--- title: "Lenny's Newsletter — 2019 年合集" date: "2019-01-01" source: "Lenny's Newsletter" url: "https://www.lennysnewsletter.com/" ---
# Lenny's Newsletter - 2019 (25 issues) This file contains 25 articles/episodes. --- ## [1/25] A Three-Step Framework For Solving Problems 👌 [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ec85cabc-5222-4a71-9e48-159f1981c07e_1600x800.png)](https://substackcdn.com/image/fetch/$s_!z_HZ!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fec85cabc-5222-4a71-9e48-159f1981c07e_1600x800.png) It’s 2012 and our team has just joined Airbnb. We’re tasked with building out a “social travel” experience for Airbnb travelers. The thinking is that travelers on Airbnb are siloed across the city, and if we make it easier for guests to meet up and do things together, Airbnb trips would be significantly more meaningful. We work long and hard to design an amazing experience for travelers to discover fun local things to do with other travelers. Fast forward to 6 months later when we launch the V1 in San Francisco. The product is beautiful and the experiences smooth. Adoption however…not so much 📉. A small percentage of travelers give it a shot, and it generally goes OK, however it’s far from the reaction we were looking for. We iterate a bit, make some incremental improvements, but a few months later we end it and move on. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/999571b9-9839-4cd5-9c65-892caa844a3e_1280x853.png)](https://substackcdn.com/image/fetch/$s_!XzE0!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F999571b9-9839-4cd5-9c65-892caa844a3e_1280x853.png) An early design of the product we launched, giving Airbnb travelers an easy way to find fun things to do with other travelers — designs courtesy of [Shaun Modi](https://shaunmodi.com/meetups) I personally took many learnings away from that experience, but most of all it instilled in me the importance of getting the problem statement right. Though many factors contribute to a project’s failure, **nothing is more certain to cause a project to fail than a misunderstanding of the problem you are solving**.In the example above, we recognized too late that the real problem we should have been solving was not “travelers want to hang out with other travelers”, but instead, “travelers want to find high quality non-touristy things to do.” Hanging out with other travelers is one solution to this, not the actual problem. Luckily another team recognized this and ended up launching a much better solution, [Airbnb Experiences](https://www.airbnb.com/s/experiences), a few years later. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/5684d902-5fc3-4540-9df8-a46fff2d3277_179x166.png)](https://substackcdn.com/image/fetch/$s_!ijA4!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5684d902-5fc3-4540-9df8-a46fff2d3277_179x166.png) As I noted in [my last post](https://medium.com/@lennysan/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56), I firmly believe that nailing the problem statement is the single most important step in solving any problem. It’s deceptively easy to get wrong, and when done well it’s a superpower of the best leaders.Luckily all it takes is three simple steps: - **Step 1: Crystallize the problem you are solving** - **Step 2: Align on the problem with your team and stakeholders** - **Step 3: Keep coming back to the problem** > “True happiness occurs only when you find the problems you enjoy having and enjoy solving.” — Mark Manson ([The Subtle Art of Not Giving a F\*ck](https://www.amazon.com/dp/B019MMUA8S/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1)) #### A little bit of context first This framework is most effective when you have a project in mind, either a new product or a new feature. Before you dive into design or engineering, go through the following steps to set your project up for success. If your team doesn’t have a clear vision (i.e. where you’re going) or overall strategy (i.e. how you’ll get there), pause here and figure these things out first; [this](https://boz.com/articles/strategy-tactics.html), [this](https://www.salesforce.com/blog/2013/04/how-to-create-alignment-within-your-company.html), and [this](https://www.amazon.com/Good-Strategy-Bad-Difference-Matters-ebook/dp/B004J4WKEC/ref=sr_1_1?crid=3SUB4MWG7602M&keywords=good+strategy+bad+strategy&qid=1554495219&s=gateway&sprefix=good+strategy+bad%2Caps%2C204&sr=8-1) will help. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/142f4c29-c178-438e-b699-f8102c43f3bf_358x300.png)](https://substackcdn.com/image/fetch/$s_!a8Xu!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F142f4c29-c178-438e-b699-f8102c43f3bf_358x300.png) # Step 1: Crystallize the problem you are solving Start by answering these questions about your project: - *Description: What is it?* - *Problem: What problem is this solving?* - *Why: How do we know this is a real problem and worth solving?* - *Success: How do we know if we’ve solved this problem?* - *Audience: Who are we building for?* - *What: What does this look like in the product?* You can also use this handy [1-Pager template](https://docs.google.com/document/d/1541V32QgSwyCFWxtiMIThn-6n-2s7fVWztEWVa970uo/edit) ([copy it here](https://docs.google.com/document/d/1541V32QgSwyCFWxtiMIThn-6n-2s7fVWztEWVa970uo/copy)). I find it most effective if a single person takes the first pass (usually the PM, but doesn’t have to be). Below is a bit more detail on question. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f40339af-0497-4c78-8355-90215b6bbfd8_182x200.png)](https://substackcdn.com/image/fetch/$s_!FvYp!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff40339af-0497-4c78-8355-90215b6bbfd8_182x200.png) #### **Description: What is it?** This is just a brief description of what you’re thinking, so that folks reading this doc can quickly grok what this project is all about. Keep it brief. #### Problem: What problem is this solving? The problem statement itself is foundational so spend extra time there. Think of the problem like a hypothesis. What do you believe the problem you are solving is, and why? You’ll add more context later. Key attributes of a strong problem statement include: 1. **It’s short.**Aim for a single sentence to describe the actual problem. The more you need to explain it, the less clear the problem ends up being. 2. **It’s focused.** It includes just a single clear problem that can be owned by a single team and solved in a reasonable amount of time. It’s often very helpful to add some examples of what problem you are \*not\* solving. 3. **It references a “need” that is not being fulfilled.** Try to focus this around a user need, but can also be a business need if necessary. The [Jobs-To-Be-Done framework](https://jtbd.info/2-what-is-jobs-to-be-done-jtbd-796b82081cca) is especially useful here. 4. **It includes a what and a why.** What’s going wrong, and why is it a problem? You’ll need to back this up in the next section. 5. **It’s agnostic of a solution.** Resist the urge to jump to a solution this early. Examples of good problem statements: - Lyft drivers are cancelling rides too often because the passengers are too far away. - Airbnb hosts are feeling frustrated because they want to improve, but are finding it difficult to figure out how. - Users are dropping off at too high a rate at the final step of the signup flow. Examples of bad problem statements: - User growth is slowing. [Issue: Too broad for this process, see advice on approaching big picture strategy [here](https://boz.com/articles/strategy-tactics.html) and [here](https://www.amazon.com/Good-Strategy-Bad-Difference-Matters-ebook/dp/B004J4WKEC/ref=sr_1_1?crid=3SUB4MWG7602M&keywords=good+strategy+bad+strategy&qid=1554495219&s=gateway&sprefix=good+strategy+bad%2Caps%2C204&sr=8-1). Also not user-centric.] - Build a loyalty program. [Issue: Assumes a solution. What’s the problem this is solving?] - Users are bouncing from the signup flow. [Issue: Not focused enough, and missing a hypothesis of the why. Go one level deeper.] #### Why: How do we know this is a real problem and worth solving? This is where you collect evidence backing up your problem statement, aka hypothesis. What initially convinced you that this was a problem? What makes it clear to you that this problem needs to be tackled? Sometimes at this step you realize this problem isn’t actually worth prioritizing right now, or that you need to adjust how you think about the problem. That’s the whole point of this exercise, so don’t resist it. There are infinite problems to tackle — your goal is to feel confident that this problem is worth your team’s time right now. A few tips for this step: 1. **Look at both quantitative and qualitative evidence.** Collect all data points that point to this being a real and important problem. 2. **Quality over quantity.**Three to five strong data points is far better than a dozen tangentially related points. Your case ends up being weaker with too many items because often you end up filling it with minor and unrelated data points to make it look like a lot of evidence. Your case doesn’t have to be perfect or air-tight. 3. **Play devil’s advocate with yourself.** Try to convince yourself that this isn’t actually a real or big enough problem. What gaps do you have in your evidence? Is the evidence truly telling you what you think? Push yourself here. In the end it’ll be judgement call amongst many tradeoffs. Your job is to make the best case you can with the data you have. Continue refining the problem statement as you learn more. #### Success: How do we know if we’ve solved this problem? Did you achieve what you set out to achieve? How will you know? Answer that question and write it down in this section. > “Did I do that or did I not do that? Yes? No? Simple.” — Andy Grove This criteria becomes incredibly important throughout the project because it helps you make decisions and prioritize. Does feature X increase the chances of achieving the goal you set? If not, cut it. Ideally this is a specific metric, with a defined goal, that you can easily measure. Ideally it directly connects to your team’s KPI’s. Ideally it is based on hard data about the opportunity size, investment size, and a heuristic from past experiments. Rarely is it ever ideal. Here is some advice for defining your success criteria: - Try hard to make it a concrete number, e.g., 10% increase in X, 50% decrease in Y, 20% adoption of feature Z within 3 months. - Pick a goal that’s believable, but ambitious. What’s a goal that if you were to hit, your team and your leaders would be excited about? - If you don’t think a metric makes sense for your goal (think long and hard about this), write out what concretely the world would look like if this was a big success. Make that the success criteria. #### Audience: Who are we building for? This is pretty self-explanatory. It should rarely be for all of your users. Is it for new or returning users? Is it for casual or power users? Is it for users on mobile or web? etc. #### What: What does this look like in the product? This is where you take a shot at describing the solution to the problem.Depending on the way your team operates, and how much is already known, this can be very high level or very detailed. In my experience the key here is aligning with your designer(s) to figure out how much detail they want and what would be most helpful in the process. # **Step 2: Align on the problem with your team and stakeholders** Have you ever seen those Chipotle billboards along the highway (pictured below)? Years ago my co-worker [Peter](https://twitter.com/PeterKirwan) pointed out the trick behind these ads — each of us is picturing our most ideal and delicious ideal burrito inside of that silver burrito. We all see what we want to see. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fa02a4b4-62fd-4230-969a-df4d59fe785a_1280x960.jpeg)](https://substackcdn.com/image/fetch/$s_!M3TL!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffa02a4b4-62fd-4230-969a-df4d59fe785a_1280x960.jpeg) **Problem statements are like silver burritos.**Everyone on your team has a unique version of the problem in their heads. Sometimes they are nearly identical. Sometimes they are very different. The larger and more complex the project, them more likely they are different. Your job is to eradicate this misalignment early and often. Open up the wrapper and make sure everyone agrees on the burrito inside. Luckily we have a great document from Step 1 that will make your job 10x easier. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/20564a84-e510-47d9-8db1-6ee7b5b2a810_274x200.png)](https://substackcdn.com/image/fetch/$s_!jxPB!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F20564a84-e510-47d9-8db1-6ee7b5b2a810_274x200.png) I usually approach this step like so: 1. I take a crack at Step 1 (but again, it can be anyone on your team that’s passionate about the particular problem) 2. Share the draft with the entire team that’ll be involved in this project. Ask for feedback (in comments, in email, or in person). Integrate the feedback, and re-share. 3. If the feedback is converging and the team seems aligned, great. If not, pull everyone together and chat through disagreements in person. 4. Once your team is aligned, share with your stakeholders. It’s extremely important that your team and the folks judging your success are aligned on the problem you are solving before you get too deep into design/eng. 5. Bring the team together for an in-person kickoff where you again review the problem statement, answer any outstanding questions, and make sure your team has everything they need to get rolling. # **Step 3: Keep coming back to the problem** The classic Seinfeld clip below, where Jerry and Elaine attempt to get a car they previously reserved, is a great metaphor for a classic trap in product development. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e69548b1-b8b0-4678-bcd4-2847c2b3ea7a_478x350.gif)](https://substackcdn.com/image/fetch/$s_!B-YK!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe69548b1-b8b0-4678-bcd4-2847c2b3ea7a_478x350.gif) **We often start with great intentions and alignment, but when it counts most — when the work is actually being done — we often don’t hold on to the problem we set out to solve.** And that’s the most important part of the problem. [![Image from A Three-Step Framework For Solving Problems 👌](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/afb3ac94-1466-4d09-9d49-f1a37f0c8d07_320x200.png)](https://substackcdn.com/image/fetch/$s_!IVt7!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fafb3ac94-1466-4d09-9d49-f1a37f0c8d07_320x200.png) A number of years ago I remember working on a project where we were building a dashboard for Airbnb hosts. The initial problem we defined and aligned around was reducing host response time —shrinking the average time it took a host to respond to a guest’s message. Our hypothesis was that hosts would respond more quickly if their unread messages were more prominent, and were also reminded that reply time impacts their search ranking. In the end we were right, but throughout the project, as the scope and complexity grew (pro tip: dashboards are a classic “silver burrito” problem), I found myself having to repeatedly remind the team what problem we set out to solve.Nothing helps reduce scope creep more than coming back to the problem statement and the success metrics.**You can solve many problems in many ways, but you can also build a beautiful product that solves no problems.** Avoid this trap with a few good habits: 1. In every design review, make sure the designers start by reviewing the problem statement. If it’s not clear, ask “What problem are we trying to solve?” 2. In every progress update to stakeholders, review the problem statement to make sure everyone continues to be aligned on the outcome. 3. Before finalizing designs make sure to ask yourself: “Am I feeling confident this is going to solve the problem we set out to solve?” # **A final note** We are all professional problem solvers—technical problems, interpersonal problems, organizational problems, etc. You won’t escape solving problems. > “Problems are constant in life. When you solve your health problem by buying a gym membership, you create new problems, like having to get up early to get to the gym on time, sweating like a meth-head for thirty minutes on an elliptical, and then getting showered and changed for work so you don’t stink up the whole office. When you solve your problem of not spending enough time with your partner by designating Wednesday night “date night”, you generate new problems, such as figuring out what to do every Wednesday that you both won’t hate…Problems never stop; they merely get exchanged and/or upgraded.” > > — Mark Manson ([The Subtle Art of Not Giving a F\*ck](https://www.amazon.com/dp/B019MMUA8S/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1)) Any time spent refining your problem-solving skill, in yourself and in your team, is time well spent. If you’d like to take this even further there are five books I highly recommend: 1. [Deep Work](https://www.amazon.com/dp/B00X47ZVXM/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) 2. [The Subtle Art of Not Giving a F\*ck](https://www.amazon.com/dp/B019MMUA8S/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) 3. [Good Strategy, Bad Strategy](https://www.amazon.com/Good-Strategy-Bad-Difference-Matters-ebook/dp/B004J4WKEC/ref=sr_1_1?crid=3SUB4MWG7602M&keywords=good+strategy+bad+strategy&qid=1554495219&s=gateway&sprefix=good+strategy+bad%2Caps%2C204&sr=8-1) 4. [Measure What Matters](https://www.amazon.com/dp/B078FZ9SYB/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) 5. [Lean Analytics](https://www.amazon.com/Lean-Analytics-Better-Startup-Faster/dp/1449335675) If you’ve found additional habits, tools, or docs that help you tackle problems more effectively I’d love to hear it — **[tweet at me](https://twitter.com/lennysan)**. Sincerely, [Lenny](https://twitter.com/lennysan) *Big thank you to [Sean](https://twitter.com/sean_lynch?lang=en), [Brett](https://matterapp.com/), and [Yelena](https://twitter.com/yelenart?lang=en) for reviewing early drafts.* --- ## [2/25] How to get into product management ![Image from How to get into product management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ca1f772a-0fac-45d7-a303-ca0d4db7edf4_2400x1600.jpeg) The role of product manager (PM) is the most fascinating role within tech teams right now. PMs are closest to the center of the action, have a disproportionate amount of influence over key decisions, and often go on to start their own companies. It’s no surprise then that product management has begun to show up on lists of the [best](https://www.glassdoor.com/blog/best-jobs-in-america-2018/), [hottest](https://www.usnews.com/education/best-graduate-schools/top-business-schools/articles/hot-jobs-for-mba-graduates), and [most promising](https://blog.linkedin.com/2019/january/10/linkedins-most-promising-jobs-of-2019) careers in the U.S. (and not just in tech). Seven years ago, after [joining](https://medium.com/s/please-advise/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56) Airbnb, I decided to take the leap myself and transitioned from engineering into product (becoming one of the first few PMs at Airbnb). Since then, I’ve helped a number of folks inside and outside Airbnb transition into product from other functions, including from Operations, Data Science, and Finance. **This post is a summary of everything I’ve learned and recommend when asked for advice on making this transition.**I’ll cover how to make sure the PM role is right for you, advice on landing your first PM role, and the skills you’ll need in order to excel. # Start with Why: Make sure PM is right for you Though I never planned to become a PM, I now couldn’t imagine having any other role within an org. It’s often a thankless, nerve-racking, and all-consuming. But, when it works, you feel like you were born to do it. Before you take the plunge yourself, take an honest assessment of what drives you — is this role actually right for you? #### Become a product manager if you are fulfilled by: 1. Solving people’s problems (both your users’ and your team’s) 🙇‍♂️ 2. Driving business growth 📈 3. Working closely with a variety of people 👨‍🎤 4. Developing a strategy 🤔 5. Getting shit done ✅ 6. Leading a team (through influence, not authority) 🤝 7. Communicating often and broadly 🗣 8. Making decisions 👍 9. Creating amazing experiences for people 👌 10. Being organized, detail oriented, and prepared 😎 #### Do not become a product manager if you are primarily fulfilled by: 1. Appreciation 🥳 2. Having your way 😑 3. Being left alone 🚨 4. Always being right 🤓 5. Designing or building things yourself 👩‍🎨 6. Everyone liking you 🥴 7. Flow states 🧘‍♂️ 8. Avoiding meetings 🤐 9. Avoiding email ✉️ 10. Avoiding people 🤨 You don’t need to connect with every item in this list, but if the gist feels right, keep reading. # Plan the How: The four most common paths into PM Based on my experience, and the many experiences [shared](https://twitter.com/lennysan/status/1123576007405993986) with me, here are how most people get their first shot at product management: 1. **Internal transition at a large company** — Generally the easiest and quickest route, but requires three things aligning — an internal transfer process of some kind, having a chance to demonstrate the skills outlined below, and most importantly an internal PM champion for your transition (generally your new manager). If two of three exist, find a way to make the third happen. Otherwise, pursue one of the other paths. More advice on how to execute this move [here](https://blog.hubspot.com/service/become-product-manager) and [here](https://www.quora.com/How-can-I-break-into-product-management-without-prior-experience-I-have-a-background-in-software-development-5+-years-and-an-MBA-from-a-Top-30-business-school-I%E2%80%99ve-been-turned-down-away-to-lack-of-experience-How-can-I-strengthen-my-candidature/answer/Ian-McAllister). ![Image from How to get into product management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/615415d8-0559-43a4-9cbb-7d4a94c54802_1028x1152.png) 2. **Finding a junior PM role at a large company** — Likely the most common route, but is limited to companies with [APM](https://medium.com/pminsider/product-management-digest-apm-3c2631683139) or [internship](https://www.linkedin.com/jobs/product-management-intern-jobs/) programs. This is an increasingly common route for MBA graduates (though an MBA [is not necessary](https://www.quora.com/Does-a-product-manager-need-an-MBA-Isnt-it-true-that-a-technical-guy-with-a-creative-bent-will-have-an-upper-hand-on-technical-software-products-than-a-management-guy-Isn%E2%80%99t-product-management-about-managing-the-product-not-people) to become a PM). If you don’t have an MBA, look into programs such as [Product School](https://www.productschool.com/) and [General Assembly](https://generalassemb.ly/education/product-management), and join communities like [PMHQ](https://productmanagerhq.com/join-the-community/%29). Otherwise, look for ways to practice the below skills in your current job. The key to this route is clearly demonstrating that you are smart, driven, and have raw strengths in a handful of the skills described below. More advice on how to land this [here](https://hackernoon.com/forget-the-mba-heres-the-fastest-way-to-become-a-product-manager-b3a230a7c055), [here](https://productcharles.com/how-to-get-into-product-management/), and [here](https://www.quora.com/How-do-you-get-into-a-product-management-role-with-no-prior-experience-as-a-PM). ![Image from How to get into product management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c1106afd-c40f-4151-8bcf-34b1b8921597_1032x1100.png) 3. **Joining a startup with a burning need** — The key to this route is having connections with startup founders, showing a lot of hustle, and delivering success when you are given the chance. Look for jobs at startups ([HN](https://news.ycombinator.com/jobs)/[AngelList](https://angel.co/jobs)), find a way to meet founders, and focus on developing the skills I lay out below. Having a very strong [growth mindset](https://fs.blog/2015/03/carol-dweck-mindset/) is key since you’ll have to learn how to do this job on the fly. In this path you can either start as a founding PM, or transition into it after doing the job for a while. The latter is how [Airbnb’s original head of product](https://www.linkedin.com/in/joebot) got into product management. ![Image from How to get into product management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/22e78a72-ac7a-4a1d-9e5d-52f26841b25b_1056x1036.png) 4. **Starting your own company**—This is by far the most work-intensive path, and rarely planned, but hey, it works. This is how I personally got into product management. CEOs often become PMs after an acquisition since the job is very similar. Alternatively, founders can take on the PM role at their own company as the company grows. I wouldn’t actually recommend prioritizing this route to becoming a PM, but it’s something to keep in mind when starting a company. ![Image from How to get into product management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6c6a2df2-a943-4a8b-96e8-a7a016b325bf_1046x998.png) Though this career transition often seems mysterious and random, it should give you comfort that every product manager working today has gone through this transition in one form or another. If you are still skeptical that you can make this happen, here are stories from PMs that came from [engineering](https://medium.com/pminsider/my-path-to-product-management-ed322881be53), [design](https://uxdesign.cc/how-i-transitioned-from-ux-to-product-management-14775167f249), [data science](https://medium.com/@treycausey/why-good-data-scientists-make-good-product-managers-and-why-theyll-be-a-little-uncomfortable-155bb9687f3), [user research](https://medium.com/@randomateo/what-it-s-like-to-switch-from-user-research-product-management-fc78649be16b), [program manager](https://medium.com/@womeninproduct/ask-wip-how-do-you-transition-from-a-program-manager-role-into-a-product-manager-f2684ad13e17), [consulting](https://medium.com/career-relaunch/transitioning-from-consulting-to-product-management-shit-is-hard-efdd87f992ae), [sales](https://product.voxmedia.com/2017/6/8/15762566/shifting-gears-from-sales-to-product-management), [marketing](https://hackernoon.com/from-marketing-to-product-management-3de21282c7ce), and [business school](https://blog.usejournal.com/how-to-get-into-product-management-esp-for-the-mba-folks-4374bab31be8). # Develop the What: The seven core skills to build The role of product management [varies](https://www.mckinsey.com/industries/high-tech/our-insights/product-managers-for-the-digital-world) by company and by team, but in my experience the following seven skills (in order of importance) are the most crucial to build early in your PM career. Along with a short overview of each skill, I’ve included a set of concrete suggestions for how to develop that skill, as well as links to my all-time favorite writing on each topic from industry experts. Don’t worry about being incredible at all of these — instead double down on your strengths and fill in the gaps. #### 1. Taking any problem and being able to develop a strategy to resolve it 🤔 The job of a product manager is to marshal the resources of their team to drive business value. Your team will be given problems (e.g. grow adoption of a product, reduce churn of a service, increase conversion of a flow), and your responsibility will be to guide your team to make it less of a problem. A strategy, paired with a clear vision, is essentially your route from problem to solution. > A good strategy is a set of actions that is credible, coherent, and focused on overcoming the biggest hurdle(s) in achieving a particular objective. > > — [Richard Rumelt](https://goodbadstrategy.com/) **Some recommendations for developing your strategic thinking:** - Ask the best PMs you know to talk you through the vision and strategy they developed for a recent product initiative (they’ll be excited to share, trust me) - Take a problem your current company (or friend) is having and come up with a [framework](https://www.producttalk.org/2016/08/opportunity-solution-tree/) that breaks the problem into solvable chunks - Learn about [the difference between vision, mission and strategy](https://boz.com/articles/strategy-tactics.html) - Read [WTF is Strategy?](https://hackernoon.com/wtf-is-a-strategy-bcaa3fda9a31) by [Vince Law](https://medium.com/@vincelawco) - Read [How to Become a Strategic Leader](https://sloanreview.mit.edu/article/how-to-become-a-strategic-leader/) by [Julie Zhuo](https://medium.com/@joulee) - Read [Applying Leverage as a Product Manager](https://blackboxofpm.com/applying-leverage-as-a-product-manager-ffad4a99db24) by [Brandon Chu](https://medium.com/@brandonmchu) - Read [A Three-Step Framework For Solving Problems](https://uxdesign.cc/how-to-solve-problems-6bf14222e424) by me 🙃 - Read about and practice [Amazon’s working backwards strategy](https://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management) - Buy and read [Good Strategy, Bad Strategy](https://www.amazon.com/dp/B004J4WKEC/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) by [Richard Rumelt](https://www.anderson.ucla.edu/faculty-and-research/strategy/faculty/rumelt) #### 2. Executing, getting shit done ✅ A PM that is good at nothing else but execution is valuable to a team, while a team with a PM that can’t execute is better off without that PM. Tactically this includes things like building a roadmap that everyone on your team is aligned behind, setting and hitting deadlines, and ruthlessly unblocking blockers. For new PMs, my advice is to begin practicing this skill immediately. > Executing well is like captaining a tight, smooth-sailing ship. You need to make sure that everyone knows what they need to do and then does it, that the crew hums together in unison, [and] that you estimated the journey well enough to have packed ample supplies. > > — [Julie Zhuo](https://twitter.com/joulee) **Some recommendations for developing your execution skills:** - You’ll only learn how to execute by doing. Find a friendly PM and ask to take on the “[project management](https://medium.com/paymo/product-manager-vs-project-manager-b4ac603d872a)” duties for one of their projects (pro tip: don’t ever call a *product*manager a *project* manager 😳). - Pay attention to people around you that are good at shipping — how do they run meetings, how do they address issues as they arise, what systems do they use to keep their team aligned? - Learn about OKRs and goal setting by reading [Measure What Matters](https://www.amazon.com/dp/B078FZ9SYB/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) by [John Doerr](https://medium.com/u/9ee9b0ebeddf) - As [Sachin Rekhi](https://medium.com/u/bb06de487a5b) [suggests](https://www.sachinrekhi.com/how-am-i-going-to-move-my-product-forward-today), regularly ask yourself “how am I going to move my product forward today?” - Read [Building Products](https://medium.com/the-year-of-the-looking-glass/building-products-91aa93bea4bb) by [Julie Zhuo](https://medium.com/@joulee) - Read [A Product Manager’s Job](https://medium.com/@joshelman/a-product-managers-job-63c09a43d0ec) by [Josh Elman](https://medium.com/@joshelman) - Read about [Sheryl Sandberg’s Career Advice](https://www.inc.com/justin-bariso/sheryl-sandberg-just-gave-some-brilliant-career-ad.html) #### 3. **Communication** 🗣 Engineers code, designers produce designs, and product managers …communicate. Everything you do as a product manager is done through writing, speaking, and meetings. As [Boz](https://en.wikipedia.org/wiki/Andrew_Bosworth) puts it, “[communication](https://boz.com/articles/communication-is-the-job.html)*[is](https://boz.com/articles/communication-is-the-job.html)*[the job](https://boz.com/articles/communication-is-the-job.html).” You can never be *too* good at this, and it’s very difficult to over-communicate. > The burden of communicating among teams, in between departments, and being the go-to get-it-done-guy/gal for CEOs and managers — it all tends to fall heavily on the Product Manager’s shoulders. Product Managers are the linchpins of their organizations. The fillers of “the white space” — the processes and tasks that need to happen, but for which no one is specifically responsible. > > — [Nichole Elizabeth DeMeré](https://twitter.com/NikkiElizDemere) **Some recommendations for developing your communication skill (borrowed from my [previous](https://medium.com/s/please-advise/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56) post):** - **Emails**: Force yourself to look at your email at least once before sending it. There’s always something you can cut or clarify. [Here’s an email strategy](https://hbr.org/2016/11/how-to-write-email-with-military-precision) I love, courtesy of the military. Also, know that it’s very difficult to over-communicate. - **Docs**: Always ask for feedback from at least one person before sharing a doc widely. Focus on clean and consistent formatting. Close out comments before sharing with execs. Make it easy to scan. Keep pushing yourself to learn to write better. - **Meetings**: Include the primary goal of the meeting in your invite, ideally along with an agenda. If you attend a meeting that doesn’t feel productive, point it out. Invite as few people as possible. Leave with clear action items. Follow up over email with the action items and owners. Read [How to Run a Quarterly Product Strategy Meeting](https://medium.com/speroventures/how-to-run-a-quarterly-product-strategy-meeting-a-board-meeting-for-product-3a14c4d53d1b) by [Gibson Biddle](https://medium.com/u/370100ca0fe1). - **Presentations**: Are you sure you need to do a presentation versus an email? Make sure your audience knows the goal of the presentation — are you looking for a decision or general feedback, or purely sharing information? It’s not as obvious as you think. Get feedback on your presentation; fresh eyes always catch the glaring issues. And keep it short — no one ever wished that presentation went longer. - **Storytelling**: This is a meta-skill that will make you better at all of the above. [This](https://speakingsherpa.com/how-to-tell-a-business-story-using-the-mckinsey-situation-complication-resolution-scr-framework/) framework is an excellent tool for laying out your pitch, and a few more helpful guides can be found [here](https://hbr.org/2014/03/the-irresistible-power-of-storytelling-as-a-strategic-business-tool) and [here](https://www.fastcompany.com/40480193/5-ways-charity-water-uses-storytelling-to-inspire-more-giving). #### 4. Leadership through influence 🤝 Generally, PMs have all of the responsibility without any actual authority. It’s a tough and rather unusual gig. But when it works however, it’s extremely fulfilling. In order to succeed you need to be able to build trust with your teammates, make decisions but also give everyone a voice, and keep morale up no matter what’s going on. The best PMs quickly become the de-facto leaders of the team, not because of any actual authority, but because they help everyone on the team do the best work of their lives. > [A great product manager] is both trusting and trustworthy. She knows the difference between trust and blind faith, and invests in building a working environment where people have each others’ backs. She sets an example with her own behavior and works from the assumption that people have good intentions. She listens and always strives to understand others’ context, point of view and perspective. > > — [Lawrence Ripsher](https://hackernoon.com/what-makes-a-great-product-manager-3c1d03b90356) **Some recommendations for developing your product leadership skills:** - Watch PMs around you closely — how do they get things done when they don’t actually manage anyone on the team? - Find a small project that you can lead, ideally working closely with a PM mentor - Foster culture within whatever team you are on. Establishing fun rituals and customs, plan outings, and create a lasting identity for your team. - Read [The Most Underrated Product Management Skill: Influence Without Authority](https://www.sachinrekhi.com/the-most-underrated-product-management-skill-influence-without-authority) by [Sachin Rekhi](https://medium.com/@sachinrekhi) - Read [10 Traits of Great PMs](https://medium.com/@noah_weiss/10-traits-of-great-pms-a7776cd3d9cd) by [Noah Weiss](https://medium.com/@noah_weiss) - Read [What Makes a Great Product Manager](https://hackernoon.com/what-makes-a-great-product-manager-3c1d03b90356) by [Lawrence Ripsher](https://medium.com/@ripsher) - Read [What distinguishes the Top 1% of product managers from the Top 10%?](https://www.quora.com/What-distinguishes-the-Top-1-of-product-managers-from-the-Top-10/answer/Ian-McAllister?srid=3wR&st=ns) by [Ian McAllister](https://medium.com/@ianmcall) - Read [Product Management skills NO ONE talks about](https://hackernoon.com/product-management-skills-no-one-talks-about-5d50debfb815) by [Taruna Manchanda](https://medium.com/@Taruna2309) - Read [The Job of Leadership](https://medium.com/@ev/the-job-of-leadership-757e4bc3e539) by [Ev Williams](https://medium.com/@ev) #### 5. Making decisions, informed by data 👍 Teams generally look to the PM to help them reach decisions. Expect to be making dozens of decisions on behalf of the team daily. Your best friend in making decisions is a clear set of [principles](https://medium.com/the-mission/this-principle-from-amazon-s-team-will-change-your-life-e8e02220007b) you aligned on previously, and hard data (both quantitative and qualitative). The less opinions you have to rely on, and the more facts you have at your disposal, the easier your life gets. > The decisions PMs make are the ones that unblock their team so they can continue to build. They don’t need to make every decision, but they are responsible for ensuring a decision gets made — whether by them, their team, or their stakeholders. Product managers are the hedge against indecision. > > — [Brandon Chu](https://blackboxofpm.com/making-good-decisions-as-a-product-manager-c66ddacc9e2b) **Some recommendations for developing your decision-making skills:** - Study how successful companies make decisions through experimentation ([Airbnb](https://medium.com/airbnb-engineering/experiments-at-airbnb-e2db3abf39e7), [Uber](https://eng.uber.com/xp/), [Netflix](https://medium.com/netflix-techblog/its-all-a-bout-testing-the-netflix-experimentation-platform-4e1ca458c15), [Pinterest](https://medium.com/@Pinterest_Engineering/building-pinterests-a-b-testing-platform-ab4934ace9f4)), and find a way to launch an experiment or two where you work today - Watch successful leaders around you make decisions — how quickly are they making decisions, what do they ask about before making a decision, how do they communicate their reasoning? - Always have a perspective on a decision (your own POV), but also be ready to change your mind given new information - Read about [Type-1 and Type-2 decisions](https://www.inc.com/jeff-haden/amazon-founder-jeff-bezos-this-is-how-successful-people-make-such-smart-decisions.html) - Read [Making Good Decisions as a Product Manager](https://blackboxofpm.com/making-good-decisions-as-a-product-manager-c66ddacc9e2b) by [Brandon Chu](https://medium.com/@brandonmchu) - Read [The Art of Decision Making as a Product Manager](https://www.sachinrekhi.com/the-art-of-decision-making-as-a-product-manager) by [Sachin Rekhi](https://medium.com/@sachinrekhi) - Read [The Agony and Ecstasy of Building with Data](https://medium.com/the-year-of-the-looking-glass/the-agony-and-ecstasy-of-building-with-data-56215764d67c) by [Julie Zhuo](https://medium.com/@joulee) - Read [Your Job is Not to Make Every Possible Customer Happy](https://thinkgrowth.org/your-job-is-not-to-make-every-possible-customer-happy-f59a59595af) by [Steve Blank](https://medium.com/@sgblank) - Read [Product strategy means saying no](https://www.intercom.com/blog/product-strategy-means-saying-no/) by [Des Traynor](https://medium.com/@destraynor) #### 6. Building great products, and having taste 👌 At the end of the day you are building a product for other people, and so you’ll want to build some experience doing this. All of the other skills above play into this, but there are a few unique skills to develop here, including building an instinct for what makes a product great, how to find the balance between art and science, and how to best work with other disciplines. > Product intuition is a skill: it is the observation of human behavior, trained by data, and applied to software. > > — [Merci Victoria Grace](https://twitter.com/merci?lang=en) **Some recommendations for developing your product sense:** - Find a way to build a product yourself or with friends, and get it out into the world. Find a small problem and try to solve it for someone (or yourself). There’s absolutely no better way to learn than to do it yourself. - Learn to notice what makes you like and not like a product. Consider keeping notes about what makes products good and bad. - Learn about [design thinking](https://www.ideou.com/pages/design-thinking) - Read [Building Products](https://medium.com/the-year-of-the-looking-glass/building-products-91aa93bea4bb) by [Julie Zhuo](https://medium.com/@joulee) - Read [How to Work with Designers](https://medium.com/the-year-of-the-looking-glass/how-to-work-with-designers-6c975dede146) and [Engineers](https://medium.com/the-year-of-the-looking-glass/how-to-work-with-engineers-a3163ff1eced) by [Julie Zhuo](https://medium.com/@joulee) - Read [Training your product intuition](https://medium.com/@merci/training-your-product-intuition-276a7f8965b6) by [Merci Victoria Grace](https://medium.com/@merci) - Read [How to Master The Discipline of Product Management](https://medium.com/evergreen-business-weekly/how-to-master-the-discipline-of-product-management-not-the-job-of-product-manager-28d2c493d445) by [Eric Jorgenson](https://medium.com/@ericjorgenson) - Read [Top 11 Frameworks Every Product Manager Should Know](https://blog.usejournal.com/top-11-frameworks-every-product-manager-should-know-aad46dd37b62) by [Abhishek Shah](https://medium.com/@abhishekshah) #### 7. Always being prepared 😎 In my opinion, one of the most underrated yet most valuable traits for a PM to have is what I call the *“I got this”* aura. Everyone should feel that if you take something on it will get done, and done *exceptionally* well. The key to building this aura is to become increasingly detail oriented, to be more prepared than anyone else, and to have a higher bar than those around you. I personally started off being very bad at this, and saw a lot of growth in my career once I prioritized these skills. > [Great PMs] say what they’ll do, and then do what they say. Their follow-through is impeccable, and they don’t let details slip. When they join a team, quality and pace seems to dramatically improve overnight. > > — [Noah Weiss](https://twitter.com/noah_weiss?lang=en) **Some recommendations for developing your “I got this” aura:** - *Never* come to a meeting without spending at least a few minutes preparing and collecting your thoughts - Keep a high bar for everything you do — re-read the recommendations in item #3 above (Communication) - Build your “spidey sense.” Look ahead and around corners. What could go wrong and how can you prepare? Plan for contingencies. Read [The Score Takes Care of Itself](https://www.amazon.com/dp/B002G54Y04/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) by Bill Walsh for a world-class lesson on this. - Find people around you that are very well organized and learn from them. What are they concretely doing to stay on top fo things? Ask them. - Read [Top Hacks from a PM Behind Two of Tech’s Hottest Products](https://firstround.com/review/Top-Hacks-from-a-PM-Behind-Two-of-Techs-Hottest-Products/) by [First Round](https://medium.com/@firstround) - Read [Time Management: Tips for Product Managers](https://medium.com/@johnpcutler/time-management-tips-for-product-managers-925e4ac5efa9) by [John Cutler](https://medium.com/@johnpcutler) #### **Bonus**: Skills you’ll need to build over time to continue to excel - Vision — Determine your team’s north star, articulate it clearly, and get your team and stakeholders to buy into it - Business sense — Understand what drives the business, and help your team and company build the right things in the right order - An obsession with impact — Connect everything you are doing to the impact it will have on your business and your customers - A growth mindset — See yourself, and those around you, as ever-evolving and capable of improving ### Where to go from here The road to becoming a PM can often be long and unpredictable — the most interesting things in life often are. Zooming out, you can boil down the job of a PM into four words: “Figure out what’s next.” So, what comes next for your journey into product management? My advice is to start developing and demonstrating the skills I outlined above. Read, process, and put your learnings into action however you can (creativity is part of being a PM). Your job is to be as prepared as possible when an opportunity arises. As you do this, push forward on one or two of the paths I suggested. This may take a year or two or three. If you’re not getting anywhere, try another route. Meet PMs, listen to their feedback, and act. If you truly believe this is the right role for you, find a way. If I missed anything, if you disagree with anything, or if you have any questions — don’t hesitate to **[tweet me](https://twitter.com/lennysan)**. 🥳 Sincerely, [Lenny](https://twitter.com/lennysan) *Big thank you to [Yelena](https://twitter.com/yelenart?lang=en), [Ben](https://twitter.com/byosko), [Isabel](https://twitter.com/isabeltewes), [Godfrey](https://twitter.com/Godfrey_Okeke), [Galen](https://www.linkedin.com/in/galen-mcandrew-41995b95/), and [Craig](https://www.linkedin.com/in/craig-minoff-b582804/) for reviewing drafts of this post. 🙏* --- ## [3/25] What Buddhism Taught Me About Product Management [![Image from What Buddhism Taught Me About Product Management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b237910d-fa7d-453c-b37e-58abd0d8b596_1600x1199.jpeg)](https://substackcdn.com/image/fetch/$s_!3q3A!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb237910d-fa7d-453c-b37e-58abd0d8b596_1600x1199.jpeg) **The Buddha would have made an excellent product manager 🤩**️**.**He was obsessed with [solving people’s problems](https://en.wikipedia.org/wiki/Nirvana_%28Buddhism%29), he summarized his ideas into [handy lists](https://www.insightmeditationcenter.org/books-articles/dhamma-lists/), and he developed simple [frameworks](https://tricycle.org/wp-content/uploads/2016/05/Eightfold-Path-final-web-1024x614.png) for achieving his vision. He was also one of the earliest practitioners of [working from first principles](https://jamesclear.com/first-principles), famously sitting under a Bodhi tree for forty nine days straight in order to “see things as they truly were.” 🧘‍♂️ Though it seems like [everyone](https://www.wired.com/2013/06/meditation-mindfulness-silicon-valley/) in tech is talking about mindfulness and meditation these days (sometimes [too much](https://qz.com/1489982/jack-dorsey-missed-the-point-of-meditation-on-his-myanmar-retreat/)), there’s a reason: [it](https://consultqd.clevelandclinic.org/evidence-based-mindfulness-what-science-tells-us-about-mindfulness-meditation-and-its-benefits/) [works](https://en.wikipedia.org/wiki/Research_on_meditation). As I’ve delved into the practice myself over the past year (a.k.a. just started to scratch the surface), the simple teachings have proven to be surprisingly valuable in my day-to-day life. **Below I look at [the three core teachings](https://www.lionsroar.com/what-are-the-three-marks-of-existence/) within Buddhism, and share how I’ve applied them to my job as a product manager.** If any of the following resonates with you, I would encourage you to explore the ideas for yourself (see suggested reading at the end of this post). > These truths are not presented in Buddhist teachings as dogmas demanding blind faith. Buddhists feel that these truths are universal and self-evident to anyone who cares to investigate in a proper way. > > — [Bhante Gunaratana](https://en.wikipedia.org/wiki/Henepola_Gunaratana) # 1. There is suffering 😨 The Buddha’s core initial insight into human nature was that we are forever dissatisfied. We do not find lasting happiness or satisfaction in anything we experience, and thus we suffer. We think we’ll be happy when we finally get what we want (e.g. that title, that raise, that house), but we quickly feel unfulfilled and desire the next thing. This is referred to as [Dukkha](https://en.wikipedia.org/wiki/Dukkha). [![Image from What Buddhism Taught Me About Product Management](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/132dea9e-d905-4322-a3d2-8455c9845db4_1600x800.png)](https://substackcdn.com/image/fetch/$s_!uDUq!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F132dea9e-d905-4322-a3d2-8455c9845db4_1600x800.png) > *Anyone who has had even the briefest introduction to Buddhist teaching is familiar with its starting point: the inescapable truth that existence entails suffering.* > > — [Jack Kornfield](https://jackkornfield.com/) Why is this? According to [Robert Wright](https://robertwright.com/about/) in his recent [book about Buddhism](https://www.amazon.com/dp/B01MPZNG63/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), dissatisfaction is rooted in our evolution. **Natural selection highly optimized us to spread our genes, NOT to be happy.**Seeking more status, more wealth, and more possessions helped us find more mates, and better mates.Our intuition makes us believe that we’ll be happy when we get these things, and for a bit we are, but it quickly (and always) fades. We forget how many times we’ve been disappointed by that short-lived satisfaction, and thus continue seeking. It’s a very pernicious illusion. It makes sense though — if we were fully satisfied with that one meal, that one tool, that one trip — we’d be dead meat. When it comes to leading teams of people and building products for people, we live under a similar illusion. We think we can get to a place where everyone — our coworkers, our direct reports, our users — are happy. “I’ll solve that one problem and things will be OK again”. In truth that is rarely the case, and when it is, it doesn’t last. There will always be more problems, more challenges, and more “suffering”. The key to reducing (and ending) suffering, for you and your team, is to accept that you won’t ever fully solve all of your problems. Fires will burn. People will get upset. Things will go wrong. This is the natural order of things. Recognize this, fix the problems, and keep moving forward. **Find your fulfillment in solving problems, not in forever keeping problems from arising.**If you want to explore this teaching further, start [here](https://www.lionsroar.com/what-is-suffering-10-buddhist-teachers-weigh-in/) and [here](https://www.lionsroar.com/the-buddha-taught-one-thing-only/). > Suffering usually relates to wanting things to be different than they are. > > — [Allan Lokos](https://en.wikipedia.org/wiki/Allan_Lokos) # 2. All things are impermanent ❄️ So what is the source of suffering? According to Buddhism, **our unhappiness is rooted in a very simple misunderstanding about the world — believing that things last**. This is called [Anicca](https://en.wikipedia.org/wiki/Impermanence). This misunderstanding leads us to cling to things that feel good (e.g. a great meal, a sweet new gadget, a promotion). We want them to last. When they invariably change or go away, we get sad. No matter how hard we hold on, everything (literally, EVERYTHING) changes, and eventually goes away. Buddha’s final words express this directly: > Impermanence is inescapable. Everything vanishes. > > — Buddha The solution is surprisingly simple (though not easy). Just let go. Let go of craving, of attachment, of desire. Recognize that all things are impermanent and that there’s no use in clinging. Fully appreciate the good times while they last, be present and in the moment, but when they change or go away, let them go. The following poem expresses the sentiment beautifully: > He who binds to himself a joy > Does the winged life destroy > He who kisses the joy as it flies > Lives in eternity’s sunrise > > — [William Blake](https://en.wikipedia.org/wiki/William_Blake) For me, this teaching has been transformative both in work and in life. At Airbnb, as with every hyper-growth company, change is ever-present. With regular re-orgs, shifts in priorities, rotating team-members, etc., you are constantly in a state of flux. There are two ways to approach these changes. One, you could try to keep holding onto what you have, to fight it. Often this is very necessary and important. However, in many cases you’re fighting just to fight, or because you’re afraid of change. See if you can notice this next time something is about to change. In my experience, a better approach is to learn to become very comfortable with change. To recognize that change is part of life (and business). **Nothing, no matter how well it’s working, is going to last. Welcome change. Anticipate change. Use the change to your advantage. Appreciate the good times while they last, but don’t cling to anything.** > Once we see that everything is impermanent and ungraspable and that we create a huge amount of suffering if we are attached to things staying the same, we realize that relaxing and letting go is a wiser way to live. Letting go does not mean not caring about things. It means caring about them in a flexible and wise way. > > — [Jack Kornfield](https://jackkornfield.com/) This teaching can apply to changes from the outside, as well as from the inside. **Often times the hardest things to let go of are*****our own*** **ideas/products/strategies.** We identify with them, and we get attached to them. That is exactly the problem. Early in my PM career I felt that when I owned a product, it was my job to make sure it survived, no matter what. It took a long time for me to learn this is completely wrong — your job is to help accelerate the good ideas, and kill the bad ideas. The longer you keep a bad idea alive, even if you were tasked with making it work, the worse it’ll be for both you and the business. [Eric Ries](https://medium.com/u/d2f31bf094c6) explains this well in [James Beshara](https://medium.com/u/7c2f3607e5fa)’s [recent podcast](https://player.fm/series/below-the-line-with-james-beshara), around the 31:00 mark. You can learn more about the teaching of impermanence [here](https://www.insightmeditationcenter.org/books-articles/articles/impermanence/) and [here](https://beherenownetwork.com/joseph-goldstein-ep-49-truth-of-impermanence/). > All human unhappiness comes from not facing reality squarely, exactly as it is. — Buddha # 3. There is no lasting self ⛄️ A third foundational teaching of Buddhism is that there is no lasting “self”. This is referred to as [Anatta](https://en.wikipedia.org/wiki/Anatta). According to the teaching, which is actually supported by [recent](https://qz.com/506229/neuroscience-backs-up-the-buddhist-belief-that-the-self-isnt-constant-but-ever-changing/) [scientific](https://www.livescience.com/55999-is-your-self-just-an-illusion.html) [research](https://bigthink.com/ideafeed/good-news-science-buddha-agree-theres-no-you), the sense that there’s an unchanging and lasting “me” inside our bodies from birth to death, is an illusion. Your identity and ego are constructs of your brain. The sense of control you have over your actions is similarly a construct. We see ourselves as the CEO of our lives, when we’re actually the observers. These constructs are very helpful for our lives, they help us be productive in the world, but that doesn’t make them real. > To understand not-self, you have to meditate. If you only intellectualize, your head will explode. > > — [Ajahn Chah](https://en.wikipedia.org/wiki/Ajahn_Chah) As the quote above so eloquently puts it, this is a tricky teaching to fully grasp. Advanced meditators experientially feel this teaching, and I’ve felt glimmers of it in my own meditation practice, but the idea itself is powerful even if you haven’t personally felt it. For me, this teaching has been a valuable reminder to always keep my own ego in check. As a PM, you’re often the default choice to present your team’s work and the first to get credit when things go well. In my experience, whenever I’ve instead given those opportunities to other team members, or deflected credit, the team and its efficacy has gotten stronger. **Though we all know that the most effective leaders place the team above themselves, we forget this in practice, especially when our ego has a chance to shine.** This same idea is echoed in one of the most important business books of all time, [Good to Great](https://www.amazon.com/dp/B0058DRUV6/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), which looked at over a thousand companies to understand what distinguishes so-called “good” companies from “great” ones. What the [data showed](https://www.jimcollins.com/concepts/level-five-leadership.html) was that the most successful companies were led by leaders whose “ambition is first and foremost for the cause, for the organization and its purpose, not themselves.” This is what [Jim Collins](https://www.jimcollins.com/) called a Level 5 Leader. At the risk of your head exploding 🤯, if you want to learn more about this buddhist teaching, check out [this](https://www.accesstoinsight.org/lib/authors/various/wheel202.html) and [this](https://samharris.org/the-illusion-of-the-self2/). > According to the teaching of the Buddha, the idea of self is an imaginary, false belief which has no corresponding reality. [It] is the source of all the troubles in the world from personal conflicts to wars between nations. In short, to this false view can be traced all the evil in the world. > > — [Walpola Rahula](https://en.wikipedia.org/wiki/Walpola_Rahula_Thero) # **Additional resources 🤗** As a beginner, I still have much to learn about these teachings and how to apply them to life and work. [I’d love to hear from you](https://twitter.com/lennysan) if you have any stories to share, or suggestions for topics I should explore further. If you’re curious to learn more yourself, I would encourage you to explore these resources: #### Books - [Why Buddhism is True](https://www.amazon.com/dp/B01MPZNG63/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), by Robert Wright (don’t get turned off by the title) - [Mindfulness in Plain English](https://www.amazon.com/Mindfulness-Plain-English-20th-Anniversary-ebook/dp/B003XF1LKW/ref=sr_1_1?crid=9VZP2RN8YKUE&keywords=mindfulness+in+plain+english&qid=1555804524&s=digital-text&sprefix=mindful%2Cdigital-text%2C195&sr=1-1), by Henepola Gunaratana - [Waking Up](https://www.amazon.com/Waking-Up-Spirituality-Without-Religion-dp-1451636016/dp/1451636016/ref=mt_hardcover?_encoding=UTF8&me=&qid=), by Sam Harris #### Online reading/listening - [Buddhism for Beginners — Lion’s Roar](https://www.lionsroar.com/beginning-with-buddhism-and-meditation/) - [Intro to Buddhism — Spirit Rock Meditation Center](https://www.spiritrock.org/intro-to-buddhism) - [10% Happier Podcast](https://www.10percenthappier.com/podcast) If you’ve have any questions, suggestions, or just want to say hi — don’t hesitate to **[tweet at me](https://twitter.com/lennysan)**. *Big thank you to [Sean](https://twitter.com/sean_lynch?lang=en), [Yelena](https://twitter.com/yelenart?lang=en), [Ben](https://twitter.com/byosko), and [Gauri](https://twitter.com/gauri?lang=en) for or reviewing early drafts of this post. 🙏* Sincerely, [Lenny](https://twitter.com/lennysan) --- ## [4/25] What Seven Years at Airbnb Taught Me About Building a Business [![Image from What Seven Years at Airbnb Taught Me About Building a Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/9433a380-7255-4054-acb7-afae7b3d1165_3103x1813.png)](https://substackcdn.com/image/fetch/$s_!yFro!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F9433a380-7255-4054-acb7-afae7b3d1165_3103x1813.png) ###### Tips for new employees, painted on the walls during a hackathon. Mural: [Andrea Nguyen](https://andrealikes.to/), [Jeany Ngo](https://www.jeanyngo.com/), [Katie Chen](https://www.katiechen.design/) In 2012, shortly after Airbnb [acquired](https://techcrunch.com/2012/12/13/airbnb-acquires-localmind/) our startup, I overheard co-founder Joe Gebbia giving guidance to a designer tasked with redesigning the homepage. He said, “Build something the internet has never seen before.” I vividly remember thinking, *What does that even mean? And is this the bar for everything around here?* Looking back, I’ve come to recognize that this mindset has been one of the key ingredients in Airbnb’s historic growth. I first joined Airbnb as an engineer, then became one of the first members of the budding PM team. Back then, there were a couple dozen engineers, a few designers, and two very cute dogs. Over the next seven years, as the company scaled to thousands of global employees, countless cute dogs, and over $30 billion in value, I took on a lot of interesting problems and worked with many incredible people. Since leaving a few weeks ago, I’ve been jotting down my biggest lessons from these experiences. I’ve [realized](https://twitter.com/kylemeyer/status/566366186389004288?s=21) I should share these lessons with anyone else working to build a company. I can’t promise they will all apply to your situation, but they have been core to Airbnb’s success. # Create strong culture, values, and rituals It’s increasingly common for people to choose companies that connect with their personal values, both as consumers and employees. From day one, Airbnb has been a company obsessed with strong culture, clear values, and quirky rituals. Over the years, I’ve witnessed how effective this has been in creating a competitive advantage, allowing the company to hire [the](https://www.cnbc.com/2018/03/06/greg-greeley-former-amazon-prime-vp-moves-to-airbnb-homes.html) [best](https://hbr.org/2017/04/i-joined-airbnb-at-52-and-heres-what-i-learned-about-age-wisdom-and-the-tech-industry) [talent](https://press.airbnb.com/fred-reid-joins-airbnb-as-global-head-of-transportation/), move quickly when [opportunities](https://www.nytimes.com/2017/02/05/technology/airbnb-super-bowl-ad-trump-travel-ban.html) arise, and push through [adversity](https://techcrunch.com/2011/08/01/airbnb-offers-unconditional-apology-and-50000-insurance-guarantee/). Most importantly, it has made it easy for leaders to stay true to the long-term mission and for the team to hold them accountable. How did Airbnb create a strong culture? Three key ingredients: - **Founders obsessed with culture.** [See Exhibit A](https://medium.com/@bchesky/dont-fuck-up-the-culture-597cde9ee9d4) and [Exhibit B](https://www.youtube.com/watch?v=RfWgVWGEuGE). This is fundamental, especially as you scale. It influences who your first few hires are (who co-create the culture) and the values you model (knowingly or unknowingly). - **A strong sense of self.** Airbnb did this through a codified set of core values created by a small task force about three years in. Airbnb uses these core values when measuring success (are we achieving our mission?),hiring (a core values interview group vets all candidates), evaluating performance (it’s baked into the peer-review process), and looking at large deals. Everyone at the company can recount the values verbatim. - **Rituals.** Cookie time Tuesdays. New hire tea time. Hosted bar. Human tunnels. Fun facts. Silly but regular rituals create space for employees to strengthen bonds and bring joy to the workplace. Don’t overthink your rituals; experiment and see what sticks. [![Image from What Seven Years at Airbnb Taught Me About Building a Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/982a7559-8de6-44e9-9866-39a3e62bddee_1599x2133.jpeg)](https://substackcdn.com/image/fetch/$s_!ucqX!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F982a7559-8de6-44e9-9866-39a3e62bddee_1599x2133.jpeg) Here’s an [excellent video](https://www.youtube.com/watch?v=RfWgVWGEuGE) to help you get started in building your own culture and values. **Main takeaway:** Be obsessed with your company (and team) culture. # **Nail the problem statement** Crafting and aligning on a problem statement is the single most important step in solving any problem. I’ve consistently seen simple projects with vague problem statements go in circles for weeks and months, while complex projects with strong problem statements sail smoothly. A few key tools that I’ve found helpful: - This [one-pager template](https://docs.google.com/document/d/1541V32QgSwyCFWxtiMIThn-6n-2s7fVWztEWVa970uo/edit) is something I’ve refined over the years to crystallize the problem and opportunity for my team and stakeholders. - The situation-complication-resolution [framework](https://speakingsherpa.com/how-to-tell-a-business-story-using-the-mckinsey-situation-complication-resolution-scr-framework/) is extremely helpful in communicating the story to a wider audience. - The jobs-to-be-done [framework](https://jtbd.info/2-what-is-jobs-to-be-done-jtbd-796b82081cca) helps ensure you’re addressing real customer needs. **Main takeaway:** Obsess over crystallizing the problem you are trying to solve and align your entire team behind it. # Set wildly ambitious goals At the end of each year, we were often shocked at how close we came to hitting our wildly ambitious, seemingly impossible goals. And when I say wildly ambitious, I’m making an understatement — Brian, Airbnb’s CEO, is (in)famous for doubling our proposed goals, and often pushing us to 10 times the goal. This ambitious approach has pushed teams to think bigger and rise to the occasion. Five key ingredients to doing this well: - **Set uncomfortable goals.** Our approach was to pick a goal that made us uncomfortable, while also clearly understanding why hitting it would be incredible for the business. Two questions we asked were 1) What would need to be true for us to hit this goal? and 2) What could we accomplish without barriers (budget, people, dependencies, etc.)? - **Make sure someone is directly accountable.** Hitting this goal needs to be an individual person’s job. If a number doesn’t have a person’s name next to it, it’s not going to happen. - **Think long-term.** We generally looked ahead five to 10 years in order determine that year’s goal, both in terms of growth and our mission. Though we didn’t always nail it, we’ve increasingly put a lot of thought into the impact our work has on the many stakeholders we serve, which was recently crystallized by Brian in an [open letter](https://press.airbnb.com/brian-cheskys-open-letter-to-the-airbnb-community-about-building-a-21st-century-company/). - **Give a cross-functional team ownership of how to achieve the goal.**Your number-one job as a leader is to assemble the right team, point team members in the right direction, and stay vigilant in unblocking them. - **Celebrate success, don’t punish failure.** Follow through on the original intent of the goal — it was meant to push you, not kill you. If you don’t hit the goal but get close, congratulate the team and move on to the next goal. **Main takeaway:** When setting goals, think bigger. # Start with the ideal and work backward A variation of Amazon’s [working backward methodology](https://www.quora.com/What-is-Amazons-approach-to-product-development-and-product-management) that I’ve seen work exceptionally well at Airbnb starts with envisioning the perfect user experience. A classic example was a project code-named Snow White.Inspired by the approach Disney took in developing the original *Snow White* film, the founders began looking at Airbnb not as just a website or a service, but as a story with a beginning, middle, and end. *Snow White* was one of the first films to use the technique of storyboards, and thus the team developed a set of storyboards of the ideal guest and host experience, identifying key emotional moments along that journey. These storyboards quickly became a key tool in identifying our biggest gaps and opportunities, and informed the early company strategy. You can read more [here](https://techcrunch.com/2012/07/18/airbnb-brian-chesky-snow-white/) and [here](https://www.fastcompany.com/3002813/how-snow-white-helped-airbnbs-mobile-mission), and watch this [great video](https://www.youtube.com/watch?v=nT7Irq8YuSo) of the team discussing the process. [![Image from What Seven Years at Airbnb Taught Me About Building a Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/8a00a863-041a-4056-ad0c-77549bd837ed_2400x1024.jpeg)](https://substackcdn.com/image/fetch/$s_!rLlG!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F8a00a863-041a-4056-ad0c-77549bd837ed_2400x1024.jpeg) A more recent example was when we wanted to make it easier for guests to book a home on Airbnb. The process at that point had many steps, including a waiting period while the host reviewed the request. Instead of spending months or years micro-optimizing individual parts of the funnel, we stepped back and explored what the ideal booking experience would look like. In this case, it was unquestionably a guest being able to instantly book any home without having to wait. Initially, it seemed impossible to convince every host to allow guests to book without approval. (Only about 5% of bookings were instant at that time.) Nonetheless, it became clear that this was where our business needed to go long-term, so we put all of our team’s resources behind this bet. Over the course of a couple of years, we transformed the marketplace to where the vast majority of bookings are now instant. A few key ingredients to this process: - **Write or draw out what the ideal experience looks like, feels like.** In our case, before diving into any short-term optimizing, we sketched out the ideal booking flow on paper and wrote a sample blog post to describe what we’d announce if this were to become real. - **Create a framework.**To make the problem more tractable, break it down into manageable chunks. In the case of instant book, the biggest gap was giving our hosts more control over who could book their home instantly. We broke that gap into two types of problems: “can” problems (am I able to use it?) and “want” problems (do I want to use it?), then worked through them in priority order. - **When it feels uncomfortable, get more data.**A change this significant is often scary for your colleagues or users. Before you give up, look at actual data. Validate your assumptions through a quick experiment, user research, or historical data. As one data point, many people internally and externally assumed a trip booked instantly would lead to a lower-quality experience (less communication, more transactional), hurting long-term growth. A quick data dive showed otherwise, and that, along with a few other key data points, cleared the path for internal buy-in. **Main takeaway:** Look for opportunities to make a step-function change by imagining the ideal state and working backward from that. # Think of your org design as a product As you move up the ranks of leadership at a product org, you quickly learn the most important product to get right is how you organize your people. How you structure your org can be a force multiplier or a hindrance to achieving your mission. There are a number of key ingredients to successful org design: - **Optimize for dedicated cross-functional teams with a clear mandate.** In my experience, this is the single most impactful thing leaders can do when setting up a team. You want self-contained teams that can move autonomously toward an agreed-upon goal. Any missing resource (designer, DS, budget), additional cross-team dependency, or conflicting surface area cuts the team’s impact immensely. (This is often invisible until later.) Minimize the number of times a team will need to meet with or wait for another team. Well-functioning teams feel like a black box that outputs regular updates and amazing work. - **Get the goals right.** A lot has been said about goals (for example, [SMART goals](https://www.mindtools.com/pages/article/smart-goals.htm) and [OKRs](https://www.ted.com/talks/john_doerr_why_the_secret_to_success_is_setting_the_right_goals?language=en)), but I think teams still underestimate the power of getting goals right. Setting the right goal can be the difference between incredible progress and unending churn. Goals should 1) be limited in number — ideally just one or two, 2) have quick feedback loops that allow you to see impact immediately, 3) be directly connected to top-line business growth, 4) be easily understood, and 5) be uncomfortable. - **Be aware that there is no perfect org design.** At Airbnb, I went through almost a dozen reorgs. I’ve never seen a single org plan that addressed every issue and made everyone happy. Make sure you’re addressing the biggest pain points, future-proofing it as much as you can, and then move forward. The plan will have flaws, like overlapping product ownership, two teams with the same key metric, or a team owning far too much. Note the flaws and put systems in place to work around them. Set expectations that the org will change again in the future. [![Image from What Seven Years at Airbnb Taught Me About Building a Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c47b2390-f57a-4ecb-a110-68ebf1c869aa_1600x1200.jpeg)](https://substackcdn.com/image/fetch/$s_!WMJB!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc47b2390-f57a-4ecb-a110-68ebf1c869aa_1600x1200.jpeg) ###### “Use Your Voice”, by [Shantell Martin](https://shantellmartin.art/), drawn free-hand over the course of a day at Airbnb HQ **Main takeaway:** Build autonomous units with well-defined goals and get out of the way. # Maintain a high bar for everything Coming from the startup world, I was accustomed to moving quickly, settling for good enough, and thinking short-term. There was always too much to do and too little time. Who knew if the company would even be around in a year? An early manager at Airbnb instilled in me the power of keeping a high bar for my work. Looking back, this one change has profoundly impacted my career. How to keep the bar high for yourself and the team around you: - **Emails.** Force yourself to look at your email at least once before sending it. There’s always something you can cut or clarify. [Here’s](https://hbr.org/2016/11/how-to-write-email-with-military-precision) a style I love, courtesy of the military. - **Shared docs.** Always ask for feedback from at least one person before sharing a doc widely. Focus on clean and consistent formatting. Close out comments before sharing with execs. Make it easy to scan. Keep pushing yourself to learn to write better. - **Meetings.** Include the primary goal of the meeting in your invite, ideally along with an agenda. If you attend a meeting that doesn’t feel productive, call it out. Invite as few people as possible. Leave with clear action items. Follow up over email with the action items and owners. - **Presentations.** Are you sure you need to do a presentation versus an email? Make sure your audience knows the goal of the presentation — are you looking for a decision or general feedback, or purely sharing information? It’s not as obvious as you think. Get feedback on your presentation; fresh eyes always catch the glaring issues. And keep it short — no one has ever wished that presentation went longer. - **Hiring.** The people you bring in determine the company you become. My advice is to only hire people you feel “hell yes” about. If it’s a maybe, it’s a no. More on this advice [here](https://sivers.org/hellyeah). **Main takeaway:** Ask yourself and your team these questions often: How could we go just a bit bolder? What would it take to make this slightly better?How do we make this meeting a little more productive? How do I make this doc or email a bit crisper? Could I set the bar a little higher? # Keep your teams focused When I took over the supply growth team at Airbnb, I found a small team spread across a long funnel. They were seeing wins, but were unable to build real momentum. I’d seen the same thing when I took over a team responsible for improving trip quality. In both cases, reducing the problem space and providing a more focused mandate resulted in gains in impact and morale. Aim for teams to have a focused problem to rally around and obsess about. In the case of supply growth, our solution was to first divide the team into focused units (a team driving referrals, a team owning top-of-funnel organic growth, a team owning performance marketing, etc.), and then grow each team with resources appropriate to that problem space. In the case of trip quality, we dedicated a quarter at a time to a specific aspect of quality (host response rate, guest review rate, etc.). Once we found large opportunity, we doubled down in the subsequent quarter. If you apply this lesson to your product, allowing users to focus on the task at hand is one of the most powerful tools in increasing the number of successful user experiences. Some of the biggest guest conversion gains I saw at Airbnb came from simple tweaks that gave users fewer things to think about — things like opening listings in new tabs (avoids getting lost while exploring), extending session length (you don’t need to log in as often), and removing links within the payments flow (avoids distractions). We saw the same thing on the host side, from always having a “recommended” tag when presenting a set of options, to defaulting settings based on host persona, to adding inline tips so users don’t bounce. Don’t underestimate the power of focus. **Main takeaway:** Focus. Focus. Focus. Thinking back to what Joe suggested to that one designer many years ago, Airbnb truly has built something the internet has never seen before. It’s been an incredible experience watching the company grow and evolve through the years. I feel grateful for the opportunity to have been a part of that ride for so long and to have worked with the brilliant, kind, and driven people who walk the halls of Airbnb every day. ### Takeaways - Be obsessed with your company (and team) culture. - Crystallize the problem you want to solve and align your team behind it. - When setting goals, think bigger. - Make step-function change by imagining the ideal and working backward. - Build autonomous units with well-defined goals and get out of the way. - Ask: Can I be bolder, better, more productive? Can I set the bar higher? - Focus. Focus. Focus. [![Image from What Seven Years at Airbnb Taught Me About Building a Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/baa9ad88-399e-4704-a0fc-4b6a9759d413_1600x1200.jpeg)](https://substackcdn.com/image/fetch/$s_!eqk2!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fbaa9ad88-399e-4704-a0fc-4b6a9759d413_1600x1200.jpeg) *A big thank you to Vanessa, Ann, Brett, and Yelena for reviewing early drafts of this post.* --- ## [5/25] Where Great Product Roadmap Ideas Come From [![Image from Where Great Product Roadmap Ideas Come From](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b2d1fab9-9ee8-49d4-920d-33bdc6d0d8c6_2600x1966.jpeg)](https://substackcdn.com/image/fetch/$s_!Qty1!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb2d1fab9-9ee8-49d4-920d-33bdc6d0d8c6_2600x1966.jpeg) 1. Talking to customers 👂️ 2. Talking to employees who talk to customers (e.g. sales, customer support, marketing) 🤗 3. Observing your customers, through data and user research 🧐 4. Spending quality time with previous data dives and user research 🔬 5. Using the product yoursel️f 🕵️‍♀️ 6. Thinking in a quiet place 🤔 7. Having small discussions with teammates 💁‍♂️ 8. Working backwards from your long-term vision 🤩 9. Looking into what caused users to churn 📉 10. Looking at competitors 👀 11. Looking at adjacent markets 😏 12. Looking at analogous businesses in completely different markets 🔭 13. Creating user journey storyboards 🎞 14. Having hackathons and watching the demos 👩‍💻 15. Catching technology shifts 📱 #### Where great ideas rarely come from: 1. Large brainstorms — bad source for big new ideas, but has other benefits such as getting everyone on the team involved in the process 🎯 2. Staying heads down for too long — give yourself space to go big and wide on occasion 🙃 3. Copying what your competition is doing — don’t assume they actually know what they are doing 😝 If there’s anything missing that you’ve found valuable, I’d genuinely love to hear it. [Tweet me](https://twitter.com/lennysan) or leave a comment below. Sincerely, [Lenny](https://twitter.com/lennysan) *Thank you to everyone who contributed your great suggestions on [this twitter thread](https://twitter.com/lennysan/status/1135563031352471552), particularly [Gustaf Alströmer](https://medium.com/@gustaf), [Alistair Croll](https://medium.com/@acroll), [Blake Robbins](https://medium.com/@blakeir), [Carey Caulfield](https://medium.com/@careycaulfield), [Lin Classon](https://twitter.com/lin_IRL), [Justin Jones](https://twitter.com/devpuppy?lang=en), [Henry Vazquez](https://twitter.com/hvasquez), and [Jatin Bhatia](https://twitter.com/JBhatia001)*🙏 --- ## [6/25] 28 Ways to Grow Supply in a Marketplace 📈 *Yesterday I was fortunate enough to be a guest contributor to [Andrew Chen’s blog](https://andrewchen.co/grow-marketplace-supply/). The response has been amazing. Below I’ve included that entire post, along with a dozen bonus examples and tips that didn’t make it into the original post. My intention is to dive deeper into some of these tactics and strategies in future posts, so if there’s anything specific that you’d like to hear more about, I’d love to know. [Tweet me](https://twitter.com/lennysan) or leave a comment below.* [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/08b2c1a3-c557-418a-9872-b743c1b6e1d7_1920x1280.jpeg)](https://substackcdn.com/image/fetch/$s_!MvA5!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F08b2c1a3-c557-418a-9872-b743c1b6e1d7_1920x1280.jpeg) > Airbnb now seems like an unstoppable juggernaut, but early on it was so fragile that about 30 days of going out and engaging in person with users made the difference between success and failure. > > — [Paul Graham](https://twitter.com/paulg), founder of YC Deciding to open your home to strangers is a complex decision. Over the course of the seven years that I spent at Airbnb, my work centered around helping people all over the world make this decision. As the number of homes on Airbnb scaled from around 100,000 in 2012 to over 6 million today, I led teams tackling everything from supply growth, to guest booking conversion, to marketplace quality. As a result of this experience, I’m often asked what I’d recommend startups do to grow supply in their marketplace. The truth is that at the root of Airbnb’s success was a very good idea — affordable and unique travel experiences for guests, and great income for hosts. That being said, an idea is nothing without execution. **Below is an overview of every tactic and strategy I’ve seen used to bootstrap and accelerate supply growth, both at Airbnb and other successful marketplaces.** Though some of these worked at Airbnb, and some didn’t, every marketplace has different challenges — my advice is to pick a few tactics that resonate, experiment with them, learn, and adjust. [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/5b55724d-5c23-4ab0-a6a9-d81b367e9747_1600x1293.png)](https://substackcdn.com/image/fetch/$s_!WNrF!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5b55724d-5c23-4ab0-a6a9-d81b367e9747_1600x1293.png) **Examples of marketplaces**: *Airbnb, Uber, Lyft, eBay, Etsy, Hipcamp, DoorDash, Caviar, Uber Eats, GrubHub, Rover, Wag, Postmates, Patreon, Thumbtack, TaskRabbit, Outschool, Fiverr, Kickstarter, Lugg, Peerspace.* [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/28ec52ae-9b29-4a1b-b5fc-fbfffaa065e0_2400x112.png)](https://substackcdn.com/image/fetch/$s_!8hdK!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F28ec52ae-9b29-4a1b-b5fc-fbfffaa065e0_2400x112.png) ### Tactic #1: Nail the value prop on your site/app 👌 > Understanding the context and expectations of your audience is vital to engaging them. At Airbnb we tailored the value props all the way from ad creative to landing pages. > > — [Dan Hill](https://www.linkedin.com/in/hilldan/), ex-Airbnb Growth Lead, CEO of [Alma](https://alma.app/) **What**: You need to convince visitors why they should become “hosts” on your platform when they visit your site (and then deliver on that promise). This may be obvious, but this is a foundational piece that enhances every other tactic below. It’s especially impactful for marketplaces that primarily grow organically because you’ll end up converting a significantly larger portion of your traffic. **Stage:** Start on day 1, and continue iterating **Cost:** Small **Impact on Airbnb supply growth:** X-Large **Examples**: At Airbnb, the earnings estimate was an order of magnitude more effective than any other value prop. Any time we hid or obscured it, growth dipped. However, it’s critical that this estimate is realistic, both for legal reasons and to set the right expectations for your users. [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/95ca5323-2aa2-4dca-90e4-fe886efa9c74_1600x787.png)](https://substackcdn.com/image/fetch/$s_!2hwb!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F95ca5323-2aa2-4dca-90e4-fe886efa9c74_1600x787.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/5bca49a9-37bd-4aa9-8ae3-c343658a5085_1600x874.png)](https://substackcdn.com/image/fetch/$s_!XQlS!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F5bca49a9-37bd-4aa9-8ae3-c343658a5085_1600x874.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f4915e27-3c59-4a00-9244-160fdf9e5d11_1600x795.png)](https://substackcdn.com/image/fetch/$s_!idnx!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff4915e27-3c59-4a00-9244-160fdf9e5d11_1600x795.png) An example where an opportunity is being missed (doesn’t show possible income): [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ab54c0af-4cb1-4094-b1d9-c40ce286ddb8_1600x746.png)](https://substackcdn.com/image/fetch/$s_!sWrI!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fab54c0af-4cb1-4094-b1d9-c40ce286ddb8_1600x746.png) **Tips**: 1. Take your best shot at the pitch at first, and keep iterating as you learn more about your users. 2. Help the user understand how they would benefit from hosting with you, and address all of their concerns. In most cases, it’s primarily going to be about the income they can make. 3. Deliver on the promise. Or at least get close. This will lead to word-of-mouth growth, which is key. **Question:** What has worked when pitching your existing “hosts”? Make sure your site/app says the same thing boldly and directly. ### Tactic #2: Add entry points to the value prop 👉 **What:** Drive your site visitors towards your “host” pitch. This includes call-outs in the top level nav, in the footer of every screen, and sprinkled throughout the user experience. Do not assume your visitors know this exists, or why they should ever consider it. **Stage:** Start on day 1, and continue iterating **Cost:** Small **Impact on Airbnb supply growth:** Large **Examples**: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ee7eeed9-ce49-4365-b4fb-0ef64a66a16d_1600x657.png)](https://substackcdn.com/image/fetch/$s_!47oU!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fee7eeed9-ce49-4365-b4fb-0ef64a66a16d_1600x657.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/d9031fb8-f2f2-4c79-a93f-80829bca6f73_1600x795.png)](https://substackcdn.com/image/fetch/$s_!rsee!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fd9031fb8-f2f2-4c79-a93f-80829bca6f73_1600x795.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c9dc55bf-7617-4c9b-b062-bbf3109ead82_1600x876.png)](https://substackcdn.com/image/fetch/$s_!pjE_!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc9dc55bf-7617-4c9b-b062-bbf3109ead82_1600x876.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/38109adc-2cc6-4f5d-8070-3de21fbcc1d0_1125x1045.jpeg)](https://substackcdn.com/image/fetch/$s_!RWb3!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F38109adc-2cc6-4f5d-8070-3de21fbcc1d0_1125x1045.jpeg) An example where an opportunity is being missed (no entry point into becoming a driver): [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f11e0064-33c7-4af5-a56e-9ec08ba83dcc_1600x747.png)](https://substackcdn.com/image/fetch/$s_!WZCo!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff11e0064-33c7-4af5-a56e-9ec08ba83dcc_1600x747.png) **Tips**: - It’s hard to have too many entry points into your “host” pitch. Users will ignore it if it doesn’t apply to them. Resist the urge to be shy about this, especially if you are supply constrained. - Every time your user has a good experience, encourage them to become a “host”, to provide this experience to others (while making money). - Be more aggressive with this than you’re comfortable. **Question**: Where else can you include a call-out to consider becoming a “host”? ### Tactic #3: Offer a referrals program 👭 > If your product requires word-of-mouth to convince most people to start using it, you can engineer more growth by building an incentivized referrals program. The incentive will be fuel that pushes people over the edge to tell their friends about something they love using > > — [Gustaf Alströmer](https://medium.com/u/221459a385bf), ex-Airbnb Growth Lead, Partner at YC **What:** Incentivize word-of-mouth by paying existing members for every new member they refer to the platform. **Stage:** Start early with a scrappy version, and get smarter over time **Cost:** Medium **Impact on Airbnb supply growth:** Large **Examples**: At Airbnb, the host referral program became the single most efficient and effective growth lever for consumer supply, cost efficiently driving both the largest share of attributable supply AND the highest quality supply, [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/276276cc-073b-4627-80cb-47c826b69bfa_1600x968.png)](https://substackcdn.com/image/fetch/$s_!O9Dp!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F276276cc-073b-4627-80cb-47c826b69bfa_1600x968.png) Uber: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e9f1ec6e-2cd7-4e42-8997-395d4d23dd00_1172x756.png)](https://substackcdn.com/image/fetch/$s_!xjLv!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe9f1ec6e-2cd7-4e42-8997-395d4d23dd00_1172x756.png) Airbnb: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e22c88d2-7bf7-4ecc-b8a1-35023fb0e6c7_1600x770.png)](https://substackcdn.com/image/fetch/$s_!mxuC!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fe22c88d2-7bf7-4ecc-b8a1-35023fb0e6c7_1600x770.png) Lyft: **Tips**: - If most of your supply growth is coming from word-of-mouth, and especially if your users have large social graphs, then a referrals program is going to be huge for you. - Once you have this, don’t hide it. Promote it throughout the user experience. - Once you reach scale, fraud becomes a real issue. Watch for it as you grow, and invest in addressing it. **Question:** What’s the simplest way you can test a referrals offering? ### Tactic #4: Run direct sales ☎️ > After calling and activating 100 listings in a market, we then drove demand there to see what converted. We then called these hosts to help them convert their requests into bookings. This was all manual, but super effective, all the while we were getting direct market feedback. > > — [Georg Bauser](https://www.georgbauser.de/), ex-International Expansion at Airbnb **What:** Call, email, or go door-to-door to pitch potential “hosts” on joining your platform. Sometimes this includes convincing them to switch from a different platform, sometimes it includes teaching them how to do it in the first place. This tactic is one of the more complex and operationally heavy, but also often the most effective at bootstrapping a marketplace. **Stage:** Early-stage for B2C, an evergreen lever for B2B **Cost:** Medium **Impact on Airbnb supply growth:** Medium-Large **Examples**: - Lyft: - DoorDash: **Tips**: - Hand-hold your early members. Help each new early member becomes successful in order to seed the platform with the type of supply you want. As a bonus, these early hosts will become loyal and unlikely to switch to a competitor, because you are building the business together. - This tactic is particularly effective if your supply is un-commoditized and has high LTV, and if you’re creating a new market or behavior. - Be creative in how you figure out contact information. **Question**: What’s stopping you from cold-calling potential “hosts” today? ### Tactic #5: Piggy-back off of existing networks 🔌 > Initially, the Etsy team were freelance web designers and one of their clients was a craft forum called getcrafty.com. Throughout the redesign process, the Etsy team interacted with the website’s 10,000 users to best understand their needs. They began to notice that there was a large number of users who were looking for a platform to sell their handmade wares. While they were building Etsy, they also found out about Crafster.org, this time a message board with 100,000 users and were able to tap into another willing market. We extended an accommodating bridge to a preexisting online community, and they jumped aboard happily. > > — [Chris Maguire](https://www.freecodecamp.org/news/growth-hacking-lessons-from-the-big-guys-daebb2c791d2/), co-founder of Etsy **What:** Go to the place your existing supply is distributed and convince them to switch. **Stage:** Early-stage **Cost:** Small **Impact on Airbnb supply growth:** Large **Examples**: - Airbnb: - Omni: - General: **Tips**: - To be successful here, you’ll have to be “creative” in how you do said piggy-backing. Airbnb piggy-backed off of Craigslist for both [supply](https://davegooden.com/2011/05/how-airbnb-became-a-billion-dollar-company/) and [demand](https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/). - Make it super easy to switch from them to you. - You will only win if you can drive more demand or profit to that same supply. Otherwise, why would they choose you? **Question:** Where do people currently find what you are offering, and is there a way you can piggy-back off of that channel? ### Tactic #6: Hold meetups 👋 > To launch a city, we’d travel there and hold a meetup. Here in San Francisco, it’s not a big deal to meet a founder. In other places, that’s pretty novel. They would get so excited that they met us that they’d tell their friends. The markets started turning on, and we religiously focused on making sure customers loved us. > > — [Brian Chesky](https://twitter.com/bchesky), CEO of Airbnb **What:** Bring “hosts” and anyone considering become a host together in person. This can be small intimate gatherings or large’ish events. **Stage:** Early-stage **Cost:** Small **Impact on Airbnb supply growth:** Medium early-stage, Small late-stage **Examples:** [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/3595a534-1e37-47d0-82bc-715fe9bb11b4_1200x799.jpeg)](https://substackcdn.com/image/fetch/$s_!0Gmb!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F3595a534-1e37-47d0-82bc-715fe9bb11b4_1200x799.jpeg) Source: - Read the first part of [this interview with Reid and Brian](https://medium.com/pm-insights/handcrafted-solutions-creating-a-product-your-customers-will-love-bc0cb2342cc0). - [Lessons in Building Movements through Community Action from Douglas Atkin, Global Director of Community at Airbnb](https://cmxhub.com/douglas-atkin-global-director-of-community-at-airbnb-on-building-movements-through-community-action/) **Tips**: - The highest value of the meetups is for employees to listen to users, to answer questions, and simply to give people a chance to meet and share. Resist the urge to fill the time with presentations and speeches. - You don’t need to spend a bunch of money on each meetup. They can be scrappy and simple. - Don’t expect to be able to quantify the impact of hosting meetups. We tried this many times and we never saw any measurable impact. But, looking back, it’s clear that it was important early on. **Question**: Where is your early community most concentrated? Why aren’t you there right now? ### Tactic #7: Leverage events and PR 🎪 > In the early days we targeted a lot of events: the DNC, the Presidential Inauguration, music festivals, the World Cup, Olympics, etc. Events and PR were the main way we bootstrapped the network in the early days. > > — [Brian Chesky](https://twitter.com/bchesky), CEO of Airbnb **What:** Leverage a specific event to pitch potential “hosts” and seed PR stories about how your service is helping people. **Stage:** Early-stage **Cost:** Small **Impact on Airbnb supply growth:** Medium **Examples**: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ec8d225d-dcd5-40ad-81f1-41e6a873eedd_1600x1476.png)](https://substackcdn.com/image/fetch/$s_!zega!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fec8d225d-dcd5-40ad-81f1-41e6a873eedd_1600x1476.png) - Airbnb: - Uber: - TaskRabbit: **Tips**: - Find ways to be creative and stand out during the event. - Use that same creativity to develop PR pitches. What would give the press an interesting angle on the event? - Get on the ground. You need to be there, hustling. **Question**: Are there punctuating moments where your offering is most beneficial for your supply? ### Tactic #8: Run performance marketing 💰 > Performance marketing is about reaching people where they are, inspiring them to take action and doing so cost effectively. You quickly learn that it’s a unique blend of art and science, and we were most effective at scaling this powerful lever when we had a dedicated cross-functional team sitting together — product, marketing, engineering, data science, design, content, and finance. > > — [Fatima Husain](https://www.linkedin.com/in/fatima-husain-0a278711/), ex-Airbnb host paid growth lead, Principle at [Comcast Ventures](https://comcastventures.com/) **What:** Run Facebook, Google, Twitter, etc. ads. **Stage:** Early-stage for some businesses, late-stage for others **Cost:** Medium/Large **Impact on Airbnb supply growth:** Medium **Examples**: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/65f83af9-976e-4097-8862-1fe9160a1aaf_516x556.png)](https://substackcdn.com/image/fetch/$s_!JRgm!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F65f83af9-976e-4097-8862-1fe9160a1aaf_516x556.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/48795c51-563d-4f38-885d-61b5c3a6d92e_1060x1004.png)](https://substackcdn.com/image/fetch/$s_!UwD1!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F48795c51-563d-4f38-885d-61b5c3a6d92e_1060x1004.png)[![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/fcb76bf2-193b-4a1a-8758-90b613cd7c70_1568x876.png)](https://substackcdn.com/image/fetch/$s_!uNdy!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ffcb76bf2-193b-4a1a-8758-90b613cd7c70_1568x876.png) **Tips**: - Knowing your supply LTV is key, so that you know how much you can spend. - You can figure out the basics yourself, but try to hire people that have done this before. - This lever works, but can easily become [addicting](https://andrewchen.co/paid-marketing-addiction/). **Question**: Where do your potential “hosts” spend time online? ### Tactic #9: Convert demand to supply 🙃 > Converting travelers to hosts definitely moved the needle when we launched a new market. Plus, these new hosts were the most empathetic as they remembered the guest’s needs. > > — [Kati Schmidt](https://www.linkedin.com/in/katrinschmidt/?locale=en_US), ex-Head of B.D., Airbnb Germany **What:** Convince users to become “hosts” on the platform. This builds on Tactic #2 — go deeper into the user experience and find moments when it makes sense to pitch “hosting” (e.g. after a great experience). **Stage:** Start early, and continue iterating **Cost:** Small **Impact on Airbnb supply growth:** Medium early-on, Small later-stage **Examples:** [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a0bf0bc9-8ec5-4dab-b76b-a53b069b3397_1600x1370.png)](https://substackcdn.com/image/fetch/$s_!mVjY!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa0bf0bc9-8ec5-4dab-b76b-a53b069b3397_1600x1370.png) **Tips**: - This can be manual/ops based at first, and productized over time. - Think about a clever pitch you can make to your users, e.g. “Pay for your trip by hosting your home”. - See how Uber, Lyft, and Airbnb do this throughout the demand-side experience. **Question**: What percentage of your demand could potentially be the supply? If it’s in double digits, see if you can suggest or even incentivize this behavior. ### Tactic #10: Invest in SEO ⛓ **What:** Drive organic search traffic to your site. **Stage:** Early for some businesses, late-stage for others **Cost:** Small **Impact on Airbnb supply growth:** Small **Tips**: - SEO is generally more effective for demand. I haven’t seen SEO be a major driver of growth on the supply side, including at Airbnb. - The best SEO content is user-generated-content that is created as a part of the user experience. - Find an SEO expert to help you figure this out. **Question**: What job are you solving for potential “hosts”, and what does that translate to when they search for solutions? ### Tactic #11: Acquire supply 🤑 > We needed to move fast and acquiring companies with inventory in these competitive markets provided an immediate benefit. Often times the expense of the acquiring the company that had the inventory was cheaper than the cost to go about acquisition in an organic way. The key is to understand the migration percentage that would come through. We aimed for 60–80% to migrate over. > > — [Jonathan Golden](https://twitter.com/jpgg), first PM at Airbnb, partner at [NEA](https://www.nea.com/) **What:** Acquire companies that currently have the supply you want. **Stage:** Always **Cost:** Large (but strategic) **Impact on Airbnb supply growth:** Small globally, Large in key markets **Examples**: - Airbnb: [Crashpadder](https://techcrunch.com/2012/03/20/airbnb-acquires-uk-based-crashpadder-as-part-of-international-growth-push/), [Statthotel](https://www.internetworld.de/e-commerce/internet/statthotel-uebernommen-277295.html) - Rover: [DogBuddy](https://www.prnewswire.com/news-releases/leading-pet-care-company-rover-com-accelerates-european-growth-with-dogbuddy-acquisition-885852466.html), [DogVacay](https://www.geekwire.com/2018/inside-rovers-dogvacay-deal-former-rivals-went-one-brand-not-two-acquisition/) - Eventbrite: [Ticketfly](https://www.eventbrite.com/blog/press/press-releases/eventbrite-completes-acquisition-of-ticketfly/), [Picatic](https://www.eventbrite.com/blog/press/press-releases/eventbrite-acquires-picatic/) **Tips**: - Since you are betting on network effects, the value of that supply to your network should be much higher to you than to a small local company. Thus, it may be worth paying a premium. - Make sure the supply you are buying is actually good. - Don’t underestimate the work it’ll take to migrate the supply, both technically and interpersonally. **Question**:Are there small players with a strategic foothold you can acquire or merge with? ### Tactic #12: Partner with supply aggregators 👋 **What:** Plug-in a partner’s supply into your marketplace, through partnerships, licensing, or even scraping. **Stage:** Always **Cost:** Small **Impact on Airbnb supply growth:** Small **Examples**: - GrubHub: - DoorDash: **Tips**: - Be strategic and thoughtful about the type and quality of supply you bring on. The quality and experience with that supply will reflect directly on your brand, not theirs. - Make sure you are clear on your long-term competitive advantage, and not only growing this partner’s business. What’s your differentiator, and how will you maintain it? - Make sure the user experience is smooth and feels native. **Question**: What would be the biggest upside of adding 3rd party supply to your marketplace? ### Tactic #13: Build your own supply 💪 > One of the smartest things we did in the early days of Udemy was produce our own courses. Production (i.e. filming & editing video content) is a huge friction point in our supply-side process. So, we produced a few of our own courses in the beginning and then marketed the heck out of them. This wasn’t scalable, but it did allow us to build powerful social proof points which were critical to our long-term success. > > — [Dinesh Thiru](https://www.forbes.com/sites/groupthink/2013/04/02/how-to-grow-a-marketplace/#185578ab76be), VP of Marketing at Udemy **What:** In some marketplaces, you can either bootstrap supply by creating it yourself (e.g. videos), pay early users to become supply (e.g. Uber/Lyft paying drivers a salary), or your build your entire business on your own supply (e.g. Sonder). **Stage:** Depends on business **Cost:** Medium/Large **Impact on Airbnb supply growth:** Small **Examples**: - At Airbnb, read Brian Chesky’s [answer to the first question in this interview](https://medium.com/cs183c-blitzscaling-class-collection/scaling-airbnb-with-brian-chesky-class-18-notes-of-stanford-university-s-cs183c-3fcf75778358). His and Joe’s apartment was the first unit of supply on Airbnb. - See example #1 in [this post about Udemy](https://www.forbes.com/sites/groupthink/2013/04/02/how-to-grow-a-marketplace/#185578ab76be). **Tips**: - Set the norms through the type of supply you create. - Often not possible due to the business model. - Be careful about the legal implications. **Question**: What would it cost to build your own supply, and how does that compare to customer acquisition costs? ### Tactic #14: Run broadcast and out-of-home ads 📺 **What:** TV commercials, podcast ads, movie ads, etc. **Stage:** Always **Cost:** X-Large **Impact on Airbnb supply growth:** Small **Examples:** [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/65d89669-8e34-4077-9a29-9e2512540960_1600x900.jpeg)](https://substackcdn.com/image/fetch/$s_!rgk4!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F65d89669-8e34-4077-9a29-9e2512540960_1600x900.jpeg) Airbnb Billboard, [source](https://www.pinterest.com/pin/508273507941191302/?lp=true) [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/bb157dd8-31c7-4d8e-b01f-eedef6ea8753_1024x683.jpeg)](https://substackcdn.com/image/fetch/$s_!Ua0S!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fbb157dd8-31c7-4d8e-b01f-eedef6ea8753_1024x683.jpeg) Lyft bus ad, [source](https://skift.com/2016/04/14/lyft-is-spending-millions-on-an-ambitious-expansion-plan-in-the-u-s/) [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/4fbcec11-9604-4b96-8000-bdedbf535936_1280x720.jpeg)](https://substackcdn.com/image/fetch/$s_!yK90!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F4fbcec11-9604-4b96-8000-bdedbf535936_1280x720.jpeg) Uber TV commercial, [source](https://www.youtube.com/watch?v=NiVXmLkcOiA) **Tips**: - Don’t expect to ever be able to measure the impact. Because you won’t. - The main benefit is generally brand-building. - Do something unique and noteworthy. **Question**: Are your potential “hosts” watching the same (ideally not super-popular) media or passing through the same physical parts of town? ### Tactic #15: Run affiliate marketing 📝 **What:** Incentivize content producers to send you traffic by paying them for every member they refer. **Stage:** Mid/Late **Cost:** Small/Medium **Impact on Airbnb supply growth:** Small **Examples:** [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f892f506-5bc7-4451-890c-11614a71478e_1600x914.png)](https://substackcdn.com/image/fetch/$s_!VRrf!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff892f506-5bc7-4451-890c-11614a71478e_1600x914.png) Affiliate marketing for Uber/Lyft [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/c9fae9c1-41ad-4dec-bcc5-10d052b6908f_1600x917.png)](https://substackcdn.com/image/fetch/$s_!Cf0J!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fc9fae9c1-41ad-4dec-bcc5-10d052b6908f_1600x917.png) Affiliate marketing for Airbnb [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/76db656d-6b2b-4a9f-99ad-91cd29313966_1600x917.png)](https://substackcdn.com/image/fetch/$s_!GfuG!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F76db656d-6b2b-4a9f-99ad-91cd29313966_1600x917.png) Affiliate marketing for Postmates **Tips**: - Takes very few people to operate, should pay for itself from day 1. - There are companies out there that do a lot of the heavy lifting for you. - Make sure to have brand guidelines that content creators must follow, otherwise the content ends up being bad. **Question**: Are your competitors doing affiliate marketing? ### Tactic #16: Send direct mail 📬 **What:** Send potential “hosts” physical mail, pitching them on your platform. **Stage:** Always **Cost:** Medium **Impact on Airbnb supply growth:** Small **Examples**: [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a999d296-adbb-49d1-8182-9602000f9904_600x337.jpeg)](https://substackcdn.com/image/fetch/$s_!MzVn!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa999d296-adbb-49d1-8182-9602000f9904_600x337.jpeg) - Uber: - GrubHub: **Tips**: - This is an under-appreciated channel. - Tricky to measure, but possible. - Check out [Lob](https://lob.com/) to make this super easy. **Question**: Is this a channel your competition hasn’t tried yet? [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ad218576-9bc8-468a-bd86-3f434cfb00de_2400x112.png)](https://substackcdn.com/image/fetch/$s_!i_8H!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fad218576-9bc8-468a-bd86-3f434cfb00de_2400x112.png) ### Tactic #17: Optimize conversion 📈 > All conversion optimization should start with user research. The biggest gains in optimization don’t come from brute-force A/B tests, but from trying to understand the real barriers to people using your product. For example, early at Airbnb we realized that the biggest hurdle for new hosts was knowing how much to charge for their space. So we built [price guideance](https://spectrum.ieee.org/computing/software/the-secret-of-airbnbs-pricing-algorithm) into the flow. > > — [Dan Hill](https://twitter.com/danhilltech?lang=en), ex-Airbnb Growth Lead, CEO of [Alma](https://alma.app/) **What:** Improving the percentage of people that start publishing that actually finish it. **Stage:** Start early, and continue iterating **Cost:** Small **Impact on Airbnb supply growth:** Medium **Tips**: - Top-of-funnel levers will generally be orders-of-magnitude higher impact than any mid-funnel levers like this one, but early on are often low-risk big-wins. Later-stage, you can continue to squeeze % point’s of growth for a while. - Figure out which part of the conversion funnel is the biggest issue, and focus all of your efforts there. Be careful spreading yourself too thinly across the entire funnel. - In my experience, a big redesign of the flow often ends up hurting conversion. **Question:** Which part of the funnel is most important to improve, and what are three things you do to improve this? ### Tactic #18: Send re-engagement emails/pushes 📩 **What:** Emailing users that didn’t complete publishing, encouraging them to finish. **Stage:** Always **Cost:** Small **Impact on Airbnb supply growth:** Small/Medium **Tips**: - You’ll get most of the win by simply having an email, and then quickly hit diminishing returns once optimizing it a few times. - Don’t be afraid to send a few reminders. - Make the CTA extremely clear. **Question:** What’s one helpful thing you can suggest to bounced users to re-inspire them? ### Tactic #19: Make re-engagement calls 📞 **What:** Calling users that didn’t complete publishing, encouraging them to finish. **Stage:** Early-stage for B2C, an evergreen lever for B2B **Cost:** Medium **Impact on Airbnb supply growth:** Small **Tips**: - Always ask users why they didn’t finish the process — this should inform your roadmap and processes. - Early on you can use this as a customer development opportunity. - Long-term, measure the ROI to make sure it’s worth the time. **Question:** Which bounced users appear to be the most valuable and worth a call? [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/688370c4-3e3d-4cd0-a9a6-e2cfef8795a5_2400x112.png)](https://substackcdn.com/image/fetch/$s_!GAx2!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F688370c4-3e3d-4cd0-a9a6-e2cfef8795a5_2400x112.png) ### Tactic #20: Optimize activation 🥳 > When I think about the ROI of things that you can do in a business, make certain that your customer is safely handed from acquisition to the activation. Make certain that they are activated and you have done everything in your power in order to make certain they have found their “Aha” moment and they have began habit forming. > > — [Shaun Clowes](https://twitter.com/shaunmclowes?lang=en), CPO at Metromile **What:** Getting new users to a key milestone that you believe is important for long-term retention. This is sometimes called the “aha” moment. **Stage:** Early/Mid-stage **Cost:** Small **Impact on Airbnb supply growth:** Small/Medium **Examples**: - At Airbnb, an activation was getting a new listing to its first booking within the first month. - At Uber, an activation was completing the first ride. - [Inside the 6 Hypotheses that Doubled Patreon’s Activation Success](https://brianbalfour.com/essays/patreon-onboarding-growth) **Tips**: - First, you need to figure out what milestone is key to a new “hosts” long-term success. It’s rarely an exact science. - Goal your supply teams on reaching this point, vs. simply when they go live. - Adjust this milestone if you learn something new down the road. **Question:** What’s the one most impactful thing a “host” can do to improve their chances of getting booked? ### Tactic #21: Optimize retention 🔐 > Retention is the core of your growth model and influences every other input to your model. This is important because if you improve retention, you’ll also improve the rest of your funnel. > > — [Brian Balfour](https://twitter.com/bbalfour?lang=en), Founder/CEO of Reforge **What:** Increasing the percentage of new users that stick around for at least X months. **Stage:** Always **Cost:** Small **Impact on Airbnb supply growth:** Medium early-stage, Small late-stage **Examples:** - At Airbnb, we didn’t spend a lot of time focused directly on retention. When we did, the majority of our efforts centered around helping new hosts get booked and have a great first stay. - Excellent retention reading over at [Reforge](https://www.reforge.com), including [Why Retention Is The Silent Killer](https://www.reforge.com/blog/retention-engagement-growth-silent-killer) and [Retention is Hard, and Getting Harder — Here’s Why](https://www.reforge.com/blog/retention-is-hard-and-getting-harder). - [Retention metrics roundup of articles and links](https://andrewchen.co/retention-metrics-roundup-of-articles-and-links/) by [Andrew Chen](https://medium.com/u/8edc94d7a232). - [Casey Winters on how to create long-term growth](https://www.intercom.com/blog/podcasts/greylocks-casey-winters-on-how-to-create-meaningful-growth/) **Tips**: - In my experience, it’s difficult to significantly impact retention head-on. The key is that your product/service needs to continue to be genuinely useful. Make it more useful and retention will grow. - Track retention by cohort, vs. globally. - Make sure to capture data on why people leave, to inform future work. **Question:** What is the single most common theme in why “hosts” leave, and what can you do about it? ### Tactic #22: Expand existing supply 🤲 **What:** Convince existing successful “hosts” to increase the number of units they offer. **Stage:** Always **Cost:** Small **Impact on Airbnb supply growth:** Small **Examples**: - An Airbnb host buying additional properties to manage. - A Hipcamp host adding additional campsites. - An Outschool teacher offering additional classes. **Tips**: - This can be one of the biggest growth drivers for certain businesses, don’t underestimate the potential here. - In some cases, this is going to be easy (e.g. online classes), in some very hard (e.g. homes). - Educate users on what kind of new supply would be most successful. Channel their excitement and point them in the right direction. **Question**: Have you actually talked to your successful “hosts” about adding additional supply? [![Image from 28 Ways to Grow Supply in a Marketplace 📈](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a9122c2d-2ac8-479d-95c4-2733cc82c9b8_2400x112.png)](https://substackcdn.com/image/fetch/$s_!p76g!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fa9122c2d-2ac8-479d-95c4-2733cc82c9b8_2400x112.png) ### Strategy #1: Increase benefits, reduce costs ⚖️ **What:** Potential “hosts” will do mental calculus when considering signing up: is the cost (e.g. work, risk) worth the benefits (e.g. money, status). Make a list of ways to increase the benefits and reduce the costs, do them, and share this clearly. **Stage:** Start on day 1, and continue iterating **Examples:** - Airbnb — Reduce costs: Host Guarantee, free photography - Airbnb — Increase benefits: Guaranteed revenue, online payments - Uber — Reduce costs: Car leasing, guaranteed income - Uber — Increase benefits: Choose when to get paid, flexible hours **Tips**: - Building it won’t be enough, make sure to make it clear what you do for your users to increase benefits and reduce cost. ### Strategy #2: Single-player mode 🦸‍♀️ > OpenTable sold software to restaurants that created value for them without requiring any diners on the “buyer” side of the marketplace. They built a unique table management and CRM product (the “Electronic Reservation Book”) and charged a subscription fee for the service. The initial benefit to restaurant customers was the software. Once OpenTable acquired hundreds of restaurants in a city, they started to have a compelling diner value proposition. > > — [Eli Chait](https://blog.elichait.com/2018/04/09/how-the-100-largest-marketplaces-solve-the-chicken-and-egg-problem/), ex-Director of PM at OpenTable **What:** Make the platform to “hosts” useful even when there is no demand. **Stage:** Early-stage **Examples**: - OpenTable: Simplified reservation management for restaurants - Eventbrite: Created free web pages for your event - More: **Tips**: - In most marketplaces, [supply is king](https://andrewchen.co/why-uber-for-x-failed/), so your single-player-mode should generally be focused on the supply side. - This won’t be possible for every marketplace. ### Strategy #3: Get to critical mass 💥 > Our co-founder [Nate Blecharczyk](https://twitter.com/nathanblec) is highly quantitative and had determined that 300 listings, with 100 reviewed listings, was the magic number to see growth take off in a market. Observing New York, Paris, and a few other top markets, we saw a step-function change in the rate of bookings growth at 300 listings, the point at which guests had enough options to find a listing that matched their tastes and their travel dates. > > — [Jonathan Golden](https://twitter.com/jpgg), first PM at Airbnb, partner at [NEA](https://www.nea.com/) **What:** There is a point at which you have enough supply that you see an inflection point in demand conversion — estimate it and get your supply to that number. **Stage:** Early-stage **Examples** - Airbnb: - Airbnb and others: - Facebook: " **Tips**: - Don’t overthink it. Figure out a milestone enough people believe within the org, and use it until you can figure out something better. It’s more important to have something good-enough than to have nothing. ### Strategy #4: Bootstrap trust 🤝 > We looked at people’s willingness to trust someone, based on how similar they are in age, location, and geography. The research showed, not surprisingly, we prefer people who are like us. The more different somebody is, the less we trust them. That’s a natural social bias. What’s interesting is what happens when we add reputation to the mix — in our case with reviews. When you have less than three reviews, nothing changes. But if you’ve got more than ten, everything changes. High reputation beats high similarity. The right design can actually help us overcome one of our most deeply rooted biases. > > — [Joe Gebbia](https://medium.com/u/8e37c023687a), Co-Founder of Airbnb and CPO **What:** At first all you have is new supply, but users have no reason to trust it. Give them reasons to trust. **Stage:** Early-stage **Examples**: - Airbnb: Early employees were given credit to travel for free as long as they left reviews for new hosts. - Airbnb: Make the supply look great, e.g. free photography, structured data with limited customization. - Airbnb: Reduce risk, e.g. Handle payments online, Host Guarantee, 24/7 support. - Uber and Airbnb: ### Strategy #5: Internationalization ⛩ > Internationalization is a challenge and risky. But tech companies need to be global to win. It’s about the right strategy and answering the right questions at the right time. Not going international is a wasted growth opportunity. > > — [Georg Bauser](https://www.georgbauser.de/), ex-International Expansion at Airbnb **What:** Make your site and experience work outside of initial native language/culture. This includes building out translations, local payment types, customer support in those languages, and often people on the ground getting things rolling. **Stage:** Mid-stage **Examples**: - [Launching airbnb.jp in record time](https://medium.com/airbnb-engineering/launching-airbnb-jp-in-record-time-52f8b0af965d) - [Who did what in international expansion in 2018](https://medium.com/the-expansion-partner-blog/who-did-what-in-international-expansion-in-2018-96ff7efcc775) - [How Netflix Expanded to 190 Countries in 7 Years](https://hbr.org/2018/10/how-netflix-expanded-to-190-countries-in-7-years) **Tips**: - International expansion is often one of the major inflection points for growth accelerating, so time it wisely. - Pick the markets you want to win and go big there, vs. going broad immediately. It’s hard enough to win one market. - This often requires doing things that don’t scale at first. ### Strategy #6: Segment supply 👩‍🌾 👩‍✈️👩‍🔬 > Early on Airbnb presented only one image of itself to hosts. Many types of hosts deemed the platform unsuitable, but opening ourselves and marketing to business travel hosts and luxury home hosts gave those hosts a message they wanted to hear. They could host the types of guest they felt were suitable for their property. This allowed us to onboard inventory we previously couldn’t, and gave existing hosts more optionality in how they marketed to and serviced those guests. > > — [Marc McCabe](https://twitter.com/mccabe?lang=en), ex-Head of Airbnb for Business **What:** Determine what categories of supply you have and/or want, and dedicate teams to growing that type of supply. Generally, different categories require very different tactics, skills sets, and operating cadences. **Stage:** Mid/Late-stage **Examples**: - Airbnb: Private homes, vacation rentals, luxury home. - Uber: Black cars, individual car owner, scooter. - eBay: Individual sellers, brick and mortar stores, wholesalers. **Tips**: - When introducing a new class of supply, there are many important considerations, including making sure you have a team whose ass is on the line for making this supply successful, making sure the demand side is set up to convert this new supply well, and avoiding overly diluting your marketplace differentiation. - New segments often appear organically, and it’s up to you to decide if (and when) you want to double down on segment, or squash it. - For the more professional segments, you’ll likely need to build advanced tools and integrations in order to fit into their existing workflows. #### Final thoughts Looking back at my time at Airbnb, a few things become clear. One, there were no silver bullets — success came from many wins building on each other. Two, most things we tried didn’t have an impact — but enough did. Three, it all only made sense in hindsight. My advice to you as you navigate scaling your marketplace is above all else, stay focused on providing value to your users. Their success will make or break you. Beyond that, avoid spreading your team too thinly across many tactics (aka focus), double down on the things that show promise (aka focus), and never lose sight of your north star (aka focus). Also, focus. **For more writings about growth, product, management, and related topics, make sure to subscribe to [my new newsletter](https://lenny.substack.com/) and hit me up [on twitter](https://twitter.com/lennysan).** Sincerely, Lenny *Thank you [Andrew Chen](https://twitter.com/andrewchen),* [Gustaf Alströmer](https://twitter.com/gustaf), *[Jonathan Golden](https://twitter.com/jpgg)*, *[Fatima Husain](https://www.linkedin.com/in/fatima-husain-0a278711/), [Marc McCabe](https://twitter.com/mccabe?lang=en), [Dan Hill](https://twitter.com/danhilltech?lang=en), [Kati Schmidt](https://www.linkedin.com/in/katrinschmidt/), and [Georg Bauser](https://expansion-partner.com/) for reviewing early drafts of this post and contributing great ideas. 🙏* --- ## [7/25] The Power of Performance Reviews: Use This System to Become a Better Manager 🤝 Ever since my [first piece of writing](https://lenny.substack.com/p/what-seven-years-at-airbnb-taught) after leaving Airbnb, I’ve been wanting to do a deep dive into performance reviews. IMHO, they are the secret weapon of the best managers. **Done well, they improve performance, align expectations and accelerate your report's career. Done poorly, they accelerate their departure.** I’ve been fortunate to have amazing managers, like [Vlad](https://www.linkedin.com/in/vladimirloktev/), who showed me how powerful performance reviews can be, and so when the First Round Review reached out about doing a guest post, this felt like the perfect opportunity to share these learnings. Below is an excerpt from [the full article](https://firstround.com/review/the-power-of-performance-reviews-use-this-system-to-become-a-better-manager/) — enjoy! ## **FOLLOW THIS THREE-STEP PERFORMANCE REVIEW SYSTEM** The system I’ve come to rely on is made up of three equally important parts: - 1. Prepare - 2. Deliver - 3. Follow-up This template forms the foundation of the system, and we’ll walk through each section in detail below. **[Here’s the Google Doc version of the template for your own easy use.](https://docs.google.com/document/d/1SXO4eH8ZvpuONpdlxpu6y1ufDS0n6vbciV4IJzpm-sc/edit?usp=sharing)** [![Image from The Power of Performance Reviews: Use This System to Become a Better Manager 🤝](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/f4bcf3d5-b8b0-4913-8c01-0b0012a9076e_640x1027.jpeg)](https://substackcdn.com/image/fetch/$s_!bJVo!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Ff4bcf3d5-b8b0-4913-8c01-0b0012a9076e_640x1027.jpeg) ## **STEP 1: PREPARE, PREPARE, PREPARE** This is where the bulk of your time should be spent, as it sets up the steps that follow. Start by gathering data on how your direct report did, both by seeking input from your report’s peers and a self-assessment from the individual directly. You want to get as much signal as possible at this stage, ideally as early on in the process as you can (I typically start at least a month before a scheduled performance chat, since it often takes a while to get everyone’s responses). There are many ways to do this, and most companies have their own system for gathering feedback, but you can always take a lightweight approach over email. First, work with your direct report to identify five to eight people who’d be able to provide input. Then fire off emails (bcc’ing everyone) asking [three simple questions](https://hbr.org/2011/08/three-questions-for-effective-feedback): > *Hi Joe,* > > *In an effort to help Jane level up in her career, I’m gathering peer feedback from people she works most closely with. I would really love your input. If you can find 5-10 minutes in the next few days to answer these questions, I would truly appreciate it (and so will Jane):* > > *1. What are 2-3 things Jane should start doing? Why? > 2. What are 2-3 things Jane should continue doing? Why? > 3. What are 2-3 things Jane should stop doing? Why?* > > *I will keep your answers anonymous, unless you tell me otherwise. Please be honest and candid, as that’s what’ll help me give Jane the best support in her career. And, if there’s anything else you’d like to share, good or bad, I’d love to hear it.* > > *Thank you!* In parallel, ask your report to do self-review, with an email such as: > *Hi Jane,* > > *Ahead of our upcoming performance conversation, I would love to get your perspective on how things went. Could you please answer these three questions, along with anything else you’d like to share, and get back to me by X/X?* > > *1. What were your top five accomplishments in this cycle? > 2. What 2-3 areas do you want to focus on developmenting over the next cycle? > 3. What are your goals for your career over the next two years?* > > *Thank you!* While you’re waiting for the feedback, I strongly recommend you start crystalizing your opinion on how your report performed. What did they do well? What is keeping them back? What are the one or two most critical development areas for them to focus on over the next cycle? This is a key step to reducing bias and avoiding being completely swayed by what peers say. As you begin to gather your thinking, and as peer feedback begins to roll in, start to flesh out [the template](https://docs.google.com/document/d/1SXO4eH8ZvpuONpdlxpu6y1ufDS0n6vbciV4IJzpm-sc/edit?usp=sharing) referenced above, which you’ll eventually share with your report. Let’s walk through each section: **Accomplishments:**Detail the person’s accomplishments over the course of the period. Collect these from the report’s self-review, peer feedback, and your own notes that you’ve been keeping throughout the year. Each item here should be significant and meaty. For example, write “Hit team’s goals” and “Shipped project X on time and under budget," not “Held a great meeting” or “Went to three conferences." In this same section, I also like to include a sampling of the best positive peer feedback I’ve collected, ideally three to five of the best quotes about the person (anonymized of course). **Superpower:**Most performance reviews over-index on development areas. The reality is that an individual will have just as much impact (if not more) on an organization if they flex what they are really good at, instead of just trying to improve on the areas they’re struggling with. Here, you have a chance to highlight that. Describe their biggest superpower, and how they can flex it further. A few examples of superpowers that I’ve highlighted in the past include a special knack for storytelling, execution, or galvanizing a team. There’s a lot of [research](https://hbr.org/ideacast/2016/01/stop-focusing-on-your-strengths.html) that shows focusing on strengths is much more effective than obsessing over weaknesses. Note that it’s important to watch for bias here, since many of us unconsciously describe the same behavior by men as a strength and as a weakness by a woman. (You can read more on this topic [here](https://hbr.org/2018/05/the-different-words-we-use-to-describe-male-and-female-leaders), [here](https://fortune.com/2014/08/26/performance-review-gender-bias/), and [here](https://hbr.org/2017/04/how-gender-bias-corrupts-performance-reviews-and-what-to-do-about-it)). **High level feedback:** Next, I take a step back and summarize the report’s performance in a short narrative, about four to six sentences. I try to make a simple story arc, starting by describing how far they’ve come, then a sentence or two about how they did this cycle, and ending on a high-level overview of what they need to focus on next. **Development areas:** Identify one to two development areas to focus on for the next cycle, and put them in the middle column (see the screenshot below). This part is core to the performance review, so selecting these with care is absolutely critical. A few specific suggestions for how to nail these down: - What is **most** holding the person back from the next level? If your company has a leveling system, leverage it to explain your thinking. - Do any clear themes emerge from the peer feedback or self-review? - If your company does calibration, is there a key issue you’re hearing from other managers? Even if it’s not something you agree with, it’s something you’ll need to address. - Make sure you still identify important development areas for even the highest of performers. No matter how amazing someone is, there’s almost always something they can focus on to get to the next level. A few examples of potential development areas include reliable execution, increasing code quality, and more succinct verbal communication. Don’t worry so much about making the descriptions super comprehensive here, as the details will be filled into the next column. A common mistake here is including *too many* development areas (more than two makes it very hard to make meaningful progress on any), or not making the development opportunities concrete enough (where your direct reports are left guessing at what you really mean). **[Read the full article here](https://firstround.com/review/the-power-of-performance-reviews-use-this-system-to-become-a-better-manager/)** --- ## [8/25] This Week #0: Advice on growth, product, and leadership Thank you for taking a chance on this newsletter. As you may have noticed it’s been relatively dormant for the past few months 😬 It’s time to change that — with a little experiment. Thanks to some of my previous writing (and tweeting), I get a lot of great inbound questions centering around driving growth, building product, and broad leadership skills. The advice I’ve shared seems to resonate with folks (while also selfishly helping me crystalize my own thinking) so I’m going to lean into this. Instead of answering these questions privately, or just on Twitter where they quickly disappear, I’m going to share the advice here in this newsletter. **Think of this as an advice column for growth, product, and leadership.** I’ll aim to do this every one to two weeks, and depending on the interest, tackle three to five questions each round. On occasion I may have guest contributors, or dive deep into topics. It’s an experiment. If it ends up being valuable, I’ll continue. If not, I’ll stop. > **CALL TO ACTION: If you are having a hard time with anything at work (or even trying to just optimize something) related to growth, product, org, management, communication, or leadership — simply reply to this email and let me know.** I’ll pick a few questions, keep it anonymous, and share some candid suggestions in an upcoming newsletter. I don’t expect to have all of the answers, but I do hope to make things a little bit better for you. To kick things off — a few recent questions I received about management, product, and business… ### Q: Do you have any advice for how to “manage up”? Managing up, a.k.a managing your manager, is an essential skill at every level (even CEO). It enables you do your best work, while getting the recognition you deserve. A few behaviors and tactics that have helped me over the years: 1. **Over-communicate**: Consistently share what you plan to do, what you’re doing, and what you did. It’s nearly impossible to over-communicate. I started sending a weekly “State of Me” email to my boss, with (1) things they can help me with, (2) my current priorities, and (3) things on my mind. It worked wonders. 2. **Set expectations**: When taking on work, set realistic expectations around time, resources needed, and quality. Your performance will be judged based on how it compared to your manager’s expectations. Be ambitious, but also be realistic. 3. **Share the trade-offs**: When asked to make changes to a plan, be transparent about the trade-offs. Don’t assume they know what you know. What will suffer? What will benefit? What do you recommend? Partner with your manager to make the best decision. 4. **Prioritize and communicate**: When asked to take on additional work, particularly last minutes, prioritize it amongst your existing priorities and share your updated priorities with your manager. Ask them if they disagree — adjust if so. 5. **Do great work**: The better you do -> the more your manager will trust you -> the more freedom and influence you will have. If you feel micro-managed, and others around you don’t, it’s likely because you aren’t performing well. Do great work and life will get better. ### Q: As a PM, when the team is humming along, what should I do when I have extra time? Work your way up this stack, finding ways to refine and optimize each step: > **Execution —> Strategy —> Vision** **Execution:** - Does everyone know what they’ll be doing next? - Are there any blockers slowing down the team, now or approaching? - Are there any processes that could be improved? - Are you on track to hit your goals? What are 3 things you could do to increase those odds? **Strategy:** - Do you have a clear plan for how your team will achieve its mission? - Is the strategy easy to understand and find? If you ask anyone on your team what your strategy is, would they be able to explain it? - If you had to be more bold, what would you change? **Vision**: - Is it clear to you what long-term success for your team and product concretely looks like? Is there a North Star for your team? - Is this also clear to your team? - Does achieving your vision matter? Remind people why. And last, a few things you can always do more of: - Communicate: Is there any additional communication you can do, within your team and to key stakeholders? - Listen: What challenges is your team having that you haven’t yet recognized? - Have fun ### Q: How can I differentiate my product/business from potential competitors, in the eyes of our customers? With so much noise and competition it’s crucial that your offering stands out. Customers need a reason to choose you over the nearly identical competition. What makes you different and better? This is where differentiation comes in. Here’s twenty ways you can differentiate your product or business: 1. Lowest price (Walmart, Amazon) 2. Highest quality (Whole Foods, Ritz) 3. Most convenient (Uber/Lyft, 7/11) 4. Best product experience (Apple, Zoom, Instagram) 5. Best customer service (Zappos, Nordstrom, AMEX) 6. Best solution to a problem (Google, Superhuman) 7. Limited supply (Supreme) 8. Unique supply (Netflix, Disney, Airbnb, Hipcamp) 9. Most personalized (Stitch Fix, Five Guys) 10. Most delightful (FaceApp, TikTok) 11. Most trusted (DuckDuckGo, Yubikey) 12. Most flexible (Salesforce) 13. Celebrity endorsed (Air Jordans, George Forman Grill) 14. Good for the world (Patagonia, Beyond Meat) 15. Good to employees (Southwest, Costco) 16. Good for you (Lush, Fitbit) 17. Most local (Colombiana Beer, Waterstones) 18. Tribe (Harley Davidson, Soulcycle, Crossfit) 19. Status (Louis Vuitton, Rolex, PBR) 20. Story (Bob’s Red Mill, Airstream) Some of the best companies are a combinations of these: - Trader Joe (1 + 2 + 5 + 8) - IKEA (1 + 3) - Tesla (4 + 5 + 6 + 7 + 10) - Costco (1 + 2 + 3 + 5) - Coke (3 + 8 + 20) Alternatively, you can decide not to differentiate significantly and just win by scaling faster: Uber vs. Lyft, DoorDash vs. Uber Eats, Rocket Internet **Have a question you’d like advice on? Simply reply to this email. I promise I won’t bite.** Sincerely, Lenny 👋 --- ## [9/25] This Week #1: Must reads on growth, what PMs should focus on when joining a new team, and the value of an MBA Thank you for all of the questions that have come in over the past week! I was half-worried no one would take me up on the offer — instead, we now have a backlog of over two dozen intriguing questions. To avoid completely nerd-sniping myself I’m going to keep it to three questions per week. If you don’t see your question answered below, stay tuned for future posts! 🙏 *Note: If you find this valuable, can you do me a favor and click the little gray heart below the title above? It helps get the word out about this budding newsletter.* 😍 On to this week’s questions! ### Q: I just applied to a growth role at a payments company — it looks like I’ll get the job. I’ve done a bit of growth before, but mostly retention. What do you advise I read up on to learn more about growth? I have a few go-to resources that I generally share, but I decided to [take this question to Twitter](https://twitter.com/lennysan/status/1173618854397792256) and got back a motherload of great stuff. Below is a subset of what I think will be most helpful to you right now. Before you dive in, however, a warning: Don’t let yourself get overwhelmed. It may seem like the folks you’re reading have it all figured out — but they don’t. They’ve learned a few things, and wrote about them, by going through the same process you’re about to go through. Take a few ideas at a time, discuss them with your team, and try them out in the real world. You’ll learn most by doing. **Favorite online reads**: 1. [Growth Marketing](https://www.julian.com/guide/growth/intro) by [Julian Shapiro](https://twitter.com/Julian) 2. [Everything by Brian Balfour](https://brianbalfour.com/essays), start [here](https://brianbalfour.com/growth-machine) 3. [Everything on Reforge’s website](https://www.reforge.com/blog/) (and definitely sign up for [their classes](https://www.reforge.com/all-programs)) 4. [Everything Andrew Chen has written](https://andrewchen.co/list-of-essays/), start [here](https://andrewchen.co/whats-next-in-growth-and-marketing-for-tech/) 5. [Everything Casey Winters has written](https://caseyaccidental.com/tag/growth/), start [here](https://caseyaccidental.com/what-are-growth-teams-for-and-what-do-they-work-on/) 6. [Everything Sean Ellis has written](https://www.seanellis.me/blog.html), start [here](https://blog.growthhackers.com/the-growth-pyramid-revisited-1ec8ff51877) 7. [Growth Design](https://growthdesigners.co/resources) by [Lex Roman](https://twitter.com/calexity) **Favorite books:** 1. [High Growth Handbook](https://www.amazon.com/dp/B07DRPGGQ7/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) 2. [Hacking Growth: How Today's Fastest-Growing Companies Drive Breakout Success](https://www.amazon.com/dp/B01IZTCF6Y/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) 3. [Traction: How Any Startup Can Achieve Explosive Customer Growth](https://www.amazon.com/Traction-Startup-Achieve-Explosive-Customer-ebook/dp/B00TY3ZOMS/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=&sr=) 4. [Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies](https://www.amazon.com/Blitzscaling-Lightning-Fast-Building-Massively-Companies-ebook/dp/B0791239V7/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=&sr=) 5. [How to Measure Anything: Finding the Value of Intangibles in Business](https://www.amazon.com/How-Measure-Anything-Intangibles-Business-ebook/dp/B00INUYS2U) **Favorite videos**: 1. [How to Improve Conversion Rates](https://www.youtube.com/watch?v=PGqX9fpweyc&feature=youtu.be) 2. [Indispensable Growth Frameworks from My Years at Facebook, Twitter and Wealthfront](https://www.youtube.com/watch?v=OxNrMeRme0E) 3. [HubSpot, Brian Balfour "Growth Is Good, But Retention Is 4+Ever"](https://www.youtube.com/watch?v=ch7aps2h8zQ&t=761s) 4. [Y Combinator videos](https://www.youtube.com/channel/UCcefcZRL2oaA_uBNeo5UOWg/videos?view=0&sort=dd&flow=grid) **People to follow who share growth content:** [@andrewchen](https://twitter.com/andrewchen), [@angelsteger](https://twitter.com/angelsteger), [@bbalfour](https://twitter.com/bbalfour), [@briannekimmel](https://twitter.com/briannekimmel), [@calexity](https://twitter.com/calexity), [@dahartattack](https://twitter.com/dahartattack), [@frost](https://twitter.com/frost), [@HilaQu](https://twitter.com/HilaQu), [@JeffChang30](https://twitter.com/JeffChang30), [@merci](https://twitter.com/merci), [@nateliason](https://twitter.com/nateliason), [@npilosof](https://twitter.com/npilosof), [@onecaseman](https://twitter.com/onecaseman), [@SeanEllis](https://twitter.com/SeanEllis) Check out the [full thread](https://twitter.com/lennysan/status/1173618854397792256) if you want to dig deeper. ### Q: I'm starting a new PM role in a week, and wanted to know — what can a new PM do immediately to set the right tone with teammates, and pave the path for credibility and collaboration? Such an important question. I like to think of a new PM joining your team much like a new roommate moving in to your apartment — even though you’ve interviewed them and did extensive reference checks, you’re still a little skeptical, not sure you want to trust them with the keys to the house, and wonder what this person actually does for a living. To make the best impression as a PM joining a new team, here’s where I’d focus during your first 30, 60, and 90 days: **First 30 days — Focus on building trust** 1. Ask lots of questions. Learn about the team, the business, and the product. Make it clear you aren’t coming in to tell everyone what to do, particularly before you have context. 2. Talk to customers. Get on-the-ground truth from your users. Even though this will just be anecdotal evidence, it’ll start to build up your product knowledge, and will give you a tangible idea of who you’re building for. 3. Find 2-3 quick wins that make the lives of the team better. This can be unblocking a blocker, resolving a lingering decision, or improving an annoying process. **First 60 days — Focus on improving execution and driving tangible impact** 1. Does everyone know what they should be doing at all times? 2. Are there unnecessary meetings that waste people's time? 3. Are blockers being addressed quickly? 4. Is everyone on the same page about upcoming deadlines? 5. What can your team do to drive more impact? **First 90 days — Focus on developing your point of view on strategy and vision** 1. As you learn about the business and product, figure out for yourself what you believe the next step for the team should be. Begin to form a long-term strategy. 2. Building off of that thinking, work with your team to develop a 6-12 month roadmap and rally everyone around it. 3. While you work with your team on this, in parallel tee up your thinking with stakeholders (e.g. your manager, their manager). Make sure they are bought in early so that you don’t present a plan that flops. What do you do after 90 days? Keep doing all of these things above. Plus, [all of these things](https://www.lennyrachitsky.com/p/how-to-get-into-product-management) (skip to part three). No one said being a PM was easy. ### Q: What is the value of an MBA for product managers? If you were hiring for a lead PM/Director - do you value 2 years of experience as a PM more than 2 years of business school, all else equal? Also, what are extended education programs external from the day to day job if I want to continue to grow into a product leader? If I’m reading between the lines correctly — you are considering doing an MBA program in order to accelerate your PM career. If that’s right, my advice is simple: In most cases, it’s not worth it. There are better ways to accelerate your career (see below), especially if you already have a PM gig. When I’m looking at PMs for a potential role, nothing beats experience doing the actual job. However, if you are trying to break into product management, or find yourself stuck in your career, an MBA is not the worst idea. You learn a lot of valuable skills, it’s an increasingly common path *into* product management, and some of the strongest PM’s I’ve worked with had MBAs (not causal though). A few alternatives to an MBA to accelerate your PM career (sorted by how I’d sequence them): 1. Talk to your manager — work together on a plan to level you up 2. Find a PM mentor (or two) and meet monthly — ask hard questions 3. Work on a variety of products and teams — spend time doing growth, building foundational tools, creating infra, etc. 4. Switch to a different (stronger) team within your org — or to a different company 5. Subscribe to and read everything from [PMHQ](https://www.productmanagerhq.com/join-the-community/) and [Mind The Product](https://www.mindtheproduct.com/product-management-newsletter/) A few reads to explore further: 1. [Does a product manager need an MBA?](https://www.quora.com/Does-a-product-manager-need-an-MBA-Isnt-it-true-that-a-technical-guy-with-a-creative-bent-will-have-an-upper-hand-on-technical-software-products-than-a-management-guy-Isn%E2%80%99t-product-management-about-managing-the-product-not-people) 2. [Forget the MBA. Here’s the fastest way to become a product manager](https://hackernoon.com/forget-the-mba-heres-the-fastest-way-to-become-a-product-manager-b3a230a7c055) 3. [How do you get into a product management role with no prior experience as a PM?](https://www.quora.com/How-do-you-get-into-a-product-management-role-with-no-prior-experience-as-a-PM) Till next week! Sincerely, Lenny 👋 **P.S. Let me know what you think!** Is this useful? What could be better? Tell me! I promise you won’t hurt my feelings. This is an experiment and I need feedback. --- ## [10/25] This Week #2: Tackling the chicken-and-egg problem, building a growth team from scratch, and addressing overlap with PM peers 🤔 Welcome to the third edition of the Q&A series! Thank you for all of the feedback and kind words so far. It means a lot. 💛 Keep the questions coming! Anything you’re struggling with at work around business growth, personal growth, building product, people issues, management, org design, or communication is game. If I don’t have anything insightful to say on a topic, I’ll find someone amazing to help answer your question. **New addition this week:** A bit of inspiration for your week ahead at the end of each newsletter. If you’re finding value in this newsletter, please share it with a friend and click the little gray heart above. The bigger this community gets, the more we all learn. On to this week’s questions… ### Q: When creating a new product, what are some strategies and tactics for minimizing the cold start problem — making the product useful with zero users and data? I’ll assume your product involves a marketplace, since that’s where “cold start” (a.k.a. chicken-and-egg) problems are most common. Based on many conversations with folks at about a dozen marketplace companies, these five tactics seem to be the most common solutions to the chicken-and-egg problem: 1. **Single-player mode**: Make your product immediately useful to one side of the marketplace, which seeds that side and then draws in the other side. Examples: OpenTable handling reservations for restaurants before getting into guest discovery — bootstrapping supply, GrubHub scanning restaurant menus and putting them online — bootstrapping demand. 2. **Pay one (or both) sides:** Instead of relying on the marketplace to support both sides immediately, pay the supply or demand to stay in your marketplace. Examples: Lyft and Uber paying early drivers a salary, and also giving early users free credits. 3. **Employees are early supply:** Have your employees offer the service early on. Examples: Airbnb founders hosting their apartment, Rover employees doing dog-sitting. 4. **Focus on one market:** If your service is location-specific, you’ll need to solve the chicken-and-egg problem in every market. To make your life easier, start with getting critical mass in just one market. Examples: Rover in Seattle, Airbnb in NY. 5. **Focus on one niche:** Similar to the above, for companies that aren’t location-specific, pick a niche and build critical-mass around it — then expand out. Examples: eBay and Beanie Babies, Eventbrite and tech events. In most cases you’ll be supply constrained from the start (you need something to sell after all), thus most of the solutions focus on growing supply. ### Q: I recently started a new product manager role and some of my work overlaps with a technical program manager that's been with the company much longer. There's been some tension because of that overlap — I'm wondering how to manage that relationship and make it effective so we work together productively. Tricky spot. Not only do you have to deal with the traditional fuzziness of a product manager’s role, you’re also dealing with the power of tenure and history within an org. Labels like product manager, program manager, and project manager can mean substantially different things at different companies, and there’s no hard rule that says you get to do X if your title is Y. However, in the abstract, a program manager has a meaningfully different skillset from a product manager, and thus there should be a distinction between these roles and the people you hire to fill them. At the risk of not getting these totally right and upsetting people, here’s how I think about these three roles: - **Project Manager: Responsible for** ***project*** **success**. This includes making sure everyone is aligned around the same deadlines, that the right people are talking when they need to be, and that the project launches on time. Success generally means these projects launch on time and under budget. *Projects*, unlike products and programs, are one-off and come to an end. - **Product Manager: Responsible for** ***product*** **success**. Examples of products include the [Substack](https://www.substack.com/) website, the [Google Maps](https://www.google.com/maps) mobile app, and the [Slack](https://slack.com/) onboarding flow. Success means these products drive business impact. This role often encompasses the *project* management responsibilities and includes a direct relationship with the people building product — engineers, designers, researchers. - **Program Manager: Responsible for** ***program*** **success**. Examples of programs include running the Bird scooter charging program, the Airbnb Superhost program, and the Lyft ambassador program. What’s the difference between a *product* and a *program*? In my view, it’s whether the core of the work is building a product (i.e. working with engineers, designers, researchers), or using existing products (i.e. working with ops, sales, marketing), respectively. What’s the difference between a *program* and a *project*? This is even fuzzier, but generally, a *program* is made up of multiple *projects* and requires longer-term thinking. With that out of the way, here’s my advice for how to find clarity in your specific situation: 1. **First, try to work it out the person directly** — If at all possible, talk to the person about this one-on-one first. I bet you they are feeling the same frustration. Point out that you want what’s best for the team (and company), you’re feeling hampered and frustrated with a lack of clarity around your roles, and that you’d like to resolve this to make both of your lives better. If you can get to a place you are both happy, then codify it and share this with your manager(s) — it’s important that they’re also aligned with your worldviews. 2. **If that doesn’t work, go to your manager(s) —** If you don’t think the first option will work, or you’ve tried and it failed, then talk to your manager (and possibly their manager). Share concrete examples of where you see overlap, the negative impact this has been having, and your perspective on how to address it. Lean on them to clarify roles with you and the other person (and their manager). Don’t be afraid to bring this to their attention early — in my experience, these things rarely get worked out without a manager being involved. 3. **Differentiate between historical roles vs. ideal roles** — Encourage everyone to take a step back from what the world is today and to think about what the ideal roles and responsibilities for each role *should* be. As you scale your org, what should program managers be responsible for, and what should product managers be responsible for? What kind of skillsets should you hire for in each? What is the career progression for each role? Work backward from that ideal. 4. **Avoid waiting for the perfect answer** — As a corollary to the above, don’t wait for all of the details to be worked out before you make changes. This can often take months (or years.) Instead, figure out the biggest issues, align on a few improvements, and act on them. 5. **Consider changing titles or teams** — Maybe this program manager should be a product manager? Maybe you two should be on different teams? Think about the best long-term change, not just short-term solves. The worst thing you can do is nothing — these kinds of things rarely get fixed organically. So I’m glad you are recognizing that this issue, and working to resolve it. Keep at it! ### Q: How do you build a growth team from scratch? Read these three essays and you’ll be on your way: 1. [Building a Growth Team from Zero to Fifty](https://brianbalfour.com/essays/building-a-growth-team-from-zero-to-fifty) 2. [How to build a growth team – lessons from Uber, Hubspot, and others](https://andrewchen.co/how-to-build-a-growth-team/) 3. [How Do You Choose the Best Growth Team Model?](https://medium.com/swlh/how-do-you-choose-the-best-growth-team-model-632ad5a85be9#.7bkat2fn5) A few additional thoughts: 1. Everyone in a company should feel responsible for helping it grow — from the CX team to the IT team to the product team. Though it’s extremely valuable to have a dedicated growth team (you should have one), don’t ever think you can delegate growth to just that one group. 2. Early on, focus on the things that can give you 2x - 10x growth. Unless your product is designed to grow through viral loops, a % increase in conversion in the early days isn’t going to have the best ROI. 3. In most cases, once you’re retention is healthy, your biggest growth wins will come from the top of the funnel. You should put a significant portion of your budget and resources there. This includes things like referrals, performance marketing, SEO, and landing page optimization. Sincerely, Lenny 👋 **A bit of inspiration for the week ahead:** 1. [The Entire Plane of the Milky Way Captured in a Single Photo](https://kottke.org/19/08/the-entire-plane-of-the-milky-way-captured-in-a-single-photo) 2. [How the economy works by Ray Dalio](https://www.youtube.com/watch?v=PHe0bXAIuk0&app=desktop) - Learned more about the economy in 30 minutes than I have in 30 years 3. [Tycho's sunrise set at Burning Man](https://soundcloud.com/tycho/inversion-burning-man-sunrise-set-2019) - Live from the Dusty Rhino in Black Rock City [Sign up now](https://www.lennysnewsletter.com/subscribe?) --- ## [11/25] The Secret to a Great Planning Process — Lessons from Airbnb and Eventbrite Hi friends! As a break from our regularly scheduled programming, I’ve got [a new long-form essay](https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/) out, in collaboration my good friend [Nels](https://www.linkedin.com/in/nels-gilbreth-36a9821/) (who led finance and then global revenue strategy for many years at Eventbrite). In it, we share everything we’ve both learned about running a yearly (and quarterly) planning process — including plug-and-play templates, common pitfalls, and some fun stories. Check it out, and let me know what you think! 🙏 Below is an excerpt from the essay. You can find the full article [here](https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/). *An excerpt from the [First Round Review article](https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/) by [Lenny Rachitsky](https://twitter.com/lennysan), a former product lead and head of consumer supply growth at Airbnb, and [Nels Gilbreth](https://www.linkedin.com/in/nels-gilbreth-36a9821/), former Head of Global Revenue Strategy at Eventbrite.* [Read the full article](https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/) It's almost the end of Q3, which means annual (and quarterly) planning is just around the corner. If you’re like most people, this sentence just filled you with dread. We've been through dozens of planning cycles after spending 10 years at **Eventbrite** and seven years at **Airbnb**, so we've seen firsthand how messy and challenging it can be. Sometimes we were still working on our annual plan — three months into the year. Other times a half-assed plan was rushed through approvals, only to be abandoned entirely after only six months. For most of us, by the time planning ends we’re left with bruised egos, misaligned plans, and a lack of buy-in. On the flip side, we've also seen the power of a great planning process. In one case, a single team took it upon themselves to consistently stay ahead of planning. They were always ready to rock and roll on day one of the quarter, and as a result delivered significant impact more quickly (and with higher morale) than anyone else. **Planning is hard because it's inherently different from other exercises your organization takes on**. Rather than focusing on day-to-day execution, it requires a large number of people to think about a variety of possible futures, align on one single future, and then plot a concrete course to get there. Taking this on for your own personal goals (for example, a New Year’s resolution), feels challenging enough — doing this with dozens or thousands of people can feel nearly impossible. > You can’t expect the organization to “just know” how to pull together a quarterly plan. Working without an agreed-upon framework can often be a recipe for disaster. Below we’ll share a system that we call the **“W Framework**.**”** We hit on this idea after leaving our respective orgs and reminiscing on our experiences coordinating large numbers of people to drive collective impact. We realized that the root cause of nearly all bad planning processes is very simple: **a basic lack of understanding of roles — who is responsible for what, when**. For example, who should have a say in the plan, and when? What exactly does each stakeholder need to deliver, and to whom? Who sets the timelines? Who holds everyone accountable? And who makes the final call? These questions are too often left unanswered, which leads to chaos and disappointment during the planning process. The framework is made up of four steps: 1. **Context**: Leadership shares a high-level strategy with Teams 2. **Plans**: Teams respond with proposed plans 3. **Integration**: Leadership integrates into a single plan, and shares with Teams 4. **Buy-in**: Teams make final tweaks, confirm buy-in, and get rolling [![Image from The Secret to a Great Planning Process — Lessons from Airbnb and Eventbrite](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/68431cce-3598-4a7e-a172-7021f24087ef_1000x694.png)](https://substackcdn.com/image/fetch/$s_!zFMs!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F68431cce-3598-4a7e-a172-7021f24087ef_1000x694.png) [Read the full article](https://firstround.com/review/the-secret-to-a-great-planning-process-lessons-from-airbnb-and-eventbrite/) Sincerely, Lenny (and Nels) 👋 --- ## [12/25] This Week #3: Finding product/market fit, interviewing for a Director of PM role, and structuring discussions with senior leaders Hello and welcome to my weekly newsletter, where I tackle your questions and share advice about building product, driving growth, managing humans, and anything else that’s challenging you at work. I’ll answer three questions each week (keeping your name and company anonymous) until you stop sending me questions. If you have anything you’d like advice on, or just want to say hi, simply reply to this email and ask! I won’t have all of the answers, and I’ve still got much to learn myself, but through this experience I hope that together we can all become better at whatever it is we do. If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by telling your friends to [sign up here](https://www.lennyrachitsky.com/). On to this week’s questions! ### Q: I have a startup idea and I’ve started talking to potential customers about it. What should I be asking them to know if I have Product/Market Fit? Oh, that fabled Product/Market Fit (PMF) 🔮 Many seek it, few find it. The search for PMF is not so different from a treasure hunt — you’re pretty sure there’s gold somewhere out there, you find vague clues along the way, and you have to keep your crew/team/investors from mutinying before you discover it. If you do find it though (and you can manage to keep it), glory and treasure await 🤑 **What is PMF?** It just means you’ve created something that people want. You can read more about why it’s important in [this legendary article by Marc Andreesen](https://pmarchive.com/guide_to_startups_part4.html) (who coined the term). **How does one know if they’re indeed building something people** ***will*** **want?** In my experience, you never *really* know you have PMF until you’ve built the thing, gotten people to use it, and enough people continue to use it for an extended period ([here’s a way to measure this once you have enough users](https://firstround.com/review/how-superhuman-built-an-engine-to-find-product-market-fit/)). Also, it’s not a binary, big-bang, event — you simply get clearer and clearer about what the market wants, build it for them, and hope that it has lasting, differentiated, value. Remember the [Yo app](https://www.justyo.co/)? or [CryptoKitties](https://www.cryptokitties.co/)? Lots of initial traction, and then a quick fade. It felt like PMF, but that there’s fools gold. 😏 What you want to do at your stage, up until you can measure things like long-term retention and level of “disappointment” if your product disappeared, is to build increasingly greater confidence that you’re heading towards treasure. You do this through the initial conversations you’re having now, and later with wireframes, prototypes, and having people use the actual product. When talking to potential customers early on, here are the three things I’d look for to build confidence that you are heading towards PMF: 1. **Passion:** How excited do people get when you describe your idea? You want to see people get visibly excited. You want them to ask you how soon this thing will exist. You want to hear them offer you money for it. This will be hard to miss. If you can’t find a handful of people that act this way, you either don’t have PMF, you aren’t pitching it well, or you haven’t talked to the right people. Adjust one or two of these things and see if you can get there. Try to find at least five people who are very excited. As Paul Graham famously said, “It's better to have 100 people that love you than a million people that just sort of like you.” 2. **Skin in the game:** Are people willing to pay you for this product? Ask them this directly. Even try to get them to pay you now (i.e.. literally send them an invoice) to get early access to the product. *Nothing* will be a better signal of interest and PMF if you can do this successfully. Try this even if it’s a consumer app that you won’t charge for — it’ll show you how much value you’re creating in people’s lives. 3. **A clear why:** As you talk with these potential users, keep asking “why.” Why are they excited about your product? What specifically is it going to do for them? Why is this problem a big deal? Why aren’t they using something else instead? This will both help you make sure you’re understanding what they are saying, and help you get to the core of their pain point. Concrete questions I’d ask in your interviews after you describe your idea: 1. How are you currently solving this problem? 2. What annoys you about your current approach? 3. If you had a magic wand, what would you wish for to solve this problem? 4. How much would you pay for this if it existed? 5. Why is this a problem for you? [Listen for answer] Why is that? [Listen for answer] Why is that? [Listen for answer] Why is that? Final tip: Pick the people you talk to carefully. Figuring out the target audience for your product is very much part of this search, so be careful getting discouraged by talking to the wrong group of people. ### Q: Any advice on interviewing for a director-level PM position? As you progress in your PM career, moving from an individual contributor (IC), to a manager of PMs, to a manager of manager of PMs, your gaze rises from the week-to-week, to months out, to years out. You’re increasingly looking further out into the horizon — laying ground-work, anticipating challenges, and working towards a long-term vision. You focus less on day-to-day execution and more on putting place strong vision, strategy, and people. With that in mind, when interviewing or hiring for a director-level PM, the five most important traits to nail IMHO are: 1. **Long-term strategic thinking:** As a Director of PM, you will be asked to take on large complex problems (e.g. growth is slowing on a marquee product, launch a critical new product from scratch, build out this key piece of infra), and find a clear path to solving those problems. Unlike doing this as an IC PM, the scope will be bigger, the stakes will be higher, and the number of people involved will be larger. When interviewing, expect to be asked about times you’ve defined strategies for problems in the past, and to be given complex business problems that you’ll need to tackle either at home or in-person. Focus on your approach to breaking down the problem and your strategy for addressing it, not on having the perfect solution in the end. 2. **People leadership:** As you move up the career ladder as a PM manager you become increasingly distant from the actual product. More and more your impact comes out of the work of other people. As Andy Grove famously shared in [High Output Management](https://www.amazon.com/dp/B015VACHOK/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), “the output of a manager is the output of the organizational units under his or her supervision or influence.” Thus, your ability to lead and influence people becomes ever more critical. When interviewing, expect to be asked about your leadership style, how you’ve navigated people challenges in the past, and what your reports and peers would say about working with you, if asked. 3. **Stakeholder management:** Similarly, you’ll be spending a lot of time working with senior external leaders. Sometimes, even more time than with your own team. When interviewing, expect to be asked about times you had to push back on stakeholders, when you had to go along with something you didn’t agree with, and how you’ve set things up for success when presenting to execs. 4. **Impact:** As a de-facto leader of a large number of resources (i.e. engineers, designers, data scientists, researchers, etc.), you will be expected to drive significant impact (i.e. changes the trajectory of the business). Expect to be asked how you’ve prioritized for impact in the past, how you align your team behind the most impactful work, how you set goals, and how you think ahead to make sure you’re always working on the highest impact opportunities. 5. **Communication:** Your ability to communicate clearly, concisely, and convincingly will be essential to being successful at every one of the above attributes. Expect to the asked about concrete tactics you’ve learned for communicating with your team and stakeholders, how you keep your team and stakeholders up to date on what’s happening, and how you communicate bad news. Also, be cognizant of how you’re communicating during the interview — that itself is an important signal to the hiring team. ### Q: When you were doing check-ins with senior leadership, did you often find decks were necessary to communicate? If so, curious if you found certain content/structures to be best. Check out the [McKinsey Situation-Complication-Resolution (SCR) Framework](https://speakingsherpa.com/how-to-tell-a-business-story-using-the-mckinsey-situation-complication-resolution-scr-framework/). My last manager introduced me to this and it’s changed the way I present information ever since. You can apply this to any medium, and in many different contexts. In terms of the actual medium, that decision depends so much on what your audience is expecting (are decks encouraged? are they banned?), what sort of information you’re communicating (designs? strategy? a bunch of data?), and your personal style of communication (do you like to point to things on a screen? do you like the attention to be on you?). My advice is to pick whatever you’re most comfortable with, tell the story you want to tell, see how it goes, and iterate. Watch to see if the leaders stay engaged and understand what you want them to understand. If not, ask for feedback from those leaders or your manager, and try something different next time. That’s it for this week! Have something you’d like some advice on? Just ask by replying to this email. 🤔 **Inspiration for the week ahead 🧠** 1. Book: [No Hard Feelings: The Secret Power of Embracing Emotions at Work](https://www.amazon.com/No-Hard-Feelings-Embracing-Emotions/dp/0525533834/ref=asc_df_0525533834/?tag=hyprod-20&linkCode=df0&hvadid=312136634064&hvpos=1o1&hvnetw=g&hvrand=12732337914494514401&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9031961&hvtargid=aud-801381245258%3Apla-635014706097&psc=1) — A deeply researched, beautifully illustrated, and immediately actionable guide to turning emotions at work from a liability into an asset, for you and your team. 2. Blog post: [Cross the world four times](https://sivers.org/4) — A (rare) new blog-post Derek Sivers. It’s a tear-jerker. 3. Podcast: [Dan Carlin's Hardcore History](https://podcasts.apple.com/us/podcast/dan-carlins-hardcore-history/id173001861) - If you have any interest in history at all, start with [this episode](https://podcasts.apple.com/us/podcast/show-50-blueprint-for-armageddon-i/id173001861?i=1000169593374) and just try to stop listening. Sincerely, Lenny 👋 --- ## [13/25] This Week #4: Motivating engineers to hit deadlines, PM career ladders, and aligning with execs Hello and welcome to my humble newsletter, where I answer your questions and offer candid advice about building product, driving growth, working with other humans, and anything else that’s stressing you out at the office. I’ll tackle three reader questions each week (keeping your name and company anonymous) until you quit sending me questions. I definitely won’t have all of the answers, and it’s just my one perspective, but hey, it’s free! 🤝 If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by telling your friends to [sign up here](https://www.lennyrachitsky.com/). 😎 **New this week:** Let’s experiment with comments 🤷‍♂️ If you have any of your own suggestions to share, on any of the topics we cover below, open up the newsletter in a browser, scroll to the bottom, and post a comment. 🤙 On to this week’s questions… [![Image from This Week #4: Motivating engineers to hit deadlines, PM career ladders, and](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b77fdc5c-b4db-43fb-ba63-dc5d80fe50c1_220x145.gif)](https://substackcdn.com/image/fetch/$s_!scV8!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb77fdc5c-b4db-43fb-ba63-dc5d80fe50c1_220x145.gif) ### Q: The biggest question I'm dealing with is how to motivate my eng team to hit deadlines that aren't necessarily connected to anything specific. It feels like they've been dragging their feet and nothing I’ve done has helped. Since a PM’s primary job is to marshal the resources of their team to drive business impact, it’s understandable why one would be concerned, frustrated, maybe even question their ability to product manage when things aren’t moving fast enough. The first thing to know is that this is extremely common — I haven’t yet met a PM that wasn’t at one time frustrated by how long it takes to get things out the door. It’s almost part of the job. That being said, there are often good reasons for why things take longer than you’d suspect, so I’d encourage you to start with listening and understanding: 1. **Ask questions** — Talk to your engineers and/or eng manager to understand why things take as long as they do. Come at it with genuine interest, not an agenda. You may discover they also feel like it takes too long to ship, and can point you to something you can actually help unblock or streamline for the team. 2. **Look at other teams** — Are your engineers working slower than those on other teams within the org? Talk to other PMs to get a rough benchmark. At most modern eng orgs, there are a lot of steps engineers must go through before they can ship code. This including manual Q&A, code reviews, unit tests, going through architectural reviews, and launching brand new services. These are generally good things, and in the long-term make things move faster. 3. **Do post-mortems** — After a project ends, particularly when you missed another deadline, do a post-mortem with the team. [Here’s a pretty good guide](https://backlog.com/blog/run-incredibly-effective-post-mortem-meeting/). The key is that you all come at it with a motivation to learn, not blame and point fingers. I’ve found these meetings to be one of the most effective ways to root out problems large and small. Nothing helps you get better, at product or at life, than a feedback loop. 4. **Re-evaluate how you use deadlines** — It sounds like your deadlines are arbitrary. Which is fine. Having deadlines is a super useful tool to get sh\*t done. However, it’s important to be up-front about this. I like to say “Let’s come up with an arbitrary deadline!” when setting the date, just to be super up-front about this. Some may ask why have a deadline at all? In my experience, it actually does help get more stuff done, helps a cross-functional team coordinate deliverables around a unified date, and it helps you coordinate all of the other moving pieces in the business (e.g. sales training, CX roll-outs, etc.). It also creates *some* accountability. 5. **Alternate between hard and soft deadlines** — Building on the last point, sometimes deadlines are actually important, and sometimes they aren’t. With soft-deadlines, be upfront but also encourage your team to build muscle to accurately estimate work in order to get it right when it counts. Following this, assuming you are still feeling like the team can work harder and take deadlines more seriously, here are some of the most effective ways I’ve found to motivate anyone on your team (engineers, and everyone else): 1. **Connect the work they are doing to their personal motivations:** Find out each person’s individual goals (e.g. they want to become a manager, they want to start a company, they want to be promoted), and help them see the connection between the work they are doing and achieving this goal. For example, how does this project help the person build the skills to start a company in the future, or manage others, or get a better shot at a promotion? Make sure they see that. 2. **Connect the work they’re doing to the higher mission**: Assuming they joined your company because they believed in the mission, make sure it’s clear how what they are working on day-to-day helps achieve this mission. It’s often hard to see it, or we take for granted that everyone sees that connection. Make it explicit in team meetings, project kickoffs, 1-Pagers, decks, and 1:1’s. 3. **Partner with their manager**: As a PM, there’s only so much you can do through influence. It’s difficult to be super direct sometimes, especially if you want to maintain a healthy relationship with the team. Your best friend in changing team-member behavior will always be their manager. It’s critical that you have a good relationship with them, and that you see eye-to-eye. If you do, then you should work together to make change. If you don’t, try to get there. Help them see what you see by leveraging some of the things I mention above and below. 4. **Make sure you have buy-in**: Are your team members actually bought into these timelines? Do they feel like they actually committed to these dates? If not, then it’s obvious why they aren’ hitting them — they never said they would. If that’s the issue, when you are setting timelines, ask your team members how long they expect something to take. It’s OK to push back occasionally, but generally, just trust them. Then, work out the sequencing based on everyone’s direct estimates, confirm everyone feels good about the plan, lock it in, and then share it widely. Check-in on how things are going in your regular team syncs. 5. **Align incentives**: People respond to incentives, so figure out how to incentivize hitting dates. In addition to the other points noted above and below, a few additional incentives to explore: 1. Connect impact to employee performance: Does delivering impact on the business reflect on people’s performance review? If so, shipping quickly will directly follow. If not, make sure it does. This is critical. 2. Status: When someone hits a public deadline, celebrate them publicly. But be careful punishing people who don’t — otherwise people will pad deadlines or ship crappy code. 3. Autonomy: Make it clear the more frequently they hit dates, the more freedom and autonomy they’ll have going forward. Which is true — if you do well, you move up the ranks, and you have more autonomy. 4. Financial: If they are hitting dates reliably, they’ll be more likely to be promoted. Which leads to a raise. An occasional spot-bonus helps too. 5. Peer pressure: If they miss a date, they’re letting down the team and customers. It doesn’t feel good to let people down. 6. **Align passions:** As much as possible, make sure people are working on things they are actually excited about. This often includes building mastery in something (e.g. ML, react, growth), or filling a gap they have to address in order to be promoted. If the person doesn’t actually care about the project, it’ll show in everything they do, including missing dates. 7. **Align skill-sets:** Make sure the people doing the work are actually well suited for. Sometimes things take way longer then they should because the people doing the work are still learning how to actually do it (e.g. learning a new language, learning a new process, learning new tools). If this is an issue, lean on the more senior team members to help ramp people up more quickly. 8. **Sprints:** How far ahead are you estimating dates? People are bad at estimating. Consider switching to a more agile product development process where you only need to estimate two weeks out. This alone may address your issues. 9. **Change the deadline when you have new information:** Often after a project begins you uncover unexpected hurdles that didn’t inform the estimate. Instead of trying to squeeze things in, consider simple resetting the deadline. Make it an official change to the date, get buy-in again, and share it widely. 10. **Sometimes, you just need to fire people 😲:** Occasionally, people just aren’t good at their job, and can’t deliver what you hired them to do. After doing whatever you could to get them there, and being clear about their underperformance for a period of time, it sometimes makes sense to just let people go. It’s often the best move for both of you. High level, all you really need for your team to excel is (1) smart and (2) motivated people. If people continue to take way too long to ship, and you’re confident this isn’t just an incorrect perception, then one or the other is amiss. Figure out which one, and focus on addressing that. Any other advice from your own experience? Leave a comment below and share your tips 🤜🤛 ### Q: I've always thought about how to improve my career as a PM. One thing that I wish I could find was a legit career ladder that's actually used in a tech company. Do you know of any? I’ve shared a bit about what to focus on as your progress in your PM career in this tweet-thread… … but in terms of official career ladders, borrowing from [this juicy collection of links from BestPracticer](https://bestpracticer.com/skill/product-career), here are my current five favorite public PM career ladders: 1. [Intercom](https://blog.intercomassets.com/blog/wp-content/uploads/2019/05/Intercom-PM-job-ladder-Logo.pdf) 2. [Oscar](https://www.linkedin.com/pulse/deep-dive-product-management-leveling-oscar-sara-wajnberg/) 3. [Gusto](https://engineering.gusto.com/a-framework-to-help-product-managers-achieve-their-potential-2/) 4. [XO Group](https://medium.com/pminsider/product-manager-skills-by-seniority-level-a-deep-breakdown-cd0690f76d10) 5. [Gitlab](https://about.gitlab.com/handbook/product/#product-management-career-development-framework) Know of any better examples? Leave a comment and share it with others 👇 ### Q: We send out a monthly report card to our customers, highlighting some key metrics about their usage. The metrics are mostly vanity so I took over the task of improving it to make it more “actionable.” But every time I present an iteration of it to execs, I get a response saying it is still not “actionable.” Also, all of their ideas are too blue-sky, vague, or difficult to implement (lack of data, accuracy, scalability issues, etc.). Can you give any tips or advice on how to navigate this? It seems like you’re having a tough time getting your execs onboard with your ideas. A few tips: 1. **Get data:** What evidence do you have that backs up your ideas? What convinced you that your ideas are right? Do you compelling quotes from user research you can share? Do you have any metrics that point too your ideas being right? Do you just have a hunch you want to test? If yes, make the case logically, building on the data or experience you’ve built up. If not, get some data. Be prepared to be proven wrong. 2. **Assume good intentions and listen:** When your execs tell you that your ideas aren’t “actionable”, dig further. Why not? What would make them more actionable? Why do they think this? When they share ideas that are too blue-sky, what can you do to make them more concrete? It’s your job to take inputs and ship the most impactful work — feedback is a gift 🎁 3. **Figure out the ideal product, and work backward:** [Check out what I wrote previously about Airbnb’s approach to this](https://marker.medium.com/what-seven-years-at-airbnb-taught-me-about-building-a-company-e1d035d49c56) (search for “Start with the ideal and work backward”). Don’t limit yourself by what’s easy. Remove that constrained cap for now and think about what the “ideal user experince” would be. Truly assume no constraints. Once you have that, put the cap back on and think about what it would actually take to achieve it. How much work would it really take? Is it that crazy? Pitch it to the execs, and see if they’d actually be on board with making it possible. As someone famous probably said, often times we are limited not by what’s possible, but what we *think* is possible. 4. **Get out of the building:** Stop debating opinions and talk to real users. Show your concepts to at least five users and use that to guide your thinking. Every time I’ve done this I’ve re-remembered how incredibly valuable talking to real users is. Never assume you know what your users want without talking to them. 5. **Work backward from your goal:** What metric are you trying to drive with this project — increasing a specific action? more purchases? more invites? Make sure you’re aligned on this KPI with your execs, since that will (and should) inform how you prioritize the ideas. Then, when presenting the ideas, sort them based on which will make the biggest dent in the metrics. If there is disagreement — what’s the quickest test you can run to validate the assumption? That’s it for this week! ### Inspirations for the week ahead 1. Book: [Am I Overthinking This? Over-answering life's questions in 101 charts](https://www.amazon.com/gp/product/B07SKK9KWF/ref=ppx_yo_dt_b_d_asin_title_o06?ie=UTF8&psc=1) - True, this is a book by my wife. Also true, it’s extremely delightful and you will not regret checking it out. Also, she doesn’t know I’m doing this. 2. Article: [Three Big Things: The Most Important Forces Shaping the World](https://www.collaborativefund.com/blog/three-big-things-the-most-important-forces-shaping-the-world/) - Wow, this kind of blew my mind. Don’t miss it. 3. Show: [Inside Bill’s Brain](https://www.netflix.com/title/80184771) on Netflix - Inspiring, optimistic, and moving. We could do with a bit more of this these days. [Sign up now](https://www.lennysnewsletter.com/subscribe?) **If you’d like some advice, or just want to say hi, just reply to this email and ask! And please [share this newsletter with your friends](https://www.lennyrachitsky.com/) if you’re finding this valuable.** Sincerely, Lenny 👋 --- ## [14/25] This Week #5: Overcoming impostor syndrome, introducing growth to an org, and how to partner with your data scientist Hello and welcome to my humble newsletter, where I attempt to answer your questions and offer candid advice about building product, driving growth, working with other humans, and anything else that’s stressing you out at the office. 🤝 If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by telling your friends to [sign up here](https://www.lennyrachitsky.com/). 😎 **New this week:**A guest contributor **😍** Check out the second question about impostor syndrome. And from last week—our comment experiment from last week didn’t work. Turns you need to be on a paid plan for that feature to work. This is how we learn. 😩 On to this week’s questions. . . ![Image from This Week #5: Overcoming impostor syndrome, introducing growth to an org, and](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/97ac70fe-c2dc-43c8-ada8-c731852f10ce_480x270.gif) ### Q: I’m wondering if you had any thoughts on impostor syndrome and product management? This job is really freaking hard, and most days I feel like I’m terrible at my job despite external signals like getting put up for promotion. I ❤ this question. I went through some *serious* impostor syndrome myself for several years (does it ever totally go away?) right after a promotion at Airbnb. I had this sense that if I made a single mistake, in a meeting or with a launch, even once, everyone would see that I had no idea what I was doing and everything would crumble. It was real and it was rough. What helped me most during that period was actually talking to a professional coach. She helped me see different perspectives that I hadn’t seen, to understand that the downside wasn’t as bad as I thought, and that things were actually going really well. **🎉 As a treat for you all, my [favorite executive coach, Kate Hosie](https://www.powerhouse-coaching.com/), generously offered to share her advice on this question! Occasionally I’ll ask experts in a field to take certain questions, and this week we’re very lucky to have Kate help out. Enjoy! 🎉** — I have a few points of view on this question, coming from different angles. I’ll be starting from a place of *self-compassion* or *acceptance* about your impostor syndrome and then shifting more toward a position of *growth*. Try not to think of these as mutually exclusive, believing that the only way to grow is to judge yourself. Instead, self-judgment prohibits sustained healthy growth. It’s really difficult to improve ourselves when we don’t even want to truly look at ourselves. Instead, if you can imagine a polarity, with self-compassion and acceptance to the far left and growth to the far right, ask yourself what you recommend most for yourself right now. I sometimes see my work as both “comforting the afflicted and afflicting the comfortable,” so knowing whether you’re more afflicted or maybe a little too comfortable may help you to decide what’s more important right now: 1. **See it as a sign of success**: Impostor syndrome is normal and is generally a sign that you’re enjoying some degree of success in your life. Think of it this way: if you were pumping gas or stacking shelves somewhere, you wouldn’t be experiencing impostor syndrome. So first of all, you could stop and give yourself a pat on the back for at least being in a role that’s challenging enough to warrant having impostor syndrome about in the first place. As I’ve mentioned above, acceptance is underrated and the first step in any real change. 2. **See the truth in it:** Sometimes people experience impostor syndrome because it’s true. You may be in a new role or a new industry. Your role may be growing faster than you are. This happens all day long so, no judgment. However, the degree of negative emotion you’re experiencing regularly is directly related to the level of responsibility you’re taking in your life. It’s like a seesaw or teeter-totter: when negative emotion is up, responsibility is down, and vice versa. Only every single time. So if your negative emotions are recurring, it can help to step back and ask yourself where you’re not taking responsibility in your role. For example, where are you procrastinating, making excuses, blaming others, not addressing root cause issues, ignoring structural problems, not developing yourself but instead just coasting, not really delivering but instead going through the motions? Look for where you’re out of integrity with yourself and what you know you need to be doing. 3. **Look for burnout**: Start to pay attention to what degree this feeling of your being an impostor is valid and to what degree it may just be what I call “the burnout talking.” Career burnout is very common and can be primarily traced back to three causes: (1) over-caring, (2) lack of appreciation, and/or (3) not working to your strengths or at the appropriate ability. Burnout directly impacts our self-confidence, and our self-talk invariably suffers, where we start to think that we’re not actually that good at what we’re doing anyway. Not a fun loop to find yourself in. I’ll speak to these causes of burnout one at a time: - ***Over-caring:*** To what degree are you caring appropriately about your work? Versus over-caring, where your identity is all wrapped up in what you do and the rest of your life is suffering from malnourishment. If you’re over-caring, you’re likely to be over-investing and have lost your sense of perspective. Perspective-taking capacity (PTC) is critical in leading others through ambiguity, and it’s often lost when we don’t take sufficient breaks, vacations, or sufficient care of ourselves. A typical scenario is when someone sacrifices sleep to get more done, thinking that they will only be impacted physically by the sacrifice. However, a lack of sleep impacts us physically, mentally, psychologically, and emotionally. How much sleep have you been getting lately? To what degree is that impacting how you feel about yourself? I will hazard a guess and say: more than you likely realize. Focusing on your own peak performance, or what I prefer to call “optimal functioning,” through getting your energizing and restoration habits in place, is critical and almost invariably requires a greater focus on recovery than most people give themselves. - ***Lack of appreciation***: This is also pretty common. You can be grinding things out and no one even notices or cares, or, even worse, you may feel criticized or judged for everything you have yet to do. If you expect appreciation to come from above, then you’re limiting yourself. Studies done on burnout recovery and prevention show that appreciation from peers is just as impactful as appreciation from whoever you’re responsible to, so think about how you may like to build this into or across your own teams and peer groups as a permanent structure in how you run your meetings, conduct your one-on-ones, etc. Also, acknowledging your own progress helps. It’s easy to see everything we still have not yet done, so find a way to pay attention to your own progress and celebrate that where possible. We can’t get everything done in one day or one week, but it’s highly likely that you’re always moving forward. Don’t lose sight of that, and give yourself some credit. - ***Not working to your strengths or at the appropriate ability***: Most people build their careers on what depletes them. To what degree do you even know what your intrinsic strengths are, or what is naturally energizing for you, versus what you find depleting? Knowing and using your strengths will help you avoid burnout. When you avoid burnout, you will be less inclined to experience that fun voice in your head that we call impostor syndrome. Also, you would think that operating at a level below your actual ability would make you feel better about yourself, but the reverse is true. It diminishes your self-confidence. So you may like to step back and ask yourself if you’re operating at the right level or whether you’re living on your knees. No judgment, please. Just curiosity and compassion, which will allow you to be more honest with yourself. 4. **Sometimes the job is just plain hard:** Product management is challenging. And that’s OK. You don’t need to be perfect. What I do suggest for people in highly complex roles is that they do four things in particular, which comes from the Four Factor Model I learned from Professor Michael Cavanagh, who is an expert in complexity theory from the University of Sydney. Those things are: - ***Keep your perspective-taking capacity*** (mentioned above) by looking at the big picture—more broadly than you would normally be inclined to do. A simple way to picture this is imagining that you’re working at ground level, versus looking at things from the top of a tall tower. When you’re at the top of the tower, you have PTC and an elevated ability to see all the connected parts. You can’t do this if you’re grinding it out at the coal face. If you’re leading others, the top of the tower is where you need to spend most, if not all, of your time, and to help others see what you can see from that vantage point. - **Take responsibility for your own mindfulness**, for example by starting some kind of meditation practice of even 10 minutes a day using something like Headspace. This will help you keep yourself calm among all the VUCA (volatility, uncertainty, complexity, and ambiguity) elements you, your organization, and your industry are exposed to. - **Ensure that you have a clear shared purpose** with those around you, to keep you aligned when everything starts to come undone. It will bring you back to what matters most and prevents thrash. - **Stay in dialogue**. Talk often, talk broadly, and listen to people you don’t want to listen to. Stay open. Share what you see when you see it. This takes the burden from you, and you will find that you are a part of a shared responsibility. You can’t do your role on your own. Remember that. A great PM doesn’t try to work things out on their own but instead stays in good, open relationship, and in dialogue, as things constantly emerge. Be an open system. This is realistic. Be realistic. — *You can learn more about Katherine Hosie at [www.Powerhouse-Coaching.com](https://www.powerhouse-coaching.com/) or by emailing her at [katherine@powerhouse-coaching.com](mailto:katherine@powerhouse-coaching.com).* ### Q: What’s your advice for introducing growth to a company that has a pretty standard way of thinking about it, i.e. “sales and marketing”? The more involved I get, the more I notice that we can really benefit from switching our mentality toward “growth” and breaking down the barriers between marketing, product, sales, etc. I’m inferring that you want to introduce a more cross-functional and “analytical” mindset to growth—what used to be known as “growth hacking” but is now known as just a “growth team”: > [A growth team] is a hybrid of marketer and coders who looks at the traditional question of “How do I get customers for my product?” and answers with A/B tests, landing pages, viral factor, email deliverability, etc. On top of this, they layer the discipline of direct marketing, with its emphasis on quantitative measurement, scenario modeling via spreadsheets, and a lot of database queries. If a startup is pre-product-market fit, [a growth team] can make sure virality is embedded at the core of a product. After product-market fit, they can help run up the score on what’s already working. > > —Andrew Chen, [Growth Hacker Is the New VP Marketing](https://andrewchen.co/how-to-be-a-growth-hacker-an-airbnbcraigslist-case-study/) Good news: you’re right to try to make this shift. There’s no question that the tighter and unified your product, data, engineering, research, marketing, and sales teams are, the more bottom-line impact (and less waste) you’ll end up seeing. It just makes sense—fewer silos, more collaboration, being data-informed, and leveraging complementary skill sets lead to better outcomes. This is how all companies should and will operate eventually, and you’re pulling your company toward that future. Bad news: this will be hard. Once a company has a certain mindset for how growth happens, and enough senior leaders who want to protect their jobs/teams/power, it’s difficult to dislodge. Good news: reality isn’t going to change because people don’t want it. Change will come for your growth org eventually, whether folks like it or not. A few suggestions for how to accelerate the shift toward a “growth team”: 1. **Bring in experts:** Invite growth leaders from companies that your leaders admire to meet with your company’s leaders. Or even have them do a fireside chat that leaders attend. Ask them pointed questions about how they operate, and how marketing and sales fit in. An outside voice is often very impactful. These sorts of chats had a big impact at Airbnb. 2. **Benchmark against other companies:** A lighter-weight approach to the above would be to simply talk to these external folks yourself and collect lessons. Then build that into a pitch that you share with your execs. 3. **Get buy-in from the top:** For a real growth org to spring up, you need support from the CEO (or another senior leader). They need to make it clear that this is important and requires the support of the existing marketing and sales leaders. Without this, you’ll run into all kinds of friction, politics, and tension. Why? Because people will feel like their jobs are being threatened. Help them see where they’d fit into this new structure. 4. **Run an experiment:** If you can’t get buy-in on a big change, get buy-in for a small change—ask for a six-month experiment where you pull together a data scientist, an engineer, a PM (and, ideally, a designer and a researcher), and see what kind of impact you can make. Then show your leaders how much (measurable) growth this small investment has made, and what you could do with 5x more resources. Try to actually get six months—otherwise you’ll risk running out of time by the time you figure out how to operate as a team, instrument the product, design, build, launch, and wait for the results of your experiments. 5. **Become a thought leader within the org:** Send a weekly “This Week in Growth” email highlighting lessons from your company and other companies. Invite weekly or monthly speakers to talk about growth to your team. Start a Slack room where you jam on growth topics. Share podcasts, share articles, share books about growth. Become the person everyone thinks about when they think “How the heck do we drive more growth??” [See Question #3 in this previous post](https://www.lennyrachitsky.com/p/q-and-a-tackling-the-chicken-and) for advice on how to build your growth team once you have buy-in. ### Q: I recently joined a company as a data scientist. While the team I am on is great and supportive, the engineering and product leads have not had much experience working with data scientists and the like. As a result, we have found it difficult to work out our processes and I don’t feel I am contributing as much as I would like. So I suppose, in short, my question is—how have you found success using data specialists in cross-functional teams? In my experience, having a data scientist on your team is like having a superpower. You’ll see things you wouldn’t have seen, make faster and better decisions, and have significantly more impact. Eventually, your teammates will realize this too. Here’s what you do. Send the following email to your partners on the team, and if they disagree, send them my way: — *Hello,* *I asked this guy [Lenny](https://lennyrachitsky.com) for advice on how to get the most value out of your data scientist, and here’s what he said:* 1. ***Treat them as a partner:** Share* what *you are trying to achieve and* why*, not just the queries you need run. If they are senior (and good), you’ll be astounded by how many new ideas and novel insights they’ll bring to the table. 🤝* 2. ***Know what motivates them:** Find out what kind of work your DS partner enjoys doing most, and try to give them as much of that type of work as possible (when there is flexibility). Some DSs love knocking out answers to questions. Some love tackling long-term deep problems. Some love low-level infrastructure work. 🤗* 3. ***Prioritize asks:** DSs are often barraged with questions, seemingly always urgent—a lot of “this’ll be quick!” Work with your DS on a (public) prioritized list of outstanding to-dos, and when new asks come in, work together on the updated priorities. Review together weekly. 🧐* 4. ***Know what you’ll do with the answer:** For the questions you ask your DS, have a clear and precise answer for “What will you do with the answer when you have it?” Your DS should ask you this each time. You will find that many of the things you want to know are not actually going to change anything, and thus not worth looking into.* 5. ***Share findings widely:** Each time a data question is answered or an insight discovered, encourage the DS to share it with the wider team and other DSs. Try to save them somewhere that will last. This information is gold for when you are looking for new ideas. 🗣* 6. ***Put them in the spotlight:** Encourage your DS to be the one sharing their work in meetings, presentations, brainstorms, etc. Help them get the credit they deserve for the work they do. 👏* 7. ***Find a balance:** Don’t be data-driven—be data-informed. Use the insights from the data as one input to a decision (so critical), but leave a bit of room for other inputs beyond data. 🤔* That’s it for this week! ### Inspirations for the week ahead 1. Watch: *[General Magic](https://www.generalmagicthemovie.com/)*—an inspiring, gripping, and improbable story about a small company in the ’90s that influenced much of the technology we use today. It’s also an excellent case study in what happens when you lack product management. 🤪 2. Read: “[Three Big Things: The Most Important Forces Shaping the World](https://www.collaborativefund.com/blog/three-big-things-the-most-important-forces-shaping-the-world/)*”*—If you love *Sapiens*, you’ll love this. 🤓 3. Learn: [How to Put on a Duvet Cover](https://www.realsimple.com/home-organizing/decorating/decorating-bedroom/how-to-put-on-a-duvet-cover)—Life will never be the same. 🤯 [Sign up now](https://www.lennysnewsletter.com/subscribe?) **Please [share this newsletter with your friends](https://www.lennyrachitsky.com/) if you’re finding it valuable.** And if you’d like some advice yourself, or just want to say hi, just reply to this email and ask! I’ll tackle three reader questions each week (keeping your name and company anonymous) until you quit sending me questions. I definitely won’t have all of the answers, but hey, it’s free! 🤝 Sincerely, Lenny 👋 --- ## [15/25] This Week #6: Cultivating good relationships with distributed co-workers, building trust to accelerate growth, and leveling up as a PM when you have extra time Hello and welcome to my humble newsletter, where I attempt to answer your questions and offer candid advice about building product, driving growth, working with other humans, and anything else that’s stressing you out at the office. 🤝 If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by telling your friends to [sign up here](https://www.lennyrachitsky.com/). 🙏 **New this week:**The one and only [Hiten Shah](https://twitter.com/hnshah) guest-answering one of your questions. Don’t miss it! **😍** On to this week’s questions… [![Image from This Week #6: Cultivating good relationships with distributed co-workers](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/84d8b63e-afb9-4c7e-baae-14c69b8e4227_480x206.gif)](https://substackcdn.com/image/fetch/$s_!B2he!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F84d8b63e-afb9-4c7e-baae-14c69b8e4227_480x206.gif) ### Q: In the next year, more and more of the engineers and designers I’ll be interacting with will be remote. What advice do you have for cultivating a good relationship with remote engineers and designers? Since I have very little experience with extended remote work myself, I decided to ask someone who has lived (and written about) this life for years, [Hiten Shah](https://twitter.com/hnshah), to take this question. He immediately (and generously) agreed. If you don’t know Hiten, he’s a legend. Not only is he one of the nicest, most insightful, and most helpful people you’ll ever meet, he also co-founded four companies (KISSmetrics, Crazy Egg, Quick Sprout, and most recently [FYI](https://usefyi.com/)), has invested in 100+ more, and for years has been putting out loads of rich content about [startups](https://usefyi.com/notion-history/), [growth](https://thestartupchat.com/) , and appropriately . . . [remote work](https://usefyi.com/remote-work-resources/). Here’s Hiten’s take: — On a distributed team, you are not in the same physical space, so you don’t get to see each other in-person. You don’t get to just walk up to someone’s desk and show them something, or ask them a quick question. Instead, all of the forms of communication with your team are digital: text, voice, and video. As a result, **remote work leads to an increase in miscommunication**. For engineers and designers, the number one impact of miscommunication is being forced to redo work, and make unexpected changes after you think you are done. All because of something that got lost in translation. **Good relationships with remote engineers and designers require ensuring that there are methods for avoiding miscommunication. You do this by maintaining clarity.** Your goal on a remote team is to create a culture where it’s OK to ask for clarification when something feels unclear. This is the key to successfully working on a remote team. Ensuring that everyone is on the same page about exactly what needs to be done. Here are a few tactical best practices to help you build good relationships with your co-workers: 1. **Always write things down**: Whenever you’re on a call, make sure that anything that’s important gets written down. Options that were discussed, decisions that were made and next steps, plus who is going to do them. Go even further for your recurring meetings and have a single document that incorporates an agenda and structured meeting notes of what was discussed each time. It’s also important to fully and clearly document specs to ensure understanding. The more that gets documented, the better. 2. **Screenshare when possible:** If you’re talking about work that an engineer or designer is doing, screenshare and go right into the tool where their work and tasks are documented. For example, this could be your ticketing system, a spec document or even an Invision prototype. Work together by having a discussion, going back and forth on the feedback and ideally collaborating in the appropriate tool while on the call. This way nobody has to remember to update things later. 3. **Postmortem everything that’s shipped**: Especially whenever larger bodies of work are completed and shipped to customers. Marketing, product, big customer wins. It should all be postmortemed to understand what went well and what didn’t. This way you are constantly assessing how things are going and are able to discuss how to improve them. Having great process and documentation is the key to remote work. You can’t just come up with a process and expect it to work well for you without reviewing and iterating it. For more remote work best practices that are backed by research that we’ve done, [read these 11 best practices for working remotely written by my co-founder Marie](https://usefyi.com/remote-work-best-practices/). *—* *Thanks [Hiten](https://twitter.com/hnshah)!* ### Q: I work at a Fintech company — how would you think about growth here? Our main challenge is building trust with users (because without that they won’t want to share any of their information), and not being a daily use product. First of all, let’s talk about a few ways you can build trust with users: 1. **Social proof:** If people that you trust are using a product, you’ll certainly be more likely to trust it. [Some examples of this in action](https://blog.hubspot.com/marketing/social-proof-examples). How might you leverage data and testimonials from people already using your service to create social proof — how many people are using it, what kind of people, from where, and for what purpose? Help your users immediately see that people just like them are already using and loving your product. 2. **Authority**: If someone in authority has vetted a product, you’ll be much more likely to trust it. [Some examples of this in action](https://www.nngroup.com/articles/authority-principle/). How might you surface your certifications, approvals, badges, awards, seals, or endorsements from authority figures? How might you acquire more of these? Whatever you have — make sure your users see these early and often. 3. **Guarantees**: If something goes wrong, who’s got my back? What’s the downside of giving this product a shot? How might you make your users feel like they’ll be safe and protected no matter what? The [Airbnb Host Guarantee](https://www.airbnb.com/guarantee) was an incredibly powerful tool for getting new hosts over the hump of opening their home up to strangers. 4. **Reputation**: This is likely less relevant to your business, but reviews from other users (e.g. Yelp reviews, Uber reviews, Airbnb reviews) are one of the most powerful ways to communicate trust. If many other people have had a good experience, it’s likely you will too. [Here’s a good read on this topic](https://sloanreview.mit.edu/article/online-reputation-systems-how-to-design-one-that-does-what-you-need/). 5. **Great UX:** A badly designed site/app immediately introduces suspicion. Particularly when dealing with money. Pay attention to the details — the resolution of images, padding, grammar, performance, and general visual polish. Listen for these issues in user research. Little things can make a big psychological impact here. [Watch Joe Gebbia’s TED talk about how Airbnb designs for trust](https://www.ted.com/talks/joe_gebbia_how_airbnb_designs_for_trust?language=en). 6. **Deliver:** With our increasing interconnectedness, word-of-mouth spreads quickly. Particularly if you do something wrong. Nothing destroys trust in your brand more quickly. At the same time, if you consistently provide a great experience, and deliver on your promise — that’s how you’ll build real long-term trust. [The Amazon Flywheel](https://fourweekmba.com/amazon-flywheel/) is a good example of this in action. With that in mind, three growth levers I’d suggest you explore: 1. **Top-of-funnel: Referrals**. For a product that relies on trust, there’s nothing more powerful than an endorsement from a friend. Airbnb had a similar trust challenge, both on the guest side (“stay in a stranger’s home, are you crazy?”) and on the host side (“have a stranger stay in my home, are you crazy??”). [Referrals](https://www.airbnb.com/refer) proved to be the single biggest attributable growth lever on both sides of the marketplace. When designing your referrals program, it’s important that (1) the referer has a meaningful incentive, be it cash or credits, that (2) this program is easily discoverable, and that (3) you are incentivizing the right behavior — the referral reward should only pay out once the new user has hit a valuable milestone. 2. **Mid-funnel: Landing page(s).** Start building trust from the first moment a user visits your site. How might you leverage some of the ideas I referenced above to instill a strong sense of trust in your product immediately? How might you continue that message throughout the remaining experience? What concerns do people have, at which stage of the flow, and what are you doing to address them? Also, no matter what you’re selling — is the value prop for your product crystal clear? What will compel users to stick around? Make sure to show these pages to real users and listen to their reactions. Continue iterating on this indefinitely. 3. **End-of-funnel: Remind users of the value you’re providing.** Without knowing what exactly it is your product is, I’ll take a guess and assume that it’s a “set it and forget it” kind of service, where you sign-up, connect your financial accounts, and good things happen for me. If true, then find ways to remind users of all of the good that you’re doing, and why they’d be fools for quitting. Wealthfront and Betterment do a great of this with a regular email showing me how much interest I’ve earned lifetime with them. ### Q: I’ve been a PM at a startup for about 18 months. A few months ago the business shut down, and for a variety of reasons I’ve decided to take some time off to do some extended travel. With months of travel ahead of me, I’d like to use this time to level up my PM game, and I wanted to get your advice on what you think would be the highest leverage learning opportunities during this time. Truthfully, it’s tough to get significantly better at product management without actually doing product management. No amount of reading, classes, or discussions will be as good a teacher as doing the actual work. However, having time to step back, to process, to read deeply, and to build complementary skills is a rare gift and can indeed accelerate your progress once you return to the job. Here are a few things I’d suggest for your time off: 1. **Follow your energy:** What have you been yearning to do or learn while employed, but have been unable to because you’ve been too busy or lacked the energy? Maybe it’s learning to design, or learning to code, or getting better with data. *Do that. Do the thing that you are most pulled towards.* Even if it’s not directly beneficial to your job today, at the worst you’ll feel much better finally having scratched that itch. 2. **Read, with a goal:** Determine 2-3 skills you most want to develop (strategy? execution? leadership?), pick a set of books and articles that speak to these skills, and work through them. [Here’s a set of curated articles and books I previously put together for each of the primary PM skills](https://www.lennyrachitsky.com/p/how-to-get-into-product-management). I’m happy to share more if you let me know what skills you’d like to focus on. Be careful adding too many items to your list, or book/articles that you aren’t excited about, because you’ll quickly get bored or overwhelmed, and lose motivation. 3. **Read, without a goal:** Not all things need to be goal-oriented. Make time to read stuff you’re super excited about even if it’s only tangentially related. [Biographies](https://www.amazon.com/dp/B00KVI76ZS/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1), [history books,](https://www.amazon.com/Sapiens-Humankind-Yuval-Noah-Harari-ebook/dp/B00ICN066A/ref=tmm_kin_swatch_0?_encoding=UTF8&qid=1571439116&sr=8-1) and [documentaries](https://www.generalmagicthemovie.com/) are great for this. As an example of this in action, [here’s the story about how Walt Disney’s biography changed Airbnb’s strategy](https://www.fastcompany.com/3002813/how-snow-white-helped-airbnbs-mobile-mission). 4. **Write:** One of the main reasons I’ve started writing is because it helps me learn. Consider doing some writing, reflecting both on what you’ve learned over the past 18 months, and on the reading that you’re doing on your time off. This can be as simple as a bullet list of PM learnings, or as in-depth as a Medium article. 5. **Take experiential classes:** At a high level, product management, as a skillset, is a combination of leadership + business thinking + product design. Instead of reading about these skills, find some local classes that will help you build them in a different context. Want to work on leadership — maybe take a class on teaching an adventure sport. Want to work on business thinking — maybe take a class on running a local business. Want to work on product design — maybe take a class making pottery. Use this opportunity to look beyond the digital world. That’s it for this week! ### Inspirations for the week ahead 1. Read: [Which Way Do You Run? by Ben Horowitz](https://a16z.com/2019/10/17/how-to-be-effective-ceo-leader/) — “Almost all CEOs know where the problems are, but only the truly elite ones run towards the fear.” 💪 2. Listen: [The Portal by Eric Weinstein](https://podcasts.apple.com/us/podcast/8-andrew-yang-dangerously-different-candidate-media/id1469999563?i=1000452045633https%3A%2F%2Fpodcasts.apple.com%2Fus%2Fpodcast%2Fthe-portal%2Fid1469999563) — An fantastic new podcast that will make you smarter. Start with the episodes with [Andrew Yang](https://podcasts.apple.com/us/podcast/8-andrew-yang-dangerously-different-candidate-media/id1469999563?i=1000452045633), [Werner Herzog](https://podcasts.apple.com/us/podcast/3-werner-herzog/id1469999563?i=1000445326690), or [Peter Thiel](https://podcasts.apple.com/us/podcast/1-peter-thiel/id1469999563?i=1000444670908). 3. Watch: [Optical grape sorting](https://www.youtube.com/watch?v=AamACDnwRts) 😳 **If you’re finding value here, please [share this newsletter with your friends](https://www.lennyrachitsky.com/).** [Share Lenny's Newsletter](https://www.lennyrachitsky.com/?action=share) And if you’d like some advice yourself, or just want to say hi, just reply to this email. I’ll tackle three reader questions each week (keeping your name and company anonymous) until you quit sending me questions. I definitely won’t have all of the answers, but hey, it’s free 🤷‍♂️ Sincerely, Lenny 👋 --- ## [16/25] This Week #7: Effectively communicating about a failure to execs, managing founder expectations, and hiring a Director of PM Hello and welcome to my humble newsletter, where I attempt to answer your questions and offer candid advice about building product, driving growth, working with other humans, and anything else that’s stressing you out at the office. 🤝 If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by telling your friends to [sign up here](https://www.lennyrachitsky.com/). 🙏 **New this week:**A friendly reminder to click the little grey heart up near the headline, if you find this newsletter valuable. <3 On to this week’s questions… [![Image from This Week #7: Effectively communicating about a failure to execs, managing](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6253a3db-f579-46f5-8820-2f6430f63697_220x118.gif)](https://substackcdn.com/image/fetch/$s_!EgGv!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F6253a3db-f579-46f5-8820-2f6430f63697_220x118.gif) ### Q: What are your thoughts on communicating failure, like missing our team’s set goals? I’m new to my job and the first idea I pitched got buy-in very quickly. However, even through the initial user tests went great — the actual MVP we launched is doing horribly. I am struggling on how to communicate this, and which actions to take. Unfortunately I am in a quite “old-fashioned” environment where sharing failure is not common. Before getting into how to deliver bad news, a few suggestions to get your mind in the right place: 1. **Failure is super normal:** A large percentage of technology projects fail. I would venture to say MOST projects fail, in one way another. Why? Because you’re doing something that has never been done before. That’s what makes them worth doing. 2. ***You*** **aren’t the project:** Don’t equate a project’s success with your personal success. You are doing a job, to the best of your abilities. You’ve had successful projects in the past, and you will again. You’ve also had failures in the past, and you will again. And some of the best work happens when taking a big risky bet. 3. **It’s not** ***that*** **big of a deal:** I’m going to assume no one died, no one got hurt, and that you didn’t blow a bunch of money and resources. If true, all that was really lost was some negligible amount of resources and time. To a large company, that is not a big deal. It happens all the time. This is part of the game in business. It will likely be forgotten within the year. Now, a few suggestions for how to frame bad news to leadership: 1. **Be up front**: The truth will come out. Don’t try to hide it. More than that, I’d encourage you to lean into it: “This project failed. Let me tell you what happened, what we’ve learned, and what we’re recommending as next steps.” Leaders respect people who are clear-headed, up-front, and take responsibility. 2. **Stay positive:** Avoid coming into the discussion looking down and depressed. Your energy and body language will influence how folks feel. Smile, be friendly, and convey optimism for the future. 3. **Separate the idea from the execution:** When a project fails, sometimes it’s because the idea was bad, but sometimes it’s because it was executed badly. It’s easy to assume that it was a bad idea, especially if you were the one executing it, but I’d encourage you to take a hard look at the project and decide if it’s worth taking another shot at it with a different approach. 4. **Describe the journey the project has been on:** Before diving into the results, paint a (succinct) picture of the sequence of events the led you to launch this MVP. It sounds like there was a lot of excitement for this idea — remind people why they were so bullish on it. Include early successes, user quotes, and learnings along the way. A visual timeline is often a good way to present this. 5. **Share what worked:** What did you learn through this experience? What theories did you disprove? What surprised you and your team most? As [Eric Ries](https://theleanstartup.com/) taught us, the best way to measure the progress of new endeavors by how much you’ve learned. 6. **Have a clear plan for next steps:** Building on the previous point, it’s *extremely* important that you have a clear recommendation for what to do next. This is how you turn a failure into an opportunity. Looking at the learnings from this experience, what should the company do next? Folks will be looking to you to guide them. This could be simply killing the project quickly and moving on. Or pivoting to something that showed signs of success. Or taking a whole new approach to the same problem. I’d spend most of your time thinking through this part. 7. **Show you care:** Your company leaders will want to feel that you are committed and excited about the work, and to moving forward on whatever path ends up being chosen. If you do still care — make that clear. Bonus: Watch this [documentary about General Magic](https://www.generalmagicthemovie.com) to see how beneficial failure can sometimes be. [Sign up now](https://www.lennysnewsletter.com/subscribe?) ### Q: How do you, as a product managers, manage expectations with founders when their idea has to change? We’re well funded, and have been trying to scale a product — but it’s not working. We’re also feeling a lot of pressure from the board. I’ve included this question because there’s a lot of overlap between it and the previous question, but with two important difference: (1) the attachment to the idea will be much stronger, and (2) the impact of changing it will be much larger. Basically, it’s a much harder version of the above question. Sorry 😭 When looking to change someone’s mind about something they firmly believe in, here are some tactics that have worked for me: 1. **Bring them on the journey with you:** It takes time to change someone’s mind. Particularly something as big as a founder’s core idea. How might you bring them along the same journey you went on that convinced you that this was the wrong direction? What were the key data points, experiences, and learnings for you? Share them as you experience them, with your takeaways, and always with a “here’s what we’re doing next to continue learning how to make it work.” I share a story of this kind of experience in [the introduction to this essay](https://uxdesign.cc/how-to-solve-problems-6bf14222e424). 2. **Align on the key hypothesis and test them one by one:** Something is keeping your founder convinced this is a great idea. Listen to these insights, and the assumptions behind them. Then, together, come up with a set of tests that you can cheaply run to vet these assumptions. Ask what would convince them that maybe this isn’t right. At some point, you’ll either run out of things to test, or you’ll be able to show that maybe it’s working. 3. **Stay optimistic:** It’s important that you come across as being on the same side as the founder — you are there to help uncover how to make this work. Be the person that comes up with the hypothesis to test, with next steps after each test, and a running set of conclusions. 4. **Show them irrefutable data:** Even though data isn’t everything at this stage, there often is compelling data (either quantitative or qualitative) that can paint a pretty clear picture of what’s not working. An approach here is to work backward from what a compelling case for pivoting would be (e.g. what data points would this need, what kinds of quotes would you need from users), and then go get those. 5. **Have someone they trust convince them:** It’s often tough and IC on the team to convince the founder of anything they don’t want to believe. Does the founder have a trusted advisor that you can pitch on your perspective, and then work together to influence the founder? 6. **Give the founder a chance to save face:** It’s difficult for anyone to admit they are wrong. Especially a company leader. Knowing this, find a way to make it feel like less of a failure and more of an evolution based on new learnings. “You made a decision based on prior information, and it was the right one given what you knew, but now that we know more, it makes sense to change direction.” 7. **Accept they may never change their mind:** I have many friends who have worked for founders are CEOs who are extremely stubborn and essentially are impossible to convince they are wrong. If you begin to feel that’s the case in your company, step one is to recognize that, and step two is to decide if you want to continue working in that environment. ### Q: Could you flip the "interviewing for a Director PM role" question [from a few weeks back](https://www.lennyrachitsky.com/p/weekly-q-and-a-finding-productmarket) and share your thoughts on what interviewers should look for when *hiring* a Director of PM? I’ve recently come across the writings of [Jackie Bavaro](https://twitter.com/jackiebo), who has some stellar content on hiring Product Managers. So first of all, go [read this](https://medium.com/@jackiebo/how-to-hire-great-product-managers-f07a3c9337ea) and then [this](https://medium.com/@jackiebo/how-to-hire-great-product-managers-part-3-writing-interview-questions-5b8bd221beff). In addition First Round has a great [roundup of PM hiring advice](https://firstround.com/review/our-6-must-reads-if-youre-hiring-a-product-manager/). Now, what is different between hiring a Director of PM vs. an IC PM? I’d say the top three differences are that they will be (1) managing PMs, (2) taking on large scope, and (3) working closely with senior leaders. Here are some of my favorite interview questions for the seven key skills to focus on for interviewing PM Director candidates (same as the [previous answer](https://www.lennyrachitsky.com/p/weekly-q-and-a-finding-productmarket), plus two new ones to keep things interesting): 1. **Long-term strategic thinking** 1. Have them pick a 3+ month-long project they’ve led and are proud of, and to walk you through it from inception to completion. I jump in along the way to explore how they thought strategically about each step of the process. 2. Present them with a sample challenge that you’re facing at our company and have them talk through how they wouldd tackle this problem, from vision to strategy to through the execution. 3. Taking the above concept further, I’ve found great signal in giving a candidate 2 hours to tackle a challenge, on their own at a desk in the office, and then to present their proposal to the interview panel. 2. **People leadership** 1. “When I ask them, what would people you’ve managed in the past say about you? What about people your peers?” 2. ‘Tell me about a time you’ve had to deal with a low-performer. How did you communicate something was wrong? And what did you do to help them improve?” 3. “Tell me about a time when a team you were leading didn’t gel. Why do you think that happened, and what have you learned?” 3. **Stakeholder management** 1. “Tell me about a time you took the initiative and make something happen that needed to happen.” 2. “Tell me about a time you strongly disagreed with your manager. What did you do to convince them that you were right, and what happened?” 3. “Tell me about a time you were behind schedule on a high-visibility project — how did you communicate the news to stakeholders? How’d it go?” 4. **Impact** 1. “What measurable impact have you had at your previous companies?” 2. “How do you measure the impact of someone in your role?” 3. “Say we look back a year from now, what kind of impact would you like to have made?” 5. **Communication** 1. “How do you keep your team updated on what’s happening higher up in the org?” 2. “How do you keep your stakeholders updated on what’s happening within your team?” 3. “Tell me about a time you messed up communicating something important to either your team or to execs — and what did you learn from that?” 6. **Decision making** 1. “Tell me about a time you had to make a decision that was counter to what your team wanted. How did you work through that?” 2. “When do you wait for consensus vs. making a call yourself?” 3. “Tell me about a time when you went against what the data was telling you?” 7. **Vision** 1. “Tell me about a time you had to develop a vision for a product or team.” 2. “How important is it to have a vision for your product or team?” 3. “What was the vision for your previous product or team?” 8. **Hiring** 1. “Tell me about one of your favorite (or hardest) hiring experiences in the past — how’d you find them, how’d you close them?” 2. “How much of your time do you expect to spend hiring?” 3. “What’s your standard interview loop process?” **Bonus: Other questions I love** - “What’s something you’re better at than most other people? What’s your superpower?” - “What’s something you’re working to improve?” - “What was your biggest product mistake? What did you learn from it?” That’s it for this week! ### Inspirations for the week ahead 1. Watch: [Camera Drone Follows Rollercoaster to Capture Dizzying Cinematic Footage](https://petapixel.com/2019/09/11/camera-drone-follows-rollercoaster-to-capture-dizzying-cinematic-footage/?fbclid=IwAR2jzExjYhUplr5LZPr6EpE_qbTRc_XQczovUbBDDHojtW4WzslaYCiAH3Ehttps%3A%2F%2Fpetapixel.com%2F2019%2F09%2F11%2Fcamera-drone-follows-rollercoaster-to-capture-dizzying-cinematic-footage%2F%3Ffbclid%3DIwAR2jzExjYhUplr5LZPr6EpE_qbTRc_XQczovUbBDDHojtW4WzslaYCiAH3E) — 👌 2. Listen: [Nir Eyal on Below the Line podcast](https://podcasts.apple.com/us/podcast/29-nir-eyal-indistractable/id1457400066?i=1000450819118) — Practical tips to become less distractable 🤫 3. Behold: [Our Dazzling Night Sky When the Milky Way Collides with Andromeda in 4 Billion Years](https://kottke.org/19/10/behold-our-dazzling-night-sky-when-the-milky-way-collides-with-andromeda-in-4-billion-years) 🤯 **If you’re finding it valuable, please [share this newsletter with your friends](https://www.lennyrachitsky.com/).** [Share Lenny's Newsletter](https://www.lennyrachitsky.com/?action=share) And if you’d like some advice yourself, or just want to say hi, just reply to this email. I’ll tackle three reader questions each week (keeping your name and company anonymous) until you quit sending me questions. I definitely won’t have all of the answers, but hey, it’s free 🤷‍♂️ Sincerely, Lenny 👋 --- ## [17/25] This Week #8: Splitting equity with late-joining co-founders, favorite roadmap templates, and small changes that improve your org Hello and welcome to my humble newsletter, where I attempt to answer your questions and offer candid advice about building product, driving growth, working with other humans, and anything else that’s stressing you out at the office 🤝 If you’re returning from last week, thank you! If you’re new, nice to have you! Help spread the word by [telling your friends](https://www.lennyrachitsky.com/) 🙏 **New this week:**Special guest contributor [Hunter Walk](https://twitter.com/hunterwalk) 🔥🤩🤯 answering one of your questions! Also, watch out for something very special coming next week. On to this week’s questions… [![Image from This Week #8: Splitting equity with late-joining co-founders, favorite roadmap](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/0aa9a6c7-0ddc-48ad-89b0-5f46b2ad122f_220x164.gif)](https://substackcdn.com/image/fetch/$s_!cgQI!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F0aa9a6c7-0ddc-48ad-89b0-5f46b2ad122f_220x164.gif) ### Q: I have bootstrapped my startup to our recently launched MVP by using paid contractors, and I’m now looking to bring in key team members (at least a CTO) as co-founders. Given that I have not raised any funds yet, one of the potential CTO candidates has agreed to join me on an equity basis. What do you recommend I offer the CTO candidate to demonstrate that I really want to work with him as a co-founder, but at the same time not make a decision that will deter potential investors (e.g. issuing him preferred instead of vested common stock for his work/contributions)? Though I’ve had a bit of experience with this, I wanted to make sure you got as complete and accurate an answer as possible — thus, I turned to the man, the myth, the legend: [Hunter Walk](https://twitter.com/hunterwalk). Hunter is a partner (and co-founder) at [Homebrew](https://homebrew.co/), former PM at Google (AdSense, YouTube), has personally worked with over a hundred early-stage startups, and has [shared a few](https://hunterwalk.com/2017/08/07/founders-should-set-aside-more-equity-for-your-team-split-the-pain-with-investors/) [strong perspectives](https://hunterwalk.com/2015/12/18/sorry-startup-employee-100-your-equity-probably-wont-make-you-rich/) on equity splits. He generously offered to share his perspective on your situation: — *Congrats! Bringing on a key technical leader is a milestone that you should be proud of, and which will impress any potential investors. Your question around equity has a few components, but directionally you’re exactly right:* - ***What’s the CTO’s value?** If they’re a true cofounder, would you consider giving them equity starting around 10% of the company — all the way up to a share equal to yours? For a very early stage company, we see “late-arriving cofounders” all the time. Otherwise, senior engineers/founding team would usually receive 1-5% of the company. These are all averages and situations definitely differ.* - ***The stock grant should be common shares with a standard vesting schedule.** Even outside of investors, this will give you comfort that you have time to evaluate this new team member before handing away meaningful portions of your company. Any venture investor will likely begin a vesting schedule for you as well.* - *Given that they’ll start work during the vesting period, the CTO might ask for something from you which signifies commitments — such as if they’re terminated without cause pre-vesting cliff, that you grant them some negotiated amount of stock. In my mind, this seems fair.* *Good luck! Building a team and a culture is the best part of building a company!* — Thank you, [Hunter](https://twitter.com/hunterwalk)! ### Q: What’s your favorite roadmap template that you like to use? Yes! [Here you go](https://docs.google.com/spreadsheets/d/1zlx3RuidNOW40Zf7gh07p2SqoR53Ungv9JFT-PhHwxI/edit)! This is courtesy of my former Airbnb colleague, [Andrew Chen](https://www.linkedin.com/in/andrewchen0/) (not [that Andrew Chen](https://www.linkedin.com/in/andrewchen/)), who had some of the most thoughtful and well-executed roadmaps of any PM I’ve ever worked with. I’ve tried a lot of different tools over the years, and I always find myself always coming back to Google Sheets 🤷‍♂️ Below is a peek, but make sure to [check out the full template](https://docs.google.com/spreadsheets/d/1zlx3RuidNOW40Zf7gh07p2SqoR53Ungv9JFT-PhHwxI/edit). **Option 1: Organized by lever (my preference)** [![Image from This Week #8: Splitting equity with late-joining co-founders, favorite roadmap](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6aae58cd-80dd-4cce-8ddf-484427814d99_2078x828.png)](https://substackcdn.com/image/fetch/$s_!JjOv!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F6aae58cd-80dd-4cce-8ddf-484427814d99_2078x828.png) **Option 2: Organized by product** [![Image from This Week #8: Splitting equity with late-joining co-founders, favorite roadmap](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6f5d4e42-2554-4c4b-8fd7-8ef9c50838b8_1184x636.png)](https://substackcdn.com/image/fetch/$s_!nHg-!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F6f5d4e42-2554-4c4b-8fd7-8ef9c50838b8_1184x636.png) **Bonus: A timeline per team member** [![Image from This Week #8: Splitting equity with late-joining co-founders, favorite roadmap](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/459a71c9-6cea-4624-9d5d-a6b8fa7e019a_2080x878.png)](https://substackcdn.com/image/fetch/$s_!ae9I!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2F459a71c9-6cea-4624-9d5d-a6b8fa7e019a_2080x878.png) If you have something better, I’d love to see it! Reply to this email and share the wealth 🧐 ### Q: What’s one thing you’ve changed within your organization that has made your team meaningfully more effective? I asked this question of you all last week, and you delivered 💛 We got a boatload of great stuff (and also ended up rocketing to the top of the Substack engagement rankings 😬). **Here are your top ten highest rated ideas:** 1. “**Keeping track of every piece of customer feedback we receive**, and then actually following up after we've made improvements to let people know they've been heard. [I created a template in case anyone is interested in trying out our methodology](https://coda.io/t/Customer-Feedback-Hub_tR3QcZZMHKW?previewTemplate=R3QcZZMHK).” — Justin Hales 2. “**Delivered monitoring/analytics with each feature implemented in the product**. This made it easy to justify more budget by having a backlog of a pretty deep set of analytics by the time we were a few months into the project.” — Jacob M 3. “After reading ‘Trillion Dollar Coach’, I liked the idea of ‘Trip Reports’. So I introduced a variation of that in our team meetings. **Every Monday morning, I asked the team to send me photos of their weekend/vacation. I collated it into individual slides and at the start of our team meeting,** we went around the room talking about your photos! (15 mins). This had a positive impact on the team. We got to know each other as humans outside of work. We let our guard down before talking about work. Especially great for new starters!” — Saffad Khan 4. “I'm in an engineering first org, so I had to introduce product into our development processes in a valuable and non-intrusive way. I did this by **introducing Product Discovery documents on topics that we want to address** [with the following structure](https://www.lennyrachitsky.com/p/-share-one-thing-that-youve-changed/comments#comment-39605).” — Yehia Khoja 5. “**We started to have ‘monthly social events’ -- a rotating set of activity-based events that each person on the team would host**. Anything from [MassVR](https://massvr.com/) to [Game Show Game Show](https://thegameshowgameshow.com/). The structure shifted a decidedly introverted team to become much more collaborative and for the newer folks on the team to ask others for help. This then set up a structure where we now have weekly "pod" meetings where various folks collaborate on technical design, coding, and strategy in a way that I never expected!” — Shashin 6. **“Moving over to Basecamp** instead of using Google Drive / Docs / Sheets.” — Monica Banks 7. “(1) **Daily Virtual Scrum over slack**, where the team shares what are the things they are targeting to achieve that day. And at the end of the day, they share the status update against each line item they shared in the morning. It reinforces for the team to go through the allocated task, and think first thing in the morning, before they start executing, (2) **Product Reviews every week/bi-weekly**. We keep changing frequency based on the backlog, (3) **We started writing the mission, vision, and strategy** for the subsequent products that we are planning to introduce. It helped me personally to avoid many mistakes we did in the past based on [this link where you shared, Lenny](https://medium.com/hackernoon/how-to-get-into-product-management-78c58bd9c8cf).” — Vikram 8. **“Created a deck on business terms used at our company** that many may not be familiar with. Things like MRR, ACV, CAC, CTR, ASO, etc. The idea was to enable everyone to be more proactively involved in discussions whenever these terms are thrown around. Now we showcase this deck to every new joinee at the company during their onboarding! [Public link to the deck](https://docs.google.com/presentation/d/1tC_p-ukMd8QMEFEU7bwUywB42-huKbF9H0K115gEqXg/edit).” — Sudeep Shukla 9. “Normally developers would do a ‘Technical Conception’ before a project begins, and that would take a few days or weeks. **What I now do as a Product Manager is a ‘Pre-Technical Conception & Legacy study’**, where I: - Study the legacy product where the team will have to work on. I study all functional aspects, write documentation (super important) to keep track of my studies,and explain how the features & logic work. - While studying the function, I also take time to note down all technical aspects that I can understand (ex: database structure of this functional perimeter, API calls during feature interactions, workflow, etc) or any leads/suggestions I can give to the developer so that can help them do the Technical Conception faster. - This is a totally new process I created in my team & company. Not only did it benefit a lot the team, but it made the project deliveries significantly faster by making the developers obtain knowledge in advance and do very fast Technical Conceptions. Our development time of projects went 300% faster.” — Chaz 10. “After reading 📚 UX for startups and other UX books in my first 2 weeks after joining the startup, **we experimented with setting aside a day where all engineers 👨‍💻 focused on a certain list full of UX annoyances** (not bugs) then send out an email with all improvements as we ate pizza 🍕 while solving them - 🚨On D-day, there was only 1 engineer who was available because the rest had emergencies. - We (me as UX & Front-end of course after discussions with the PM) moved the tickets from: 'Design in progress' 👉'Ready for Dev' 👉 'In Progress' 👉 'Code Review' 👉 'QA' 👉 'Done' - 🎉We managed to address 10% of all the UX annoyances. - After reflecting with the team 🧠, because we work in an agile way, we all decided that for every sprint ♺, we will be picking 1-2 UX Annoyances 😡 and adding them to the Backlog. This was a victory for the team! 🙌 Now we are not just looking at Painkillers (PM vs UX) but also Vitamins!” — Lewis Kang'ethe Ngugi Thank you all for your ideas! [Read the full list here](https://www.lennyrachitsky.com/p/-share-one-thing-that-youve-changed/comments), share yours if the mood strikes. That’s it for this week! ### Inspirations for the week ahead 1. **Read**: [Beyond Coffee — A Sustainable Guide to Nootropics, Adaptogens, and Mushrooms](https://geni.us/beyondcoffee). Written by [James Beshara](https://www.linkedin.com/in/jjbeshara/) (of Tilt, and [Below the Line podcast](https://podcasts.apple.com/us/podcast/below-the-line-with-james-beshara/id1457400066) fame), and just released today. It’s the most informative, well-research, and digestible (pun intended) read on these substances you’ll ever find. 🧠 2. **Watch**: [Advice on Organizing and Running Growth Teams from Dan Hockenmaier and Gustaf Alströmer](https://blog.ycombinator.com/advice-on-organizing-and-running-growth-teams-from-dan-hockenmaier-and-gustaf-alstromer/). This video is from earlier this year but I just discovered it, and was super impressed with how much damn wisdom it has packed into it. 📈 3. **Subscribe**: [Nonzero Newsletter by Robert Wright](https://nonzero.substack.com/). Wright wrote some of my favorite books, like [Why Buddhism is True](https://www.amazon.com/dp/B01MPZNG63/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1) and [Nonzero](https://www.amazon.com/Nonzero-Logic-Destiny-Robert-Wright-ebook/dp/B000Q9IRBY/ref=sr_1_1?crid=3BP7RRVM2HMQQ&keywords=nonzero&qid=1573490997&s=digital-text&sprefix=nonzero%2Cdigital-text%2C197&sr=1-1), so I was rather excited to find that he has his own Substack now. And it’s awesome. 🤓 **If you’re finding it valuable, please [share this newsletter with your friends](https://www.lennyrachitsky.com/).** [Sign up now](https://www.lennysnewsletter.com/subscribe?) And if you’d like some advice yourself, or just want to say hi, just reply to this email. I’ll tackle three reader questions each week (keeping your name and company anonymous) until you quit sending me questions. I definitely won’t have all of the answers, but hey, it’s free 🤷‍♂️ Sincerely, Lenny 👋 --- ## [18/25] How to kickstart and scale a marketplace business > “Everyone's always looking for the hack - what's the channel that will unlock something big? But every time we looked for a reason we weren't growing, it always came back to the basics –– selection, delivery quality, pricing. That's it. Always come back to first principles. Whenever we made a mistake, we forgot this.” > > – Micah Moreau (DoorDash, VP of Growth) *(This is a special edition of my newsletter — the first in a series of posts sharing insights from interviews with founders and early employees at today’s most successful marketplace businesses. Our regularly scheduled weekly Q&A series will resume in a few weeks.)* Having worked at Airbnb for many years, I’m frequently asked about what Airbnb did right in order to grow into what it is today. While sharing my learnings, **I’ve become increasingly wary of teams relying too heavily on a single company’s experience**. There are so many factors that go into an eventual success story, and what’s effective once may not be again. Thus, I’ve been yearning to get a wider perspective on what has (and hasn’t) worked for other marketplace companies. Since I couldn’t find anything out there that was comprehensive enough, I decided to be the change I want to see in the world and do the primary research myself. **Over the past few months, I’ve had the good fortune to interview dozens of incredible people with direct experience building and scaling some of the most successful marketplace companies in the world.** I’ve consolidated their learnings into a sort-of-playbook to kickstart and grow a successful marketplace business — which I’ll be sharing as bite-sized posts over the next few weeks: ### How to Kickstart and Scale a Marketplace Business **Phase 1: Crack the chicken-and-egg problem** 🐣 - **Part 1**: Constrain the marketplace 🔬 *(this post)* - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Phase 2: Scale your marketplace 📈** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand)** [Determine if you are supply or demand constrained 🤹‍♂️](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand) - **[Part 2:](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase)** [Scale growth levers 🔥](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase) - **[Part 3:](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting)** [Maintain quality 🏅](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting) - **[Part 4:](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)** [What would you have done differently if you did it again](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)**[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** This work would not have been possible without the enormous generosity of countless people, all willing to share their precious time, stories, and insights with me simply because I asked. The readiness to share so openly and transparently says a lot about the value people in the tech industry place on sharing and giving back. A very special thank you to **[Andrew Chen](https://www.linkedin.com/in/andrewchen/)** (ex-growth at Uber, GP at a16z), **[Babak Nivi](https://www.linkedin.com/in/bnivi)** (co-founder of AngelList), **[Benjamin Lauzier](https://www.linkedin.com/in/benjaminlauzier/)** (ex-growth at Lyft, Director of Product at Thumbtack), **[Brian Rothenberg](https://www.linkedin.com/in/brianrothenberg/)** (ex-growth at Eventbrite and TaskRabbit, Partner at defy), **[Casey Winters](https://www.linkedin.com/in/caseywinters/)** (ex-growth at GrubHub, CPO at Eventbrite), **[Dan Hockenmaier](https://www.linkedin.com/in/dan-hock/)** (ex-growth at Thumbtack, founder of Basis One), **[Dan McKinley](https://www.linkedin.com/in/mcfunley/)** (ex-Etsy, Principal Engineer at MailChimp), **[David Rosenthal](https://www.linkedin.com/in/davidjamesrosenthal/)** (ex-Rover, GP at Wave Capital), **[Georg Bauser](https://www.linkedin.com/in/georgdanielbauser/)** (ex-Airbnb, CEO of Expansion Partners), **[Gilad Horev](https://www.linkedin.com/in/gilad-horev-65902827/)** (VP Product at Eventbrite), **[Gokul Rajaram](https://www.linkedin.com/in/gokulrajaram1/)** (Caviar Lead), **[Gustaf Alströmer](https://www.linkedin.com/in/gustafalstromer)** (ex-growth at Airbnb, partner at YC), **[Hunter Walk](https://www.linkedin.com/in/hunterwalk/)** (partner at Homebrew), **[Jamie Viggiano](https://www.linkedin.com/in/jamie-viggiano/)** (ex-marketing at TaskRabbit, CMO at Fuel Capital), **[Julien Smith](https://www.linkedin.com/in/juliensmith)** (co-founder of Breather), **[Kati Schmidt](https://www.linkedin.com/in/katrinschmidt/)** (ex-Airbnb), **[Max Mullen](https://www.linkedin.com/in/maxmullen/)** (co-founder Instacart), **[Micah Moreau](https://www.linkedin.com/in/micahmoreau/)** (VP Growth at DoorDash), **[Mike Duboe](https://www.linkedin.com/in/mikeduboe/)** (ex-growth at Stitch Fix, investor at Greylock), **[Mike Xenakis](https://www.linkedin.com/in/xenakismike/)** (ex-SVP of Product at OpenTable, Lecturer at Kellogg School of Management), **[Nickey Skarstad](https://www.linkedin.com/in/nickeyskarstad/)** (ex-Director of Product at Etsy, VP of Product at The Wing), **[Nate Moch](https://www.linkedin.com/in/natemoch)** (VP at Zillow), **[Sander Daniels](https://www.linkedin.com/in/sander-daniels-44bb0324/)** (co-founder of Thumbtack), **[Tal Raviv](https://www.linkedin.com/in/talsraviv/)** (growth at Patreon), and **[Tamara Mendelsohn](https://www.linkedin.com/in/tamaramendelsohn/)** (VP and GM at Eventbrite). Unless otherwise stated, all of the quotes below come from my direct interviews. # Background ### What is a marketplace business, anyway? A marketplace business is one that **(1) connects demand** (i.e. people who want a thing) with **(2) supply** (i.e. people who have that thing), and **(3) leads to a financial transaction**. These businesses do not generally own any supply, do not provide products or services directly, and (eventually) handle the money being exchanged. Simply put, their job is to provide a platform where the supply and demand efficiently find each other and transact successfully. **Examples of classic marketplace businesses:** Airbnb, Uber, Lyft, Alibaba, eBay, Etsy, Hipcamp, DoorDash, Caviar, Rover, Postmates, Thumbtack, TaskRabbit, Craigslist **Examples of non-marketplace businesses:** Delta Airlines (they own all of the inventory), YouTube (no financial transaction), Slack (no supply). ### Why are marketplaces great businesses? 1. **Network effects**: The more users you get, the more useful/cheap your product becomes, the more users you get (e.g. Lyft/Uber vs. taxis) 2. **Barrier to entry**: Once they have a strong network effect, it becomes increasingly difficult to enter or replicate the marketplace (e.g. Airbnb vs. hotels) 3. **Efficiency**: No inventory means cheaper to operate (e.g. Airbnb vs. hotels) 4. **Scalability**: No inventory means easier to scale (e.g. Rover vs. dog hotels) 5. **Flexibility**: No inventory means easier to pivot (e.g. Uber Black -> Uber X) ### Important disclaimers 1. **For many of these companies, the primary reason they became successful was not because of some amazing growth insights – it was primarily because of great product/market fit**. Many folks I spoke to are first to admit this. The growth levers they employed helped accelerate (and control) growth, but they may have been successful anyway. At least for a while. 2. **Past behavior is not predictive of future behavior**. When reading through the lessons below, my advice is to focus more on ways of thinking and the cleverness behind the ideas –– not only the specific tactics. Many of the most successful growth levers of the past no longer work, or are significantly less effective. Take inspiration from what you read, but don’t expect them to work the same way for you. 3. **This research is based on interviews, of events many years ago.** Memory can be faulty, takeaways could be anecdotal, and you often don’t *really* know what mattered in the end. Also, I probably got some stuff wrong, so please don’t take any of this as gospel (and I’ll include any corrections in future posts). All that being said, I’ve tried my best to triangulate what actually happened across multiple sources, and made sure things *felt* right. With those caveats in mind, let’s dive in! # **How to Build a Marketplace Business** ## **Phase 1: Crack the chicken-and-egg problem 🐣** Once a marketplace business is operating, supply (i.e. restaurants, homes, drivers) happily serve demand (i.e. eaters, travelers, passengers). However, when your marketplace is just getting started, and you have neither supply nor demand, **it’s challenging to get the flywheel going. You must convince one side of the marketplace to commit before the other side.** For example, without restaurants onboard, a customer looking for food has no reason to check your app. And without customers using your app, restaurants have very little reason to spend time onboarding onto your platform. This is known as the “chicken-and-egg problem”, and solving it is one of the biggest barriers to launching a marketplace business. Below, and over the next few posts, we’ll walk through the steps that the biggest marketplaces worked through in order to crack this problem. Also, here’s a cheat sheet: ![Image from How to kickstart and scale a marketplace business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/a7da5fd8-bbf4-4c66-af5e-cf03056d575f_2135x1686.png) ### Step 1: Constrain the marketplace 🔬 **The first major learning that emerged from this research is that, with the exception of one company, every single marketplace that I interviewed constrained their initial marketplace** to more quickly get to critical mass. To some this may seem counter-intuitive — why limit your growth and opportunities when you are starting out? It turns out that **the best way to get big is by first going small**. The research points to two ways to constrain a marketplace: (1) by **geography**, and (2) by **category**. If the offering requires supply and demand to be in the same physical location, the constraint is always geographical (e.g. a limited set of markets). Otherwise, it’s category-based (e.g. handmade goods). And the one exception to this rule, Thumbtack, is a fascinating case study in and of itself. ![Image from How to kickstart and scale a marketplace business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/e2802120-0e27-4daf-a03b-38bec7453147_1900x860.png) #### If the service requires supply and demand to meet, it always started with a **geographical constraint (i.e. a single market)** **Rover:** > “**We started in Seattle, and stayed hyper-focused on Seattle, for a while**. Seattle was the perfect market for us: very dog-friendly, early adopters, techy, working professionals who go on vacation and business trips. Plus Amazon is super dog-friendly. There is probably no more dog-friendly city in America. This helped figure out the product quickly.” > > — David Rosenthal **Airbnb:** > “Similar to how **the founders first focused on New York early on**, when Airbnb expanded internationally in 2011, **we focused on creating critical mass in just a few markets** in which we were quickly able to unlock supply and demand.” > > — Kati Schmidt **Uber:** > **“We created a playbook for opening up a new market**, which got set by the Launcher team (led by [Austin Geidt](https://www.linkedin.com/in/austin-geidt-bb173b20/)). The first thing they would do when they launched market is to figure out supply. **The goal was to get over 30 drivers, shooting for ETA of less than 15 minutes**.” > > — Andrew Chen **OpenTable:** > “We ultimately discovered **if we had enough restaurants in a market, we’d have enough value for the diner to use OpenTable**. Dining is local, so **concentration was key.** A rule of thumb was that if we could get to 50-100 concentrated restaurants in a city, we had enough for a consumer to land on the site, cast a wide net, and get a consideration set that was meaningful enough to not be disappointed.” > > — Mike Xenakis **Instacart:** > “**We selected our initial markets where there would likely be demand**, e.g. Chicago in the winter. A high household income, fewer households with cars, and frequently inclement weather — typically means people want delivery.” > > — Max Mullen **Breather:** > “When transaction length was low (a 2 hour room booking), proximity was super important. **We had areas of density like the Flatiron District**, where we added units and they kept getting booked immediately. It was clear product/market fit. **We followed this in a super dense and a very precise way. This cafe, at this location, at this time, is working. Duplicate this exactly.** Don’t try to create something else. Don’t try to launch a new city yet. Don’t change anything. What is the exact same thing I can duplicate or extend? What else can this customer go do after? How can I double the size of the transaction. A lesson of marketplace companies -- if you are in a place with a decent market size, then just double down on what’s working. You don’t need to do anything new. Like with Airbnb, it was working in NY, so just create that again and again and again.” > > — Julien Smith **Zillow:** > “When we started the mortgage marketplace, there were no automated systems for anonymous, accurate, real time mortgage rates. So **we had to start small in a single market** and work with mortgage brokers who would respond to emails and manually enter quotes by hand every day.” > > — Nate Moch #### Essentially every other marketplace (not location-based) started with a **category constraint:** **TaskRabbit:** > “While we were always a broad platform, **we were very deliberate about building a liquid marketplace for our most popular task categories**, which were and continue to be: handyman tasks (including IKEA assembly), house cleaning, and moving help. We focused on these categories to ensure that there was high-quality supply to meet the consumer demand for these services.” > > — Jamie Viggiano **Eventbrite:** > “Find your core use-case, and gain traction there. **For Eventbrite, this was tech mixers and conferences**. As you got invites from events, you started to see the name Eventbrite over and over and it became a thing. We focused on this, based on seeing where most early traction was.” > > — Brian Rothenberg **Etsy:** > “From the beginning, we had **only three categories of things** you could sell: vintage items, craft supplies, and handmade items.” > > — Etsy, Dan McKinley #### In one rare, fascinating, and deliberate case, **Thumbtack decided to eschew any constraint:** > “The conventional wisdom was to narrow focus to a category (like Amazon did with books) or geography (like Yelp did with San Francisco). **We didn't get funding for many years in part because we did the opposite -- we did all categories and all geographies from the beginning**. People thought that wouldn't work, that we were boiling the ocean. In retrospect it was the only way to build a marketplace in our space at scale -- being broad in category increased the frequency of use of our product from once every couple years (how often do you need to hire a house painter?) to 8-12 times a year (the number of Thumbtack services an average American household hires annually). And being broad in geography allowed us to scale our marketplace as fast as possible, giving us the revenue, traffic, and thus experimental velocity we needed to bootstrap a great product. In our case we wouldn't have survived had we done it any other way.” > > — Sander Daniels Once you’ve decided how to constrain your marketplace, you then need to pick which side of the marketplace to put most of your resources behind (supply or demand). **In our next post, learn how today’s biggest marketplace companies decided whether to concentrate on supply vs. demand early-on, plus how one “marketplace” realized they weren’t a marketplace after all.** **Other posts:** - Part 1: Constrain the marketplace 🔬 *(this post)* - [Part 2: Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - [Part 3: Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - [Part 4: Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) [Sign up now](https://www.lennysnewsletter.com/subscribe?) --- ## [19/25] How to Kickstart and Scale a Marketplace Business – Part 2: Cracking the Chicken-and-Egg Problem 🐣 - Supply vs. Demand > “When we were starting out, we looked at the biggest marketplace companies – eBay, Craigslist, Amazon. There were two things in common: (1) They had all the supply, and (2) they had ugly products and brand. **The lesson we took away from this was that all that matters is supply**. So we decided to focus on that above all else. We postponed building brand and delightful product until we had liquidity. Dozens of other startups took another direction. Case after case, it proved a mistake. Creating scaled supply early on matters more than anything.” > > — Sander Daniels, Thumbtack *(This is a special edition of my newsletter — the second in a series of posts sharing insights from interviews with founders and early employees at today’s most successful marketplace businesses. Our regularly scheduled weekly Q&A series will resume in a few weeks.)* The response to the first edition of this series has significantly more enthusiastic than I anticipated (who knew so many people are interested in marketplace growth 🥳), so I’m excited to jump right into part two. To be honest, [part one](https://www.lennyrachitsky.com/p/how-to-kickstart-and-scale-a-marketplace) may be the *least* interesting portion of the entire series — it only gets better from here. Enjoy! ## **Step 2: Decide which side of the marketplace to concentrate on**🧐 Once you’ve decided how to constrain your marketplace (geo or category), you then need to decide which side of the marketplace to put most of your resources behind — growing supply (e.g. dog walkers) or growing demand (e.g. dog owners). **My second major learning from this research is that the vast majority of successful marketplaces focused almost all of their resources on growing supply early-on** (80% of the companies I interviewed, 14 out of 17). In all of these cases, the companies found that their supply was either driving its own demand, or word-of-mouth was strong enough to take care of demand. In the three remaining cases (Rover, TaskRabbit, Zillow), there were clear signs that supply wasn’t an issue and thus resources quickly shifted to demand. And, in one illuminating case, one company realized they weren’t a marketplace at all 🤯. ![Image from How to Kickstart and Scale a Marketplace Business – Part 2: Cracking the](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/37785dd7-4990-401e-ab49-de771179a6fd_1898x990.png) #### The vast majority of **successful marketplaces concentrated most of their efforts** in the early years **on creating supply** **Eventbrite:** > “**In the early days, we were only focused on driving supply. We found that supply drove demand.** Specifically, event creators drove traffic to our site. Most event organizers had some built in demand that they brought with them. We also believed that the supply side would be the hardest to acquire, since event ticketing (in the US at least) is sold through a single platform, so we focused there first.” > > — Tamara Mendelsohn **Lyft:** > “No question, **supply growth was the unlock for demand growth** at Lyft” > > — Benjamin Lauzier **DoorDash:** > “When I started looking at the evolution of how marketplaces like ours grow, the playbook is the same: Get restaurants -> Get delivery people -> Get customers. **The largest growth lever has always been the supply -- the restaurants. They bring the demand**.” > > — Micah Moreau **Etsy:** > “In the early days **there was a huge focus on sellers**. The marketplace needed sellers and their listings to build enough supply to attract buyers. Also, the sellers were also the buyers early on. **Supply directly created demand**. They were literally all the same people.” > > — Nickey Skarstad and Dan McKinley **Caviar:** > “Restaurants, restaurants, restaurants. **In food, restaurants (our supply) drive demand** because they have their own brand that diners want to order from.” > > — Gokul Rajaram **Instacart:** > “We always onboarded **supply ahead of demand**” > > — Max Mullen **GrubHub:** > “To scale, **we always went supply side first**” > > — Casey Winters #### In a few (3 of 17) cases, however, supply growth took care of itself and **demand quickly became the primary constraint.** My hypothesis is that this happens when you can offer your “supply” super easy, super flexible, meaningful income. OR, in the case of Zillow, your supply is essentially publicly available data (i.e. county and tax assessor records) used in a new way. **Rover:** > “For us, the scarce resource was demand. **I don’t think we were ever supply constrained**. **Supply was easy.** It was the dynamics of the market -- if you are someone who loves dogs, you work from home, you are in a situation where an extra $50 is meaningful, why wouldn’t you sit on Rover? It’s a no-brainer. Demand was much harder because we had to change customer behavior. We had to convince someone to get over the hump of letting a stranger watch their dog -- similar to Airbnb.” > > — David Rosenthal **TaskRabbit:** > “**TaskRabbit was never supply constrained**. We had thousands of people on our waitlist to provide services, but the demand-side was more challenging. Over time we actually ended up charging new supply an application fee to reduce the volume of applications, and to increase the quality, while managing our costs to process background checks and other onboarding costs.” > > — Brian Rothenberg **Zillow:** > “Our case is a little strange because **we started the marketplace by getting supply that wasn’t really supply (we used public data)**. We used that to get demand, which we in turn used to get the real supply (listings). We would not have been able to get listings without demand.” > > — Nate Moch #### And finally, an important lesson from Patreon that sometimes you’re better off admitting you aren’t a marketplace after all > “**A lot of people wrongly think of Patreon as a marketplace**. I don't blame them - most of Patreon's team for a while thought of Patreon as a marketplace. Fortunately, we corrected our vision and our metrics in time to match the reality of our product market fit. **Realizing we weren't a marketplace was the best thing that happened to us.** It allowed us to take ‘Discovery’ (find a creator to pledge) off our roadmap, because we realized this would misalign us with creators as those creators got big. Similar to Etsy's ‘graduation problem.’ It allowed us to focus on building an apps and developer platform (analogous to Wordpress/Salesforce/Shopify/Segment etc.) instead. Something that YouTube and Facebook, with their competing products, could not do.” > > — Tal Raviv Assuming you still believe your business is a marketplace — you’ve now determined how to constrain your marketplace (geo or category), and picked a side to concentrate on (most likely supply). Now, you need to actually build your initial supply and demand. **In our next two posts, we’ll dive deep into how these marketplaces approached early supply and demand growth — including the 12 most common growth levers, the most effective tactics, and a bunch of great stories. Stay tuned!** [Sign up now](https://www.lennysnewsletter.com/subscribe?) **Phase 1: Crack the chicken-and-egg problem 🐣** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)** [Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **Part 2: Decide which side of the marketplace to concentrate on 🧐** ***(this post)*** - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Quiz:** Can you guess which growth lever was most commonly used to drive early supply for the majority of today’s marketplaces: SEO, Referrals, Single Player Mode, Direct Sales, Piggy Backing, or Performance Marketing? No need to tell me — just see if you can guess. And if you want to cheat, the previous post has the answer 👀 --- ## [20/25] How to Kickstart and Scale a Marketplace Business – Part 3: Cracking the Chicken-and-Egg Problem 🐣 - Growing Initial Supply > **“Supply growth was all sales - door to door, walking into restaurants during their downtime, talking to owners**. It was very sales driven. What we did was take every excuse they had for not using GrubHub, and removed it as an obstacle. Fast forward to a couple of years later — you only pay when you receive orders, there are no hidden fees, you can cancel any time. We got to a place where there was zero downside to sign up and to give it a try.” > > — Casey Winters (ex-growth at GrubHub, CPO Eventbrite) Welcome to the third post of our limited series on marketplace growth, where I share learnings and insights from founders and early employees at today’s most successful marketplace businesses. I’ll be releasing four more parts over the next two weeks, and then I’ll return to my regular cadence of once-a-week. 🤙 I continue to be blown away by the response to this project. Thank you so much to everyone who has sent me kind words, helpful feedback, or shared these posts with others. I started this research out of a personal desire to learn more about other marketplace businesses, but seeing how valuable this has become to so many makes me feel all warm and fuzzy inside. What I said in the last post continues to be true — it only gets better from here. If you’re new to this series, don’t miss the earlier posts covering **Phase 1: Cracking the chicken-and-egg problem:** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)** [Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - Part 3: Drive initial supply 🐥 *(this post)* - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) [Sign up now](https://www.lennysnewsletter.com/subscribe?) ## Step 3: Drive initial supply 🐥 As we saw in the last post, the vast majority of marketplaces start off supply-constrained. Interestingly, most marketplaces *continue* to stay supply constrained throughout most of their history (which we’ll spend more time on later). Why are most marketplaces supply constrained? [Li Jin (partner at a16z) said it well](https://twitter.com/ljin18/status/1099418839979315201), “the best consumer marketplaces end up supply-constrained because they tap into an incredible amount of demand. The product/market fit is so strong that this demand puts pressure on supply.” **With supply being so essential, how did today’s biggest marketplace companies grow their initial supply? Below we’ll dive into each and every lever, but here’s a cheat sheet:** ![Image from How to Kickstart and Scale a Marketplace Business – Part 3: Cracking the](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/ae0aa833-5470-41bd-b3dc-f123fceaa4e2_2134x433.png) I’ve integrated all of my learnings and surprises into the individual sections below, but before we get there, one fascinating meta-learning that emerged from this research is how *few* levers individual companies found success in early-on. **The median number of levers that the biggest marketplace companies relied on to kickstart supply growth was just TWO (and the average was 2.5).** Though this isn’t necessarily true for everyone, the lesson here for most teams is to focus, focus, focus. Early on, you are more likely than not to find most of your success in a couple of levers. Figure out what those are and double down. Now, let’s get into each lever (sorted by most commonly utilized): ### **1. Direct sales** #### One of the most significant learnings (and surprises) for me in doing this research was how important one-on-one direct sales was to most early marketplaces. Sales ended up being a crucial lever for about 60% of the companies I talked to — twice as common as the next biggest lever (piggy-backing and referrals). **Airbnb:** > “**Direct sales was critical to get the first listings on the platform**, especially in immature markets without critical mass. It enabled us to pick and choose different supply types and build the right mix of homes. The local teams were accountable for their market and could themselves decide which supply to acquire, e.g. in which neighbourhood, what size of the listing, and price points.” > > — Georg Bauser **OpenTable:** > “On the restaurant side, unfortunately, there were no easy levers early days. **It was hire a direct sales force on the street.** **People on the street knocking on doors, carrying the software.** Demo’ing it and showing them how it worked.**”** > > — Mike Xenakis **Etsy:** > “The main thing that I believe really worked was **recruiting sellers in person at craft fairs** and elsewhere. This was a small activity in terms of human effort, but it scaled beyond that since the sellers marketed themselves.” > > — Dan McKinley **Caviar:** > “For us, for supply growth, it was **direct sales / field sales - no question**!” > > — Gokul Rajaram **Uber:** > “Uber Black was initially ops and phone driven. **They would call limo companies to pitch them**. A lot of limo companies were sole proprietorships, and the pitch was ‘While you are waiting for trips, we’ll guarantee you a minimum level of income if you keep this app on’.” > > — Andrew Chen **DoorDash:** > “**The primary lever for restaurant growth was pounding the pavement, inside and outside sales, people on phones, door to door sales**. The pitch is that we bring you incremental demand. Large QSRs and fast casual chains like McDonald’s, Chipotle, and Panera have quoted publicly that delivery is 70-80% incremental, and thus gives resturants access to new types of customers. We have always prided ourselves as being a merchant-first platform. For a small mom and pop business, they don't have many options to drive demand. They’re doing payroll, marketing, staffing; all of these things take them away from why they started a restaurant in the first place, and what makes them happy. We can do the marketing for you, and help keep your kitchen busy even when in-restaurant dining is slow.” > > — Micah Moreau **AngelList:** > “**To grow initial supply, we asked a bunch of investors we knew to fill in a web form** with their name, location, markets they like, investments per year, typical investment amount, etc.” > > — Babak Nivi ### **2. Referrals** #### The second most common early supply-growth lever (tied with the next lever) was offering a referrals program — incentivizing existing supply to refer new supply. About a third of the marketplaces I spoke with saw a lot of success here. **Lyft:** > “Referrals and ambassador programs were big for us early on. **Double digits of %’s of new supply early on came from these programs**. We went after students because our primary audience was younger and millennial. Some students made so much they had [weekly lobster dinners](https://splinternews.com/these-college-roommates-made-six-figure-incomes-recruit-1793844669). The pitch to students was to get some work experience and make some money. We had tiers of rewards -- the top tier was essentially a part-time job. As a reward at the top tier, we gave you a letter of recommendation from the COO of Lyft, which many students valued very highly, and was very cheap for us. **Referrals (online program) was more impactful top-line, but Ambassadors (people referring users on the ground) were key piece to the launch strategy in each city** -- seeding supply and demand ahead of launch. We were able to reduce overhead when launching a city this way, by getting the word out early.” > > — Benjamin Lauzier **Uber:** > “On the supply side, **referrals was about 1/3 of the first trips — and they were also the best drivers.** The other 1/3 was WOM, and 1/3 was paid.” > > — Andrew Chen **Caviar:** > “Referrals, yes, **a big growth lever on supply in every market**, both early in the life of a market, and later too.” > > — Gokul Rajaram **DoorDash:** > “**Referrals is massive on the Dasher side**. It is effective on the consumer side too but a lower % of our acquisition mix than dashers.” > > Micah Moreau ### **3. Piggy-back off of an existing network (mostly Craigslist)** #### About a third of the marketplaces also relied heavily on piggy-backing off of an existing network (in almost every case, Craiglist) to bootstrap their supply growth. I don’t have a lot of quotes here (sorry!), but when it worked, it was the first or second most important lever for these companies. **Uber:** > “The first thing the launcher team would do when they launched a market would do is figure out supply. **They would go straight to Craigslist**.” > > — Andrew Chen ### **4. Word of mouth** #### Though not really a growth lever, organic word of mouth was a significant factor in the growth of early supply for about a fourth of today’s biggest marketplaces. **OpenTable:** > “**The restaurant industry is very tight**. Every restaurateur sure knows each other -- so if someone is trying something out, there is a virality that takes place. We benefited from that. A year or two later, with the transient nature of restaurant employees, they are bouncing every couple of years -- if they go from one restaurant that’s using OpenTable, the first thing they say to the owner is that you have to get this software.” > > — Mike Xenakis **Eventbrite:** > “You can read our IPO filing — WOM was listed as a key strength and quantified as **36% of supply awareness**.” > > — Brian Rothenberg **Patreon:** > “**Creators come to the platform because they already follow their peers online**, and thus see other creators launch on Patreon.” > > — Tal Raviv ### **5. Subsidizing** #### Similarly, about a fourth of the marketplaces I spoke with bootstrapped supply by subsidizing (paying for it) in some form. **Uber:** > “**We used money to solve the problem**. We’d guarantee you $40/hour to drive. All you had to do was maintain an acceptance rate of 70% and keep your app running. You could decline riders up to a point, but you don’t get paid for doing nothing.” > > — Andrew Chen **Lyft:** > “**We had an income floor for drivers**, to guarantee some amount of money per hour. This helped us jump-start the marketplace from scratch.” > > — Benjamin Lauzier **Breather:** > “You have to choose which side to subsidize. For Breather, that was the supply side. **We subsidized it with things like furniture and locks, to increase the quality**. With low size transactions (e.g. 2hrs), you can’t walk in and have it be schmucky.” > > — Julien Smith **Zillow:** > “**We subsidized leads in almost all of our marketplaces to get them going**. We wanted to show new users the quality of our connections and give them a risk-free way to get started. We would then slowly turn on pricing as we proved the value. This helped us build supply in the early days of each marketplace.” > > — Nate Moch ### **6. Employees are the early supply** #### In a few cases (Rover, TaskRabbit, and DoorDash), the company’s own employees were the initial supply — both to create liquidity and to better understand the problem space. **Rover:** > “**All early supply was employees**” > > — David Rosenthal **DoorDash:** > “We have a policy where **everyone in the company dashes once a month**. In the early days, there was always a shortage of dashers, so Tony and the team dashed constantly, close to every day. In addition, Tony and his wife had their weekly date night on Friday nights, and on some of those date nights Tony and his wife would dash together.” > > — Micah Moreau **TaskRabbit:** > “**In the earliest days, Leah [the CEO] and the early team were Taskers**. I remember distinctly dispatching employees from HQ when tasks would come in. In the early days, we were obsessed with ensuring that every customer who came to the platform had a delightful experience. If that meant we had to drop everything we were doing and run a task, we did. It was a great way to ensure quality in the early days.” > > — Jamie Viggiano ### **7. Single-player mode** #### I was surprised to learn that the tactic of bootstrapping one side of a marketplace by offering that side a tool they find useful on its own (aka “single-player mode”) wasn’t more common. But when it worked (for OpenTable, Eventbrite, Patreon), it was the most important tactic for these marketplaces to get off the ground. **OpenTable:** > “To get into the door with restaurants, we couldn’t lead by talking about online bookings -- there were no online bookings. **We decided to invest in the software side of the business -- we created a solution that could stand on its own without the demand side**. What this meant was building a suite of tools for restaurants to replace their manual booking process (usually a notebook they passed around). Our sales pitch initially was 90% “use our software to better run your restaurant”, and 10% “we’ll help customers find your restaurants and book a table online.” > > — Mike Xenakis **Eventbrite:** > “We made the product **self-service for the supply side** early on.” > > — Tamara Mendelsohn ### **8. Performance Marketing** #### I was also surprised to learn how rarely performance marketing was used to grow initial supply, being a major lever early-on only for Lyft and Uber. **Lyft:** > “**SEM + Display + FB was effective early on for both supply and demand**. It gave you a baseline for CAC that you can use for other levers. Even if it was a tinkle of growth, we had the machine going, and it allowed us to dial it up and down.” > > — Benjamin Lauzier **Uber:** > “**The paid channel was half the signups, but only 1/3 of the first trips**, which tells you it was the least efficient channel.” > > — Andrew Chen ### **9. Loops** #### **A couple of companies (Eventbrite and Airbnb) found a powerful supply-oriented loop (also known as a flywheel, or virality), which drove early supply** **Eventbrite:** > “**We invested in strengthening viral loops** in our product where attendees (the demand side) would become event creators (supply side). In addition, we had a free-to-paid loop where our free product (free to use for free events) attracted a lot of creators who tried the product for free first. Many of these free creators later hosted paid events, converting into paid users. **The free viral loop ultimately drove 34% of supply-side awareness/acquisition**, and 17% of creators who have produced a free event have gone on to host a paid event within twelve months (included in our public IPO filing).” > > — Tamara Mendelsohn and Brian Rothenberg **Airbnb:** > “Person books trip —> loves the experiance and gets an offer to make their home available for guests while on their trip to help pay for trip —> becomes host” > > — Casey Winters ### **10. Events** #### And a few companies (Airbnb and Lyft) successfully organized events/meetups to help build early supply. **Airbnb:** > “**To launch a city, we’d travel there and hold a meetup**. Here in San Francisco, it’s not a big deal to meet a founder. In other places, that’s pretty novel. They would get so excited that they met us that they’d tell their friends. The markets started turning on, and we religiously focused on making sure customers loved us.” > > — Brian Chesky ([source](https://medium.com/cs183c-blitzscaling-class-collection/cs183c-session-18-brian-chesky-d680da55f80c)) **Lyft:** > “**An early part of our foundation was onboarding classes for drivers**. We would bring bagels, and have dozens of driver applicants come at once to go through a series of educational videos & chats.” > > — Benjamin Lauzier ### **11. SEO / Content Marketing** #### I was very surprised by how rarely SEO was impactful in driving early supply growth — only being a key lever for Eventbrite. > “**We invested in blog posts, white papers**, ‘How to Market Your Event’ articles that drove SEO traffic from creators. > > **In addition to content we wrote ourselves, we had a great UGC/SEO loop**: 1) creators built their event pages with user generated content, 2) creators linked to their event pages on Eventbrite from their own websites, 3) these Eventbrite.com event pages ranked well in SEO. They also created content for and funneled link value to our "San Francisco events" SEO pages. 4) this drove both demand, and a good portion of supply as well.” > > — Tamara Mendelsohn and Brian Rothenberg ### **12. Leverage your community** #### And finally, maybe the most unique lever of supply growth I came across in this research came from Etsy. > “**One of the most effective early levers for supply growth was building the Etsy community**, offline. After spending years going to craft fairs every weekend promoting the brand we launched a program called **Etsy street teams that organized passionate community members around the country (eventually the world) and had them be on-the-ground brand evangelizers**. We provided tools and money for these leaders to start their own “teams” (or chapters made up of other sellers) that went to craft/vintage fairs and promoted the Etsy brand to buyers. Some of these teams are still around and [very much alive today](https://www.etsysf.com/). More recently Etsy has invested in traditional advertising but early on, they did nothing of the sort - it was sellers promoting their shops/the brand that drove growth. **And they were not compensated -- they got value from sharing what they were passionate about, ie. Etsy!**” > > — Nickey Skarstad Once you sense that you’ve got enough supply — or even prior to that (we’ll spend more time on how to understand this in a subsequent post) — you then need to figure out how to drive your initial demand. In our next post we’ll explore this exact question, covering the twelve most important early demand-growth levers across these seventeen companies. **Can you guess what the first two most common growth levers might be?** I was pretty surprised when I saw this. Hint: They aren’t performance marketing, SEO, referrals, sales, or PR. **Ask: If you work at any of the companies I looked into:** 1. PLEASE let me know if I got anything wrong. I’ll correct it in the next post. Just reply to this email or DM me [@lennysan](https://twitter.com/lennysan). 2. If you have any other insights to share about what was important early-on for your company (or any marketplace company), I’d love love love to know. Please share! [Sign up now](https://www.lennysnewsletter.com/subscribe?) --- ## [21/25] How to Kickstart and Scale a Marketplace Business – Part 4: Cracking the Chicken-and-Egg Problem 🐣 - Growing Initial Demand (plus a Bonus!) > “We worked with restaurants who didn’t have websites, or had really poor websites, and helped them build a site. We ensured that every restaurant website would implement a booking module that used OpenTable. **It introduced the concept of online bookings to consumers, and introduced them specifically to OpenTable.** That’s where they landed when they clicked to reserve a table, and even the confirmation email they got was from us — so why not look at OpenTable in the future? This became the #1 driver of customer acquisition, and is even now.” > > — Mike Xenakis (ex-SVP of Product at OpenTable, Lecturer at Kellogg School of Management) Welcome to part four of our limited series on marketplace growth — **a deep dive into early demand growth**. A marketplace business, or any business for that matter, is nothing without demand (a.k.a. customers), so I’m very excited to dive into how today’s business marketplace businesses drove their early demand. If you’re new to this series, don’t miss the previous posts in **Phase 1: Cracking the chicken-and-egg problem:** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)** [Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - Part 4: Drive initial demand 👋 (this post) As planned, this will be the final post in “Phase 1”. **In the next phase, I’ll explore how these companies** ***scaled*** **their marketplaces — including which growth levers continue to be most effective at scale, how they maintained marketplace quality, and how these companies know if they are supply or demand constrained**. Though there are many more things you need to get right in the early days of a new marketplace business (e.g. hiring, positioning, getting to PMF), and building a successful marketplace business is never going to be as easy as following a few steps you read in a newsletter, I zeroed in on capturing the learnings that are most unique and essential to building a marketplace business. That being said, if there’s anything else that you would love love love to learn more about, just hit me up! Replying to this email or [DM me](https://twitter.com/lennysan). If there’s enough demand 🤪, I may investigate a few more topics in future posts. Until then, enjoy! *P.S. If you’re finding this content valuable, consider clicking the little gray heart below the headline at the top of this post, and/or [sharing this newsletter with friends](https://www.lennyrachitsky.com/). 💛* ## Step 4: Drive initial demand 👋 At this point in our story, you’ve constrained your early marketplace (probably by geo or by category), picked which side to first concentrate on (probably supply), and have started building your initial supply. **At some point, you will need to invest in driving demand. How soon you need to invest here depends significantly on the strength of Product/Market Fit (PMF), where growth is coming from, and how easily you are acquiring supply.** Some companies, like OpenTable, Lyft, Uber, DoorDash spent very little of their early resources on driving demand. Others, like Zillow, Rover, and TaskRabbit quickly shifted to prioritizing demand growth. Here are a few signals that tell you to shift your focus to demand: 1. **Supply growth is coming easily** — people are signing up without much convincing. 2. **Your supply is heavily underutilized** — they have a ton of availability and few bookings. 3. **You have yet to prove that you are solving a problem for people** — have you seen that potential customers actually find value in your “supply”? This alone is a deep topic that deserves its own post, but a simple heuristic you can use here is to compare your offering to what else is out there (marketplace or not). If you offer a product that is cheaper (i.e. Airbnb), more convenient (i.e. Uber), or just better (i.e. Etsy) — you’re on your way to PMF. If not, consider spending more time validating that you are solving a real problem for people. Read [this](https://abovethecrowd.com/2012/11/13/all-markets-are-not-created-equal-10-factors-to-consider-when-evaluating-digital-marketplaces/) and listen to [this](https://tim.blog/2019/11/25/starting-greatness-mike-maples/) for excellent advice on this topic. **With this in mind, let’s dive into how to drive your early demand.** ![Image from How to Kickstart and Scale a Marketplace Business – Part 4: Cracking the](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/3de86889-25dd-4e62-9915-f9a3044f3250_2134x396.png) ### **1. Word of mouth** #### For me, one of the most fascinating learnings from this phase of the research was how impactful word-of-mouth was for early growth of most of today’s biggest marketplace businesses — it was the most important growth channel for over half of the companies. Though this isn’t actually a growth “lever”, it was an enormous growth driver for these companies, and was a strong early signal of Product/Market Fit. Pro tip: If you don’t know what share of your growth is coming from word-of-mouth, you should find out. **Lyft:** > “**WOM was huge early on**. That was the reason behind the ‘pink mustache’, it got people's attention whenever Lyft entered a new market. Even ‘pink mustache’ related keywords in search were a significant source of our organic traffic.” > > — Benjamin Lauzier **Airbnb:** > “If you look at the composition of growth of Airbnb, **WOM was by far the biggest driver early-on**. Way over 50% on the guest side, and way over 70% on the host side.” > > — Gustaf Alströmer **OpenTable:** > “On the diner side, **it all started out with WOM**. We launched the site, and people start to discover it. They liked to talk about.” > > — Mike Xenakis **Uber:** > “**WOM was huge.** The end state was like 50% paid, 15% referrals, 35% WOM. Early days the mix was closer to 30% referrals, **50-60% WOM**, and the rest PR and other random things.” > > — Andrew Chen **AngelList:** > “**Demand growth was mostly word of mouth**. We had a lot of credibility with entrepreneurs from our work on venturehacks.com.” > > — Babak Nivi **TaskRabbit:** > “**Word of mouth was a huge driver of our business in the early days**. In fact, in those early days, 90%+ of customers came in through WoM (that includes customers telling other customers as well as press).” > > — Jamie Viggiano **Instacart:** > “**A third of our demand was WOM early on**. Maybe more.” > > — Max Mullen ### **2. Supply driving demand** #### Just as interesting as the prevalence of word of mouth is how many companies DIDN’T have strong word of mouth early on and still succeeded (also about half). In those cases, companies found other channels to drive demand. #### The second most common growth lever (effective for over 40% of marketplaces, and also a big surprise to me) was the marketplaces’ supply directly driving its demand. This is the primary reason these companies focus almost exclusively on supply growth — the supply created the demand. **DoorDash:** > “**Restaurants did a lot of the marketing for us**. They would actually print placards and stickers and put it up in the restaurant, without our help, and often without us knowing. Stickers on the windows worked extremely well. **Restaurant owners are enterprising entrepreneurs and are super creative at driving demand.**” > > — Micah Moreau **GrubHub:** > “**We did in-store signages**, but we copied it from Yelp who was the first with their ‘People love us on Yelp!’ stickers. We did Open/Closed signs, sandwich boards, printed menus, business cards with promos on it, delivery bags. You name it - we tried it.” > > — Casey Winters **Etsy:** > “**Sellers were doing their own grassroots marketing** and that became a big growth driver. Etsy pushed sellers to promote their shops to their communities in order to drive growth of their shops, which in turn drove growth of the marketplace overall.” > > — Nickey Skarstad and Dan McKinley **Eventbrite:** > “Due to the nature of organizing events, most **event organizers had some built in demand that they brought with them**” > > — Tamara Mendelsohn **Patreon:** > “Patreon's growth model is that we acquire creators who already have established, passionate followings (which they incidentally built on attention marketplaces like Youtube etc.) and they then **market their page to their patrons**.” > > — Tal Raviv ### **3. SEO** #### **SEO, unlike on the supply side where it was only impactful for one company, was a vital early demand growth driver for over 40% of marketplaces.** **Thumbtack:** > “One day my co-founder Jonathan was in a bar in San Francisco and by chance sat down next to one of the world’s top SEO experts. They started chatting about Thumbtack. At that point, we had never even heard of SEO, but he soon became a board member and helped architect much of our SEO strategy, which **ended up being 80-90% of our growth**. We did a number of things that were scaled and unconventional at the time. For example, we surveyed [tens of thousands of businesses](https://www.thumbtack.com/survey#/2019/1/states) around the country, asking how ‘business friendly’ their local government was and then ranking every state and city. This was a huge bet — I worked on it full time for about seven months — but it turned into a very successful program. There was such useful information that it ultimately went beyond SEO and turned into a big branding event for us.” > > — Sander Daniels **GrubHub:** > “**SEO was 30% of all new users (our #1 lever)**, e.g. ‘Thai food near me’, and 10-15% SEM. We spun up landing pages for each restaurant, essentially creating websites for every restaurant, as most restaurants didn’t have one. Even integrated into Google Local.” > > — Casey Winters **DoorDash:** > “**We did SEO quite a bit**. To this day, a large percentage of restaurants don't have an online presence, in any real capacity. For us, visits from search to individual restaurants pages is quite large. Today, people come to us for the restaurant. People come to us because we got the food.” > > — Micah Moreau **Eventbrite:** > “**SEO was one of our main early growth levers.** We actually found overlap between efforts that were intended to be purely demand-focused, and those efforts actually attracting supply as well. For instance, our local SEO pages (ie: "San Francisco events") drove demand, but these pages also accounted for approximately 20% of our SEO-acquired supply.” > > — Tamara Mendelsohn and Brian Rothenberg **Etsy:** > “With millions of product listings getting indexed by Google, **search traffic was very real even early on**. ” > > — Nickey Skarstad **Zillow:** > “We didn’t start out focusing on SEO, but as we were growing via PR and word of mouth we noticed a competitor with no brand awareness growing almost exclusively via SEO. We knew at that moment we needed to be best in class at SEO and we put a lot of effort into building that skill. **You don’t necessarily need to start with SEO as a small company, but as a huge free traffic source, you want to make sure you are positioning yourself to get that traffic as you grow.**” > > — Nate Moch **OpenTable:** > “**We were a little late to the game on the SEO front, but once we understood its importance we invested fairly heavily**. We brought in an outside expert who helped launch our SEO program. Within a few months we had tripled our SEO referrals and it quickly became a big source of new users.” > > — Mike Xenakis ### **4. Performance marketing** #### The next most common early demand growth lever, instrumental for about a third of marketplaces, was performance marketing — Google, Facebook, and Twitter ads. **Breather:** > “We got good at this by hacking the Twitter ad platform. We relied on something Twitter didn’t expect people with Twitter ads to do. **Most people who ran Twitter ads wanted follows or RT’s — instead we designed it to onboard people onto Breather.** I created a Twitter ad from my own personal account, with a friendly face and a personal message: ‘Breather is launching in NY! Reply to me if you want to try it out.’ They DM’d me and I manually ended up onboarding thousands of people, walking them through a seven-step funnel over email. **It was very labor intensive, but this hockey-sticked growth for the company.**” > > — Julien Smith **Airbnb:** > “**Had we not done online marketing early on, we certainly wouldn’t have been as big as we were today.** It was people googling things related to staying in homes and apartments, and we just bought those keywords. It was a way of being strategic about where we wanted to grow.” > > — Gustaf Alströmer **Rover:** > “**Most of our customer acquisition was through Google Ads**. We targeted people searching for dog-boarding, and searching for a kennel. Later DogVacay and we started clobbering each other in spend, which partly led to us later merging.” > > — David Rosenthal **GrubHub:** > “We bought AdWords for restaurants once we had 4+ restaurants for a specific cuisine type. **SEO was our #1 lever, and SEM was #2**.” > > — Casey Winters **Lyft:** > “**Performance marketing was very significant early on**. It also allowed Lyft to fine-tune our messaging throughout the product, we could see what values resonated best for people who were new to the brand.” > > — Benjamin Lauzier ### **5. PR** #### PR was impactful for about a third of the companies I spoke with. For companies like TaskRabbit and Zillow, it was their primary growth lever. **TaskRabbit:** > “**Early on, our marketing strategy was mainly focused on driving positive WoM and press**. Back in 2009-2011, the sharing economy was in its infancy (if a thing at all) and there was a fair amount of hesitancy and reluctance on the part of customers to invite strangers into their homes to complete tasks. As a marketer, it was our #1 job to get customers over that hesitancy. **The best way to inspire trust and confidence is through word of mouth and press.**“ > > — Jamie Viggiano **Zillow:** > “Zillow is a unique story in that **we started our growth with PR**. We created a controversial product (putting values on homes and showing aerial images) and shared a lot of housing data and stats. We made public data accessible that was previously hard to find and empowered people with lots of data and information. It helped create a lot of brand recognition and generate traffic. Our timing was also incredibly important because we had created a single source of truth on housing market data when home values were dropping during the Great Recession. Data about home values was crucial for the media to cover, so we were able to bolster awareness and trust of our brand and get into the news cycle because people wanted to know what was happening in the housing market.” > > — Nate Moch **Airbnb:** > “In the early days, we targeted a lot of events: the DNC, the Presidential Inauguration, music festivals, the World Cup, Olympics, etc. **Events and PR were the main way we bootstrapped the network in the early days**.” > > — Brian Chesky ([source](https://medium.com/cs183c-blitzscaling-class-collection/scaling-airbnb-with-brian-chesky-class-18-notes-of-stanford-university-s-cs183c-3fcf75778358)) ### **6. Loops** #### A handful of companies uncovered powerful demand-side growth loops, which became significant growth channels for their marketplace. **GrubHub:** > “**We built a supply generated content loop**: Get content (i.e. menus) → aggregate it → get traffic → convert that traffic → can now promise more demand to restaurants → get more restaurants” > > — Casey Winters **Etsy:** > “**An early growth driver was a loop that was created by sellers** who were making handmade items buying the supplies to make those handmade items from other sellers. This self-sustaining ecosystem created nice network effects and powered buyer growth early on, before more organic buyer growth happened over time.“ > > — Nickey Skarstad **Eventbrite:** > “**On the demand side, early levers were Facebook and Twitter as attendees shared the events** that they had bought tickets for and encouraged their friends to attend.” > > — Tamara Mendelsohn ### **7. Referrals** #### An early referrals program was important for demand growth for three of the companies I spoke with (Instacart, Airbnb, Uber) — we’ll see in a later post that this channel becomes increasingly important as companies scale. **Uber:** > “Early days, about **30% of trips** came through referrals” > > — Andrew Chen **Instacart:** > “We found a lot of success in a consumer referral program **–– about a third of our demand came through referrals early on**. Word of mouth referrals were already happening, but providing a good referral program allowed us to track and optimize referrals.” > > — Max Mullen **Airbnb:** > “The way to think about **referrals is sort of an engineered word of mouth**. So, if people are already talking about your product, referrals through which you can engineer more people talking about your product. One way could be just making it easier. Another way could be by using financial incentives.” > > — Gustaf Alströmer ### **8. Direct sales** #### Although direct sales was the single most common growth lever on the supply side, only three companies (Lyft, Uber, Rover) found this to be valuable (and vital) on the demand side. **Lyft:** > “**We literally went door to door to startups**, giving away free cupcakes and donuts, along with coupons to take a free ride on Lyft. We were like ‘Hey company, Lyft just launched, have this free box of goodies.’” > > — Benjamin Lauzier **Uber:** > “**There was a very significant use of street teams**. They went to places like the Caltrain station and handed out referral codes. There are stories about how Travis went to Twitter HQ personally and handed out referral codes. This eventually became a global Ambassadors program.” > > — Andrew Chen **Rover:** > “We had people **go to dog parks and hand out flyers** and coupon codes” > > — David Rosenthal ### **9. Events** #### Essentially the same companies that found success with events on the supply side (Airbnb and Lyft) also found success on the demand side (plus Uber). **Lyft:** > “**Launch parties were big for us**. We saw them as one of our main growth levers. We wanted to create a grass-roots movement in each city. Even though they would get us exposure to about a thousand people max, they were a way to create a core group of passionate users who would become ambassadors for Lyft long-term. Looking back, we attributed a big part of this working to Lyft’s differentiated culture.” > > — Benjamin Lauzier **Uber:** > “**One of the big ideas for kickstarting growth in a market was a concept of a “rider zero.”** We wanted the very first rider on the platform in a new market to be a local celebrity, like the Mayor of Topeka. This is also how we ended up doing things like Uber Kittens and Uber Ice Cream” > > — Andrew Chen ### **10. Single-player mode** #### Before they had meaningful supply, a few companies found something they could immediately offer new demand-side users (a.k.a. single-player mode). **GrubHub:** > “**Our demand-side solve for chicken and egg problem was to scan delivery menus** from restaurants, put them online, and drive SEO traffic. Once we had traffic, went to restaurants, asked if they wanted this traffic. Eventually, once we had low friction enough for restaurants to join, we could go straight to restaurants and signed them up on the spot.” > > — Casey Winters **AngelList:** > “**We made a form for startups and told them to fill it in if they wanted intros to the investors**. We reviewed each on and sent the good ones to the investors on a mailing list. If the investor liked it, they asked for an intro.” > > — Babak Nivi **Instacart:** > “**We collected signups while the markets were closed** so we had a list to email when they opened” > > — Max Mullen ### **11. Partnerships** #### For TaskRabbit and OpenTable, building early partnerships meaningfully accelerated their growth. **TaskRabbit:** > “**We did a fair amount of partnerships** with other notable and established brands, like Pepsi, Bravo TV, Gap, Sephora, and more. Most of these partnerships took the form of IRL activations (i.e. getting product in the hands of customers). Like press, these partnerships helped raise the level of brand awareness as well as establish TaskRabbit’s credibility. **It was extremely powerful to be in the company of these big brands, generating both brand awareness and user signups.**” > > — Jamie Viggiano **OpenTable:** > "We leveraged partnerships to drive demand. We partnered with Citysearch, AOL Digital Cities, Yahoo, Metromix. Anytime one or our restaurants was listed on an online directory, you could find an OpenTable link (before API’s, you actually went to the OpenTable site). **However, despite the breadth of partnerships, it only accounted for about 15% of our bookings.** The rest came from OpenTable.com directly or our restaurants' websites. > > — Mike Xenakis ### **12. Mobile** #### And finally, though less of a lever these days, moving to mobile early-on was an important growth lever for Zillow and Thumbtack. **Zillow:** > “**This may sound crazy now, but moving quickly to the mobile platform was a huge growth driver for us**. We made an early commitment to mobile back before it was obvious everything was going mobile. We even built our own mapping solution for Blackberry because they didn’t have the mapping tools we needed. We consider moving fast on new platforms and technology really critical. We take advantage of new technology (ipads, apple tv, 360 cameras, etc) because we get extra attention (Steve Jobs featuring the Zillow iPad app) and first mover advantage.” > > — Nate Moch #### Now, having looked the twelve most common demand-side growth levers, as you zoom out and look at the bigger picture, a couple of additional meta-learnings emerge: 1. **Supply vs. demand levers:** Though eight out of twelve levers apply to both supply and demand, the impact those levers have on supply vs. demand is very different. Direct sales, for example, is the most common growth lever on supply, but only the eight most common for demand. Similarly for referrals (third vs. sixth, respectively). 2. **The number of impactful levers:** The median (and average) number of levers that any individual company bet on for supply was roughly two, but for demand, it was three. Though that doesn’t sound like a big difference, it does tell us that companies see impact from more channels when driving demand (vs. supply). ## 🎁 Bonus #1: What DIDN’T work Some of the most interesting learnings often come from a decision to *not* do something, or when an investment *doesn’t* work out. As I spoke with folks, I looked for these stories. Here are some of the most informative examples: ### 1. Paid growth **Thumbtack:** > “Paid marketing was not a big lever for us — we didn't have the cash or revenue model to support until we were many years in!” > > — Sander Daniels **TaskRabbit:** > “We spent very little money in the early days on digital ads. Paid ads became more important about 5 years after launch.” > > — Jamie Viggiano **Instacart:** > “We did almost no paid marketing marketing early on.” > > — Max Mullen ### 2. Loops **Lyft:** > “That's something I think Uber invested a lot in that never quite worked out as much for us ironically.” > > — Benjamin Lauzier **DoorDash:** > “We never explicitly went out and said we're going to build a \*viral loop\*” > > — Micah Moreau **Patreon:** > “Given that someone already has an audience and has potential to succeed on Patreon, them using Patreon as a patron first [and discovering Patreon this way] is naturally the best advertisement for it. However, unlike Eventbrite, I'm not sure about the incrementality of this path vs. simply seeing that another creator you admire using Patreon. I would guess seeing a creator you admire using Patreon successfully is 99% of what convinces a creator to sign-up, and actually paying as a patron of that creator is icing on the cake.” > > — Tal Raviv ### 3. Supply driving demand **TaskRabbit:** > “Most of the tasks were completed behind closed doors so we didn't have the same benefit as the ubiquity of the Lyft mustache.” > > — Jamie Viggiano **Rover:** > “Seeing Rover t-shirts out in the world wasn’t a growth driver” > > — David Rosenthal ### 4. PR **OpenTable:** > "We actually shied away from PR. Given the nature of fine dining (i.e. it's planned and infrequent), we didn't believe PR could actually drive meaningful demand. We loved our business and preferred to fly under the radar with respect to potential competitors. In fact it was only after we went public that our PR ramped up, as did competitive responses.” > > — Mike Xenakis ### 5. Referrals **TaskRabbit:** > “We started with a ‘give $10, get $10’ model back in 2010 when referral programs were in their infancy. I remember developing these programs manually at first (testing via email) to see the efficacy. And then ultimately integrating them into the product once we understood their impact on driving the business. However, it wasn't significant. Customers tended to share organically and didn't rely on the referral program.” > > — Jamie Viggiano ### 6. SEO **Caviar:** > “SEO was low impact for us” > > — Gokul Rajaram ## 🎁 Bonus #2: Do things that don’t scale As a closing reflection on Phase 1, I wanted to share one of the most important takeaways from these interviews — something that is often underestimated or overlooked: **Starting a marketplace business is HARD.** Every single person I spoke with reminded me of the hustle, the scrappiness, and the grit that it takes to make it work. If you’re struggling, and reading these stories makes it feel like it was easy for anyone, keep reading. **Breather:** > “**The real answer in how you onboard supply or demand in a cold-start marketplace is you do whatever it takes.** Is this going to work? No? Ok, well is this going to work? No? Keep trying until it works. I designed a funnel where I got leads through Twitter, and **manually walked hundreds of people of through the seven-step process**. I emailed them to go download the app. Then pinged them — have you downloaded yet? Yes? Now create an account! … Have you created an account yet? I did this over email with hundreds of people.” > > — Julien Smith **Thumbtack:** > “We spent so much time early on doing things that felt like reverse engineering Google’s algorithm. It felt like wasted time and effort in the grand scheme of things. What we always dreamed of was building a great product and focusing on the algorithm was a diversion from that. **But we had no choice — SEO fueled the business, and we needed to buy time to one day build a great product and brand.**” > > — Sander Daniels **Airbnb:** > “We had this Silicon Valley mentality that you had to solve problems in a scalable way because that's the beauty of code. Right? You can write one line of code that can solve a problem for one customer, 10,000 or 10 million. For the first year of the business, we sat behind our computer screens trying to code our way through problems. We believed this was the dogma of how you're supposed to solve problems in Silicon Valley. It wasn't until our first session with Paul Graham at Y Combinator where we basically… **the first time someone gave us permission to do things that don't scale, and it was in that moment, and I'll never forget it because it changed the trajectory of the business**” > > — Joe Gebbia ([source](https://firstround.com/review/How-design-thinking-transformed-Airbnb-from-failing-startup-to-billion-dollar-business/)) **DoorDash:** > “An example of scrappiness Tony always gives is the Cheesecake Factory in the Macy's building in San Francisco. The reason we won the Cheesecake Factory — it’s on the sixth floor of the mall, by the way — is because **we had dashers just dedicated to running up and down the elevator to handoff the food, instead waiting for a dasher to park**. That’s one example of us going the extra-mile, operationally, and doing things that don’t scale.” > > — Micah Moreau **GrubHub:** > “We printed business cards for restaurants. Later we tried other things, like sending orders to restaurants as a cold-fax, followed by a call. **We even tried faxing restaurants that weren’t on the system orders**, but that went badly, orders didn’t get made.” > > — Casey Winters **Etsy:** > “The origin is shrouded in mystery, but my understanding is that the founders had been doing contract web work full-time. At some point, they did a job for a craft-related forum and noticed that there was a group of eBay sellers there that were nonplussed with eBay. So they built a prototype of an early version of Etsy, and got some of those people interested. **Then they went to local craft fairs and showed it to people, one by one.**” > > — Dan McKinley **Lyft:** > “**We invested in many non-scalable levers early on**. That was big for us. Some examples of that are on customer side — when I had joined, the teams had been going door to door at startups, giving away coupons, giving away cupcakes and donuts, along with coupons.” > > — Benjamin Lauzier **DoorDash (yes, another story):** > “**The very first iteration of DoorDash was a website called paloaltodelivery.com** with PDF'd menus of restaurants in Palo Alto. Tony and the team printed a bunch of flyers charging $6 for delivery and put them all over Stanford University. He and the team first wanted to see if there was demand. That was how it all started. A website with PDF menus.” > > — Micah **Thumbtack (and yes, another story):** > “There are two dimensions for how to think about a marketplace, (1) Frequency of job, (2) Size of job. Thumbtack is a low frequency, high value job. Which meant we couldn’t build a narrow marketplace like Uber (just cars on demand), or other companies with high frequency jobs. We needed to build a marketplace that was broad across all categories. **We had to brute forcing it with a mediocre product, which bought us the time to survive and one day focus on building a great product (which we’ve now been able to do)**. We knew building this marketplace well would require decades and we were willing to make tough prioritization decisions early on.” > > — Sander Daniels That’s it for this edition! **Stay tuned for “Phase 2: Scaling your Marketplace”!** *P.S. If you work at any of the companies I looked into, or any large marketplace company, and have additional insights or feedback, please let me know! Just reply to this email or DM me [@lennysan](https://twitter.com/lennysan).* ### Overview: **Phase 1: Crack the chicken-and-egg problem** 🐣 - **[Part 1](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)**[: Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **Part 4:** Drive initial demand 👋 (this post) **Phase 2: Scale your marketplace 📈** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand)** [Determine if you are supply or demand constrained 🤹‍♂️](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand) - **[Part 2:](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase)** [Scale growth levers 🔥](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase) - **[Part 3:](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting)** [Maintain quality 🏅](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting) - **[Part 4:](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)** [What would you have done differently if you did it again](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)**[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** [Sign up now](https://www.lennysnewsletter.com/subscribe?) --- ## [22/25] How To Know If You're Supply or Demand Constrained 🤹‍♂️ - Phase 2 of Kickstarting and Scaling a Marketplace Business > **“Lyft was always supply constrained. It was obvious to everyone.** You open up the app on a Friday night and there were no cars available. Instead, you got a Lyft message saying sorry, try again later. We eventually ended up having to build a waitlist for supply to catch up to demand. > > This was especially bad for us because Lyft focused on being reliable — a ride when you need one, with the tap of a button. **The aha moment, or inflection point, was a 3 minutes ETA. Under 3 minutes felt instantaneous.** When it was over 3 minutes, you were incentivized to shop around, take the bus, walk, or take another ride sharing company. This goal gave our local teams a north star. We found this number by looking at the data – app open to ride conversion, and long-term retention. We saw an inflection point there. At 3 minutes, saw the curve inflect.” > > *— Benjamin Lauzier (ex-Product Lead for Driver at Lyft)* **Welcome to Phase 2 of our series on marketplace growth — Scaling Your Marketplace** 🎉 This phase will address the four questions I’m most frequently asked by post-PMF marketplace companies: - **Part 1**: How do I know if I’m supply or demand constrained? 🤹‍♂️ *(this post)* - **Part 2**: How do I accelerate growth at scale? 🔥 - **Part 3**: How do I maintain quality in my marketplace? 🏅 - **Part 4:** What would you do differently if you could do it again? **🔮** Again, thank you to everyone who has sent me encouragement, new insights, and suggestions for future posts — [keep them coming](https://twitter.com/lennysan)! And for those of you tired of posts about marketplaces 🤷‍♂️, I’ll soon go back to tackling your questions about building product, driving growth, or anything else stressing you out at the office ([an example](https://www.lennyrachitsky.com/p/this-week-overcoming-impostor-syndrome)), after these four posts are out. And, finally, early next year I’ll share the remaining portion of this series, **Phase 3: Evolving Your Marketplace** 🐛 *(\*cough\* still working on it \*cough\*)* If you are new to this series, do yourself a favor and check out **Phase 1: Cracking the chicken-and-egg problem:** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)** [Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) Enough BS, let’s dive in! # **Phase 2: S**cale your marketplace 📈 At some point, if enough pieces fall in place and the flywheel starts to whirl, you’ll begin to realize that maybe, just maybe, you’ve got a real working marketplace on your hands. Congrats! Nice work. Enjoy this moment — very few companies get this far. Around this time, you will also begin to find that your early tactics and assumptions become increasingly less effective. Is your marketplace still supply-constrained — maybe it’s demand constrained now? Should you keep building out a sales force, or focus on productizing everything? How do you maintain the high-quality experience your customers have come to rely on as you scale? These are some of the questions I’m most frequently asked by teams at marketplaces that are starting to scale up. **And, as it happens, these are the same questions we’ll explore over the next few posts — starting with how to determine if you are supply or demand constrained** 🤹‍♂️ ![Image from How To Know If You're Supply or Demand Constrained 🤹‍♂️ - Phase 2 of](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/2be334c8-f415-4c04-bddb-c16eca2c9874_2134x1532.png) Before we dive in — how do you know when it’s time to “scale”? It’s rarely a binary decision, but few signals to look for: 1. You believe that you have PMF. Again, read [this](https://abovethecrowd.com/2012/11/13/all-markets-are-not-created-equal-10-factors-to-consider-when-evaluating-digital-marketplaces/) and listen to [this](https://tim.blog/2019/11/25/starting-greatness-mike-maples/) for excellent advice on this topic. A simple heuristic is that retention and growth are healthy in your early geo/category. 2. You have a strong hypothesis for how to launch a new market or category. 3. There is a strong competitive threat and you need to respond. ### Step 1: Determine if you are supply or demand constrained 🤹‍♂️ Unlike Phase 1, where 80% of the companies I looked at focused on supply growth almost exclusively, the story quickly gets more complicated as you scale. Though many marketplaces continued to stay supply-constrained indefinitely (e.g. Uber/Lyft, OpenTable, DoorDash), an equal amount saw different supply vs. demand imbalances by geography or category. **Side-note: What does being supply-constrained or demand-constrained even mean?** It simply means that your *biggest* constraint to driving additional transactions is a lack of supply (e.g. Airbnb Homes, Uber drivers) or a lack of demand (e.g. Rover dog owners, TaskRabbit customers). In theory, you always want more of both, but in many cases adding more of one side doesn’t actually lead to growth. Your resources are better spent elsewhere. ![Image from How To Know If You're Supply or Demand Constrained 🤹‍♂️ - Phase 2 of](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/6fd095b7-c30f-4b4d-9cfd-57b0002ff4b2_2134x297.png) #### A very large share of marketplaces are always supply constrained About 40% of the companies I talked to started off supply-constrained and then *continued* to be supply-constrained throughout all of their history. For these companies, the ROI of adding new supply greatly outweighed investing in driving new demand. I have a few theories for why it was true for these companies (e.g. difficult of acquiring supply, novelty of experience, strength of PMF), but I don’t see a super-consistent pattern. If you have insights into this, [I’d love to hear them](https://twitter.com/lennysan). **Uber:** > “**We didn’t think about supply demand imbalance a lot because we were always supply constrained**. This directly led to surge pricing — we eventually decided that our goal should be that **less than a certain percentage of trips should be surged in a market** (~20% - 30%). The idea is that any market that was over that percentage was under-supplied, and vice versa. This became our rule of thumb. We always thought about, from a user experience, what level of surge before people start to dislike it?” > > — Andrew Chen **OpenTable:** > “**For us, we knew we had to stay with supply**. We were able to graph out restaurant penetration (absolute and percentage of market), and overlay diner growth and the percent of reservations we could deliver per restaurant. It was amazing just how similar each market behaved. Our ability to accurately forecast growth and, therefore, wisely invest in each market, was tied to this direct correlation of restaurant penetration to reservation booking volume. And, not surprisingly, the growth curve wasn't linear, but instead exponential as you might expect in a network effects business.” > > — Mike Xenakis **DoorDash:** > “When we look at growth, it's always one of three things: Selection, Delivery quality, and Affordability. All supply-oriented. **So we were essentially always supply constrained. There are times where we feel demand constrained, but it's very rare.** When we launch markets our focus is to get to a small, defined number of deliveries per day (for example, 100 deliveries per day), within a relatively defined space, not all of Greater Toronto, for example, but a couple of neighborhoods. When markets hit that level, they “graduate” as a market. We find that if we don't get to that level of deliveries per day in a market relatively quickly, dashers churn and restaurants churn.” > > — Micah Moreau #### Very few companies are always demand-constrained On the other side, only three of the companies I looked at were always demand-constrained at scale. **Rover:** > “For us, the scarce resource was demand. **I don’t think we were ever supply constrained**. **Supply was easy.** It was the dynamics of the market -- if you are someone who loves dogs, you work from home, you are in a situation where an extra $50 is meaningful, why wouldn’t you sit on Rover? It’s a no-brainer. Demand was much harder because we had to change customer behavior. We had to convince someone to get over the hump of letting a stranger watch their dog -- similar to Airbnb.” > > — David Rosenthal **TaskRabbit:** > “**TaskRabbit was never supply constrained**. We had thousands of people on our waitlist to provide services, but the demand-side was more challenging. Over time we actually ended up charging new supply an application fee to reduce the volume of applications, and to increase the quality, while managing our costs to process background checks and other onboarding costs.” > > — Brian Rothenberg **AngelList:** > “When we pivoted to syndicates **we became LP-constrained**.” > > — Babak Nivi #### And finally, and most interestingly, nearly half of marketplaces had varying levels of supply vs. demand imbalance About 40% of marketplaces I looked at had differing levels of supply vs. demand imbalance across geography and/or category. In some places these marketplaces were supply-constrained, and in others demand. To address this, these companies developed models or heuristics to help them understand which side needed their focus. Though never perfect, and constantly evolving, these models were instrumental in helping them focus their resources. **GrubHub:** > **“We created a model that looked at restaurant coverage in a market to tell us which markets were supply constrained:** (1) What % of restaurants in a market are on GrubHub vs. not, and (2) the number of orders per GrubHub restaurant. If orders per restaurant in that area were in the higher percentiles, we focused on supply in those markets.” > > — Casey Winters **Thumbtack:** > **“We went through a process to find a metric what was most predictive of consumer satisfaction (NPS in out case), and found that ‘Hire Rate’ was directly correlated with the NPS score they ended up giving later**. So we focused on Hire Rate. We found that customers were happy when they got at least three results when searching for a Pro, and that we were healthy when 60% of the search results included 3 or more quotes. Below that meant we were supply constrained.” > > — Sander Daniels **Airbnb:** > “To determine if we were supply or demand constrained in a market, **initially we used occupancy rate** — if it was above a certain % we were supply constrained. Then, we moved to a model where we looked at occupancy rate vs. bookings rate, and when there was a downward inflection point we knew what occupancy rate that market was supply constrained at. Most recently, we use an econometrics model that tells you for each market — do you get more incremental revenue from one additional unit of supply or demand.” > > — Lenny Rachitsky **Zillow:** > “To track supply and demand and figure out where we were constrained, **we would watch the marketplace health stats like quotes per loan request, loan requests per user, competitiveness of rates, and contact rates by market/area**. If we were low in a given area, we would work hard to build supply in those areas or turn down demand.” > > — Nate Moch **Instacart:** > “The goal for a marketplace is to invest in a supply-demand balance. So you're always investing in both. **One metric we use is called Availability. When Availability is high, it means customers can order for immediate delivery**. We worked hard to make sure availability is high so that customers are able to order and get value from our service immediately after they sign up.” > > — Max Mullen With a renewed sense of which side of the marketplace to concentrate on, the next question will naturally be **“How do I scale and accelerate growth for my marketplace?”** Lucky you, that’s the very topic of our next post. Stay tuned! [Sign up now](https://www.lennysnewsletter.com/subscribe?) ## Overview **Phase 1: Crack the chicken-and-egg problem** 🐣 - **[Part 1](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)**[: Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Phase 2: Scale your marketplace 📈** - **Part 1:** Determine if you are supply or demand constrained 🤹‍♂️ (this post) - **[Part 2:](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase)** [Scale growth levers 🔥](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase) - **[Part 3:](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting)** [Maintain quality 🏅](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting) - **[Part 4:](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)** [What would you have done differently if you did it again](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)**[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** --- ## [23/25] Accelerating Growth at Scale 🔥 Phase 2 of Kickstarting and Scaling a Marketplace Business > “Mike Pao, GM of Uber in Boston, was having trouble getting supply to show up at 3am when people were leaving bars. So he sent an email to all of the drivers in Boston: We will manually double your payments if you drive at night, ignore your receipts. It worked. All of the other cities started to copy it, and then eventually it was implemented in HQ. **That’s how surge pricing was invented.**” > > *— Andrew Chen (ex-growth at Uber)* Welcome to the second part of Phase 2 of our deep dive into marketplace growth — Scaling Your Marketplace 📈 **Below, I’ll share the levers and tactics that today’s biggest marketplaces** ***currently*** **rely on to drive growth.** To me, this was one of the most interesting areas to explore because I’ve never seen a comprehensive breakdown of growth levers across companies at scale. What percentage of companies rely on paid growth? Referrals? SEO? So many learnings! Read on! ## **Step 2:** Accelerate growth at scale 🔥 **Early on, you do things that don’t scale. At some point, though, you need to scale the things you’re doing.** As a result, the number of levers you can rely on for growth at scale is substantially reduced — from a total of sixteen different levers early on (across early supply and demand growth), to only eight down the road: 1. Performance marketing (key for 70% of the companies I spoke with) 2. Expanding geographically (65%) 3. Conversion optimization (50%) 4. SEO (50%) 5. Direct sales (35%) 6. Referrals (30%) 7. Loops (25%) 8. PR (17%) This isn’t to say that other tactics will never have impact for *your* business — just that these eight levers were the only impactful and scalable levers for these seventeen companies. Here’s a cheatsheet: ![Image from Accelerating Growth at Scale 🔥 Phase 2 of Kickstarting and Scaling a](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/b8c15f9c-db9f-43f5-a7a8-a686c3b69215_2136x761.png) *Note: To simplify, I’ve merged supply and demand growth levers into a single list.* ### 1**. Performance marketing (70%)** Performance marketing (a.k.a paid growth) turned out to be the single most commonly used growth lever for these companies at scale. It’s a vital growth channel for twelve out of the seventeen companies I spoke to — up from the six companies that relied on it during their early stages. The remaining five companies (AngelList, Etsy, Eventbrite, OpenTable, Patreon) either don’t use it at all, or don’t rely on it. **Uber:** > “**The end state was like 50% paid,** 15% referrals, 35% WOM. Early days the mix was closer to 30% referrals, 50-60% WOM, and the rest was PR and other random things.” > > — Andrew Chen **DoorDash:** > “We invest in every channel. We have to constantly test and iterate to identify arbitrage opportunities. **In paid, we invest based on a ‘Time to Contribution Margin Break-Even.’** We don't invest on an LTV basis because every market is different. To say we can predict unit economics of each business and market 5+ years into the future, would be naive. The way we think about it is if we put out $5 to acquire a customer at time zero, how many months does it take to generate $5 in contribution profit (everything above fixed OpEx - like salary and rent)?” > > — Micah Moreau **Zillow:** > “At scale we continue to invest in the areas above (PR, SEO, Mobile), but we also added paid marketing. **We added paid late in our company timeline, but it made a big difference when we turned it on**.” > > — Nate Moch ### **2. Expand geographically (65%)** The second most important and effective growth lever for companies scaling up was simply expanding geographically — key for about two-thirds of companies (interestingly not for Breather or Thumbtack). **Instacart:** > “**For many years a big lever for us was expanding geographically**. As we got better at selecting and launching new markets, each new market would reach critical growth milestones faster and faster.” > > — Max Mullen **OpenTable:** > “Market expansion was absolutely **one of the most important growth drivers**.” > > — Mike Xenakis **GrubHub:** > “When we began to scale, **expanding geographically was one of our top 2-3 growth levers** for both supply and demand.” > > — Casey Winters **Rover:** > “We started in Seattle, kept it focused, learned about the dynamics of the market...**then we flipped the switch and went national**. > > We entered a city by just spending on google AdWords. We had a concept of ‘Activated markets’, and a target list of markets we were trying to active. When we saw organic growth bubbling up in new market, that informed where we would go next. For non-activated markets, we knew that performance was going to be bad because liquidity was low. We were willing to let it ride.” > > — David Rosenthal ### **3. Conversion optimization (50%)** About half of the companies I spoke with saw a lot of growth optimizing the conversion of user flows. Just as interesting to me was how many companies DIDN’T find this to be a major growth lever (including Eventbrite, GrubHub, and OpenTable) 🤷‍♂️ **Zillow:** > “**Improving conversion and engagement was a big focus as we grew**. We were very focused on how we could activate more of the users who came to our site to help them in their home shopping journey. Home shopping is not a short transaction cycle, so engagement was a very important – getting people activated, re-engagement them with email/push, and helping them take the next step toward buying a home. We had a lot of people coming to our site to check the value of their homes, but we wanted to engage them in the home shopping aspect of our product.“ > > — Nate Moch **Airbnb:** > “We saw **consistent and substantial growth gains every year** from conversion wins, from search through booking.” > > — Lenny Rachitsky **Etsy:** > “**We removed lots of early frictions** to purchasing over time — this was one of our biggest growth drivers as we scaled.” > > — Nickey Skarstad ### 4. SEO (50%) SEO also ended up being a major growth lever for about half of companies, for many only becoming a focus later in their history. **OpenTable:** > “**We were a little late to the game on the SEO front, but once we understood its importance we invested fairly heavily**. We brought in an outside expert who helped launch our SEO program. Within a few months we had tripled our SEO referrals and it quickly became a big source of new users.” > > — Mike Xenakis **Zillow:** > “**SEO was and continues to be an important channel for us**. We took advantage of our PR and content groups to drive traffic and links to our site, and created the most comprehensive database of homes with deep details of every home in the country (not just the ones for sale). We continue to work on providing the most unique and valuable data on every home (with things like 360 tours of homes).” > — Nate Moch **Etsy:** > “**Tons of listings overtime indexed by Google** brought in new traffic over time.” > > — Nickey Skarstad ### **5. Direct sales (35%)** Interestingly, direct sales became much less of a key lever for many companies (from ten companies to six companies). This is likely because the cost of scaling a sales org was outweighed by the growth coming from more scalable channels. However, for all of the food delivery businesses (plus Breather), this continued to be a vital growth channel. **Caviar:** > “For us, for supply growth, it’s **direct sales / field sales - no question**!” > > — Gokul Rajaram ### **6. Referrals (30%)** Five companies found ongoing (and increasing) success from a referrals program, across both supply and demand. **Uber:** > “Today, about **15% of new users come from referrals**, 35% from WOM.” > > — Andrew Chen **Airbnb:** > “Today, referrals drives about **10-15% of all new supply**” > > — Lenny Rachitsky DoorDash: > “**Referrals is massive on the dasher side**. It is effective on the consumer side too, but less so.” > > — Micah Moreau ### **7. Loops (25%)** And loops continued to be critical for four companies — Eventbrite, GrubHub, OpenTable, Uber. **Uber:** > “Early days it was black car drivers and riders, where there's no overlap. It wasn't until 2015 that we built the "R2D funnel" which **became the largest attributable signup source of riders turning into drivers**!” > > — Andrew Chen **OpenTable:** > “As the business scaled, **the restaurant website diner acquisition continued to be the most efficient and most effective**. What happened, while we grew simultaneously restaurant websites started growing, and the quality of the websites was finally growing (didn’t take 4 mins to load, flash graphics), went hand in hand. That was continuing to fuel growth.” > > — Mike Xenakis ### **8. PR (17%)** Finally, PR remained a key growth driver for three companies — Etsy, TaskRabbit, and Zillow. **Etsy:** > “Novel concept with quirky listings made for fun press/bloggers picking Etsy up” > > — Nickey Skarstad ### **And a few reminders about growth:** > “**We paid close attention to our customer feedback and solved top customer complaints with product investments**. We found that the experience of having an item you ordered replaced if it was out of stock could be better. So we invested heavily in this specific case: what happens when an item you ordered is out of stock? Investing in this area of our product helped many new customers have a great first experience, which in turn helped growth.” > — Max Mullen (co-founder of Instacart) > “**Many of the early levers we used to drive growth were a moment in time things** that no longer work at all or at scale. We used them where we could to bootstrap the company for a period.” > > — Sander Daniels (co-founder of Thumbtack) > “**There were no silver bullet** unfortunately. Just lots of [lead bullets](https://a16z.com/2011/11/13/lead-bullets/).” > > — Gokul Rajaram (Head of Caviar) Stay tuned for the next, and penultimate, post in this series next week — **how to maintain quality in your marketplace! 🏅** ## **Overview** - **[Part 1](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)**[: Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Phase 2: Scale your marketplace 📈** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand)** [Determine if you are supply or demand constrained 🤹‍♂️](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand) - **Part 2:** Scale growth levers 🔥 (this post) - **[Part 3:](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting)** [Maintain quality 🏅](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting) - **[Part 4:](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)** [What would you have done differently if you did it again](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)**[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** --- ## [24/25] Maintaining Quality 🏅 Phase 2 of Kickstarting and Scaling a Marketplace Business > **“French fries and buffalo wings are the most difficult problem in the restaurant delivery industry today.** We are obsessed with challenging ourselves to consistently deliver them hot and crispy.” > > — Micah Moreau (VP Growth, DoorDash) Welcome to the second-to-last 😳 post of my eight-part limited series on kickstarting and scaling a marketplace business. **In this post, I’ll share the top ten strategies that today’s biggest marketplace companies use to maintain the** ***quality*** **of their marketplaces.** And later this week, in our final post, I’ll share what the leaders I spoke to would do differently if they could do it all over again. 🔮 ![Image from Maintaining Quality 🏅 Phase 2 of Kickstarting and Scaling a Marketplace](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/18f5adc8-c6cb-4605-85a6-ab0247b09baf_220x161.gif) This post contains some of my most favorite stories from the entire series — funny, surprising, and super insightful. Read on! ## **Step 3: Maintain quality 🏅** The topic of maintaining quality is one of the top five most common questions I get from leaders at marketplace companies. As you scale and attract a more mainstream audience, preserving the level of service that keeps customers coming back becomes increasingly difficult, but also increasingly critical. You’re forced to move beyond your eager early adopters, deal with issues you never anticipated, and develop rules and processes on the fly. I’ve personally spent a lot of time working on marketplace quality at Airbnb (e.g. the Superhost program, reviews, standards enforcement), so I was excited to learn from leaders across seventeen different marketplaces. I’m even more excited to share it all with you. Let’s dive in. *The top ten strategies today’s biggest marketplaces employ to maintain quality:* ![Image from Maintaining Quality 🏅 Phase 2 of Kickstarting and Scaling a Marketplace](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/37e69650-4e6f-408e-a766-f1e5e1c4ec36_2134x519.png) ### **1. Standards + penalties** The single most common strategy to maintain quality in their marketplace, utilized by about two-thirds of the companies I spoke with, was to define (and share) clear standards for the minimum level of service. They then incentivize good behavior, and penalize bad behavior. At most companies, including Airbnb, this was an evolutionary process, starting with the simplest possible version, and iterating from there. **Eventbrite:** > “**We published community guidelines that outlined what kind of events were permissible on the platform** and invested in a fraud/spam team to build technology to catch bad actors. We saw ourselves as the fair arbiter between guests and sellers.” > > — Tamara Mendelsohn **Uber:** > “**Since early-on, drivers got a warning when they were below a 4.4 rating**. In some markets there was remedial school, like if you had a 4.0.” > > — Andrew Chen **Lyft:** > “**We created a set of levers to control the quality of the experience**. As a passenger, you live in Oakland, driver comes and finds out you want to go to SF — cancels. That’s a terrible experience. We had a few levers to avoid that, **mostly through education and penalties on the driver side**. We also understand you have your life as a driver, we understand life gets in the way. For us it was about maintaining that balance, while having cancellation policies that give you a bit of freedom.” > > — Benjamin Lauzier **DoorDash:** > “**To manage quality, we take a carrot vs. stick mentality**. Sticks would be charging more if they don't hit SLAs for example. What we think is more valuable and better for restaurants long-term is to give them financial incentives to have great operations. For example, we'll lower your commission if you can reduce dasher wait time at the restaurants.” > > — Micah Moreau **Caviar:** > “**Our quality standards were based on the local team's sense of quality**. We felt that each region (eg: Dallas vs NYC) had a different sense of quality, so it didn't make sense to standardize nationally.” > > — Gokul Rajaram **Etsy:** > “**We cared a lot about making sure items conformed to the terms of service**, but this was never actually very clearly defined. Any subjective notion of item ‘quality’ was emphatically not a thing we were policing. I did once have to write a heuristic to remove felt penises from a specific feature.” > > — Dan McKinley ### **2. Manually onboard early supply** The second most common approach, utilized by about half of the marketplaces, was manually onboarding new supply through 1:1 instruction, classes, and hands-on support. **Lyft:** > “**An early part of our foundation was onboarding classes for drivers**. We would bring bagels, and have dozens of driver applicants come at once to go through a series of educational videos & chats.” > > — Benjamin Lauzier **Airbnb:** > “**For every new listing we brought onboard, we went through a 12-point checklist (e.g. number of pictures, length of title, etc), so that every listing that went live had a minimum standard and was immediately bookable for guests.** After listing the spaces, local teams helped to educate the hosts at every single touchpoint. For example, when there was a booking request, the Sales and Account Manager called or emailed the host to explain what is happening and how to convert the request into an actual booking. This global operation was supported by a central data team that allowed us to compare progress across countries and share learnings. Being in touch with nearly every host worldwide helped to get direct market feedback and adapt processes and tools quickly.” > > — Georg Bauser **DoorDash:** > “First and foremost, the delivery experience reflects on the restaurant’s brand. We are taking ownership of their brand for as short period of time, which terrifies restaurants (understandably so!), and we take that responsibility very, very seriously. **We do a lot of unsexy operational work with restaurants in order to help them feel comfortable with this, and to help them succeed**. We have a whole team dedicated to merchant operations that helps restaurants understand what this experience (enabling delivery) will do to their kitchen, how do you handle the logistics, how they fill orders, hour by hour. We walk them through the setup, how Dashers will do pickups, how to create a flow. > > — Micah Moreau **Instacart:** > “One element of quality in our marketplace is our product listing data. For the most part, our customers don’t buy items if they don’t have a good picture. **So we went to incredible lengths to get image data for our catalog, even to the point where we would go to a store and buy one of every item just so that we could create the catalog for that store**. With a high quality catalog we were able to offer customers a good experience, since what they ordered would be what showed up on their doorstep.” > > — Max Mullen **Caviar:** > “We found that food standards don't go down — what goes up and down is operations / reliability. In fact, ironically, some of the best food restaurants might not have the best operations. So **we had to really help work with the restaurant owners to focus on operations**. Because the diner lumps both things together. Quality = great food + great reliability.” > > — Gokul Rajaram **Uber:** > “**Funny enough, in the early days, every driver was interviewed by an employee at Uber**. The first 20 were interviewed by Travis, trying to get to a certain personality. Also, from a regulatory standpoint, you needed a vehicle inspection, so there was always an offline component.“ > > — Andrew Chen ### **3. Reviews** Having a review system was fundamental for maintaining a level of quality (and trust) for about a third of the marketplaces I spoke with. **GrubHub:** > “**On the supply side, we looked at ratings, reviews, and customer service contacts. If you got poor-enough reviews or too many complaints, we had someone talk to you and potentially remove you**. This was done qualitatively by the CX team. An issue we ran into and had to work around is if you were a new restaurant and your first few orders go badly and you get screwed long-term.” > > — Casey Winters **Airbnb:** > “At Airbnb we take reviews and ratings very seriously. **In the early days, reviews were a great tool to vet supply (hosts and their listings) and demand (guests) on the growing marketplace.** We called hosts and guests to provide feedback about their stay with Airbnb. We connected with everyone, the ones who received good and bad reviews, and the ones that didn't provide reviews. By encouraging people to give reviews we fostered the Airbnb ecosystem and accelerated the growth. A host with many reviews has a higher chance to get booked compared to hosts without reviews. By focussing on reviews we continuously gathered valuable customer insights in different markets and also from various cultures. This helped to improve product, localization and translation as well as on-boarding activities for guests and hosts.” > > — Georg Bauser **Zillow:** > “We had different tactics in different marketplaces, but **one of the biggest ones was customer reviews**. This was extremely controversial – they had never been done in the real estate space before).” > > — Nate Moch ### **4. Subsidize it** A similar number of marketplaces, about a third, found ways to subsidize the customer experience in various forms in order to make sure that the customer had a good experience. **Breather:** > “With low size transactions (e.g. 2hrs), you can’t walk in and have a place be schmucky. Lower size transactions means they have to be higher quality experience by definition, so you have to subsidize it. **We heavily subsidize quality of the room, with great tables, great sound proofing. Meeting rooms are garbage normally. We went for quality through design.** And if something went wrong, we solved this through exceptional customer service, and exceptional cleaning.” > > — Julien Smith **Instacart:** > “**We would absolutely go out of our way to make sure customers are happy.** For instance, we would often redeliver a whole order at our cost in order to save dinner for a customer who received an item they couldn't use or didn't receive a key item in a recipe.” > > — Max Mullen **Lyft:** > “We always tried to align incentives as much as possible. **When giving refunds for things like cancellations for example, it was always as safety net / guarantee for some form of behavior that created a higher quality experience.** In other words: if a user does all the things expected out of them to provide a high quality transaction for all sides, and something happened in the middle, we would then rely on some subsidies.” > > — Benjamin Lauzier ### **5. Use search ranking to promote the best supply** One of the most interesting, and also most effective, levers for maintaining marketplace quality turns out to be the search ranking algorithm. When utilized well it’s one of the cheapest yet most powerful tactics you’ll find. **Airbnb:** > “**At Airbnb we thought about quality from both side of the marketplace: how could guests find listings most likely to give them an amazing stay, and, how could hosts ensure they got guests who would love what they had to offer?** One of the most hotly discussed features was 'sort by price'. For a long time we didn't offer the ability to sort by price. Why? Because in a naive version, it lowered quality. Price was not always a good indication of quality. The listings at the ends (the most expensive and the cheapest) were more often than not just mis-priced, leading to mis-matched expectations. So we worked on many iterations until we figured out how to both identify mis-priced listings, and let guests express price preferences.” > > — Dan Hill **Rover:** > “**Search results were the lever that we used to control everything in the business**. That *was* the product. The reason Rover pulled ahead of competition is that we had a much better understanding of marketplace dynamics. We knew where to seed supply in the search ranking, based on the investment we made in data science. We found that high quality supply drove repeat usage. For example, we prioritized sitters who have done multiple transactions with the same owner. We were constantly updating your quality score, seeding each new sitter appropriately in the search results. That allowed us to spend more to acquire supply, and get more LTV from each customer. We were confident they would be loyal to the platform. My advice is to figure out what the germane signals are for your transaction, and do everything you can to get more of that.” > > — David Rosenthal **Eventbrite:** > “**To keep supply quality high, we initially used a basic algorithm** that prioritized events in search results that were selling the most tickets.” > > — Tamara Mendelsohn ### **6. Quality as differentiator** A broad strategy that emerged from this research, that AngelList, Breather, Caviar, and Lyft utilized, is making quality a differentiator for your business (vs. the competition). It then becomes less about a few tactics to improve quality and more about how to infuse quality into every part of your offering. **Lyft:** > “**Quality was always seen as a differentiator for us**. We knew we had a higher bar than our competitors. Wanted to be the company with the most stringent background checks, highest bar for quality in the marketplace. Part of it was very intentional from the beginning.” > > — Benjamin Lauzier **Caviar:** > “**The Caviar brand is all about quality** — so we focused on restaurant supply above all else.” > > — Gokul Rajaram **AngelList:** > “**We only included high-quality investors and only sent them high-quality startups** that we personally vetted.” > > — Babak Nivi ### **7. Customer service** Another effective tactic for maintaining quality is having a great customer service experience when things go wrong — something Breather, GrubHub, and OpenTable heavily invested in. **OpenTable:** > “**We invested heavily in customer support**. On the restaurant side, it wasn’t just a direct sales force. We built a customer service org from the very beginning. We posted a 1-800-opentable help line on front of our hardware at the host stand. We likely knew more about the restaurant layout then any other supplier. We diagramed every outlet, power cord, phone line and electrical closet. If a restaurant called we told them to walk 10 feet and check this cord and plug it in beyond panel. We knew if they were going from pen and paper to software, it had to be up available on a Friday night. If it wasn't, we were done as a business. We needed to be their IT staff, so we invested in that. We also created a client management organization that made sure they were getting the most out of the software.” > > — Mike Xenakis **GrubHub:** > “On the demand side, **we defined personas for eaters**, a 2x2 of *Order with Other* vs. *Order by Yourself*, and *Planned* vs. *Spontaneous*. We found the toughest group was *Order by Yourself* + *Planned* — they complained the most, found coupon codes, etc. **We trained CX to keep the time they give these folks limited**. The only eaters we actually kicked off were fraudsters.” > > — Casey Winters ### **8. Find early signals of quality** Possibly the most interesting approach that I’ve come across is companies figuring out a very early signal from new supply that is predictive of long-term quality, and then helping that supply thrive. **TaskRabbit:** > “We looked at the most successful TaskRabbits -- **asked them to take a mini-Myers Briggs survey, which ended up showing two personality types were going to be good supply**: Very service-oriented people, and people who took pride in making people happy. That became part of the onboarding questionnaire.” > > — Brian Rothenberg **Rover:** > “**We started to figure out what were the predictive signals of what would make good supply**. When we would onboard supply, we asked them specific questions, and the question that was the most predictive of being a good sitter was **‘Where the dog slept at night?’** If they answered ‘In my bed’, we’d know they’d be a great sitter. So we boosted them in the search rankings. We figured out that people who have experience working with Vets were going to be amazing supply as well.” > > — David Rosenthal ### **9. Add friction** If you find that you have more supply than you know what to do with, like TaskRabbit did, adding friction to the onboarding process may be your best bet. > “Eventually, we had **new supply pay an application fee**.” > > — Brian Rothenberg ### **10. Set an example** And finally, Etsy discovered a free and underutilized tactic for creating the type of behavior you seek. **Etsy:** > “One fun accident was an early investment in merchandising. Etsy built a tool called Treasury that allowed sellers to curate collections around a theme that was then featured on their homepage. The incentive for sellers was that, if their Treasury was picked for the homepage, they would see a bump in views/sales due to the increase in traffic. The merchandising team only picked treasuries where all the items were beautifully photographed. **Sellers saw the style Etsy’s merch team liked and mimiced it, creating a high quality bar with a little education/merchandising.**” > > — Nickey Skarstad As a closing note, two meta-learning that emerged from my interviews: 1. Almost all of the quality issues are supply-side (i.e. the customer is always right), so most of the focus went there. 2. You never *solve* quality. It’s an ongoing battle, with unforeseen bumps and shifting expectations. And it only gets harder as you scale. Nearly every company ended up having full-time teams focused on maintaining (and improving) quality, with ever-increasing levels of sophistication, and no one was immune from quality faux pas. **Which is an excellent segue to our next, and FINAL, post —** what leaders at these marketplace companies would have done differently if they were to do it all over again. Don’t miss it. And if you’re finding this series valuable, share it with your friends and click the little gray heart at the bottom (and top) of this email. <3 ## **Overview** **Phase 1: Crack the chicken-and-egg problem** 🐣 - **[Part 1](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)**[: Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Phase 2: Scale your marketplace 📈** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand)** [Determine if you are supply or demand constrained 🤹‍♂️](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand) - **[Part 2:](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase)** [Scale growth levers 🔥](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase) - **Part 3:** Maintain quality 🏅 (this post) - **[Part 4:](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)** [What would you have done differently if you did it again](https://www.lennysnewsletter.com/p/what-theyd-do-differently-kickstarting)**[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** --- ## [25/25] What They'd Do Differently 🔮 Kickstarting and Scaling a Marketplace Business > “At TaskRabbit, we scaled before we had product market fit. We should have focused on fill rate — the percentage of tasks posted that were complete. It was well under 100%, and people who didn’t get matched never came back. **The company instead skewed too far into top-line growth, and should have focused on this much earlier before scaling.**” > > — Brian Rothenberg Welcome to the eighth and FINAL (for now) post in my series on marketplace growth. When I ask readers what they’ve enjoyed most about the series, the most common theme turns out to be the things that *didn’t* work out. Thus, this last post is centered around a specific question I pose to everyone that I speak to: **What would do differently if you could do it all over again?** It turns out quite a lot. From having more focus, to more structured data, to building more empathy for your supply, the lessons below are some of the most valuable in this series. I learned a lot from this, and I’m very excited to share them with you. If you’re new to this series, don’t miss the previous editions: **Phase 1: Crack the chicken-and-egg problem** 🐣 - **[Part 1](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace)**[: Constrain the marketplace 🔬](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace) - **[Part 2:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee)** [Decide which side of the marketplace to concentrate on 🧐](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-9ee) - **[Part 3:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911)** [Drive initial supply 🐥](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-911) - **[Part 4:](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5)** [Drive initial demand 👋](https://www.lennysnewsletter.com/p/how-to-kickstart-and-scale-a-marketplace-2e5) **Phase 2: Scale your marketplace 📈** - **[Part 1:](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand)** [Determine if you are supply or demand constrained 🤹‍♂️](https://www.lennysnewsletter.com/p/how-to-know-if-youre-supply-or-demand) - **[Part 2:](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase)** [Scale growth levers 🔥](https://www.lennysnewsletter.com/p/accelerating-growth-at-scale-phase) - **[Part 3:](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting)** [Maintain quality 🏅](https://www.lennysnewsletter.com/p/maintaining-quality-kickstarting) - **Part 4:** What would you have done differently if you did it again **[🔮](https://www.lennyrachitsky.com/p/what-theyd-do-differently-kickstarting)** *(this post)* On a related note, as one follow-up to this series, I’m planning to interview founders of “failed” marketplaces to find the most common anti-patterns. If you know someone that would be good for me to talk to, or if you yourself want to chat, hit me up (reply to this email or [DM me](https://twitter.com/lennysan)). Otherwise, enjoy! 🎉 ## What would you do differently if you could do it all over again? 🔮 ![Image from What They'd Do Differently 🔮 Kickstarting and Scaling a Marketplace Business](https://bucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com/public/images/7d474ed4-ee97-4454-af7c-9a7294eb844a_480x251.gif) ### **1. More focus** > “**I would have directed towards one specific use-case**. Should have realized we were a use case for meetings, like 95% of the time.” > > — Breather, Julien Smith > “At Eventbrite, everyone was driving supply growth. Eventually we created a growth team that was just focused on supply (with a bit of demand work). Then, we broke it up into two teams — supply growth and demand growth. **I would have split out a separate demand driving team earlier, to create more focus and autonomy for each team**.” > > — Eventbrite, Brian Rothenberg > “**We overemphasized quantity and breadth at TaskRabbit**. One aha moment was that people don’t want to go through 30 offerings. What are the 1-2 best choices. We eventually heard this from a lot of user testing.” > > — TaskRabbit, Jamie Viggiano ### **2. Be more aggressive** > “I would have invested a lot more money to **get growth going in restaurants earlier.”** > > — GrubHub, Casey Winters > “If you were to ask Travis, what would he say? He’d probably wish he had **gotten into China faster**. By the time Uber showed up Didi was already large.” > > — Uber, Andrew Chen > “I would have **taken advantage of some of the channels even earlier** (like SEO and email). I would also have spent more time learning from top crowdsourced, unique content, moderation sites. Really understanding how to create a platform to generate, curate, and moderate user generated content would have been really valuable and maybe have saved us from some early mistakes in that area.” > > — Zillow, Nate Moch ### **3. Think longer-term** > “**We made a critical decision the helped early on, but then bit us in the ass later.** The only way you could be listed on our site is if you used us fully — you had to use us for internal bookings and online bookings. We wanted a carrot to the restaurants. That bit us in the ass. This meant other sites could become better known on the content site because they listed everyone (e.g. Yelp). If you are looking for a restaurant and you can’t find it, that’s pretty disappointing. They changed this recently.” > > — OpenTable, Mike Xenakis ### **4. Focus on getting to PMF before scaling** > “At TaskRabbit, **we scaled before had product market fit**. We should have focused on fill rate (% of tasks posted that were complete). It was well under 100%, and people who didn’t get matched never came back. The company instead skewed too far into top-line growth, should have focused on this much earlier before scaling. We eventually addressed it by vetting supply, and getting the fill rate to 86%” > > — TaskRabbit, Brian Rothenberg ### **5. Leverage data sooner** > “Exogenous growth over time degraded, and this was a big problem. By the time this started happening, we were doing some quantitative advertising and A/B testing, and we had a really great analyst team. But these were never exactly the focus of the company or even a plurality of the product/eng team. > > **In 2012, for example, we devoted hundreds of people across the company working on pages that collectively sold 700 items per day. We had three or four people working on search, which sold 100,000 items per day in that period**. It was like this every single year, with different details. The failure just increased in scale, to the point where nearly everyone was working on a ground-up rewrite of the entire infrastructure ([now completely defunct)](https://craftindustryalliance.org/etsy-close-etsy-studio-etsy-manufacturing-focus-sales-growth-continues/) the year the last CEO got fired. We had several CEO changes, and each of those was a **missed opportunity to get real and acknowledge that the product activity of almost the entire team had nothing to do with the growth**.” > > — Etsy, Dan McKinley ### **6. Product-led growth sooner** > “We were diligent measuring CAC and LTV and retention rates. But very late to move to product-driven growth. We eventually spun up a content-driven growth loop. It was hard to get resources early on. A competitor, Eat24, cloned our site and invested a lot in SEO. They started to outrank us. We still couldn’t get resources to overcome it. If I had to change something, **I would have been less supportive of brand marketing initiatives**. We eventually ran offline marketing and TV as performance marketing.” > > — GrubHub, Casey Winters ### **7. Do things that don’t scale longer** > **“I think we did well but lost our scrappy, iterative mindset too early**. Even without a ton of traffic -- we were wasting traffic not running more tests. We kept learning, with a cadence of 1-2 tests a week. Every 1-2 weeks we launched a test, and learned something. Friday every week after work over drinks, we used Optimizely to test changes on our core landing pages. Sometimes would find really interesting insights, like “this type of messaging resonates a lot more with drivers”. This helped with the next set of big set of changes we would make. It was so low effort, and had a lot of influence. Each change would have to be under an hour of work. We did this in emails, site, and the app. We ended up not being able to find a sweet spot of testing, and self-sever and high quality enough tools. Landing pages from SEM, web.” > > — Lyft, Benjamin Lauzier ### **8. Test scalable solutions earlier** > “I would have liked to potentially **test most scalable restaurant onboarding techniques earlier on**, to see if we could still maintain quality at scale.” > > — Caviar, Gokul Rajaram ### **9. Build more empathy for supply** > “**It took us a long time was to create more customer empathy from the driver side**. We were sometimes too direct, too forceful. The right approach should have been a more holistic system that emphasizes the impact the change has on the driver experience. For example, a passenger has been waiting 7 minutes -- maybe don’t cancel. Create more connections between customer and driver. This took us too long to do. Were very tactical and short-sighted.” > > — Lyft, Benjamin Lauzier ### **10. Expand into new businesses earlier** > “**We waited too long to expand into dog walking**, and into other services for the marketplace. One specific downside of that is Wag existing. It’s exactly the same demand base. Nearly everyone who needs a sitter also needs a dog walker. It was an obvious opportunity, with better economics. But at the same time, we needed to focus -- we were in this competitive situation with DogVacay. But, my advice is if you have conviction in the opportunity, as soon as the org can do it -- do it. It’s probably a mistake at the seed stage to expand into new business lines, when you are trying to focus and shift, but once you get past that, if you think the PMF is there…go for it.” > > — Rover, David Rosenthal ### **11. Test radical ideas earlier** > “Gig economy is moving in direction of gurantees -- expectation setting is so challenging. Here is our commitment -- if you drive 20 hours a week, you are guranteed to make $2000/week. This anchors the driver in reality, set people up for success. Too often we indexed in a juicy bonuses (join now get $1000!). The premise of those weren’t habit forming -- a guarantee is. You naturally get higher intent users through the funnel. People can actually understand how Lyft fits into their lifestyle.” > > — Lyft, Benjamin Lauzier ### **12. Capture structured data** > “**Structured the data around the supply** — in the early days it was event title, date, location, and then a free form field for event description. This made it very difficult to understand the supply inventory which is essential when trying to match with demand. But since we were focused on supply-side first this wasn’t a priority and then proved difficult to change later. We ended up going through taxonomification a few times over the years.” > > — Eventbrite, Tamara Mendelsohn ### **13. Focus on quality** > “**I think an earlier emphasis on quality would have paid dividends later days**. The buyer search experience was pretty bad for a long time because of listing quality as a whole. When sellers listed an item, there was little product in place to make sure items were listed with information that could be leveraged in search results. Sellers would add lucrative keywords to their titles and tags so they would show up in more search results rather than the right search results. The search engineering team had to do a lot of wizardry to make even a semi-coherent search experience for buyers to find what they were actually looking for.” > > — Etsy, Nickey Skarstad ### **14. Avoid competition** > “**Try to obliterate competition earlier** — otherwise you end up clobbering each other, e.g. cutting take rate. That being said, competition did make us more focused and stronger.” > > — Rover, David Rosenthal And finally, before we wrap up this series and you go off telling your boss that you know exactly how to build your business because you read all eight parts of this series, I want to re-highlight the three important disclaimers that I shared in the very first post: 1. **For many of these companies, the primary reason they became successful was not because of some amazing growth insights – it was primarily because of great product/market fit**. Many folks I spoke to are first to admit this. The growth levers they employed helped accelerate (and control) growth, but they may have been successful anyway. At least for a while. 2. **Past behavior is not predictive of future behavior**. When reading through the lessons, my advice is to focus more on ways of thinking and the cleverness behind the ideas – not only the specific tactics. Many of the most successful growth levers of the past no longer work, or are significantly less effective. Take inspiration from what you read, but don’t expect them to work the same way for you. 3. **This research is based on interviews, of events many years ago.** Memory can be faulty, takeaways could be anecdotal, and you often don’t *really* know what mattered in the end. Also, I probably got some stuff wrong, so please don’t take any of this as gospel (and I’ll include any corrections in future posts). All that being said, I’ve tried my best to triangulate what actually happened across multiple sources, and made sure things *felt* right. Thank you all for reading through this work, and for all of your support 🙏 If you have questions, suggestions, or ideas for future deep dives, don’t hesitate to [ping me](https://twitter.com/lennysan) ## **What comes next?** 1. **This newsletter will return to what it originally set out to be —** an advice column for building product, driving growth, working with humans, and anything else that’s stressing you out at the office. If *you* have a question about anything along those lines, simply reply to this email (or [DM me](https://twitter.com/lennysan)). I promise I won’t bite. 🤔 2. **Phase 3 early next year** — I’ll share the final Phase of this research project, “Phase 3: Evolving Your Marketplace”, when it’s ready. **🐛** 3. **More deep dives to come —** What failed marketplaces did differently from these winning marketplaces, how to set growth goals, differences between B2B vs. B2C, and how companies structured their growth teams. 🧐 [Sign up now](https://www.lennysnewsletter.com/subscribe?) And finally, I again want to take a moment to thank everyone who helped make this research project possible. This could not have happened without the immense generosity of the following people. I was simply an editor — these folks are the real experts: 💛THANK YOU 💛 **[Andrew Chen](https://www.linkedin.com/in/andrewchen/)** (ex-growth at Uber, GP at a16z), **[Babak Nivi](https://www.linkedin.com/in/bnivi)** (co-founder of AngelList), **[Benjamin Lauzier](https://www.linkedin.com/in/benjaminlauzier/)** (ex-growth at Lyft, Director of Product at Thumbtack), **[Brian Rothenberg](https://www.linkedin.com/in/brianrothenberg/)** (ex-growth at Eventbrite and TaskRabbit, Partner at defy), **[Casey Winters](https://www.linkedin.com/in/caseywinters/)** (ex-growth at GrubHub, CPO at Eventbrite), **[Dan Hill](https://www.linkedin.com/in/hilldan)** (ex-growth at Airbnb, CEO of Alma), **[Dan Hockenmaier](https://www.linkedin.com/in/dan-hock/)** (ex-growth at Thumbtack, founder of Basis One), **[Dan McKinley](https://www.linkedin.com/in/mcfunley/)** (ex-Etsy, Principal Engineer at MailChimp), **[David Rosenthal](https://www.linkedin.com/in/davidjamesrosenthal/)** (ex-Rover, GP at Wave Capital), **[Georg Bauser](https://www.linkedin.com/in/georgdanielbauser/)** (ex-Airbnb, CEO of Expansion Partners), **[Gilad Horev](https://www.linkedin.com/in/gilad-horev-65902827/)** (VP Product at Eventbrite), **[Gokul Rajaram](https://www.linkedin.com/in/gokulrajaram1/)** (Caviar Lead), **[Gustaf Alströmer](https://www.linkedin.com/in/gustafalstromer)** (ex-growth at Airbnb, partner at YC), **[Hunter Walk](https://www.linkedin.com/in/hunterwalk/)** (partner at Homebrew), **[Jamie Viggiano](https://www.linkedin.com/in/jamie-viggiano/)** (ex-marketing at TaskRabbit, CMO at Fuel Capital), **[Julien Smith](https://www.linkedin.com/in/juliensmith)** (co-founder of Breather), **[Kati Schmidt](https://www.linkedin.com/in/katrinschmidt/)**(ex-Airbnb), **[Max Mullen](https://www.linkedin.com/in/maxmullen/)** (co-founder Instacart), **[Micah Moreau](https://www.linkedin.com/in/micahmoreau/)** (VP Growth at DoorDash), **[Mike Duboe](https://www.linkedin.com/in/mikeduboe/)** (ex-growth at Stitch Fix, investor at Greylock), **[Mike Xenakis](https://www.linkedin.com/in/xenakismike/)** (ex-SVP of Product at OpenTable, Lecturer at Kellogg School of Management), **[Nickey Skarstad](https://www.linkedin.com/in/nickeyskarstad/)** (ex-Director of Product at Etsy, VP of Product at The Wing), **[Nate Moch](https://www.linkedin.com/in/natemoch)** (VP at Zillow), **[Sander Daniels](https://www.linkedin.com/in/sander-daniels-44bb0324/)** (co-founder of Thumbtack), **[Tal Raviv](https://www.linkedin.com/in/talsraviv/)** (growth at Patreon), and **[Tamara Mendelsohn](https://www.linkedin.com/in/tamaramendelsohn/)** (VP and GM at Eventbrite). 💛THANK YOU 💛 ---