Lenny's Podcast: Product | Growth | Career

Marketplace lessons from Uber, Airbnb, Bumble, and more | Ramesh Johari (Stanford professor, startup advisor)

Nov 9, 2023

01:23:36

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Ramesh Johari, Stanford professor and startup advisor, discusses marketplace design and optimization. Topics include building successful marketplaces, role of data science, implementing rating systems, and the impact of AI. Also mentioned are experimentation, the launch of the super host badge at Airbnb, and favorite products and life motto.

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Quick takeaways

Experimentation is crucial for marketplace optimization, but businesses should strike a balance between micro-optimization and exploring new opportunities.

Data scientists play a critical role in marketplace optimization by helping businesses understand the impact of ranking algorithms and focusing on long-term value.

Businesses should create a culture of experimentation that encourages data scientists to think beyond incremental gains and supports learning from failures.

While experiments are valuable, decisions should not solely rely on experimental outcomes, and businesses should consider the broader understanding of the marketplace ecosystem.

Deep dives

The Role of Experimentation in Marketplace Optimization

Experimentation plays a crucial role in optimizing marketplaces, allowing businesses to make data-driven decisions. It helps in finding the best ranking algorithms for search and recommendation systems, resulting in more efficient matches between buyers and sellers. However, it is essential to strike a balance between micro-optimization and exploring new opportunities. While experiments provide valuable insights, businesses should not solely rely on incremental changes and should be open to taking bigger risks. By focusing on long-term value and understanding the distinction between correlation and causation, data teams can help businesses make informed decisions that drive growth and unlock new opportunities.

The Difference Between Predicting and Making Good Decisions in LTV

03:42

What is a Marketplace Business and Why is Data Important?

02:17

The Evolution of a Marketplace Business

01:22

The Impact of Rating Systems on Reviews

00:30

Introduction

4min

Building Successful Marketplaces with Data Science

28min

The Importance of Predicting Patterns and Making Decisions

5min

Importance of Experimentation and Introduction to Epo

3min

The Complexities of Experimentation in Business

5min

The Launch of the Super Host Badge and its Impact

30min

Favorite Products and Life Motto

7min

Ramesh Johari is a professor at Stanford University focusing on data science methods and practice, as well as the design and operation of online markets and platforms. Beyond academia, Ramesh has advised some incredible startups, including Airbnb, Uber, Bumble, and Stitch Fix. Today we discuss:

• What exactly a marketplace is, if you boil it down

• What you need to get right to build a successful marketplace

• How to optimize any marketplace

• An easy litmus test to see if there’s an opportunity to build a marketplace in the space

• The role of data science in successful marketplaces

• Ramesh’s philosophy on experimentation and AI

• Advice on implementing rating systems

• Why learning isn’t free

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Brought to you by Sanity—The most customizable content layer to power your growth engine | Hex—Helping teams ask and answer data questions by working together | Eppo—Run reliable, impactful experiments

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Find the full transcript at: https://www.lennyspodcast.com/marketplace-lessons-from-uber-airbnb-bumble-and-more-ramesh-johari-stanford-professor-startup/

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Where to find Ramesh Johari:

• LinkedIn: https://www.linkedin.com/in/rameshjohari/

• Website: https://web.stanford.edu/~rjohari/

• X: https://twitter.com/rameshjohari

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Where to find Lenny:

• Newsletter: https://www.lennysnewsletter.com

• X: https://twitter.com/lennysan

• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/