This video was made to celebrate Etsy’s year in 2007. That was the third year the company was in business and the second year we were invested. I think this does an incredible job of showing what the secret sauce was that made Etsy what it is.

The ability for anyone to get in their car and open up an app and get business has turned into an enormous market in the past five years. The two biggest categories are “ridesharing” (Uber, Lyft, Sidecar) and “delivery” (Postmates, Deliv, etc).

But there isn’t any reason why these two categories need to be separate. The most efficient utilization of the car and the driver’s time is to put people plus packages into the car at the same time.

And that is what our portfolio company Sidecar is announcing today. Sidecar has leveraged their shared rides technology (where two riders can share a trip and save a lot of money) to make it possible for a driver to pick up a passenger and then a package (or the other way around) and do the trip at the same time.

Sidecar is not doing the delivery piece direct to the consumer (like Postmates or UberFresh) but instead is a third party logistics provider to ecommerce companies that want to offer same day (or same hour) delivery to their customers at a price that is affordable.

Sidecar has been offering “people plus packages” in San Francisco for a while now and it has reached 10% of total ride volume. Their ecommerce partners are getting prices that are up to 80% below traditional same day delivery fees and they have cut delivery times in half. Today they are announcing that they are expanding their same day delivery service to all of their markets in the US.

Combining people plus packages is a win/win/win. Riders get even lower prices for their rides. Drivers make more money (up to 75% more in the San Francisco trial). And ecommerce companies get a less costly and faster way to get their products delivered same day (or even same hour).

Sidecar has a delivery API that allows you to integrate their driver network directly into your app so that your users can see the progress of their delivery in real time. If you are an ecommerce company that wants to leverage Sidecar’s network of drivers around the US, you can visit their Delivery page and learn more.

The innovation cycle in the “ridesharing” market is breathtaking. If you want to stay in the game you have to keep innovating and do that quickly. The result is new services, new markets, and new possibilities. And people plus packages is exactly that.

Last week Joel sent everyone at USV an email outlining his journey through and exploration of the Dark Web which ultimately resulted in a purchase of a pair of boots for his girlfriend. Jonathan replied to all with “this is the best thing I’ve read on the Internet this year” to which I replied “except it isn’t on the Internet. it should be”.

Joel got around to posting it to the Internet earlier this week. It is here.

If you haven’t used Tor, if you haven’t bought stuff from these anonymous marketplaces, if you haven’t laundered your bitcoin, if you haven’t arranged for an untraceable shipment, you might want to read how all of this goes down on the Dark Web.

As my partner Brad explained in a follow up post on the topic of the week thread on usv.com, we were so fascinated by Joel’s exploration of these Dark Web marketplaces because it feels like a trip into the future in some ways. Brad said:

The really interesting thing about Joel’s analysis is what it tells us about the future of open, transparent and legal markets on the Internet.

and

All this leaves me wondering not so much if the world will move toward decentralized, and disaggregated marketplaces, but when and why. Because the activities on the dark web are largely illegal, there is no other choice. For the rest of us, we are still generally willing to depend on a centralized platform for discovery, and identity management. For the moment, we are also still willing to accept the fees, the terms of service, and the bundling, these platforms enforce. My guess is the models pioneered on the dark web will come into the light first as leaner more efficient competitors to the first generation of peer economy companies, but the question I am still struggling with is where to look. Are there legal markets where the value of a decentralized market is greater so this transition will happen sooner, or will it happen first in any market where a first generation peer economy company goes too far by economically and politically disenfranchising the value creators at the edge of their network?

This conversation gives me some small desire to go on a shopping spree myself because its easier for me to understand something with my hands than my eyes. If and when I do, I’ll report back here, as always.

It’s fun friday. It’s also black friday. So I thought we would share with each other the best places to shop online.

For me, that’s an easy choice. I love shopping on Etsy. I like the fact that I’m buying directly from another person. I also love that the items you buy on Etsy are largely “one of a kind”.

I’m on the Board of Etsy and have been for eight years. USV owns a lot of the company. So I’m biased for sure, but if you haven’t tried shopping on Etsy, I’d encourage you to give it a try.

Where do you like to shop online?

The bitcoin blockchain is not just going to change the way money works on the Internet (and off). It’s going to change the way Internet applications are built. We have been working hard to understand how things are going to look in five to ten years and Joel Monegro has been providing much of that thought leadership inside our firm.

Since we are not into keeping our insights to ourselves, we have encouraged Joel to publish all of our work in this area (and every area). And today Joel has posted something that is really important and needs to be understood by every Internet/mobile entrepreneur, investor, developer, employee, and analyst. It is the blockchain stack and it looks like this.

The most important things to understand about this blockchain stack are the overlay networks (most of which are still emerging), and the shared data layer and the shared protocol layer. Please read Joel’s post which describes each of these in some detail.

What is most important about this emerging stack is, in Joel’s words,

This imposes a very interesting set of challenges for developers, entrepreneurs, and investors as so much of the value in the current Internet stack will be commoditized by this architecture.

Differentiation and defensibility and network effects will be much harder to obtain with this architecture. Most things will work like email. Take your keys from one app to another and all your data and relationships come with it.

Fun times are ahead. Time to put your seat belt on.

One of my favorite techniques to buying and selling transactional assets (stocks being the prime example) is to dollar cost average on the way in and the way out.

I am doing this right now with Bitcoin. I want to buy enough bitcoin so I can make charitable gifts and political donations with it and generally transact in it as much as possible. I’m buying 1.5 bitcoin every week in my Coinbase account. I have a reminder in my calendar and I buy some every week at the same time (I bought some this morning). I’ll keep doing this until I feel like stopping. A lot depends on how much I spend I guess. But the point is I would not be comfortable going out and buying a bunch of bitcoin in one transaction. There’s too much market risk in doing that. By purchasing an asset in small amounts over a long period of time you average into your price and I like doing that.

When a stock is distributed to me from USV, I generally sell a little bit and then put some away permanently. And then I slowly sell the remaining amount over a long period of time, generally three to five years. I generally like to sell once a quarter at the same time. I like the week after the earnings reports, when all the information is in the market and the market has digested it. But that’s not the important thing. The important thing is to sell roughly the same amount in a regular rhythm.

The point of averaging in and averaging out is you never get the top or the bottom, but you get the average. And the average is just fine with me.

In some ways, building a position in an early stage venture fund is the same thing. We buy a bit at the seed stage, a bit more at the Srs A stage, a bit more at the Srs B stage, and so on and so forth. In some of our best companies, we have bought stock in five to ten rounds. Some of those rounds will turn out to have been bargains. Some will turn out to have been overpriced. But on average, if you get to invest in ten rounds, you will build a very good position at a very good price.

It goes back to optimizing versus satisficing. If you want to find the optimal entry price or the optimal exit price, you will drive yourself crazy. I prefer to find an acceptable price. And I think that averaging in and averaging out does that for you.

This week our portfolio company Etsy introduced Etsy Reader, a dongle for your phone or tablet that allows Etsy sellers to sell on Etsy in real life.

The natural reaction to this would be “Etsy knocked off Square” and to some degree that would be correct. But Etsy Reader is not just a card reader. There is quite a bit of software behind the scenes that connects the checkout experience to the seller’s shop on Etsy and all of the seller tools that Etsy provides. The better way to think about this is that Etsy Reader extends a seller’s Etsy Store to the real world of craft fairs, flea markets, and other in person experiences.

Etsy Reader is about coming full circle at Etsy. In the early days, back in 2005 and 2006 when we first invested, Etsy was built seller by seller, at craft fairs, with street teams manning Etsy booths and evangelizing a new way to find customers and meet other like minded people. Etsy sellers still sell a lot at craft fairs and other face to face environments. Now with Etsy Reader, the shop can be online or offline with everything tied together.

I am excited to see Etsy Reader come to market. It’s been a dream for a while now and props to Camilla and her team for getting it out the door. Well done.

My partner Albert penned a post yesterday (on and because of labor day) talking about the changing nature of work (more freelancers working on marketplace platforms) and suggested some interesting ideas. You can read his post here.

The two really interesting and related ideas are:

– A legal right for workers on these platforms to have real time (API based) access to the information about their work, pricing, supply and demand in the marketplace, etc, etc

– The development of algorithms (and coops and communities using these algorithms) that will allow these freelance workers to extract the best rates for their work

I believe that in the long run these platforms may/will be replaced by blockchain based networks of labor where there is no platform middleman and there would be no need for a legal right to an API because all the data would be public by default.

But who knows how long it will take for that transformation to happen? In the meantime, Albert’s ideas are really good and I would encourage people who are thinking about old school based regulation of these platforms to think instead of a new school regulatory approach along the lines of what Albert has suggested.

There is only one company to date that the Gotham Gal has made an angel investment and subsequently USV has invested in and that is Kitchensurfing. I was not involved in either investment decision. The Gotham Gal made the angel investment herself. And because I was conflicted, by virtue of her investment, I recused myself from USV’s investment decision. So I don’t know as much about this company as many others in the USV portfolio.

But I know this much, it’s a fantastic service. Last night we had a dozen people at our beach house. The Gotham Gal is a great cook but she wasn’t really down with the idea of cooking and cleaning up for that large of a group. So we went with Kitchensurfing.

We wanted to eat healthy, lots of farm fresh foods, cooked without any heavy sauces or spices. We selected Chef Warren and he came through for us. He picked up some chicken at the local chicken farm. And he brought all sorts of fresh vegetables.

Our meal wasn’t one of the standard menus on his Kitchensurfing page. But it was pretty close in terms of price and selection to this one. We obviously customized it.

He grilled everything up to perfection, served it buffet style, and cleaned up everything and left the kitchen and grill as he found it.

I tweeted this out as dinner was served:

Great healthy farm fresh dinner from @kitchensurfing and Chef Warren (https://t.co/XUKyEKYtmn) tonight pic.twitter.com/57IZ4VtvPw

— Fred Wilson (@fredwilson) August 10, 2014

If you find yourself in a similar situation, with a house full of guests, without a desire to cook and clean, and are willing to spend what you’d spend if you went out to eat, try Kitchensurfing. It’s great.