How do B2B marketplace unit economics differ from those of consumer marketplaces, specifically GMV, margins, frequency of use and LTV over CAC?

I think there are a lot of similarities at the highest level. You probably start with GMV (gross merchandise value) in consumer markets. In B2B marketplaces, since you're often getting involved in the transaction, I think you start with gross processed volume or gross sales, or whatever you want to call it -- the total dollar amount running through the platform. Not necessarily in your marketplace, but more about the potential volume that the supply or demand side could bring. We typically see lower percentage take rates in B2B marketplaces due to the higher GMV, AOV and throughput. There's an inverse relationship between AOV and frequency of purchase.

Typically, the AOV in B2B marketplaces is much larger than in consumer marketplaces. For example, my Uber ride of $12 vs. a wholesale purchase of $10,000 worth of ingredients. The AOV is generally much higher because you deal with SMBs and enterprises. B2B transactions are more complex and require more stakeholders to buy-in. We expect CAC to be much higher and close a customer much longer to start. Consumer marketplaces thrive on high frequency, and B2B marketplaces need tons of volume. Volume exposes the issues that both sides face and forces you to address them in a novel manner.

We pay close attention to the relationship between CAC, LTV and payback. We don’t know what LTV is in the early days, but we try to get comfortable around how long it will take for a business to 3x their CAC. Of course, the faster, the better, but we’re looking for something between 18-24 months as a rule of thumb.

Then the last one, which I alluded to earlier, is the concept of share of wallet: what percent of the volume are you capturing or seeing and could you service through your marketplace? Not many businesses jump to mind where you can capture 100% unless you are the procurement platform for the demand side. That's what makes businesses like Provi, ResQ, Notch and others like that very exciting because they are this single source. Customers do all of their purchasing through the platform, whether it's directly managed vendors or through the marketplace.