The Bowery Capital team is continuing our blog series covering 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. This week, John Armstrong, Founder & CEO of Reibus, answers some of our questions. You can read all of the posts in our series by going here.
John - thanks for joining us - can you tell our readers a little bit about Reibus and who the typical buyers and sellers are that find themselves on your marketplace?
Reibus is a B2B platform that serves the industrial metals industry. Our typical buyers and sellers include producers of steel and aluminum, distributors (known as service centers in our industry), and the OEMs who manufacture components.
It is important to remember that we operate in the raw material space - this is before the materials have been fabricated and manufactured into a product. The raw materials we help transact are things like metal coils, plates, bar, pipe, etc. - these are the primary products we deal in before they are ultimately used in another application.
What inspired you to launch Reibus?
I wanted to start Reibus so I could be happy. When I was younger and climbing the corporate ladder, I was always thinking I would find happiness as my career progressed, but it never actually came. Eventually, I realized I was really an entrepreneur at heart. I used to blame the companies I worked for - that they were not “getting it” - but actually I was the square peg in a round hole. As I was thinking to myself about ways I could become happier at work, I decided starting my own company was the way to get there. The genuine inspiration for Reibus was me trying to find a way to enjoy the next 20 years of my career by working in a culture and environment that is positive and nurturing for people. That was the true inspiration for Reibus.
Once I figured out that I needed to do something, it was like, well, “what do I know? And what problems do I think I can fix?” and of course, working in this industry for over 20 years, I have lived and breathed the problems of supply chain inefficiencies in the metals and raw materials space on a global scale. Having experienced and understood those issues, that really was the genesis for Reibus. I then spent about six months doing market research, talking to my network, friends, and colleagues in the industry, and brainstorming what product I could build to alleviate some of the challenges that we faced every day.
How does Reibus currently monetize? And was monetization something you turned on from Day One or something you phased in over time - we have seen different marketplaces take different approaches to that question.
Reibus monetized on our very first order - we always planned to and always intend to going forward. We monetize by matching buyers and sellers on either side of the platform - buyers negotiate the price they want to pay, and sellers negotiate the price they want to receive, and the gap between those two prices is the margin that Reibus gets to keep.
Have you begun to monetize on any other potential revenue streams like logistics?
We actually had not until recently, but we just launched an internal logistics team where we provide logistics to our customers and then take a small markup on these value-added services. In fact, we are now actually offering full logistics services to our customers, even if they are not buying and selling material with us.
When you were getting started with Reibus and trying to kick start that initial liquidity, what were some methods you found to be effective for onboarding supply and demand - and how did your approach to the two halves of the market differ?
What is truly unique about our marketplace is the problem that we are solving is concurrent for both sides of the market - our customers have material they want to buy, but they also have material they want to sell. So, all of our customers work on both sides of the platform - our suppliers are our customers and our customers are our suppliers. The most pleasing thing we do is we can buy from a customer in the morning, and then sell that same customer another product in the afternoon. So, in the morning, a customer might have a product he wants to sell, often to grow his revenue and to move some material out of his building; and then in the afternoon, he will buy from us because he has a short-term problem in his supply chain--he needs to service a customer, and we are the solution.
When we thought about liquidity, it was very much about matching offsets in supply and demand. We had to start with listings - we have to get materials to sell, but our team has done a great job of balancing that out. There is no good in having all the metal in the world for sale, if you can't sell it, right? That is a bad customer experience. What we did was something we call laddering - we would ladder up our supply and demand in tandem with one another. Now that we have scaled a little bit, that supply and demand is automatically generated and matched.
How does Reibus work to differentiate itself from some of the alternative metals marketplaces that have cropped up in the last couple years?
There are two key elements - one is that we are completely independent, historically marketplaces that have entered this space are from a large service center, steel mill, or other existing participant in the market. This leads to some channel conflict - if the marketplace is not independent, do you want to share your data with a competitor? Do you want to help your competitor to improve their operating and financial performance? Independence is very important when comparing us to other marketplaces in the space.
Even more important is our unique business model where we act as a white glove service for our customers. We find a buyer, we find a seller, we finance the transaction, and we also arrange the logistics. That is where our major advantage comes from. Many marketplaces act more like a listing service, they simply notify you “Hey - here is the potential opportunity for you to buy or sell a product;” Reibus not only automatically matches the buyer and seller, we manage the entire transaction: we handle the communication, we arrange the logistics, we finance the deals, and we do the buying and selling. So when you use our marketplace, Reibus is your customer and Reibus is your supplier.
How do you evaluate the health of your marketplace as it has grown - what kind of metrics/KPIs do you focus on?
We have a few but our key one is total customer liquidity. We are in a unique position where our buyers and sellers are often the same people - they trade on both sides of the marketplace - so we look at how much they are buying from us plus how much they are selling to us. We also manage and track our cohorts - are our customers staying with us, are they growing their revenue with us, and so on, and I am proud of what our team has done there around cohort revenue retention.
Are there any levers that you found particularly effective for driving GMV growth or marketplace activity during your time running Reibus?
One key thing we have seen is the importance of those first two or three transactions with the customer. If you can delight the customer as they have their first experience with Reibus, and really go overboard - deliver faster, make sure you overcommunicate, etc. - it can make a big difference. With Reibus, what we are doing is asking customers to try something new - a new business process that solves an old problem in an industry. So, we really focus on leaning in very hard with our customers as they onboard with Reibus, and we have invested heavily in our customer success team and their purpose is to help educate our customers on our tools and the ways our platform can help them better run their business. I think that is what has driven the cohort revenue growth year after year and has really propelled us.
Can you tell us a little about Reibus’s unique anonymity component?
The anonymity is a subset of our white glove service. Because we are the buyer and the seller, that creates the anonymity in the first place, we then provide logistics services which separate the buyer from the seller, and provide financing which also separates the buyer and seller. So, in a way it is a subset of our business. But what we have found is that this has been a real value-add to our customers because often the person who is most likely to have the materials you need in short order is your competitor. This raises all sorts of challenges. First, there is the question of whether you trust them with your data. Second, is there the potential they could use that data to go win your customer from you? And third, are they going to charge you a reasonable price? This is part of why we believe customers feel comfortable trading with anonymity through a truly independent third party, which can negate some of those concerns for them.
What makes Reibus’s culture unique and why is culture so important to an early-stage company?
As I said earlier, one of the reasons for starting Reibus was that pursuit of happiness and knowing that I was going to spend the next 15-20 years working with the same people, setting out a good culture has been important from Day One. We actually started a culture process with our third employee to make sure we create an environment for people to be successful. And we understood that culture isn’t just a set of aspirational buzzwords that you put up on the wall. If you actually research what makes up a culture, cultures are behavior patterns established over a long period of time. So, when we look at our culture, we encourage it as behavior. And that starts with me – I have to lead and behave as our culture describes. For example, I interview every employee, we are at 120 employees now and I have interviewed over 300 people to get to that 120. Part of that interview is we have a really in-depth conversation about what culture means to us, and whether they are the type of person that can behave as we describe in our culture.
And then when we thought about the culture, we cracked the DNA code for the ideal employee. For example, our value of ownership - if you behave with ownership and see a problem and solve it because you have an ownership mindset, you are a great employee. If you behave with curiosity, if you have a problem and you don't know how to solve it, so you go teach yourself something new so you can fix it, you are a great employee. If you behave with courage, when you don’t know something or you think the CEO is talking nonsense and you have got the courage to challenge them on it, that is what we are looking for. We also emphasize honesty. If you are honest - and we don't talk about honesty in terms of telling the truth and not stealing - we talk about honesty in terms of being honest with yourself. Did you do your best today? Can you improve tomorrow? What things do you need to get better at? Was every conversation ideal? And then finally, if you put all that together and act and behave with grit - and some days are tough when you are building a company, not everything goes smoothly - but if you have the grit to come back day after day and keep moving forward through problems and challenges; if you are all of those things, you are the perfect employee. And if the majority of the people in our company can behave like that every day, I don't think it is possible for us to fail.
What would your advice be to any founder starting on the marketplace journey?
The key thing is to focus on the real problem that you are solving. If you simply set up a website that says, “Hey, I have a product - do you want to buy it?” you are not really creating any value. This makes it very hard to monetize - and as soon as you start charging for that, customers will move on. What you need to do is build a marketplace that creates value and solves the true problems facing your industry.
I would also say that as you are seeking out investors, try to get stakeholders in the cap table and on your team that really understand the B2B space and the marketplace environment. Even better, find investors who share your values and can help drive your culture. We have had the advantage of being able to pick the investors that we have in our cap table, all of whom are great people who have experience in the B2B space and the marketplace space. It has been really beneficial - directly and indirectly - to have stakeholders around the table that understand the problem that we are solving and the market that we are operating in.
If you liked “From The Front Lines: John Armstrong (Reibus)” and want to read more content from the Bowery Capital Team, check out other relevant posts from the Bowery Capital Blog. Look out for more content on B2B Marketplaces from us in the coming weeks
