Two-Sided, the podcast about building an online marketplace business. Two-sided of course, because we’ll discuss Demand & Supply, but also the good side and the bad side, the easy stuff and the hard stuff, and how it looks from the outside versus what is really going on on the inside of an online marketplace.
In this series, we sit down with marketplace entrepreneurs, investors and other brilliant minds who work with online marketplaces and two-sided platforms every single day.
We will talk about starting, building, growing and scaling, and every stage in between. In each episode, we will do our best to uncover insights and wisdom you won’t find anywhere else.
If you are into online marketplace businesses, you will be into this podcast.
We see more and more that that we see marketplaces perhaps don't want to to have a take rate on the on the transaction or just creating this volume and and the monetization, is or via the finance or via advertisements. So there's a real movement going on that, the marketplace shouldn't necessarily, be a transactional one, from the first phase.
Bas Rieter:Welcome to TwoSided, the marketplace podcast brought to you by Sharetribe.
Sjoerd Handgraaf:Hello, and welcome. I am Stuart, CMO at Sharetribe, and I am your host. In this episode, we dive into the world of b to b marketplaces with not one, but two guests. I'm joined today by Laurence Groenedijk and Bas Ritter from DFF. DFF uses hand for Dutch Founders Fund, and surprise, surprise, today's guests are also two of my fellow Dutchmen.
Sjoerd Handgraaf:Laurens and Bas both have a lot of experience also as founders, especially Laurens. He is the cofounder of Just Eat, one of Europe's biggest food delivery marketplaces, and Treatwell, one of Europe's biggest platforms for beauty and hair. As a font, DFF has a strong emphasis on b two b, and that's why we talk a lot about that. Among other things, we discussed the rise of re commerce and the role that technology plays there in creating trust and transparency within b two b marketplaces. We also discussed a familiar topic for those who have listened to other episodes as well, namely why focusing on niche markets can be the key to achieving fast growth in b two b spaces, especially for those many parts in industries that are still mostly non digital.
Sjoerd Handgraaf:Also, another really nice highlight is about a shift in monetization strategies. So how certain b two b marketplace are moving beyond traditional transaction fees to more hybrid models and exploring advertising and SaaS models. As you'll hear, this hangs together strongly with the need in certain industries for vertical SaaS and even vertical SaaS sometimes being the stepping stone towards building a marketplace. So please listen to this episode to hear how the people at DFF are looking at the world of marketplaces, what they see coming, and especially on how aspiring founders can capture market share in under digitized industries. Please enjoy my conversation with and Basarita from DFF.
Sjoerd Handgraaf:Hi, Laurens. Hi, boss. Welcome to the podcast.
Bas Rieter:Hi. Thanks for having us.
Sjoerd Handgraaf:Yeah. Thanks for thanks for taking the time to being here. Really great that you could both make it. I've heard a lot about DFFs. I think you guys been around for a couple of years.
Sjoerd Handgraaf:But before we go into all things DFF and what DFF means in the marketplace world, could you quickly introduce yourself? Maybe we can start with Laurence.
Laurens Groenendijk:Yes. Hi, Stuart. I'm Laurence, one of the founders, of, the Dutch Founders Fund. I actually never worked for a Buff. So back in the days, almost twenty five years ago, I started my career as an entrepreneur and basically started a company called Hapritz.
Laurens Groenendijk:Hapritz was a portal to order food online in The Netherlands, Germany, and in The UK. And, eventually, we merged the company together with Just Eat in 02/2004, on which we went to The UK and and eventually, went IPO in 02/2014. And, I was not operation involved up till 2012, and then my wife said, there is no Just Eat for hairdressers. I said, hey. That's a nice idea.
Laurens Groenendijk:So together with a bunch of friends, I I started three twelve, of course, big marketplace for beauty and hair, services, doing a 2 and a half billion GFE right now. We saw the company already after eighteen months going live to a Japanese firm, and then I started my my marketplace experience to do that in another vertical, which was fashioned and, build it Minto, big fashion retail marketplace, sold it one to the bestseller group. And so, basically, that was, let's say, my career as a marketplace entrepreneur. And then Yeah. I wanted to do something out of my comfort zone and build a space company called Hyber, but to be quite frankly, it was a little bit too much out of my comfort zone to build.
Laurens Groenendijk:Okay. No. We'll telecommunication network in space with new technology. And that was also the start when I, together with my partners here at DFS, Patrick Keshmark from Funk and, Bas Bierns, founder of WeTransfer, we sit down together. Okay.
Laurens Groenendijk:Let's let's go from more the operational side to the investor side.
Sjoerd Handgraaf:Okay. Thanks. Thanks. That is a lot of, very relevant marketplace experience. Great.
Sjoerd Handgraaf:How about you, Bas?
Bas Rieter:My name is Bas. I'm one of the investors at, DFF. We're using the names Dutch Founders Fund and DFF interchangeably because since a week or so, we've officially rebranded into DFF Ventures. Also, you know, sometimes there was some misconception whether we would only invest in The Netherlands or Heathrow. So this name captures a bit of our international footprint better.
Bas Rieter:Prior to DFF, I have been at both sides of the table as a founder running my own company, selling trees and plants for indoors, as well as an investor by running and setting up the very first student led venture capital fund of, of The Netherlands. And I also had a brief stint at LeapFunder, which is like an angel investor thing platform. So for my,
Sjoerd Handgraaf:you know,
Bas Rieter:modest 20 years old that I've been walking around here, I've always been in and around startups, working and investing in marketplaces and vertical sales for the past four years here at DFF.
Sjoerd Handgraaf:Okay. Thanks. Yeah. Thank you both for the intro. I think that's all the way because it's, you know, yesterday, for example I mean, I'm going to date this episode, but earlier I talked to, Jose Marin from FJ Labs, and, he was also you know, him and and Fabrice have also started, I don't know, three or five somewhere between three and five, like, marketplace type companies.
Sjoerd Handgraaf:And you can see that it really helps, as opposed to maybe other more general funds to understand that this is this is a slightly different piece, and maybe there's a good lead way into the, into the question. Like, could you tell a little bit about, DFF? Are there any particular verticals or models? You know, of course, micro based model, but anything else that you're focusing on?
Laurens Groenendijk:Yes. Yes. Definitely. Of course, my background is more on a b to c, but within DFF, we focus more on on the on the b to b marketplace. And and, particularly, what we would like is a b to b marketplaces in that will solve, let's say, real real world industries problems.
Laurens Groenendijk:We like this legacy industries, helping them going online, most of the time doing that in marketplace. Yeah. Yeah. I think your tagline is,
Sjoerd Handgraaf:was it investing in under digitized assets? Yeah. Cool. Yeah. Not maybe one great for word-of-mouth, but Yeah.
Sjoerd Handgraaf:Yeah. The the the Yeah.
Laurens Groenendijk:So this was where Yeah.
Sjoerd Handgraaf:And I think Yeah. Yeah. And I think, like, one maybe good example company, maybe you could tell the earliest one that I liked is Von Wood. Is that is that would that be a good example of of one of that feature?
Laurens Groenendijk:Definitely. And that's basically, that company was built at, let's say, when we look in the market, different industries where there's kind of a homo gene product In that sense, this is timber wood. Of course, there's a lot of different sizes and quality, but, where the supply side is extremely fragmented. So
Sjoerd Handgraaf:a lot
Laurens Groenendijk:of, let's say, sawmills, in The Nordics, Eastern Europe. Yeah. And, of course, the problem on the buy sides where you can really help the demand getting the better prices where you skip the middleman.
Sjoerd Handgraaf:Yeah. What what I think is an interesting question always, because am I correct? Do I profile you're correct that you're mostly pre seed seed stage fund?
Laurens Groenendijk:Yes. You did that. And sometimes we also like the concept phase. So for concept pre seed seeds.
Sjoerd Handgraaf:Okay. Yeah. But that's even better for my question because of It's easy to imagine, you know, if you're a series a a investor, like, you find something that works. So, you know, you have clear data, it looks like it's going up. But in your case, like, if you especially, like, maybe concept stays even, like, do you have a process by which you you assess a deal or, like, a company coming in?
Sjoerd Handgraaf:Like, what what more thinking from the from the point of, you know, the founders who listen to this, like, what are pointers that they should should think about when they think about their business? Like
Laurens Groenendijk:Yeah. So especially when, when we talk about b two b is what we look at is, of course, is how big is the market, but, again, here, how what type of product is it? So is it is it, let's say, like, shoot fix where you have a marketplace, but the goods are so heavy that you can only, for a good price, transported only 50 miles, for from a from a kind of supplier, or can you really build a global marketplace, from day one? We prefer, let's say, the global marketplace instead of or at least a European or a nationwide marketplace because it's going a little bit faster instead of, let's say, building this hyperlocal marketplaces, that will take a while. Of course, the first of first of all, we look at the margins and the chain, then we really, want to see how the traders or brokers in the markets operate because, order will seal.
Laurens Groenendijk:So most of the time Mhmm. This between trades, there is still this middleman. So how many steps between the buyer and eventually seller are there? How much Yeah. Of these steps can we disrupt?
Laurens Groenendijk:Basically, what we also learned within DFF, how fast can we get this to market? Is it really the question that you really want to build a full fledged website marketplace platform from day one, or or can we already start trading tomorrow? And Okay. From there on with these learnings, build something. So most of the time, the marketplace fund we see come from the industry.
Laurens Groenendijk:So they have this background in the industry. So they have all these Rolodex in place in order to fulfill a trade, and that's more the concept phase that we invest. Are they able to Yeah. To do this transaction without any digitization? And from there on, we can, of course, build a full fledged marketplace with all the all the tools on top of it to to make it even more attractive.
Bas Rieter:If I can just add on that, like, the good thing about a marketplace, especially in the beginning, is that quite often the very first, you know, value that you provide is bringing together supply and demand. Right? And you don't really need, like, a flashy website or a platform to do that. Most often when founders come knocking on our door, they've already done some trades or matchmaking manually, albeit via, like, an Excel sheets, an Airtable, or, you know, in HomeCooks, for instance, one of our portfolio companies. George actually started and Home Cooks morphed from a Facebook group where quite literally people who were selling, I don't know, their genuine jerk chicken towards their neighbor in a Facebook group that he started.
Bas Rieter:So he really seized that opportunity. And together with us, he actually built a Facebook group in a full fledged marketplace where he could also leverage, you know, cross border network effects, so to speak, that someone who made a jerk chicken in London could now actually sell their jerk chicken in Glasgow and not necessarily be restrained in a specific geographical area.
Sjoerd Handgraaf:Yeah. That's super interesting because I think those are my favorite. So in previous seasons of of, Two sided, we've I've interviewed founders. And, I think almost all of them have a story like this. Right?
Sjoerd Handgraaf:Because we you know, I won't advertise ShareDrop all the time, but, basically, we make, like, a marketplace back end as a service. So you can really easily build a full basically, a full fledged marketplace website with us. But then there is still, often we hear customers say, but, hey. I need, you know, feature x, y, or z. Otherwise, it wouldn't work.
Sjoerd Handgraaf:Or I need this thing. And and I love hearing stories, like, from you as well and from founders as well that, like, that often it's just a website, and on the back end, there's someone with five spreadsheets and just, like, you know, having maybe some search, whatever, virtual local formula to match things. I'm really happy to hear, also from your side that that's often, like, a good a good chapter because I think that that is indeed
Laurens Groenendijk:It's a behind the scenes solution
Sjoerd Handgraaf:you can offer. Yeah. Yeah. Exactly. Because I think, like, people sometimes forget that the, you know, I I believe the marketplace, like, it's not the the platform is not the product.
Sjoerd Handgraaf:Like, the product, like you said, is is the liquidity. It's bringing the the both sides together.
Laurens Groenendijk:Exactly. Exactly.
Sjoerd Handgraaf:Do you maybe have another, like, recent investment that you can talk about that you're that you're excited about?
Laurens Groenendijk:We are looking at the at the company right now that's basically, when most of our marketplace are really transactional. This is basically because it's in the health care space. It's more it's really the matchmaking. This interesting model where we, where we skip the transaction because that's just too complex in this health care industry. But in order to do so, to really go for more a advertising model.
Laurens Groenendijk:So and that's we see more and more that that we see marketplaces perhaps don't want to to have a take rate on the on the transaction or just creating this volume and and the monetization, is or via the finance or via advertisements. So there's a real movement going on that, as a marketplace shouldn't necessarily, be a transactional one, from the first phase.
Sjoerd Handgraaf:Oh, that's interesting. Okay. Can we can we go down that road a little bit? Because I think that's an interesting observation because that is also something that I've been wondering about. Right?
Sjoerd Handgraaf:Because, I think sort of traditionally, people look at the history of marketplaces like, you know, classified, like, no transaction involvement, then basic transaction involvement, then multilayer involvement. And if I'm interpreting you right, and please correct me if I'm I don't wanna miss misquote you. But but you're saying that you see a sort of movement of actually marketplaces, at least in your segment, like, moving a little bit out of the transaction and sometimes finding
Laurens Groenendijk:the Definitely.
Sjoerd Handgraaf:Yeah.
Laurens Groenendijk:And and it's then it's more to create volume in a certain market. And when you hit the transaction or in the trades itself is not so much margin left or it's too commoditized, so there's no margin.
Sjoerd Handgraaf:Mhmm.
Laurens Groenendijk:And there you see, some quite interesting models, popping up, where they just say, okay. Let's create this liquidity, and we take it from there. And most of the time, we can monetize on the the the advertisements. And I think we have this great upgrade, example buzz, in the in The US with, with this, Vetted.
Sjoerd Handgraaf:Yeah. Could you tell a little about that?
Bas Rieter:Vetgolf, you mean the the Veterinarian one. Yeah. There, like, what you see is once you've really captured critical math math, and I think VetCov sits on, like, an 80% market share. They are, like, a a procurement platform for veterinarians. They monetize, like, the line share of that monetization comes from ads, if I'm not mistaken.
Bas Rieter:So they don't
Sjoerd Handgraaf:So ads as how? Could you explain? So is there, like, some sort of featured listings? Should I think about that?
Laurens Groenendijk:Or how external. More external from from pharma from pharma, selling or try to sell, this type of, vitamins for the dog or or other medical equipments, that can be applied to to their target audience.
Sjoerd Handgraaf:So they offer some sort of promotional services
Laurens Groenendijk:for you. Definitely. Wow. Because they
Sjoerd Handgraaf:Yeah. Yeah. That is interesting. Maybe. Ah, that's interesting.
Sjoerd Handgraaf:I haven't heard about that.
Bas Rieter:Because maybe what is also, like, good to talk about is that at DFF, you know, the business model that we know and, you know, like to work with the most is marketplaces, but we always say that niche SaaS solutions or vertical SaaS, as many VCs dub it, is the brother of many marketplaces. Right? Especially in the beginning, it's you need to solve a problem for both sides, both the demand and both for supply. So the marketplace business model is quite hard to get going. So we also noticed that many founders actually start off by aggregating or capturing either the supply side or the demand side with the SaaS proposition.
Bas Rieter:And then once you've built up enough clinical mass, then it becomes much more interesting to layer a transactional component on top. I mean, like, a good example is Connect, which we, you know, we we we backed a couple of years ago, and now we're recently closed around with HV Capital, I think 10,000,000. They really started off as a vertical SaaS for lenders. So, they included, you know, CRM payments, KYC, you know, investor reporting modules to really capture, you know, the lender sides. But then, as one can imagine, if you have a SaaS tool that, you know, neatly has captured, you know, all of the the lenders in Europe and abroad, then it becomes more interesting for borrowers to also plug into the platform.
Bas Rieter:Right? So then you can also not only, you know, monetize on these features that I just, you know, explains, but also, you know, capture and monetize on the actual transaction. So, you know, we, that's also what we do in our vertical SaaS or vertical AI now. And marketplaces is are really our two biggest areas of, of it.
Laurens Groenendijk:Yeah. And and and what Bas is saying, for example, back in the days, we were, let's say, focused on this marketplace, quitting, getting this demand up running, and we found out that, we can bring all these orders to the to the hairdresser, but they actually can't fulfill it because, we did it at the allocation on the time slots. So, basically Yeah. That we had to pivot to build kind of a scheduling to, for for for for so it's most it's also very necessary to get, kind of a SaaS proposition first in the supply in order to make the demand, marketplace work, for them. By now, quite common approach, I guess, I come for the tool, stay for the network,
Sjoerd Handgraaf:know them usually. Yeah.
Laurens Groenendijk:And perhaps what is really nice what we see right now, especially the we see a lot of inbound from this recommerce marketplaces out there. And what we see is in order to get trusted so marketplace is a lot of about creating trust. It should be transparent and should be traceable. Right now, with all these, let's say, recommerce products out there with, also in the b two b, so we see, we are invested in a company called Metaco, scrap metal marketplace. We see it in, let's say, secondhand iPhone business to b two b trades.
Laurens Groenendijk:And what we see is common that you see a little more hardware is implemented into the trades. Okay. That's more from a inspection and grading perspective. So Yeah. In order to get to a kind of a trade, you should, let's say, inspect it or grade it in order to get to the right price.
Laurens Groenendijk:So the buyer Yeah. Actually have trust in that he buys it at the right price Yeah. And the right quality.
Sjoerd Handgraaf:Yeah. That is an interesting layer, actually. Like, I've talked maybe last year, I talked to, a really interesting marketplace called oh, I hope I say this right. Shortboxed. Their marketplace for comics.
Sjoerd Handgraaf:And we're also, like, you know, like, for any kind of these collectibles that it needs you need some neutral judge of, like, what is the quality. Right? Like, it's it's not it's like you said, like, you can't you can't just trust the other person buying it. So so I believe they also provided a service like that where they would be like a sort of, like I think they first started with, like, an existing sort of grading service that people were familiar with, but I think over time, if I'm not mistaken, they started building their own service so that you have indeed, like, as a unified measure. Like, okay.
Sjoerd Handgraaf:This is quality. You can trust it because this is you know, we're we're objective in this.
Laurens Groenendijk:But I see also, from that perspective, I see nice opportunity to create a marketplace of, let's say, creator economy, doing grading for different type of verticals.
Sjoerd Handgraaf:Yeah. Yeah. Yeah. Yeah. Absolutely.
Sjoerd Handgraaf:Yeah. Yeah. Yeah. Because also the nice thing, like, once you see a marketplace somewhere, you start seeing Yeah. Yeah.
Sjoerd Handgraaf:Yeah. Yeah. Different things.
Bas Rieter:So the atmosphere to, like, just now, like, layering. Right? That's also the exercise that we quite often do together with the founders. Right? Because there are different the question is always what margin pool are you chasing and how can you expand your margin pool?
Bas Rieter:Right? So it's really like an exercise. Okay. You know, at the very first and at the very, you beginning, you can take, let's say, one to 2% take rates by simply bringing together supply and demand. And then, there are different features.
Bas Rieter:We talked about adding financial services, you know, SaaS that often, you know, includes compliance or KYC modules. But just what Lauren said, I think adding grading or inspection facilities, so really hardware, is something that we have not seen around that often actually. So whether it is for Yeah. Like a Metacol that actually allows, the buy sides, to get a much better, insights in the quality of, let's say, the aluminum or whether it is for Northletter or Get Mobile, two of our other portfolio companies, that has built their own inspection infrastructure that allows them to very granularly, show the quality of a used mobile cell phone. You can only imagine what that does to not just the perceived value, but the actual underlying value of the goods that you're transacting.
Bas Rieter:Right?
Sjoerd Handgraaf:Yeah. Especially in it, like, when you think about this whole section of, like like, what Lauren said, like, re commerce, whether that is actually, I've I've I've only thought of that term previously sort of in terms of fashion and and and those kind of things. But but indeed, like, also industrial or, like like, semi industrial things. I you yeah. Yeah.
Sjoerd Handgraaf:Because indeed, like, I think a lot of the like, I think in the price that you usually pay for secondhand, you sort of underpay because you know there is a risk. Like, you you know that once in every 20 buys you're going to.
Bas Rieter:Exactly.
Sjoerd Handgraaf:Oh, yeah. Something that that's not great. And and so, yeah, that you basically you calculate enterprise. Well, if you can take that away, suddenly you can take a lot more out of that transaction. And that's I never thought about that.
Sjoerd Handgraaf:This is great. I love doing this podcast. Yeah. Okay. So we've already sort of uncovered two, like, interesting models.
Sjoerd Handgraaf:What what what Lano said that actually marketplace is moving moving away from the transaction or looking at different ways of monetizing, and now, like, this this grading model. Have you seen other trends, like, maybe even on, for example, customer acquisition side or other things? You mentioned already a little bit like AI. So so we've discussed that you started looking at SaaS, right, like, as a sort of complimentary or potentially morphing into marketplace. What have you seen AI unlock in this, like, supply demand game?
Sjoerd Handgraaf:Like, how does AI influence your your investment strategy and maybe maybe if there's a possibility to link that to marketplaces?
Laurens Groenendijk:So we have, one company that Femstar that's already back in the day started with is, let's say, getting AI, in place, to aggregate, demands. And that was, let's say, four or five years ago, it was quite new. And now we see, of course Yeah. AI moving also in the into the marketplace. For us, as a b to b marketplace, and that is from a front perspective, we we we call it internally we we have our hedge because we are providing and supporting this real economy, trades.
Laurens Groenendijk:So we're not so exposed. But, of course, we see we see a lot, on, let's say, getting, the the listings, faster, better, and better conversion on on the marketplace, especially the b two b part feels support. Because, when the Rolodex is coming to an end, of course, you have to go out. And but we saw also see that there's a big risk. And we make a little bit, strange advice to our to our portfolio companies because I think in a couple of years from now, there will become a tsunami of all these application support tools, sales support tools
Sjoerd Handgraaf:Mhmm.
Laurens Groenendijk:That actually, I think we'll get into to a moment that when you really want to build a proper b two b marketplace, you have to get the physical sales in place. Yeah. Yeah. So I think that is getting out of the the your comfort zone behind your screen and go to the streets. I think that will be more and more when when you can do it.
Laurens Groenendijk:It will look simple, more SME focused, then you can do it, of course, with with enterprise. It will be a bit tougher. But so it's more still support, more the hygiene factors.
Sjoerd Handgraaf:Yeah. It's not
Laurens Groenendijk:right now, we don't see it in the real trade yet other than, let's say, the AI hardware technology, inspection technology. Yeah. But we don't see it, let's say, hardcore in the trades.
Sjoerd Handgraaf:Because it it's funny that Yeah.
Bas Rieter:What Lauren said. Right? We really like, you know, solutions for non digital industries. And that poses a lot of opportunities, but also challenges. Generally speaking, VCs have a tendency to like and prefer tools that are built for, like, you know, a digital first audience that you can reach via email or cold calling, you name it.
Bas Rieter:Sometimes and most often, you know, whether it's vertical SaaS or a marketplace that operates in, like, a very under digitized domain, that also poses challenges for your in issue outreach. Right? For instance, we did, it's
Sjoerd Handgraaf:still in
Bas Rieter:stealth, but we did, we made an investment in a vertical SaaS for the maintenance industry. And as you can imagine, like, these guys are quite often busy and, you know, not sitting behind their computer. Right? So that also necessitates a different approach. You cannot just simply knock on their virtual door.
Bas Rieter:No. You actually have to get out there Yeah. You know, and do field sales Yeah. Which nowadays seems, you know, almost like a dirty word to some degree because people have been, you know, are used to building these automated drip campaigns, retargeting campaigns and whatnot. But really, you know, founders are sometimes underestimating the the impact and the effect that going out there in the field can actually have, you know, you know, what type of yeah.
Bas Rieter:Exactly.
Sjoerd Handgraaf:Yeah. And, of course, actually, what you mentioned is also a good point that, like, of course, for AI to be effective in any kind of field, you need stuff to be Exactly. First of all. Right? Like the you know, like like the GPT is not going to go door to door to figure this out.
Sjoerd Handgraaf:So, like, it is kind of a blocker. And and I guess at the same time, that's also maybe an additional reason for that opportunity because you if you are the first one to digitize that, you have this mode. Right? Like, this is not publicly available information for any sort of LLM to scrap then.
Bas Rieter:And it's definitely not easy. Right? Because otherwise, everyone would do it and especially, like, the complexities in the sales. But quite often also, who are you disrupting? Right?
Bas Rieter:I mean, we are not investing in any other DevOp tools because the status quo is already quite efficient. In more under digitized industries, however, like the status quo is, like, very clunky and outdated ERP system, or in the worst cases, like pen and paper based workflows. Right? So just the efficiency gains by digitizing that first is already quite substantial. But then again Massive.
Bas Rieter:Complexity remains, okay, how do you really move the needle and really change, you know, or induce a behavioral change? Because quite often these people are like, if it works, it works. Why should I bother, you know, optimizing this in the first place?
Sjoerd Handgraaf:Yeah. That's true. Yeah. Yeah. I talked in, I think, in the first season two months, it's still one of my favorite examples, this marketplace called Crexi.
Sjoerd Handgraaf:They do, a marketplace for commercial real estate and where it was somewhere in the middle. It was, like, partly digital, but it mostly involves still, like, emailing, spreadsheets and stuff like that and emailing the same spreadsheet every Friday because everybody was waiting for this report.
Laurens Groenendijk:And I
Sjoerd Handgraaf:think what they did was, like, somehow making the next step, but but indeed, I think they they sort of chose not to induce this behavior, but just make their product strong enough that it was almost a no brainer to change the behavior because you just save four hours with one one button. Yeah. Alright. This is really, really insightful. You're looking at many deals every week.
Sjoerd Handgraaf:You meet with with teams in conceptual, pre seed state, product state, like you said already. Like, you you talk to them about maybe thinking about how to do this without a website. Are there any either coming winners or, like, coming mistakes that you you see when you meet early stage teams that that our audience can learn something from? Just what they should be wary of or what should they definitely do or not do.
Laurens Groenendijk:Yeah. Also to make life easier. Not that we we like, of of course, this more vertical approach instead of a horizontal approach, but I think Mhmm. It makes so much more sense to build a company if, we are in this niche of a niche of a niche, but really big niche. And Yeah.
Laurens Groenendijk:And adapt your go to market strategy on that. So, also, we see here internally a lot of, let's say, AI tools. Okay. We can fix everything, but where you, let's say, ask them the question, but can you only sell it to all the butchers here in The Netherlands and start there? Mhmm.
Laurens Groenendijk:And that that sometimes create kind of a different mindset, to to get this focus on. What I most of the time, we underestimated this under digitized verticals. So in this industry, a lot of, let's say, people that are by themselves a little bit under digitized.
Sjoerd Handgraaf:Mhmm. Mhmm.
Laurens Groenendijk:So in order to move the the underlying market into kind of a
Sjoerd Handgraaf:Mhmm.
Laurens Groenendijk:Digitized position will take time. We see that also in the in the with Fondue, for example, in the timber trades, it's very old fashioned. Yeah. And why do why would they, let's say, move already now, to a platform when they have this guy already for the thirty years in their phone? So Yeah.
Laurens Groenendijk:That really doesn't make a big difference for them. So then you have to go to market with a different angle in the market and perhaps a full fledged buyer seller is a little bit, too fast. But perhaps first, try to digitize the traders that are already in that trade, that already have the buyer and the seller. You don't have to acquire the buyer and the seller that's already there. But first of all Yeah.
Laurens Groenendijk:Start with the, let's say, the traders or the brokers in the market to digitize them. And then in order to, let's say, they make the next step, go to all, end to end. Of course, you can be aspirational and ambitious, but you also have to be realistic. And we have to know the underlying market, what the dynamics, are.
Bas Rieter:Quite often and or especially in b two b. Right? Trust is often the catalyst for liquidity. You know, we're talking about large or order values about trade lines that have been around for, you know, decades and decades. So there might be a hesitance Yeah.
Bas Rieter:For both participants to actually, you know, transact online. So what would really help to also build that trust is what Lauren said. Right? Is to obviously, you know, like, young and hungry sales guys, for instance, can definitely have material impact. But if you take someone from the industry who knows and who has lived through the problem him or herself, who can onboard his or her own Rolodex and also talk with, you know, potential customers in a mirroring way, then you can really also feedback to that core tenants of any marketplace, which is trust.
Bas Rieter:Right?
Sjoerd Handgraaf:Yeah. That make that makes a lot of sense. Yeah. Yeah. And I think that is indeed like I don't remember now if Louder or Buzz say this, but finding the balance because, of course, you want your your your as a founder, you should be sort of unrealistically optimistic.
Sjoerd Handgraaf:You should have in your head, like, some sort of total addressable market that is just it's very big. But at the same time, you should also then your first step should be indeed like niche of a niche of a niche and just make it happen there and then maybe figure out, do you have do you have a
Laurens Groenendijk:plan? Exactly.
Sjoerd Handgraaf:You see any other developments on any lane, like, whether it's technological, legal, financial for for marketplace founders that they should be aware of in in in the cut? On a positive side, I think marketplaces, there's a
Laurens Groenendijk:the market's getting more and more regulated. It'll be easier to, let's say, have a managed marketplace with a kind of a SaaS component, in it. It will be easier to sell because most of times, these parties in the trades, don't, don't have this technology on board, that's, that for example, an ESG report or tax report or whatever report you need, with the push of the button comes out of the system. So Yeah. And and there you're really going to compete with all these new type of SaaS companies that are going that that that we see in this compliance market.
Laurens Groenendijk:But I think that's a really could be a very beneficial for for marketplace, founders, to to use that angle, the regulation angle and compliance angle to in order to to get them on the on the platform.
Sjoerd Handgraaf:Yeah. That's a surprise one actually because I think usually, like, controversial, like, like, legislation, like paperwork. Please know about Yeah. Yeah. But, yeah, that's a good point.
Sjoerd Handgraaf:Yeah.
Laurens Groenendijk:Also customs. So for international trades, where you have, let's say, AI tooling for for doing the duty tech, That kind of, let's say, angles that's I will call it internally the kind of the sexy angles that really can make a difference. Yeah. Sounds small, but could be really, really big to enter, in certain markets.
Sjoerd Handgraaf:Yeah. Absolutely. And especially, I think those things particularly, like, they are at Shutter, we always talk about, like, like, sort of a positive friction and negative friction. Like, this is like that report delivers zero value to your core business. So if, like, why the little resource you can put to it the better kind of like.
Sjoerd Handgraaf:So if you could take that away that is that is fantastic.
Bas Rieter:Yeah. Something which I really like and I'm being closely more paying attention to is the role of video commerce especially in b two b. Right? Because this has been a no brainer, especially in Asia when it comes to, you know, e commerce on beauty, cosmetics, trading cards, you have, you know Yeah.
Sjoerd Handgraaf:Like like social selling.
Bas Rieter:Exactly. Exactly.
Sjoerd Handgraaf:That kind of stuff.
Bas Rieter:But just the raw video because everyone has been talking about AI and don't get me wrong, we no one is underestimating, like, the impact that it can have. No. But just video as such is not a medium that you see used often. And now, I think it was last week that marketplaces in livestock or kettle. Right?
Bas Rieter:So really, you know, digitizing the auction of livestock and kettle, their video is obviously a no brainer. Right? And it's just interesting. You see interesting models emerging where the role of video, you know, is as impactful or maybe even more impactful as it has been in the consumer space.
Sjoerd Handgraaf:Yeah. Video. Yeah. I haven't actually I think, like I mentioned, the social selling, this is one of these things that it feels like a generational gap. Like, I'm 43.
Sjoerd Handgraaf:I would I don't see myself doing that. But on the other hand, like, this is maybe one of these, like, macro macro shifts that there's a whole, you know, generation coming into the workforce. Also be to be who who for who for who this is a great way to to to to, judge a deal and to judge supply. Yeah.
Bas Rieter:It's funny that you say that because we also see a more like macro cultural shift about this new generation of business owners. Right? That also demands, quote unquote consumerized experience. Like, it's so it's so rare that for the past decades, you know, many b to b trades have been, you know, been made via, you know, spreadsheets, telephone, or even especially in Germany with all due respect over facts. But now that there's a new generation of business owners who are used to seamless experience whether it's ordering a cap or booking an apartment abroad, like, why can you not just apply the same, you know, UX UI on beat on on b to b transactions.
Bas Rieter:Right?
Laurens Groenendijk:To add on that, I met a couple of people the last couple of months, and there's basically a second or third generation business owner. So we saw it in the big trade in Italy, where basically the the third generation is now making decision to disrupt, their own business. The the their father was also in this meeting. He said, are you do you agree? Because, your live work is going to be destroyed because your son's going to build a marketplace on top of the hill.
Laurens Groenendijk:And he was fine. And the same, let's say, one month later, Bas and I spoke with the company in Germany, exactly the same. A €75,000,000 turnover business. So this new generation want to disrupt it. Very risky, of course, but that that is what we're seeing in this type of, let's say, legacy industries.
Sjoerd Handgraaf:Yeah. Okay. Thanks. Well, this was great. If people want to reach out to DFF, what is the way to, what is the way to pitch your start up to DFF?
Bas Rieter:You can reach us on especially if you're building something in the re commerce space or, you know, heavily or critically under digitized b to b domains, we'd be very happy to, to have a chat with you.
Sjoerd Handgraaf:Alright. I I wanna thank you both very, very much for your time and your insights. I think this is a great episode. Let's meet you.
Bas Rieter:Thanks, sir.
Sjoerd Handgraaf: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. If you got inspired to build your own marketplace, go visit www.sharetribe.com. It's the fastest way to build a successful online marketplace business.