Conference Transcript - DIBS 2026-08-26

Operator

Hi, everyone. Welcome. We're really glad to introduce you to FirstDibs.com. This is David Rosenblatt, CEO. And over here we have Bradford Shellhammer, CPO and CMO. I've Googled them both, and they have incredibly impressive resumes. You should take a look. This guy's really interesting.

David Rosenblatt, CEO

Thank you. He is very interesting. Much more interesting than I am, actually. So who is FirstDibs? First Dibs is the world's leading curated online marketplace for luxury one-of-a-kind items. Our mission, as the slide says here, is to enrich lives with extraordinary design. We've been doing this for over 25 years. And just to kind of give you a feel for how we do it, what we've done, our average order value is a little bit under $3,000, which is about six times higher than the average order value of other marketplaces that are typically regarded as luxury. We've sold over $3.3 billion worth of product to over 1.2 million customers in the time that we've been an e-commerce platform, which is something that I'll get to in a minute. But I think probably the best way to give those of you who don't have a feel for kind of where the brand or the brand positioning that we occupy, is to tell you a quick story. One of my favorites, there are many actually, about this company, which is, so my background is tech, non-luxury, and actually before First Dibs, non-consumer as well. And so I joined First Dibs and I was sitting in my office one day and I looked down and I saw that I got an email from Diane von Furstenberg, the famous fashion designer, and she asked me to have lunch. And so I responded and I said, I'm sure that, you know, you didn't, this wasn't intended for me. You know, there are a lot of sort of variants of David Rosenblatt and I get emails for all of them all the time. And she said, no, I know exactly who you are. And I do. In fact, it was intended for you so why don't you come over our office was pretty close by in new york and let's have lunch and so i did and i showed up at the appointed time and when i got there i asked her so why did you want to have lunch with me and she said she had a line which i think again i've always remembered and i think captures the customer perception of first dibs uniqueness in a way that's probably better than I could do myself, which is, she said, other than my own, there are only two websites that I truly love. One is Amazon and the other is First Dibs. I've met the guy who's doing Amazon and I just wanted to meet the guy who's doing First Dibs. Okay, I'll take being in that company. But it is indicative of what we represent to people who truly care and love luxury design. Okay, our history. Like I mentioned, we're 26 years old. We were founded in the Paris flea market in 2000, which is the neighborhood in Paris, the design district, for lack of a better word. In Paris, one could say the whole city is the design district. But this is the district that's, is the district that's focused on the type of product that this business was launched to put online. I'm not the founder. The founder, Michael Bruno, moved the company to New York shortly after founding it in Paris. And for its first 10 years, the business was run in a way that was very similar to Craigslist, meaning it was a listings platform. He recruited the best sellers of antique and vintage furniture, mostly in the U.S. Those sellers listed items on the marketplace, but there was no e-commerce. The only way to buy was to call or email the seller and then negotiate a transaction off-platform. In 2011, First Dibs and Michael raised its initial venture round from Benchmark Capital, the Silicon Valley investors. And I had a prior relationship with Benchmark. I lived in New York, and I came in as part of that investment, and I've been here ever since. We've had really three primary strategic thrusts since then, which at the highest level still are relevant and kind of define how we think about who we are. Number one was to transactionalize the marketplace. So like I mentioned, we had been Craigslist. So one way to think about it is we turned Craigslist into eBay. We're now a fully end-to-end e-commerce, online, pure play marketplace. The second was, at the time that I joined, despite the fact that the company had been founded in Paris, 95% of our supply and 90% of our demand was U.S. only. The market that we operate in is fundamentally a global marketplace. If you're interested in the best design in the world, you don't care where it happens to sit. So number two was to globalize the business. And then number three was to expand the business from the vintage and antique furniture category, which was the only product that we had on the marketplace, into adjacent categories that could benefit from the brand that we had created as a byproduct of our first mover status in vintage and luxury design. And really today, you know, that still defines, again, at the highest level, sort of how we think about who we are. We went public in June of 21. That was at the peak, unfortunately, of the real estate market. Since then, the market has been on a decline, and we declined with it. GMV declined for a number of years. For much of that time, we've been adjusted EBITDA negative. We've corrected now both of those things. Our first priority was to get to break even. We got to adjusted EBITDA break even in Q4 last year. And at the midpoint of guidance for this quarter, it will have been our fourth quarter in a row of adjusted EBITDA break-even. So we're now profitable on that basis. And then the second priority has been to restore growth. And there, too, we're a little bit ahead of schedule. We had planned to get to growth positive, and I'll explain why in a few slides. In Q4 of this year, we got there two quarters earlier than planned in Q2. We grew at 7% with an adjusted EBITDA margin of 6%. At the midpoint of guidance, again, we'll grow in Q3, and that's comping a significant cutback in paid. The comps just get easier after that, beginning in Q4. And again, I'll explain that in a couple of slides. Okay, so what is the definition of the business? We are, in many respects, a classic example of a two-sided network effect marketplace. So the supply side is about 6,000 vetted professional sellers of, as I said, luxury furniture, jewelry, art, and some fashion. The difference here between us and many other marketplaces is twofold on the supply side. One is our sellers are businesses. They're not individuals. So we're not a so-called C2C or consumer-to-consumer marketplace. Our sellers are all professional sellers. And the second is they're all vetted. So it's very difficult to become a seller on First Dibs. You have to apply. You have to submit photographs. You know, we check your business records, which fairs and other venues you've sold through. We obviously look at the, we evaluate the inventory and so on. And you only get on the marketplace if you have, you know, if you check out on all of those dimensions. And, you know, one of the things that I think is a sort of interesting proof point of the benefit of that is that our combined fraud and return rate is less than 5% across all orders. If you compare that to, say, the average across fashion, luxury fashion marketplaces, you know, it's roughly in the, for them, roughly in the 30% zip code. And so the reason why that's lower, there are a bunch of reasons, but the primary reason is, you know, you don't get on the marketplace unless you're really good. And there's less reason to return items from sellers like that. The demand side consists of two types of buyers. So 70%, 7-0 of our demand is from consumers, mostly higher net worth, mostly female, mostly older. And then the balance, 30% of our demand comes from professional sellers, or sorry, professional buyers, interior designers who are to this market. What, for example, ad agencies are to the media market in the sense that they buy for a living, they're high repeat purchasers, they tend to be higher average order value buyers, and most of all, they have a significant and deep appreciation for the quality and the differentiation of our assortment. So we, of course, record GMV as GMV, gross merchandise value of all products that we sell. Our revenue model is a combination of subscription fees that we charge sellers as well as commissions. On a combined basis, our take rate is about 25%. And again, that's commissions, subscription fees, and we do sell some advertising as well, although that's a relatively small percent of the take rate.

Operator

Did I just go backwards?

David Rosenblatt, CEO

Okay. So I've mentioned a bunch of these numbers, and I'll just call out a few that I think are relevant for understanding the business. Probably the most, a couple of most, I would say actually maybe even the most important one here is the zero. We have zero dollars of owned inventory, meaning we are completely asset light. We never touch the product. Our sellers are responsible for fulfillment. We do create shipping programs that leverage our scale as an aggregator of many sellers, and we allow our sellers and buyers to benefit from both the kind of economics and the service levels that go with that. But we ourselves are not responsible for the physical fulfillment of these items. I mentioned our average order value, which is $2,850. Our median order value is $1,500, meaning not everything we sell is incredibly expensive by the standards of this marketplace. We have $10 billion of stock value, meaning the face value of all the product on the marketplace is $10 billion versus the $365 million that we sell or that we are selling each year. Why the difference? You know, I think part of it is just inherently there's a longer sales cycle in this market than there is when you're selling commoditized products like batteries and so on. On the other hand, you know, we feel like there's substantial headroom to improve the so-called conversion rate, the percentage of visitors that convert into buyers as well, even without growing that $10 billion of stock value. So while there is a significant opportunity to expand the amount of supply that's on the marketplace, we're not dependent on that in order to be able to sustain our GMV growth. Okay. I mentioned that at the inception of the company and for over a decade, we were all furniture all the time. The basic idea, again, was to take the substantial brand and kind of equity value of our brand that we generated as a byproduct of the fact that we had the best assortment and luxury design and kind of amortize or apply that to other categories that could benefit from that same level of trust. And, you know, I think in that respect, jewelry is a sort of interesting example. Jewelry is our second biggest market, second biggest category, rather. It's far and away our largest market that we operate in. And, you know, if you think about it, there's no pure play incumbent jewelry luxury marketplace on the Internet, right? There's no marketplace version of Tiffany's or so on. And this, despite the fact that jewelry is very easy to ship, very easy to return, can be bought at many different price points, is relevant to almost all women in the world and many men. It includes watches as well. So these are big markets. They're very e-commerce friendly. And yet there's no incumbent marketplace. And one of the questions I've always asked myself in the time that I've been at First Dibs is, why is that the case? I think that's because no other company has the trust that's required to be able to transact at the price points that are most common in the jewelry industry. There are marketplaces that traffic in much lower priced jewelry items than we have, but there really isn't one at scale that operates at the level that we operate at. And again, I think there's, it's just I mentioned that because I think it's a perfect example of the phenomenon that I'm talking about. You know, we also operate in the art market. There's a high degree of complementarity between art and design. And we also think there's opportunity in parts, not all, but parts of the luxury fashion market as well. This gives you, I think, a more concrete sense for the types of products that we sell. I'd call out a, you know, I don't know, probably the one that I would call out is the one in the middle, the Norman Rockwell, which we happened to sell last quarter for $1.3 million. And, you know, what was amazing about that order was that it was from a first-time buyer. So somebody showed up at First Dibs. They'd never bought from us before. they found this $1.3 million Rockwell, and they bought it, sight unseen, and from a customer, from a vendor, and from his point of view, with whom he did not have a relationship, right? So again, I think that sort of speaks to just the really compelling level of trust that our brand occupies in the mind of the buyer, even those who haven't actually bought from us, which was which was the case in this example. And the other products here, I think, again, give you a feel for what we market that others don't. This is not product that you're likely to see on almost any other mainstream marketplace. I mean, you know, Facebook marketplace, eBay, Etsy, and so on, all operate at a much lower price point level than we do. So, you know, Bradford and my background is solidly in tech, and our belief is that the best companies in every category are tech companies. The best tech companies are product-driven, full stop, and that's the best and most sustainable and also most profitable way to generate growth through product enhancements rather than through extensive advertising. We do advertise, but the majority of our growth is driven by product, And our contribution margin is about 65%, which is, I think, a good proof point of that. So what are we focused on? We're really focused on just the fundamentals of the buyer and seller experience and making that as good as possible. Bradford started last August, and this roadmap is really his. And it falls into four main categories. So discovery, which is finding things on the marketplace, right? We have 2 million items. It's not always that easy to find stuff. In many cases, buyers don't even know what they're looking for. They just want something that looks great in their living room or their bedroom or their office or whatever. And so the primary drivers of discovery or the primary components of discovery are search and personalization. And then off of First Dibs, a kind of influencer network, which we call First Dibs Tastemakers, to broaden the appeal of our marketplace beyond our historical core categories. And that's especially important, I think, in a world where search and just Google and the user experience of finding things through Google is changing in really fundamental ways and becoming a much less reliable way to acquire new users than through other channels like Instagram, TikTok, social platforms that we all know and love. Pricing, which we're in the process of expanding to trust more broadly. I think the problem this solves is that customers tend not to know what items are worth or what they should be worth because they're one of a kind. But it's bigger than that. It's also understanding and appreciating the quality of the sellers and of the vetting that we do, and on our side, making that checkout process as seamless and as frictionless as possible, which in this market, again, we're not selling batteries, right? There's a lot there that doesn't exist in other markets. And one small example of that is over half of our sales are the result of negotiated kind of discussions and exchanges between buyer and seller. When was the last time you negotiated for anything on Amazon? It's not an e-commerce experience that people find, or at least the broader market, finds intuitively obvious. And so the burden is on us. It's quite powerful, but the burden is on us to kind of describe the power of that to buyers, the fact that they can actually talk to the seller and they can negotiate with the seller and make that a kind of unforbidding, inviting experience. Shipping, I think the challenges with shipping are obvious. It's not that different than the challenges with shipping in other markets, except there are no solutions yet in this market. We're developing them. So our goals there are relatively straightforward, which are to make shipping prices kind of universally understandable before checkout, meaning you don't have to go through a whole kind of bespoke process to figure out what it's going to cost to ship something from point A to point B, have those costs be as low as possible, have them be as transparent in terms of tracking as possible, and then to make sure that the item actually gets to the buyer as quickly as possible. All of those are kind of table stakes in other markets. They don't exist in this market. And then lastly, when you're selling $1.3 million works of art, you can offer Amazon or eBay-like levels of service. Not that their service levels are low, but it's really more a different quality of service, you need to give people the ability to talk to somebody while not sacrificing, you know, kind of triple nine's level of service on some of the core deliverables like logistics and all of that. So these four are really the core focus of our product management strategy and really ultimately of our growth strategy because, as I mentioned, our strategy is to grow by product enhancements rather than only by marketing. The last thing I'll say on this is probably the best example of our kind of nature as a product-driven technology company is just our distribution of headcount. Roughly half of our folks work in product and engineering, which, again, very different from, you know, I don't know, a large auction house or, you know, a large retailer business like that. So I mentioned some of these advantages, some of these assets. But, you know, our TAM is large, over $100 billion, if you add up the sales opportunity in each of the four major categories that we're in. We really are, I think, unique in the sense that we offer a trusted platform that others don't. You know, one way I've always thought of thinking about this is, you know, when you think about the kind of e-commerce races in different markets, It's pretty clear that the race for the $50 order is over, and Amazon and potentially Walmart have won that. The race for the $5,000 order is not over yet, and I believe that we have a right to win there. We are, again, classic marketplace business with all the benefits that come with that, including high degrees of financial and operating leverage as well as increasing returns of scale and all of those MBA terms that sound like jargon, but they're true. And we and our customers both benefit from that. We are highly scalable, so we worked really hard to get to adjusted EBTA break even in Q4. As we resume growth, we will not have to resume headcount growth beyond the minimal that's required to handle higher volumes. And so, again, that plus the fact that we have a low dependence on paid advertising is what allows us to have the financial and operating leverage that we benefit from today. And the last thing I would say, and probably most interesting given just sort of where people's heads are for good reason today, every single thing that we do is now we're going to be able to do 10 times better because of AI. So all of these problems existed before. But in each of those areas, you know, if you think about our, when we think about our major product enhancements, some of the things that allowed us to get to growth a couple quarters earlier than we had planned, they're all, all driven by AI. So just, you know, as examples, discovery, you know, personalization is driven. We just rolled out a personalization algorithm that has a very positive effect on the homepage. We just this week are rolling it out to our email marketing. You know, that is an AI, that's a machine learning model. On pricing, one of the ways that we can now scalably ensure that our sellers are complying with our price parity policy is via a machine learning model. Shipping, we used to only be able to pre-quote 60 to 65 percent of items on the marketplace. That's now at 95 percent because we use a machine learning model to be able to accurately predict what it's going to cost to ship, you know, otherwise hard to quote items from point A to point B. Service, we are automating our kind of base level, lowest level of customer service inquiries via an AI model, which then frees up our service folks to support buyers of $1.4 million Norman Rockwells. Okay, financials. I think I'm just going to do one slide on financials. We're public. All the data is out there. I'm happy to answer any questions to the extent you have them. In Q2, you know, we did 90, you can see the numbers here, 96 million of GMV, 23 and change of revenue, and importantly, 1.3 million of EBITDA. I think what's interesting to me here, much less than the absolute numbers, you know, is the trend line, starting with the EBITDA set of charts on the right. You know, we worked very hard. It took us four years to get to this point of being adjusted EBITDA positive as a public company, and we're going to stay there. The next goal, as I mentioned, is if you move to the left, is to have a kind of similar, achieve a similar curve on GMV and then revenue. And that is going to be a function, in the first instance, of these product enhancements made easier over the next couple of quarters, beginning in Q4, by copying a pretty substantial cutback in paid spend that we undertook in q4 last year and all of this by the way is without a recovery in the real estate market when that happens and it will happen this is not a market that's clearly in secular decline it's a cyclical problem you know i can't call none of us can call when that's going to happen but it will then that'll add a second tailwind to our top line growth okay that's who we are Any questions? Yeah. Yeah. So we spend much less than most other marketplaces, which I think is the key point. So as I mentioned, in Q4 last year, we cut paid advertising by 50%. And that's part of the reason why our GMV declined in Q4 and in Q1. Again, we had planned to resume GMV growth in Q4. We were actually able to get there in Q2, largely as a result of the product enhancements that I discussed. What do we spend it on? Our largest source is Google, and then second largest is Meta, which is basically Instagram. Well, we only spend money on advertising that is effective. So we measure all of our ad spend on a kind of strict LTV basis. And we don't spend a dollar that's below our return threshold. Yeah. Yeah. Yeah. Yeah. No, it's a good question. So even though it's called a flea market, it's much fancier than that because it's in Paris. But the Paris flea market is the design district in Paris that specializes in high-end secondary market, I guess, is the easiest way to call it furniture. And, you know, if you were to walk into the nicest apartments in Paris and New York, London, you know, most of what you would say, oh, wow, that's beautiful, is product that originates from the Paris flea market or sellers similar to those who specialize there. So putting that marketplace online was the original business model. And for the first 10 years, it was the only assortment that we had. So 100% of what we sold was high-end vintage, meaning secondary market, or antique furniture. I think the kind of opportunity that we all felt was there was to take the brand that we generated as a byproduct of specializing in this very high quality design and using that as a way to get into other categories like jewelry, like new artisanal furniture and fashion and so on, art, that would benefit from the strength of that brand. So today, 50% of our GMV is that original category of secondary market luxury design. And the balance is both secondary market and new product in the categories that I mentioned, furniture, jewelry, art, and fashion. Yeah. So look, that's, yeah, yeah, yeah. I would say, you know, for probably 99% of what we sell, we do not seek attestation or confirmation of the authenticity of the item beyond that which is already on the marketplace and provided by the seller. And that's the benefit of having a vetted marketplace. We vet our sellers once, and then we do not vet, for the most part, at the item level beyond that, which is helpful for our economics. You know, in cases like that, we've had $6 million-plus orders in the time since we introduced e-commerce. And in those cases, the buyer typically does ask for an additional attestation. And we will work with the seller. The seller is ultimately the one that has to provide it. We'll work with the seller to provide that. But again, in 99% of the orders that we support, it's not asked for. It's not needed. Yeah. Yeah. So they they do the work, but we help in a number of ways. I mean, one is just, you know, for example, in, you know, we have technology that can automatically take a picture of a vase and, you know, put it against a white marketplace where the seller may have, you know, used a different, sorry, I say marketplace background, whereas the seller, you know, may have just taken the picture of the vase in his workshop or something like that. So we do employ technology to improve the appearance of the imagery or to improve the quality of the imagery. But for the most part, our sellers do the work. The second way that we help is we give sellers guidelines. We know because of our scale what's likely to work for the buyer. and we tell the seller and we create an incentive system where the better the seller represents the item, both in terms of the visual imagery, but also in terms of, you know, the item description and the accuracy of dimensions and so on, you know, the more good things happen to the seller, the more prominence we give the item and so on. Yeah. So I think, you know, if you think about it in terms of, there are two ways to think about it, right? What percent of our TAM on the supply side do we have in terms of number of sellers and what percent do we have in terms of number of items? And I think the answer on both is low. In our historical core category of vintage and antique luxury design, it's high. But, you know, we, again, we have this right to win in adjacent categories like contemporary design, jewelry, both secondary market and primary market art. And if you look at it on that basis, especially through a global filter, our share of professional sellers is very low. If in the future we were to expand the supply side to include consumers, otherwise known as C2C, it obviously becomes infinitesimally low, right? Because there are so many more consumers than there are professional sellers. And then equally, if you look at it on an item basis, it's also extremely low. Many of those items are in people's homes and closets. And so accessing that would require a C2C model. But that's not, you know, it's not our current focus. But for the future, it's not off the table either. Actually, we spend, you know, very little time and energy to attract sellers. And the reason, again, is because of the network effect. You know, it's sort of universally known within our industry that we have aggregated, certainly for design, meaning furniture, you know, the large majority of qualified buyers. I mean, one small example, I have a second home in Connecticut, and I remember when I was talking to Benchmark about potentially joining First Dibs, I called my interior designer who had helped us with this home, and I asked him, you know, hey, Russell, have you ever heard of this company, First Dibs? And he said, you know, if I heard of First Dibs, you know, 50% of your place in Connecticut was sourced on First Dibs. So, you know, that speaks to our share and our awareness among the most qualified users. However, the market of people that haven't heard of us, you know, is much, much larger, right? And so that's, I think, is, you know, that's the, I think, by far the bigger opportunity. And I think there are a lot of things entailed in meeting that opportunity. Part of it is creating an e-commerce experience that is, you know, has much less friction than ours does today. Part of it is increasing the amount of supply we have and so on. But that opportunity is certainly in front of us and something that we're very consciously going after. Yeah, so there are only professional buyers in furniture, right, interior designers. Outside of that, they're all consumer markets. And so, yeah, they're fundamentally different. Yeah, so with interior designers, as I mentioned, I'd say we have 95% awareness. So that's not the issue. The issue is just sort of increasing their frequency of purchasing, just similar to many other businesses. On the consumer side, it's much more of an awareness game. And one of the things that Bradford launched soon after starting is our first ever influencer network. We actually didn't have one. This brand works really well with that. One, it's very visual. And the second is it is influencer-based, right? I mean, when you think about what you want to buy, you are influenced by others in a way that's not as true in other markets. And then the third thing is that the nature of this market is such that those who can be effective influencers are typically not competed for, right? It's like we're not going for the 25-year-old, like, super hot, you know, fashion influencer who lives in, you know, I don't know, you know, wherever, right, like Soho or something like that. You know, we're going after a much more niche-y audience that has correspondingly higher credibility amongst its audience, but is much less, it's just a much less competitive process.

Operator

Thank you very much.