Lenny's Podcast: Product | Growth | Career

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

Nov 9, 2023

Ramesh Johari, a Stanford professor and startup advisor to companies like Uber and Airbnb, shares valuable insights into marketplace dynamics. He breaks down the essentials for building successful marketplaces and emphasizes the importance of data science and experimentation. Ramesh discusses effective rating systems and the common pitfalls founders face. He highlights the power of A-B testing in innovation and stresses the need for data literacy in today’s business landscape. Tune in for practical advice and a fresh perspective on marketplace design!

01:23:36

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Ramesh Johari

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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.

Common Flaws in Starting a Marketplace Business

01:31

The Difference Between Predicting and Making Good Decisions in LTV

03:42

The Impact of Rating Systems on Reviews

00:30

Building a Marketplace: The Importance of Scale Liquidity

01:24

Intro

5min

Navigating Marketplace Dynamics

23min

Data-Driven Decision Making in Marketplaces

10min

Balancing Experimentation and Innovation in Growth Strategies

2min

The Power of Experimentation in Business

21min

Designing Fair Rating Systems

20min

Encouraging Data Literacy and Community Engagement

2min

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

• X: https://twitter.com/lennysan

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