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Lenny's Podcast: Product | Growth | Career
Thinking beyond frameworks | Casey Winters (Pinterest, Eventbrite, Airbnb, Tinder, Canva, Reddit, Grubhub)
Mar 30, 2023
01:17:44
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Quick takeaways
- Founder intuition is crucial in decision-making and should be asserted until team members demonstrate superior decision-making abilities.
- Network effects play a significant role in marketplace and SaaS businesses, with direct, cross-side, and data network effects enhancing value.
- Grubhub faced disruption from companies like DoorDash and Uber Eats, highlighting the importance of recognizing and responding to potential disruptors.
Deep dives
Overview of the Podcast Episode
The podcast episode features an interview with Casey Winters, a renowned figure in the growth and product community. The episode discusses various topics, including the zero interest rate phenomenon in product management, the role of instincts versus team insights, leveraging different types of network effects, and the disruption faced by Grubhub from companies like DoorDash and Uber Eats. The interview provides insights into the challenges and strategies employed in product management and marketplace dynamics.
Importance of Founder Intuition in Product Management
Casey Winters emphasizes the significance of founder intuition in decision-making within the product management role. Founders often possess in-depth knowledge and understanding of their customers and the product, which may be difficult to communicate to others. It is important for founders to assert their expertise and provide clear direction to the team until team members can demonstrate superior decision-making abilities. Employees should also signal when they possess strong confidence and understanding of a particular area, allowing for collaborative decision-making and growth within the company.
Exploring Network Effects in Marketplaces and SaaS
Network effects are defined as the increase in the value of a product or business as more users or customers join. Three types of network effects are discussed: direct, cross-side, and data network effects. Direct network effects enhance the product for all existing users with each new user joining the network. Cross-side network effects occur when the addition of users on one side of the network enhances the value for users on the other side. Data network effects occur when more data collected through the product improves quality or reduces costs. Examples of companies and their network effects are provided, highlighting the importance of these effects in marketplace and software-as-a-service (SaaS) businesses. The disruption faced by Grubhub from companies like DoorDash and Uber Eats is also examined, emphasizing the need for marketplaces to evolve and add additional network effects to remain competitive and defend their position.
Lessons Learned from Grubhub's Disruption
The disruption faced by Grubhub from companies like DoorDash and Uber Eats is explored. The podcast discusses how cross-side network effects and increased selection offered by these disruptors posed a significant challenge to Grubhub. Grubhub was an asset-light marketplace, which hosted its own delivery through hired drivers, while the disruptors built their own delivery networks. The disruptors' ability to expand selection, enter new markets, and secure agreements with national chains led to their success. Grubhub's options for countering the disruption were limited, and in retrospect, it is suggested that acquiring one of the disruptors, like DoorDash, could have been a strategic move. The importance of recognizing and responding to potential disruptors is highlighted.
Consumer Subscription Startups: Challenges and Limitations
Consumer subscription startups face significant challenges due to lower predictability, retention rates, and lack of net dollar retention. Their success relies on higher user-based retention rates, which are difficult to achieve. Companies like Netflix, Amazon Prime, Spotify, and Duolingo have managed to thrive due to massive investments, network effects, or unique growth loops. Founders of consumer subscription startups should consider incorporating organic growth loops, network effects, or alternative monetization strategies to overcome the inherent limitations of the business model.
Adding a Marketplace to a SaaS Business
When a SaaS business adds a marketplace component, it often leads to greater success and is more replicable compared to the reverse. Examples like Eventbrite and Fair highlight the benefits of building a SaaS tool first and layering in the marketplace value proposition. To achieve scalable growth, marketplaces need to unlock cross-side network effects and create reasons for both supply and demand to transact within the platform. While some SaaS to marketplace transitions can work, they require a direct relationship with customers, emerging needs beyond a single supplier, and a different skill set to develop tools for the customer's customer.
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Casey Winters is a longtime and legendary advisor and operator. He’s worked with companies like Airbnb, Faire, Canva, Whatnot, Thumbtack, Tinder, and Reddit and until recently was the Chief Product Officer at Eventbrite, where he managed the PM, design, research, and growth marketing teams. Before Eventbrite, he led growth and product teams at Pinterest and Grubhub. In today’s episode, we discuss what Casey calls the “zero interest rate phenomenon” product manager and how to avoid becoming one. He provides valuable insights on thinking outside popular frameworks, shipping products efficiently, and avoiding overreliance on user research. We explore the three types of network effects, how to leverage them, and how to break someone else’s network effect. Finally, Casey shares his contrarian approach to interviewing product managers and his thoughts on the future of PM roles with AI.
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Find the full transcript at: Zhttps://www.lennysnewsletter.com/p/thinking-beyond-frameworks-casey
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Where to find Casey Winters:
• Twitter: https://twitter.com/onecaseman
• LinkedIn: https://www.linkedin.com/in/caseywinters/
• Blog: https://caseyaccidental.com/
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Where to find Lenny:
• Newsletter: https://www.lennysnewsletter.com
• Twitter: https://twitter.com/lennysan
• LinkedIn: https://www.linkedin.com/in/lennyrachitsky/
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In this episode, we cover:
(00:00) Casey’s background
(03:36) What Casey is up to
(05:24) Why the CPO position is frequently short-lived
(07:26) What Casey learned in his role as CPO of Eventbrite
(10:15) The “zero interest rate phenomenon” product manager
(12:17) Advice for thinking outside common frameworks
(18:35) When to bring in research
(21:16) What Whatnot does
(21:59) Casey’s approach to interviewing PMs
(23:29) Red flags in interview responses
(24:27) The future of product management with AI
(27:47) Founder intuition vs. team expertise
(33:33) How to influence founders
(37:17) Adding the delivery driver app at Grubhub
(40:00) Network effects
(43:10) Why Zillow is a sticky product
(44:05) How Grubhub’s network effect got taken over by DoorDash and Uber Eats
(51:47) Don’t underestimate the competition
(54:43) SaaS adding marketplace and vice versa
(01:02:30) Defining marketplaces
(1:03:34) What Substack is nailing
(1:05:43) Tips for B2C subscription startups
(1:13:15) Lightning round
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Referenced:
• Casey Winters on Lenny’s Podcast previously: https://www.lennyspodcast.com/how-to-sell-your-ideas-and-rise-within-your-company-casey-winters-eventbrite/
• Whatnot: https://www.whatnot.com/
• The 700-calorie breakfast you should eat if you want to live forever, according to futurist Ray Kurzweil: https://www.businessinsider.com/what-ray-kurzweil-eats-to-live-forever-2016-4
• The Way of the Gun on Hulu: https://www.hulu.com/movie/the-way-of-the-gun-0fc9590c-3f85-48ab-96e9-1da1b9695065
• Notion AI: https://www.notion.so/product/ai
• Zapier: https://zapier.com/
• Founder intuition vs. team expertise vs. customer expertise: https://caseyaccidental.com/founder-intuition-team-expertise/
• Erika Warren on LinkedIn: https://www.linkedin.com/in/erika-warren/
• Alyssa Ravasio (Hipcamp) on LinkedIn: https://www.linkedin.com/in/alyssa-ravasio-23114717/
• Marketplace supply strategy: comprehensive, exclusive, or curated: https://a16z.com/2021/03/31/marketplace-supply-strategy/
• Nassim Taleb on Twitter: https://twitter.com/nntaleb
• The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business: https://www.amazon.com/Innovators-Dilemma-Revolutionary-Change-Business/dp/0062060244
• OpenTable: https://www.opentable.com/
• Booking.com: https://www.booking.com/
• Faire: https://www.faire.com/
• How to increase your retention: https://www.lennysnewsletter.com/p/how-to-increase-your-retention-issue
• The Goal: A Process of Ongoing Improvement: https://www.amazon.com/Goal-Process-Ongoing-Improvement/dp/0884271951
• Thinking, Fast and Slow: https://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/0374533555/r
• Profit from the Core: A Return to Growth in Turbulent Times: https://www.amazon.com/Profit-Core-Return-Growth-Turbulent/dp/1422131114/
• Party Down on Starz: https://www.starz.com/us/en/series/party-down/2011
• The Last of Us on HBO: https://www.hbo.com/the-last-of-us
• Station Eleven on HBO Max: https://www.hbomax.com/series/urn:hbo:series:GYZWoOQ6F9cLDCAEAAABP
• Kicking and Screaming on Netflix: https://www.netflix.com/title/70052286
• Raven by Kelela on Spotify: https://open.spotify.com/album/06uhdSmIYrWRkdnAPjcRcT
• Optical Delusion by Orbital on Spotify: https://open.spotify.com/album/2jQbFspnSh7erex6RDKQGJ
• Stakes Is High by De La Soul on Spotify: https://open.spotify.com/album/3jlC2uhYNrhikZXLviEnpu
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Production and marketing by https://penname.co/. For inquiries about sponsoring the podcast, email podcast@lennyrachitsky.com.
Get full access to Lenny's Newsletter at www.lennysnewsletter.com/subscribe
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