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The State of Marketplaces – 2020
Roger Lee, General Partner, Battery Ventures
Justin Da Rosa, Vice President, Battery Ventures
Courtney Chow, Associate, Battery Ventures
March 2020

2.
Disclaimers
The information provided in this presentation is solely intended for the use of entrepreneurs, corporate CEOs and founders. The
information is current as of the date it was published. The contents are not intended to be used in the investment decision making
process related to any product or fund managed by Battery Ventures. No assumption should be made that the investments
identified within were or will be profitable. It should also not be assumed that recommendations made in the future will be
profitable or equal the performance of the companies identified within.
Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy
or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this
presentation nor notify readers in the event that any information, opinion, projection, forecast or estimate included, changes or
subsequently becomes inaccurate.
Battery Ventures provides investment advisory services solely to privately offered funds. Battery Ventures neither solicits nor
makes its services available to the public or other advisory clients. For more information about Battery Ventures’ potential
financing capabilities for prospective portfolio companies, please refer to our website. For a complete list of portfolio companies,
please click here.
The Battery Marketplace Index tracks 40 of the world’s largest marketplace companies. To be included, companies need to be
listed on one of the major global stock exchanges and boast a market capitalization of $500 million or more. You can track the
Battery Marketplace Index here.
This presentation is being provided for informational purposes only. Nothing herein is or should be construed as investment, legal
or tax advice, a recommendation of any kind or an offer to sell or a solicitation of an offer to buy any security.
(As of Nov 2019)
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2
All Marketplace Conference Profits Will Be Donated to COVID-19 Relief
COVID-19 Solidarity Response Fund

4.
Who is Battery?
Stage
agnostic
$8.9B
Battery’s global offices Capital raised
since inception
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5.
Note: Contains all Battery Ventures marketplace investments since the firm’s inception. No assumption should be made that the
investments identified above were or will be profitable. For a complete list of portfolio companies, please click here.
Battery Marketplace Investments
E-Commerce
@
Community
& Content
Services Travel Exchange
$375+ million invested
4
Acquired by

6.
Source: Cap IQ (as of Mar 2019) – Refers to Enterprise Values. Battery Marketplace Index is market cap-weighted & pro-rated.
* Denotes a current or former Battery portfolio company. No assumption should be made that the investments identified above were or
will be profitable. For a complete list of portfolio companies, please click here.
Battery Marketplace Index (as of Mar ’19)
5
Marketplaces
(50%)
0%
50%
100%
150%
200%
250%
300%
Mar ’12 Sep ’12 Mar ’13 Sep ’13 Mar ’14 Sep ’14 Mar ’15 Sep ’15 Mar ’16 Sep ’16 Mar ’17 Sep ’17 Mar ’18 Sep ’18 Mar ’19
Battery
Marketplace
Index
+199%
NASDAQ:
+158%
467.5B 34.8B 4.0B 5.9B 0.6B 6.6B 33.3B 8.4B 22.3B 29.0B 7.5B
8.1B2.8B
78.5B 22.5B 10.7B 17.8B 156.7B 1.6B 1.3B 19.1B 8.0B 7.1B 3.0B
25.3B15.0B1.9B 7.8B 7.4B 9.0B 6.7B 2.0B 40.4B
2.2B
11.7B
2.2B
* *
*
4.5B

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The Tide Has Turned from “Growth at All Costs” to a Balance of
Growth & Profitability
AUG
19
Shut Down
Permanently
Slashed IPO
Price Range
Restructured
Organization
Laid Off
20-80%
of its Staff
Discontinued Physical
Product Marketplace
Laid Off ~40% of
its Staff
Raised ~$430M in
’19 in Flat Rounds
Raised $100M in
Flat Round Undisclosed
Layoffs
Shut Down 12
Markets
Divested India’s
UberEats to Zomato
Withdrew IPO
Indefinitely
Cut More Than
1K Jobs
Market Cap Down
50% Since IPO
Delayed
IPO
Laid Off 100
Staffers
OCT
19
SEP
19
DEC
19
JAN
20
FEB
20
NOV
19
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“[W]e need to reduce our burn rate to a sustainable level from which we can focus
on pursuing the mission and growing the business over the long term.
We do not want to be dependent on outside capital, so self-reliance and careful
management of our resources are crucial to our future.”
— ADAM D’ANGELO, QUORA CEO (JAN 2020)
“We recognize that the era of growth at all costs is over…. investors increasingly
demand not just growth, but profitable growth”
— DARA KHOSROWSHAHI, UBER CEO (FEB 2020)

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¹ (Cap IQ) From Mar 19, 2019 to Feb 20, 2020. Data shows market cap % change since Mar 19, 2019.
The Last Twelve Months Has Been Turbulent for Marketplace
Businesses…
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Marketplace stocks took a turn in 2019 with the Uber & Lyft IPOs and exacerbated by the
WeWork implosion. This took place while the broader indexes were up >10%
(20%)
(10%)
0%
10%
20%
30%
40%
Mar ’19 Apr ’19 May ’19 Jun ’19 Jul ’19 Aug ’19 Sep ’19 Oct ’19 Nov ’19 Dec ’19 Jan ’20 Feb ’20
Battery
Marketplace
Index
+4%¹
NASDAQ:
+13%¹

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Then, COVID-19 Came Along …
COVID-19 Worldwide: The Pandemic’s Impact on the Economy and Markets
U.S. GDP is collapsing as we enter what is expected to be the worst economic contraction
since the Great Depression…
April 6, 2020
‘The Market’s in Panic Mode.’ Stock Markets Plunge 12% Amid Coronavirus Fears
…The negative superlatives for American stocks are piling up. The S&P wiped out its gain
in 2019 and is now down almost 30% from its all-time high…
March 16, 2020
Stocks Plunge, With Dow in Bear Market: Live Updates
…On Wednesday, World Health Organization officials officially designated the
spread of the Coronavirus as a global pandemic…
March 11, 2020

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Note: (Cap IQ) Share price data as of Apr 27, 2020.
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… And, the Battery Marketplace Index Only Plunged Further
18%Average LTM Share
Price Change of the
Battery
Marketplace Index

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LTM Share Price Change of the Battery Marketplace Index
Note: (Cap IQ) Share price data as of Apr 27, 2020. Top half measured as companies whose stock price performed better than the
average, Bottom half measured as companies whose stock price performed below the average. For companies with less than 12 months
of trading history, share price change is measured relative to IPO price.
But, That’s Not the Full Story
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70%
36%
15%
(18%)
(50%)
(60%)
(65%)
(80%)
(60%)
(40%)
(20%)
0%
20%
40%
60%
80%
Top Decile Top Quartile Top Half Average Bottom Half Bottom Quartile Bottom Decile

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So, what separated the winners from losers?

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efficiency.

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How do I measure efficiency?

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¹ Note: Chegg’s 2019 Adjusted EBITDA = $125M (Chegg’s 2019 Annual Report) and Uber’s 2019 Adjusted EBITDA = ($2.7B) (Uber’s
2019 Annual Report) ² Per Cap IQ as of Apr 27, 2020. For Uber, change is relative to IPO share price
The Rule of 40: Explained
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2019 Net Revenue $411M $14.1B
2019 Net Revenue Growth % 28% 26%
2019 EBITDA¹ $53M ($8.2B)
2019 EBITDA Margin % 13% (56%)
Rule of 40 41 (30)
LTM Share Price Change² +4% (33%)
EV / NTM Revenue Multiple² 10.8x 3.9x
Rule of 40 = Revenue Growth + EBITDA Margin
A
B
A B

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70%
36%
18%
(18%)
(47%)
(60%)
(65%)
(80%)
(60%)
(40%)
(20%)
0%
20%
40%
60%
80%
Top Decile Top Quartile Top Half Average Bottom Half Bottom Quartile Bottom Decile
LTM Share Price Change of the Battery Marketplace Index
Note: (Cap IQ) Share price data as of Apr 27, 2020. Top half measured as companies whose stock price performed better than the
average, Bottom half measured as companies whose stock price performed below the average. For companies with less than 12 months
of trading history, share price change is measured relative to IPO price.
The Rule of 40: Efficiency Drives Superior Returns
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Rule of 40 ~= 50
Rule of 40 ~= 10

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Rule of 401 vs EV / NTM Revenue Multiple2
Note: 1 Rule of 40 calculated as LTM revenue growth + LTM EBITDA margin from Cap IQ as of Apr 27, 2020, 2 EV / NTM Rev Multiple
from Cap IQ as of Apr 27, 2020.
The Rule of 40: Efficiency Drives Superior Returns
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8.3x
4.4x
2.4x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
Rule of 40: 40+ Rule of 40: 30-39 Rule of 40: <30

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How can you improve the rule of 40?

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Battery Growth Magic Number > 0
Migrate to subscription pricing
Battery CX Magic Number – 10x ROI
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Battery’s 3 Rules for an Efficient Marketplace

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Battery Growth Magic Number > 0
Rule # 1:

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Battery Growth Magic Number = (Rev Growth %) – (S&M % of Rev)
Battery Growth Magic Number > 0
Battery Growth Magic Number <= 0

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¹ Cap IQ as of 2019, 2 Cap IQ as of Apr 27, 2020
Rule # 1: Battery Growth Magic Number > 0
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2019 Revenue Growth1 28% 28% 8%
2019 S&M % of Revenue1 15% 13% 49%
Battery Growth Magic Number 13 15 (41)
LTM Share Price Change2 +4% +18% (43%)
EV / NTM Revenue Multiple2 10.8x 7.8x 1.6x
A
B
A B

24.
Average Battery Growth Magic Number vs LTM Share Price Change of the Battery Marketplace Index
Note: (Cap IQ) Share price data as of Apr 27, 2020. Top half measured as companies whose stock price performed better than the
average, Bottom half measured as companies whose stock price performed below the average. For companies with less than 12 months
of trading history, share price change is measured relative to IPO price.
Rule # 1: Battery Growth Magic Number > 0
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22
10
(2)
(14)
(25)
(30)
(20)
(10)
0
10
20
30
Top Quartile Top Half Average Bottom Half Bottom Quartile
+36% +18% (18%) (47%) (60%)
Battery Growth Magic Number
LTM Share Price Change

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¹ Forbes. ² Yelp’s Q1 ‘20 Shareholder Letter.
Rule # 1: Battery Growth Magic Number > 0
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Encourage Organic Traffic & Virality
Consumers as Creators / Contributors
Chegg has a library of 35M user-generated Q&A;
“evergreen” content that continues to compound
in value over time
Deep Content Library
Chegg owns the solutions to textbook questions
of major publishers (34K ISBNs); all indexed in
SEO
Product-Led Growth Human-Led GrowthVS.
Create Less Dependences on Paid
Marketing Acquisition
Data-Driven Decisions
80% of Netflix content watched is influenced by
its recommendation system¹
Unique & Original Content
A massive data set of consumer behavior allows
Netflix to create original content tailored to new &
existing users
Hyper-Local and High
Commissioned Sales Teams
are not Scalable
Headcount Drives Majority of Cost
Yelp is dependent on their 3.5K+ local
sales force² to drive business
development & revenue

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Rule # 2:
Migrate to Subscription Pricing

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Rule #2: Migrate to Subscription Pricing
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The higher percentage of longer-term plans, the better: increased cashflow,
more predictable revenue, higher retention & lifetime value (LTV)
Transactional Monthly Subscription Annual Subscription

28.
Month 12 Retention Rates: Monthly Subscription vs Annual Subscription Cohorts
Rule #2: Migrate to Subscription Pricing
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Month 12 retention rates for annual subscribers hover ~50-60%+, which is
~3x higher than Month 12 retention rates for monthly subscribers
20%
15%
55%
50%
60%
45%
0%
10%
20%
30%
40%
50%
60%
70%
Company A Company B Company C Company D
Monthly Subscription Annual Subscription
+ 2.8x + 3.3x

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Rule # 3:
Battery Customer Experience (CX) Magic Number – 10x ROI

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Battery CX Magic Number = Net Revenue / CX Cost Per Transaction
Battery CX Magic Number > 10x
Battery CX Magic Number <= 10x

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Source: American Express, Forbes, HubSpot Research, Salesforce, Glance
Rule #3: Battery CX Magic Number – 10x ROI
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The Importance of High-Quality
Customer Service
90% of Americans use customer
experience as a factor in deciding
whether or not to do business with a
company
The Power of Great Customer
Service
Customers are willing to spend 17%
more for a company with excellent
service
93% of customers are likely to make
repeat purchases with companies who
offer outstanding customer service
The Cost of Poor Customer
Service
57% of customers have stopped
buying from a company because one of
their competitors provided a better
experience
62% of customers say they share bad
experiences with other people
78% of customers have backed out of
a purchase due to a poor customer
experience

32.
Note: Based on Battery Venture’s proprietary research of both public and private companies, both within the Battery portfolio and not.
Rule #3: Battery CX Magic Number – 10x ROI
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A
B
A B
Company
A
Company
B
Company
C
Company
D
Company
E
Company
F
Company
G
Company
H
Industry Services Hospitality Fashion Mobility Mobility Hospitality Services Mobility
Net Revenue
Per
Transaction
$100 $30 $20 $2 $4 $12 $4 $6
CX Cost Per
Transaction
$3 $2 $3 <$1 <$1 $2 $2 $3
Battery CX
Magic Number 33.3x 15.0x 6.7x 6.7x 6.0x 6.0x 2.0x 2.0x

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Source: Zendesk Survey, Coleman Parkes Research, Based on Battery Venture’s proprietary research.
Rule #3: Battery CX Magic Number – 10x ROI
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Product-Led Growth
Company A
Battery CX Magic Number: 33.3x
Company G
Battery CX Magic Number: 2.0x
Comprehensive Knowledge Base / FAQ’s
67% of respondents preferred self-service vs speaking to a
support agent, while 91% of consumers would use an
online knowledge base if it were tailored to their needs
Providing an easily accessible and reliable knowledge base
will be sufficient for customers’ easier-to-answer questions,
while allowing agents to focus on tougher, more nuanced asks
Collaborative Community Forum Vetted by Moderators
Customers can engage with one another and company
representatives – ask & answer questions, search topics,
socialize, and get product updates
Mature chatbots can answer 50%+ of customer questions
Best in class CX can address 80-90% of customer
questions through automated, no touch self-service platforms
High Dependency on Customer Phone Support
For this particular company, 80% of their customer support
contacts are serviced via phone
This heavy reliance on phone support becomes time
consuming and less productive for agents. Agents must
spend more time on each interaction and phone calls limit the
number of customers they can help at once
Additionally, there’s significant cost associated with
maintaining a skilled team of live support, especially those
seeking 24/7 support
Human-Led Growth

34.
Rule #3: Battery CX Magic Number – 10x ROI
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Service Level Agreement (SLA) on Wait Time: Phone (<2 Min), Chat (<2 Min), Email (<4-8 Hours)
First Resolution Rate: 80-85%
Manager : Agent Ratio = 1 Manager: 12-15 Agents
Contacts Per Issue: 1.2 - 1.3
1
2
3
4
Contact Rate (Out of Every 100 Transactions): 15 - 30%
5

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Battery Growth Magic Number > 0
Migrate to subscription pricing
Battery CX Magic Number – 10x ROI
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Battery’s 3 Rules for an Efficient Marketplace

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The Great Recession Launchpad
Founded 2008Founded 2007 Founded 2009 Founded 2009

37.
Source: Cap IQ Market Cap ($USD) as of Apr 27, 2020 | * Denotes a current or former Battery portfolio company. No assumption should
be made that the investments identified above were or will be profitable. For a complete list of portfolio companies, please click here.
We’re Just Getting Started …
EquityValue
$10B
$36B
1998 2008 2020
Time
$1.3T
*
*
*
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*
*
*
Source: Cap IQ Market Cap ($USD) as of Apr 27, 2020 | * Denotes a current or former Battery portfolio company. No assumption should
be made that the investments identified above were or will be profitable. For a complete list of portfolio companies, please click here.
We’re Just Getting Started …
EquityValue
$10B
$36B
1998 2008 2020
Time
$1.3T
$6T
*
*
*
2025
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39.
The Team
Roger Lee
rlee@battery.com
Justin Da Rosa
jdarosa@battery.com
Courtney Chow
cchow@battery.com
Download slides here: https://www.battery.com/powered/
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