The Bowery Capital team is embarking on a ten week journey to cover B2B Marketplaces. We are doing deep dives on various companies, interviewing founders and investors, and learning what it takes to build success in the B2B Marketplace arena. Below is a part of our content series focused on insights from founders in the space. This week, Victor Hunt and Aaron Resnick, Co-Founders of Astorian, join us to jointly answer our questions about founding and running a B2B marketplace. You can read all of the posts in our series by going here.
Many B2B marketplaces start off solving a fairly discrete problem (e.g., order visibility, labor shortages, etc.) and launch with a narrow product focus when trying to get that early traction. How did you think about Astorian’s initial product in this context and what you needed to get right?
This is a challenge especially in enterprise products, because it’s easy to feel that you need a really full-featured product to gain the respect of prospects. This mindset often leads to saying you’ll do a lot of things that aren’t your core focus because you think this is necessary to “keep you in the game.” We started Astorian by interviewing prospective customers to build a laundry list of problems which we could then use to define a constrained problem set to tackle. In the beginning, we wanted to build a lot and did not have the wisdom to say no to ourselves but fortunately our limited resources forced us to work only on the most important issues upfront. As our resources grew we had to relearn the value of this disciplined approach to problem solving because the temptation to build persists. Ultimately, it’s critical to delineate what your problem set is and isn’t – we’re solving the problem of bidding out jobs to contractors for property management firms in New York City. With this in mind, our product has to be designed for these specific workflows (e.g. focusing on a standard 2-week bidding process rather than handling emergency projects or massive construction jobs) and these specific customers (i.e. the needs of professional property managers not home owners or real estate investors).
At the outset, what side of the market did you try to focus your initial adoption efforts towards (property managers vs. contractors)? How has where you focused your onboarding efforts towards evolved over time?
Our market is demand driven so we tend to focus more on property managers. When there are jobs available to bid on, it’s easy to get the contractors’ attention because the opportunities are right there in front of them. So getting the property managers on first is key. That said, the more effort we exert to make sure contractors can effectively onboard and use our service, the better the ensuing results are for the property manager, so neither side can be neglected.
How have you been able to keep repeat purchases on the platform and avoid buildings and contractors finding each other through Astorian and then moving their relationship ‘offline’?
We lower disintermediation by building compelling enough product value to hire through Astorian. This is a relationship driven business and Astorian is a relationships platform. Our goal isn’t to stop you from working with the contractors you already have a relationship with, but rather to make it easier to get bids not only from those contractors but from new ones as well. Property managers generally need 3+ bids for their projects, and even with contractors they already know, managing the bidding process with all these parties is a pain. For every project you need to bid out, Astorian makes it much easier to manage the process and find a great price, whether you end up going with an already familiar vendor or not. This keeps people coming back time and again even once they’ve found a vendor they like.
What factors have been the primary drivers of retention amongst property managers? What about contractors?
It depends on what’s most important to the property manager but in summary, Astorian eliminates a lot of grunt work for property managers that saves time, lowers their risks, and saves them money. Contractors want the valuable business and new relationships we offer.
As a vertical marketplace, you are asking existing buyers/sellers to meaningfully change their procurement/sales habits – what have you found to be most effective in getting participants to make this shift and move onto Astorian?
We actually work very hard to design solutions in a way that aligns with what our users are used to. We require very little work on their part to deliver the results that their jobs depend on, but those results would have previously taken a lot of effort and time from them. It sounds straightforward but it’s not easy because people have different procurement habits requiring us to adapt and create solutions that are familiar enough to everyone but flexible enough to match unique workflows.
Many vertical marketplaces have tried to make their product stickier by also letting it serve as a SaaS workforce/procurement management tool – how have you thought about this approach at Astorian?
Project management is a core element of our value-add at Astorian. Whether it’s managing Q&A, scheduling site visits, sharing files, or providing a project timeline, Astorian makes it much easier to collaborate, keep track, and organize project workflow than emails, hard copy files, or cloud storage.
What are some of the key metrics you’ve found most insightful for understanding the growth and health of your marketplace?
We look at cohort analyses of engagement on posting projects and hiring contractors. A marketplace is healthy if its members are coming back and using it more over time. Another factor is the rate at which projects are filled and don’t disintermediate – this measures the liquidity in the marketplace and our ability to capture the value we’re creating.