We announced Today that we invested in 1stDibs. The Company has what we look for in an investment- category leadership in a large, fragmented market that is ripe to be organized. 1stDibs is first and foremost a Luxury brand that lives Online.
What attracted Spark to 1stDibs was it’s market opportunity. The market is always the most important factor. We saw a Company with the chance to be a category leader. We saw a Brand with a strong position in a large market that’s in its infancy. That being the online marketplace for unique and valuable items. These items include antiques, jewelry, vintage clothing, vintage cars and other categories of products that are valuable, unique and desirable. The overall market is in the hundreds of billions and the opportunity is significant given that a fraction (8%) of the transactions in these markets occur online Today.
We have experience with online marketplaces at Spark and we see the key ingredients for success in 1stDibs. Organizing a fragmented and inefficient market with millions for Buyers and hundreds of thousands of Sellers is a key requirement of a successful marketplace. The best are addictive and I can personally attest to the addictive nature of 1stDibs. The opportunity we see at 1stDibs is to increase the volume of merchandise that flows through the platform from $500 million to Billions of dollars. This will be accomplished by adding Buyers and Sellers while also insuring quality, reputation and facilitating commerce. Simply put, we will increase the percentage of sales of unique and valuable items sold online from 8% to a much higher pwrcentage in the next few years. The key will be improving the User Experience.
That leads to the second reason we invested- management. Namely, David Rosenblatt and Michael Bruno. David is a rare and valuable item in and of himself combining strong leadership, strategic thinking and excellent operating skills. Michael is the visionary and creative thinker that started the company 8 years ago. They have built a solid management team at 1stDibs to match the magnitude of the opportunity.
There are several ways the Company can grow. For example, offering additional services that are related to the Buying and Selling of products is a clear opportunity. So is adding lucrative categories of goods that relate to the same Buyers and/or Sellers. So by expanding volume and adding services 1stDibs can grow without adding a dollar of commissions. While growing commissions isn’t the main focus, I would submit that Buyers and Sellers are always willing to pay for unique value. Today, there are dozens of merchants that derive well over 50% of their sales from the 1stDibs platform. Some operate exclusively online and credit 1stDibs with the bulk of their sales. This trend will continue.
1stDibs is in a position to deliver unique value as it continues to cement itself as THE Luxury marketplace. I say “THE” marketplace because there are rules in marketplaces that scale and familiarity matter. Take Amazon and EBay as examples of large scale successful marketplaces. The former has built a dominant brand based on selection and User experience in a large but competitive space. The later built a dominant brand for virtually everything based on breadth and User experience. 1stDibs has the opportunity to do for unique luxury goods what EBay did for everything else.
We are delighted to be investors in 1stDibs and look forward to working with David, Michael and company to build a meaningful business.