Emailed on November 20th, 2020 in The Friday Forward

On Wednesday, venture capitalists such as General Catalyst, Khosla Ventures, and Arbor Ventures injected $175 million in Series A funding into Heyday, a company that acquires and incubates companies that sell products on Amazon.

Not only did Heyday only recently come out of stealth and hire its first employee, it exists to gobble up Amazon merchants. Companies that primarily exist on Amazon.

"One man's platform risk is another VC's chef's kiss"

- Sean Steigerwald (TM)

The bet is that consumers want to shop in a centralized marketplace, a space currently dominated by Amazon—and that sizable businesses can spring from the e-commerce giant. Heyday CEO and co-founder Sebastian Rymarz points to Anker Innovations, a Chinese company selling eponymous portable batteries that’s now valued at $11.8 billion in trading in Shenzhen after getting its start almost entirely on Amazon.

“Warby Parker and Dollar Shave Club dominate in direct to consumer,” Rymarz says. “We don’t think that it’s going to be those brands that are going to win in marketplaces. [Marketplace] brands need a whole new stack…to be able to rank well on digital shelves and to optimize listings.”

The general idea is that brands can build enough velocity on Amazon to break free of the platform, but that's a peculiar bet given Amazon's history.

The marketplace giant has been accused of using data from independent sellers on its website to launch competing products. And what’s to say that Amazon won’t suddenly change its listing algorithm, upending companies on its platform altogether? Rymarz acknowledges those risks, though he believes Amazon has still allowed, and has a key stake in, allowing the overall marketplace to proliferate.