| SAN FRANCISCO
SAN FRANCISCO Aug 29 In a big bet on
marketplaces, venture capital firm Greylock Partners is
promoting former eBay Motors founder Simon Rothman to partner,
and dedicating $100 million to the sector.
Marketplaces - companies like auction service eBay,
accommodation service Airbnb, and personal-loan service
LendingClub - have the potential to create more billion-dollar
businesses in the next five years than in the last 20, Rothman
said in an interview with Reuters.
Unlike vendors, marketplaces do not hold inventory
themselves but connect the sellers who have it with the buyers
who want it. Innovations like the rise of smartphones, which
make it easy for customers to jump online anytime to do
business, are fueling marketplace businesses, Rothman said.
And unlike traditional businesses, where growth can create
logistical problems, online marketplaces scale well.
"When they get bigger, they get stronger," he said.
Silicon Valley-based Greylock has invested in several
networked-marketplace companies, including Airbnb, ride-sharing
service Lyft, and shopping service Wanelo.
The biggest to date is eBay, where Rothman created eBay
Motors, which grew to a $14 billion business under his
oversight. In a blog post, Greylock partner and LinkedIn
founder Reid Hoffman said Rothman would focus on
investing in marketplaces, other network-effects businesses, and
Rothman's key advice: start small.
"A lot of entrepreneurs overreach early," he said. "Having
some restraint on the scope of the project drives success."
The $100 million Greylock is committing to innovative
marketplaces will come from existing funds, a spokeswoman said.
It will cover early-stage investing through to later-stage
Rothman has been working as an entrepreneur-in-residence at
Greylock, where he advised marketplace companies.