every new person in the product team is acting like they work at Google and have these infinite resources in infinite time to make sure everything is perfect and there became such this focus on the right way of doing product management that no one's taken any risk and I felt like oh am I responsible for this like
I've created a bunch of you know Frameworks on reforge you know I'm onboarding these cpms like is this is this my fault but you know you know and reforge we're building Frameworks that are tools in a toolkit you pull them out when Rel they're not a coloring book you know to stay you know inside the lines of [Music]
Welcome to Lenny's podcast where I interview world-class product leaders and growth experts to learn from their hard-won experiences building and growing today's most successful products today my guest is Casey winners Casey was one of the first ever guests on the podcast and the first to make a return
appearance he's a legend in the growth and product Community having worked with or advised companies like Pinterest Reddit canva Airbnb Tinder Thumbtack GrubHub and many more he recently LED product at Eventbrite for just about three years and recently returned to full-time advising and he's exploring new opportunities in our chat we cover
something he calls the zero interest rate phenomenon product manager and how to avoid that what he's found works best when interviewing product managers what impact he expects from gpt4 on a roll of product management when to trust your instincts versus your team's insights and instincts what are all the different
kinds of network effects and how do you effectively leverage them plus a great story about what GrubHub missed that led doordash and Uber eat their lunch I always learned so much from chatting with Casey and I am 100 sure you will learn a lot from this episode with that I bring you Casey winners after a short word from our sponsors
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instead use your North Star metrics like activation retention subscriptions and payments an EPO supports tests on the front end the back end email marketing and even machine learning clients check out EPO at getepo.com get eppo.com and 10x your experiment velocity [Music] Casey welcome back to the podcast thanks
Lenny great to be here you're the first ever returned guest to my podcast how does that feel I feel honored perhaps a bit unworthy but you know I'll go with it well you're both worthy and I'm honored as well so thanks for joining me again I have a lot of stuff that I want to chat about but first of all I'm just
curious what are you up to these days I know you left Eventbrite as CPO I know you're doing a few advisorships with startups but how are you spending your days and what do you think is next for for Casey winners some still still spending some time with whatnot and Eventbrite as it as advisors yeah I step
back from the CPO of Eventbrite in October but still working on some long-term Marketplace strategy stuff some growth strategy stuff I'm on the board of a company called beak which is like Netflix for audio in Latin America and I'm doing some Angel Investing and in marketplaces and what I call Tech debt as a service which is you know what
are startups that are building out things that were hard for my teams in the past to like build or maintain inside previous companies the other thing I'm working on is revamping the product strategy program for reforge so I got some things keeping me busy but but definitely not as busy as I was last year
this is like a rare uh free agent Casey winners time should people reach out if they're interested in maybe working with you what's your advice for people listening I'm like yeah I always love seeing how I can help companies right so everyone should err on the side reaching out and seeing if I have time to help if
there's something they think I can help with I just you know I love talking to startups so yeah absolutely I can't can't promise anything but uh yeah I just love talking to people about this stuff awesome and we'll Point people to how to get in touch with you at the end of the episode and I'll be in the show Notes too but talking about the CPO role
see your Eventbrite your CPO it reminded me of a post you wrote about how hard the CPO role is and there's some quotes that I recall in your post about how one if you ever ask a CPO Chief product officer how they're doing no one's ever gonna say I'm crushing it right now yeah and then there's this other quote about
how you basically as a speedo just try to put some points on the board before you inevitably get fired why is that why do you find that and do you still believe that to feature after you know leaving that role yeah I would say I still believe those things I said it was funny um a product leader who will remain
nameless emailed me when I hit year three at Eventbrite and they said congrats you didn't get fired after two years what's your secret you know I I think it's very hard to keep product Market fit as a CPO within a company for a long time yeah the needs the business shift over time and of course we all have different
strengths and weaknesses in our game like no one's perfect at everything and in general you know as an executive it's just impossible to do everything perfectly and any little misstep mistake or something you just miss can blow up in a major way you know frequently CEOs have visions that can change and get
misaligned with the product leader and also you know with leadership roles you don't get put on a pip right like if a CEO loses confidence it's over immediately so nothing like that happened at Eventbrite I started to see that the areas of Leverage for a product leader were just less in my wheelhouse over time and I just talked to my boss
about it and it worked out something where I continue to advise on the things that you know I'm uniquely good at and find other people who are better at some of these other things that were maybe more important at the time but yeah it's it's a really hard role or a really uh challenging role you know
can be a lot of fun uh and I you know I learned a lot from doing it but yeah I still believe and I think I've still yet to hear someone say they've really crushed it is there anything that you learned from that experience to to survive in that role for three years you know I imagine you have a lot of skills and you're very
valuable to the company but I don't know any for someone that's in that role maybe right now just like here's something that I did that maybe you should do the first one I can think of is a big change from being a product leader to uh you know a CPO or something equivalent is you're actually a com exec first and a product exact second so I
think some mistakes I made you know early that I I corrected successfully is you want to show that you are caring and paying attention to the overall business first before just taking care of your own you know product designers product managers researchers whoever so that's that's advice I found myself Doling out
to other product leaders a lot more now that I've you know gone through it you have to not only truly care but create the perception that you care about sales about marketing about you know Eagle Etc because first and foremost you're expected to leave the business you know at that level so I think that's
something that I think is really important and I think something else is really trying to diagnose without as much bias as possible where the strengths and weaknesses of your team where the strengths and weaknesses of your product lay that out with your peers and say Here's Where We Are here's where I think we need to go
here's the timeline on which I'm going to work to get us there because I think products such a confusing uh discipline for people who aren't in it like a sales leader many CEOs you know marketing leader that they don't necessarily know what great looks like and the things they know about great leadership they don't know
if you know those things so you have to make it really clear yeah I know our okrs are not as quantitative as they should be yet that's because this team isn't ready for X Y and Z this is where we're going to get them to but it's going to take some time so one of the things we did at Eventbrite that I
thought was really helpful is you know when you go public you tend to rotate over your executive team and get public company execs versus startup execs so a few of us were new and it's just like hey let's do a deep dive on product let's do a deep dive on customer support where is it at right now what do you feel like
your job is what do you feel like are the issues you're facing where do you want to take it over the next three to five years and then let's talk about it and just forcing you to like write it all down is is really helpful but then it forces you to explain it um and it helps the rest of the executive team get better company execs
because you know now they really understand product a lot more deeply or understand finance a lot more deeply whatever the function is speaking of gaps and opportunities for people in the company to level up you've kind of been highlighting this trend that I thought was really interesting something you call the zero interest
rate phenomenon product manager can you talk about what that is and what you've been noticing yeah sure sure thing so this is something I started noticing while managing you know PMs and product designers at Eventbrite and it's now coming up with uh with whatnot as I hire help them hire new PMS
um is the environment in which a lot of product managers have come up is very distorted from when you and I started doing this kind of work I think we used to always describe PMS as you know this gang of Misfits we all started in different functions we all had different strengths and weaknesses and the PM team
you know gained as a whole from that diversity of skills and and previous experiences so what I noticed is when we started doing product reviews at Eventbrite if there was any sort of like uncertainty in a problem or a solution the product manager instead of like shipping to learn would talk about all this research they have to do to really
learn the problems really learn the solution you know in my feedback would be like no like we you know user research is a scarce resource we have to reserve it for the areas that have extreme uncertainty and high leverage for getting to certain so if you're redesigning the login page for Eventbrite you don't need to use
that resource to learn what to do just go see what Fang in the top unicorns did they probably did a good job and you know even if they didn't all of our customers also use those products so they're gonna be familiar with us copying any approach that they've taken so I think we sort of forgot in the
industry that many times the fastest way to learn is to ship uh so then if you actually get them to skip research and just go look at competitors another thing I was noticing is I'd get like a list of options other companies have done but there would be no analysis of why those companies chose different options
and what's you know most applicable you know for us so it got me thinking like okay every new person in the product team is acting like they work at Google and have these infinite resources in infinite time to make sure everything is perfect and there became such this focus on the right way of doing product management that no one's taken any risk
and I felt like oh am I responsible for this like I've created a bunch of you know Frameworks on reforge you know I'm onboarding these cpms like is this is this my fault but you know you know and reforge we're building Frameworks that are tools in a toolkit you pull them out when relevant they're not a coloring
book you know to stay you know inside the lines up so at one point I got so fed up I wrote like an internal blog post and I called it on best practices and breakfast rituals and I talked about how to release articles about the morning habits of the most successful people and if you try to do all those things it'd
take you like six hours every morning and there was this article I think it was on Business Insider or something about this futurist at Google and he talked about all the pills and food Heats for breakfast every morning to try to live longer And the reporter estimated I cost him one million a year to have these habits so I was like Hey I
want to make it clear at Eventbrite we don't have that much money we don't have that much time there's no framework that allows you to not use your brain at this company and just follow some sort of process for success in in this profession so I adopted this thing into like a public blog post that's on my blog now but
now that I've had some time outside of Eventbrite I feel like I at least partially missed the mark and what's really going on and you know you see this with like whatnot because one of the things I'm helping them with is interviewing icpms again which I haven't you know done in a while and it's fascinating interviewing
a PM or managers early in their career because what not it's a startup and you know you know better than most of us as a former founder of one startups typically require us to wear lots of hats you have to write SQL you have to talk directly to customers you have to prep marketing and sales and most importantly you have to make a lot
of decisions under uncertainty which you wouldn't necessarily expect the PM to do you know say a Google but it all boils down to using your brain in different ways you know uh Lisa who's on our legal team she called Eventbrite a public startup because the pandemic basically erased our business and we had to build it back from scratch
so now that I'm doing these interviews and whether they come from a small startup a unicorn or a public company they all sort of look the same because there's been so much funding to all these companies every company's been acting like they're Google with Google margins meaning a lot of engineering
support a lot of design support a lot of research support lots of analysts around them it actually seemed pretty ill-prepared for a real startup or even a public company with some uncertainty around it like Eventbrite so you start getting these weird responses in the interview process you you ask them to solve a
problem and they'd say things like I can't even begin to come up with Solutions until I see all the data and talk to customers and I'm like yeah I get that that's something you would normally do if you took the job but like you don't have the data you can't talk to customers make a decision now what would you do I want to see how creative
you are I want to see how much you're intuiting about the real problem the solution and they can't really answer and then you know my follow-up which I don't ask but what I really want to ask is like so when's the last time you used your brain versus follow the process someone else decided your company because like
I want the former not the latter wow amazing uh there's a lot of things I want to dig into here and I was going to ask why you call it zero interest rate phenomenon but I think what I'm hearing is it's when interest rates are zero everyone's got a lot of money things are going great everyone looks like they're
killing it successful everyone thinks they've got it all figured out and then when that goes away it's like oh maybe maybe not so and also I think zero interest rates allowed every startup to operate like it was a public company with billions of dollars yeah and you know that's gonna go away over the next
five years and it and it sort of takes us back to what product management used to be like which was you know you didn't have all these resources around you didn't have all this time to figure it out because if you don't figure out now and make it work you may run out of you know funding right yeah like a very
concrete thing that changes a lot of research teams have been laid off because they grew really large and companies kind of found maybe we don't need the like of all the things we can cut it's probably an area we can cut yep for sure there's probably PM's listening to this wondering shoot am I one of these just
like following a bunch of Frameworks what's your advice for someone that may fear that oh shoot this is maybe who I am and I don't want to necessarily be this and what could they maybe do I always advise going to companies where you can you know learn quickly and and try things right and I think you know it's certainly okay to like learn a
bunch of Frameworks there's a reason I've invested a ton of time in reforge because I think it actually really does help people to see how other people have built things in a way that they can you know scale to their other companies but you have to understand that the job is not to follow the process the job is not
to learn every framework possible the job is to figure out how to add value to customers that translates into value to the business and you know just reorient your North Star if you've gotten away from that when I joined Eventbrite you know there was this team that didn't ship anything in a quarter and you know I went to the designer who I knew and uh
you know I know that he you know likes to likes to get stuff out there and likes to get feedback and I was like dude you didn't ship anything like how could you have gone the entire quarter not shift any of your designs and felt that that was okay and if you didn't feel it was okay why'd you censor yourself come to me tell me why this
team is not letting you ship there's just no way you can get better as a designer there's no way you can have the impact on the company there's a way you can have an impact on our users so um you know those are some things that that come to mind to that question so if you're a PM on a team that maybe
isn't shipping maybe is overusing research do you have any advice of just like when it makes sense to invest in research say you have the resources like is there kind of a rule of thumb you have of like okay let's actually spend the time on this first I think about it a little bit depending on the type of job you have and the
types of customers you have so you know the more scale you have tends to be you have less sophisticated customers because you're generally like you know consumer thing where the customers are rational they're not experts and that's generally where you just try things you measure the impact they have and you
only really bring a new search research when the impact seems confusing right but you can run experiments like you can get data really easily so bias words you know getting stuff out there and seeing what what users respond to in consumer in consumer products yeah interesting if you're super Enterprise it's kind of the
opposite right each customer first off is sophisticated and tend to be rational they're paying you like six figures or more and you could talk to the customers and sales you know the customers really well directly and they tell you what they want they tell you what they're willing to pay for you build it they pay
you Bing Bang Boom right it's not obviously as simple as that but um you're basically doing the research directly with the customer and with the sales team and translating that the things that are strategic to to the business and I I would say those are the two extremes probably most people are
familiar with but we now have a lot of companies in the Middle where they have more customers those customers are more sophisticated they're consumers they're maybe employees at companies or they're small businesses and that's where you have to be more nuanced and this is of course where Eventbrite was on hey when do I really
lean in on Research when do I lean in on Data when do I pay attention to internal feedback uh so yeah for Eventbrite we really tried to focus research on the B2B side of Eventbrite where the problems seem big but not well defined enough or that problems well defined but we just really don't feel like we have the
right solution yet and you know if research is gonna be um a scarce resource inside the company which I think it will in most places you have to figure out where it's a high leverage area which means you have a really big problem uh we don't we don't understand it well enough or we know the problems babe we understand it well but
we're just not sure if our solution is gonna at any way like you know hit the mark makes me think about some of the best researchers I've worked with and they often tell me like we don't need to research on this yeah we have enough information like we have other things we should be I love it when they say that yes
this would have been a really good segue to another topic I want to talk about which is around gut instincts versus Team expertise which we're going to get to but I have a couple more questions along these lines sure you talked about interviewing PM's uh what not can actually describe what not just because you mentioned a couple times just so
people know what we're talking about oh sure so what not so a live streaming Marketplace mostly focus on the Collectibles market so you know the sellers whether it's like you know baseball cards or women's handbags or sneakers you know they'll go live on video and show you the products they have that they're selling and people who
are watching the stream can't engage with the sellers and bid on you know different items so kind of like twitch meets eBay also they describe it awesome and I'll just mention I'm a tiny angel investor in that company oh that's why you brought it up okay I get it yeah I just wanted to make sure people
understood what this word was because it's like a a fun word what not but what I wanted to actually get to is you said you were interviewing a lot of product managers for them yeah what is your approach to interviewing PMS what do you find is a is a really good signal for someone that's going to be successful I
feel like the whole thing's gotten so performative it's like interviewing is handing out Oscars based on who's prepared the best tell me about a time response versus actually assessing like who can do the job we're hiring for so it's like most PMS are better PM interviewers than PMS now there's this quote from a movie called the way the
gun I don't know if you've ever seen it uh but Benicio del Toro says in it it's like these days they want to be criminals more than they want to commit crime and I think about that quote a lot when it comes to interviewing so I would say I'm a bit contrarian here in my Approach I don't ask about your work
history I don't care about your perfectly practiced answers I'm going to give you real scenarios that I expect from the role I want to hear how you'd approach them and if you can't come up with a few reasonable ideas figure out how to test them quickly without analyst support or research I'm just not interested
and I'm not saying this is a perfect approach interviewing is a very lossy format but the more I can see them do the job we're hiring for with questions whether it's a presentation a prompt that gets me the most comfortable that they know the job they're signing up for that they've shown in a practice
scenario they can do it and they actually enjoyed it in some way are there like red flags you look for in these interviews like one is maybe set over like I can't even begin to answer this without research and data is there anything else some things I pay attention to is if they're talking about solutions that are going to take a long
time to get signal from um you know whether it's months and months of engineering time before you actually you know see the impact on users or the business I think that's always great if they're not factoring in the amount of time it will take uh in general is not you know a good sign and not thinking a bit more holistically
about the types of metrics they expect to improve versus track to make sure like they haven't gone down those are some things that I pay a lot of attention to how much do you think they're intimidated by being interviewed by Casey Winters how much do you think that factors in I think you overestimate my
importance or awareness in the community I think most people have no idea who I am when they start talking to me another thought is there's this meme that gpt4 is gonna or five or six or ten is gonna replace product managers and anytime some new feature comes out people put out these videos of oh look they're doing all the PM's jobs what's
your take on the future of PM in AI if anything I think if you thought the PM job was just filling in the latest you know reforge or shreyas framework and then getting you know that automatic Fang promotion every year and a half then yeah you're gonna get replaced by AI but I think the real PM job is the
least likely to get replaced over time because you need you know real subject matter expertise you need to you know be trading off a lot of different types of things and making good decisions for the company and for your customers so in terms of using AI now as a PM I'd actually be cautious in like the current
iteration of the cycle for PMS yep it's a tool that's trained on sounding smart rather than always necessarily being smart I was at Eventbrite the other day and someone was telling me how they were loving the new notion AI integration and she asked me if I used it I said no she's like oh you totally need to hey go
ask it your bio it's really cool and I said all right let's just do it on your screen so she did and like my bio said I started my career at Google and worked on Google Trends and a bunch of other products none of which happens like it's just complete nonsense it did have some stuff that did happen it knew I worked
at Eventbrite and it knew I worked at like Pinterest and stuff but like I liked half of it was just completely made up it sounded plausible uh but it wasn't actually you know true I think where I'm more inclined for PMS to try to get leverage out of something like gpt4 is a lot of the tedious work that's maybe not their specialty to begin with
so you know if you're not great at like Excel or Google Sheets and you need to model something you can ask it out of format something that'll probably be perfect or like how to get some zappier integration to work like it probably knows how to do that really well so I think at this point it's a pretty good
no code low code tool and it's obviously going to become a lot more than that but for a lot of these other use cases that people are touting there's a decent chance confidently tells you the wrong thing and and that would scare me as a PM I've had the exact same experience I had it described what I have done and it was
like 70 mistaken yeah is there anything you've found value in yet with GPT of any kind in your in your work or is it still kind of just poking around in novelty for you yeah I've had a couple of those things where it's like hey how do I actually get this weird thing done and it's been like you know clear bullet points take
these steps and I'm like oh great like this was actually really hard to find on Google so things like that I actually quite like it for uh so that's where my head goes to like more confidently use it because of course I'll try it and if it's wrong I'll learn where it's wrong so it's it's low risk but it's been right on some of
those things and it's like oh cool I couldn't figure out how to do that there's something on Google Docs that I need to figure out how to do that was kind of fancy I asked chat gbt it told me how to do it and I was like oh great I had a similar experience but I just needed a formula and Google Sheets and I
just told it like I need this thing and it gives me the actual formula yeah that's that's so magical when it happens yeah I don't know I'm not that good with sheets formulas uh shifting course a little bit you also wrote this really interesting post on Founder intuition versus Team expertise and there's a lot
to it and I think it's a really interesting topic because it's this classic discussion that startups have how much should a Founder trust their gut and how much should it be top down here's what we should be doing versus the team kind of bottom up figure out what to build and so I'd love to spend a little time here so maybe just to start
broadly what is this you kind of came up with a framework of how to think about when founder and tuition should overrule say team expertise and how that changes over time so maybe just talk about that yeah if Founders are lucky slash good enough to find product Market they've usually built up all this
intuition about their customers about their product and their business that are really hard to explain to others and may even be like subconscious so when they start to hire people you know these people will come in with a lot of excitement ideas maybe even really relevant experience especially you know senior leaders
and I've seen some Founders are like cool I need to let these experts start to own these areas and get out of the details and I think that's actually the opposite of what you want because none of these people know the business as well as you get you actually need to direct them until they show you they've really got it and
are making better decisions than you would so this is not a Founder example but I remember when I hired Erica Warren to build out our loyalty program at GrubHub she now leads growth at change.org and after a month or so she was like dude you're in all my meetings I got this and you know that let me know
she was in a different part uh the situational leadership framework that I had put her in so I backed away and you know she crushed it from there Founders will put a lot of new leaders in that delegate bucket too quickly it's like ah it's theirs they got it they know more than me when founders actually know the right
answer and just just tell them uh and this can of course change like in the case of Erica you know if you hire the right people they do get smarter than you you can and should start delegating and many Founders don't notice the signals where their founder intuition has been usurped by team expertise or maybe it's just ebbed in Effectiveness
over time and and that of course makes sense right Founders have all these different things they're dealing with and your employees can really dive deep in certain areas so I encourage employees to proactively signal both directions like hey I need direction from you or hey I got it from here trust me on this one
interesting so you're saying as a founder the heuristic should be if you feel confident about a decision generally you should be clear like hey I think I know what we need to be doing here and don't just like make people feel better necessarily by just saying okay you tell us what you want to do and then on the
flip side as a as an employee at the company if you feel really confident about something make it clear to the founder like I really think this is the right move is there anything more you want to add there yeah well I mean there's obviously the feedback loop of that of like you know what happens when you do either of those things
um so you know depending on the the Founder's response to that or the employees response to that there's kind of different approaches you know you can take and part of this uh yeah this cool chart of just like over time the founder expertise becomes less and less relevant and I guess is that because they just
don't spend as much time with the customers because they have other stuff going on or they hire people that are smarter and then over time team expertise goes up if you're lucky enough to scale a company there's just more and more things going on that all will reach the founder in some way but it means more breadth and less depth on any
particular issue and uh the reverse is true for you know people you hire right you're able to get really deep into things that maybe you were really deep into two years ago um but you know you just can't you can't stay deep in anymore so I I built this you know chart on um or I guess I should say table on the
different phases of you know a startup right and when you're you're finding product Market sit like everything goes through the founders like you cannot Outsource that um and then you know when you start scaling the company because you found product Market fit it's the first time that Founders run into this like classic
problem uh what got you here won't get you there I would guide you to product Market to say it was iterating on product and doing things that don't scale guess what you found a product that works don't do that anymore make a scale don't come up with new products you found the one that works the reason I came up with this
um you know framework uh originally is when I was at GrubHub uh you know we were scaling pretty nicely and fairly organically I I think um Mike and Matt the founders had intuited these phases of like building a company like pretty well but we acquired a competitor and you know I saw how that company we acquired
operated and even though they were largely in the same phase as us they still operated like they were founding the company like everything was going through the founder and you know intuitively I was like oh this is why we're requiring you and not the other way around um so uh I think it's really hard for
Founders to get those signals organically and I think it's up to us as employees to help and you know the founders can listen to the signals or not listen to those signals but that's part of why why we're here but we should also give those signals when we're confident we really get it not like coming day one being I know what your
sales strategy should be you're doing it all wrong chances are the founders weren't doing it all wrong they knew something you don't know about yet what is it that you think made it such that you won and they didn't is it because they didn't invest they didn't shift to scaling and delegating to their employees as much as the founders is
telling everyone correct right like that um everything was like not moving as quickly because everything had to go through the same person to get done so it just allowed them to not launch as many markets to not sign up as many restaurants to not figure out as many you know growth channels uh you know as
we have done got it so they just bottlenecked themselves and they weren't able to move as fast because the founder thought they needed to make these decisions and they were still the ones that knew everything yep that makes me think about most companies maybe not most but many Founders just like believe they have the answers like they are
confident they know what to do right and it's rare they get to a place of like no I actually don't well I would say no one gets suit no no one gets to it super intuitively um any advice for either as a employee at a company with a Founder like that or leader have just how to push back and help the founder understand maybe you
should let go and trust people to make decisions I think the first thing is you have to understand that it's their company not yours and the founders have impossible jobs they're not going to scale perfectly with the needs of the company like it's just something that's going to be off and it may be because there's a whole
lot of hubris by being the one of a thousand startups that made it or you know they just have personal Styles but they can run the company any way they want and I think it's sometimes surprising when founders actually want to run things sub-optimally like I think we've seen examples where Founders just want
to build cool versus focusing on what customers want or they're too obsessed with the design they're always rebranding redesigning things in ways that confuse customers yeah you know of course that's going to happen and those are some of the the worst cases um but I think you know if you do state
your point you've actually built up the expertise you're confident and you are refuted for whatever reasons you have to find ways to be contrarian and prove you're right and different Founders have different forms of feedback they listen to it might be talking to other CEOs or other operators or trusted advisors certain customers
some might be very data oriented so you just run the experiment and ask for you know forgiveness after you prove it works whatever like everyone's got like a different thing they respond to so you try to figure out what actually influences you know the CEO and build that case whether it's through an experiment the right customer intro the
right external advisor and if they rebuke that as well then you gotta disagree and commit or find a new company to join or start your own like I said it's their company they can make the call I remember when I joined Pinterest I was just coming off you know 100x increase in user growth from GrubHub and
I was ready to drive the same sort of impact at Pinterest but no one knew who I was I didn't come from Facebook or Google like most of the other people are Pinterest no one gave a about Chicago startups at the time so you know when they didn't trust my proposals I just went and talked to the
heads of growth of all the startups they did respect I talked to Dropbox I talked to Facebook and when they said all the same things I was saying but I said that they said it not me that was sadly more convincing but I didn't care because I still got what I wanted out of it which is to you know do the right thing to grow the
company and now you're one of those people that people go to if Casey says it it's probably the right way to do it whether I'm correct or not it is a role I sometimes play in the ecosystem I will admit there's an example where you were convinced something was the right way to go on the founder at one of the
companies you worked at had a different opinion they were they had ended up being right when I was at GrubHub one of the ideas one of the founders came up with was to build an app for delivery drivers so at the time you know uh restaurants had their own delivery drivers they did not work for us and we wanted to build an app for the delivery
driver so you could see where the food was along the way so you could know if there's a five minutes away whatever right um Domino's was the first to have done this at the time and we thought that would that would make a bunch of sense and I was just like how am I supposed to convince the delivery driver who doesn't
have a relationship with us to download this app from GrubHub to actually turn it on to create you know anxiety for the consumer of like they maybe didn't take the right turn or whatever I was like I don't think this makes sense no one's going to use it and you know Mike and Matt like overruled me and pushed us to do it
and in the long run it ended up being quite necessary because of the Innovations around doordash and Postmates and leader Uber Eats into having their own delivery Network and US needing to counter that that's of course a key piece of technology that needs to leverage to have parity with those new services so that was an area where
perhaps they were thinking a little bit more longer term than I was and you know I was not able to kind of get where they were going on the longer term time Horizon of how this would be actually ultimately adopted in New School this is an awesome segue to the next area but real quick how do they get drivers to
start using this app was there anything really clever they did I I think it was fairly low adoption for a while uh and leveraging basically restaurant Authority so if we were able to push on our restaurant customers effectively to say like hey if you use this it'll get you more orders we'll get you prominence
in the the UI things like that to them push down you know to their direct relationships with the drivers to get them to adopt awesome this episode is brought to you by ahrefs you probably know ahrefs as one of the leading all-in-one SEO tools used by companies like Facebook Uber Shopify LinkedIn Pinterest and thousands more
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okay so shifting to our last topic that I was excited to chat about is around Network effects and marketplaces and SAS and kind of how those things connect I feel like you have the clearest way of thinking about and explaining Network effects so maybe just to start can you just like simply explain what is a network effect and then the different
types of network effects that exist yeah no pressure after you say that right yeah so at its core a network effect is when a product or a business gets better with more users or customers using it and there's three types that I tend to focus on so the first and probably the most well known is called direct Network
effects and that's when every additional user makes the product better for all the existing users so when someone joins WhatsApp other people can talk to them that they that wouldn't be able to talk to them before and that makes WhatsApp valuable more valuable for everyone and then there are cross-site network
effects where there's two distinct types of users and adding an additional user on one side of the network makes it more valuable for all the types of users on the other side of the network and vice versa so when a restaurant joins GrubHub it creates more selection for users to order food and while more users start
ordering more food GrubHub becomes more attractive for restaurants to join so they can make more money from you know delivery orders the the last Network effect I focus on is Data Network effects and that's when the quality or cost of something improves as more data is collected through the product
So when you say content to Pinterest to a board it gives Pinterest signal on the quality of that content it's relevance to other pieces of content since they're shared to the same board and more signal on your preferences and this allows Pinterest to better recommend more content to you as well as to other people who look like you and
share similar interests so uh one thing that's tricky about these Network effects it's most people talk about Network effects in the context of social network not marketplaces or you know SAS like my background and the thing that's really tricky in understanding social networks is they're traditionally described as
these direct Network effect businesses but all of them have to become either cross side and or data at Network effect businesses over time the only companies that stay direct number effect businesses are these pure communication tools like messenger iMessage WhatsApp and there isn't a clear path to make money with those but you want to sell
ads you're becoming a cross-site network effect business and also creators versus consumers creates a cross-site network effect business if you want to get better at personalization guess what you're recommending content by leveraging you know Data Network effects I love that though you nailed it I imagine Marketplace Founders listening
to this may be wondering hey how do I can I add on these additional Network effects can I evolve towards one of these and what you're saying is not only can you you need to eventually I agree right I think you know they're a great form of defensibility first off so do they make sense for every business no
but in a lot of cases in order for you to evolve properly and continue to grow they can become a necessity are there any other examples of marketplace companies that come to mind that did a great job evolving or adding one of these Network effects or just like interesting so let's take some inventory right um
so I think Zillow is really interesting in that a real estate listing site is not particularly an interesting product but the ability of saying very rarely do you know both sides of this network people who are buying homes and selling homes need to connect but I can find a way for the brand to connect with both
of them by giving real-time pricing information on the value of homes and that creates a much stickier product for both sides I think that was a a pretty genuine uh Innovation you know that other people have tried and rarely been a successful with so that's that's one that definitely uh sticks with me you
know off the top of my head great we've been talking about GrubHub a lot and GrubHub had some pretty strong Network effects and yep and large part thanks to the work you did and one of the benefits of network FX is it creates a barrier to entry it's hard to replicate and compete with a company where they already have all this network
effect but famously GrubHub got disrupted by doordash new breaths and I need to talk about how that happened and why that happened and it'd be cool to hear just like what do you think they could have done differently and what happened where their Network effect got eaten eaten for lunch pun intended sure it's a great
question and I think people do mistake any form of network effect as this perfect form of defensibility they're the best form of defensibility but that doesn't mean they're immune to disruption and I think the main way this happens with cross-site network effects that we typically talk about for marketplaces is when a disrupter
dramatically expands selection so I want to be clear I left GrubHub at the end of 2013 before said lunch was eaten so what I'm communicating is more like public knowledge of watching these amazing companies compete rather than like being inside the fire at the time but one important thing to remember is
Grubhub was an asset light Marketplace model restaurants did their own delivery through their own delivery drivers that they hired and I wrote this post for Andreessen Horowitz a few years ago about Supply strategies in marketplaces so in that like you really need to be comprehensive or have exclusive inventory and uh GrubHub strive to be
comprehensive we show every restaurant that deliver to you even if we didn't work with them directly for online ordering so what happened about a year before I left GrubHub was that these competitors started to raise their seed rounds or series A's to build delivery Networks Postmates and doordash were the the
first two that Rose to prominence ubereats would come later but they actually started with a pretty different business model and this is an extremely different business you're hiring drivers you're managing Logistics so we call this a heavily managed Marketplace model as you are now facilitating the transaction
versus just connecting buyers and sellers and taking payments like like GrubHub did so on the one hand you have GrubHub this extremely high margin business and these businesses coming up are actually negative margin businesses at least they were for a long time so in 2013 GrubHub acquired seamless its
closest competitor at the time and you know seamless still had a lead on GrubHub in New York partially because it had this corporate program where law firms and Banks and Consultants got lunch stipends you had to redeem by ordering the food through seamless so GrubHub operated in these dense cities and and suburbs like like in New
York because those really places that had restaurants that had delivery doordash when it started operated in less dense suburbs and worked with restaurants that had never done delivery before and they would provide you know the delivery drivers themselves so this allowed doordash to grow without much competition in the early days and these
companies also took some real gambles uh one of the things they did is they delivered from restaurants they didn't have an agreement with and that caused controversy and lawsuits but what it meant is when these companies did launch in the cities to go after GrubHub it felt like doordash and Postmates and Uber had dramatically
larger selection of restaurants to choose from and GrubHub was definitely no longer near comprehensive and you know back when we talked about cross-eyed Network effects the more selection of restaurants the more attractive it is to users you know and vice versa so at that point you know grubhub's put in a very peculiar position
it had gone public after raising 80 million dollars in venture capital and Racing 100 million dollars in an IPO telling investors it's an extremely profitable high-growth asset light Marketplace but now it's got disruption pressure from operationally intensive negative margin delivery services now we're
raising 100 million dollars every six months from the private markets so with GrubHub assumed is that these businesses were just structurally unprofitable and that VCS would stop subsidizing them eventually of course that didn't happen they kept raising more money doordash eventually raised you know multiple billions of
dollars in this market and part of what they use that money for was to lock hook up agreements with national chains which GrubHub never worked with it was always like the local Mom and Pops and promotions and discounts on the demand side so all of this is happening and then the pandemic hits and all of those negative margins
turn positive for doordash for the first time if I understand things correctly and on top of that all this corporate ordering that we got from seamless no longer battered because no one goes to the office anymore so this Gambit really paid off and doordash just took the market GrubHub then tried to copy the
approaches of doordash and Postmates and they were kind of this famous letter saying that they still thought the approaches were stupid but they were their hand was forced which is kind of funny to read in retrospect um so you know a lot of armchair thinkers are like how could GrubHub have been so stupid to let doordash take the
market that they built and look I'll admit GrubHub made some mistakes but I think it would have been extremely hard for GrubHub to come out on top here so let's say in 2014 after you IPO you do actually think what doordash Postmates and Uber are doing are smart what do you do go to investors that you promised high
growth and high profits and say you need to raise more money and debt to compete with negative margin upstarts in a way that will destroy all that potential profit you mentioned the stock would drop 90 percent a lot of your employees would be because their stock is now worthless and on top of that building a delivery
network is a heavy operations play that much is none of your core competencies so to me that feels like a death sentence so I think the only play here was to buy doordash as early as possible and let doordash and they're operationally heavy culture eat GrubHub from the inside out I think Grandpa probably could have
acquired them multiple times for whatever reason it ever happened it would have seemed pretty risky had GrubHub done that investors probably would have hated it but it would have been their Netflix moment where you know Netflix bet it all on streaming and they'd BET right and this is all incredibly easy to say in hindsight but
I think what I've learned you know now that I'm more senior in my career is during existential threats you know it's like when the scene Talib says the only rational reaction is overreaction unless you have a real viable reason to assume otherwise you've got to assume the disruptor is right uh and base your
strategy on them playing an optimal game and I whereas I think you know GrubHub assumed the disruptor was wrong and that it would all play out eventually in their favor and it clearly did wow I have never heard that full story that was amazing thank you for getting in so much detail there I don't know how much of it is right but it seems it
seems right from the outside and it's interesting that it's like a version of innovator's dilemma usually Invaders know Emma's people come and do something cheaper at the low end of the market and in this case it was more they were doing something that they didn't believe with scale it was like just much more
inefficient even that was a better experience and is that is that a narrator's dilemma or is that some other version of innovators dilemma because it's to your point they couldn't almost go after it I I think it is in spirit for sure the takeaway there that you've learned is don't underestimate someone that's trying to do something that's
going to eat your lunch eventually even though it feels like a terrible business model right like if the Market's rewarding it the market will probably find a way to make it profitable and uh you know it's essentially when everyone's find like a more efficient Network effect for demand on the on the marketplace side
you probably need to copy that like as soon as possible and if you can't copy it own it right like buy it and I think we've seen this a few times like Rover and wag was another interesting example of this um where they found a more frequent use case that fit the same supply and demand and you know Rover just copied it as
soon as as soon as possible and that ended up you know working out for them in a way that you know it didn't as much for GrubHub I just did a talk recently on Marketplace uh growth strategy and someone asked me a really interesting question If you're trying to go up up against the doordash or an Uber today
what would you do and my answer is just like money was so freely available at that point that they were able to like a lot of this was spent that so much money raised you said they're raising 100 million dollars every six months like is it even possible in today's climate where you can't actually raise that much
money to have any sort of chance to beat a doordash or an Uber yeah I mean clearly they took a advantage of the zero interest rate environments that we talked about earlier that is not a replicable strategy in 2023 so any approach to compete with them has to be competing on a very different angle
um because yeah they can spend you into the dust so you know we'll see if anyone's able to build a way that creates a new Supply and Market I think you and I have seen a couple of earlier stage examples of that we'll see if any of them scale or something that feels cheaper or more fun on the demand side that would be like another way to
potentially disrupt things I think another thing that was working pretty well before the pandemic in building disruptors was focusing on the pickup use case which you know doordash cannot do as easily like they've tried right but like their whole value prop is the delivery Network which you don't need for pickup but of course the pandemics
put a lot of those startups grinding to a halt as well so you know there's always angles but you're gonna need to be incredibly clever because just attacking with a war chest is not really going to work yeah I've noticed a lot of startups launching that are trying to do white label delivery for restaurants so
they don't have to really rely on doordash but that may be maybe that's a wedge to get in and eventually they do yeah and I would say I'm pretty skeptical of those because they're just not really building the network effects on the demand side they're just more like SAS businesses and I think they'll
struggle to be you know multi-hundred million dollar in Revenue businesses because the take rate is typically like you know a third or a fourth of what you know a doordash can charge perfect segue to my next question I only have a couple more there's this uh concept and I think poll from Marketplace Founders to add a SAS
tool eventually and have both business models and then there's often the reverse where a SAS company wants to add a Marketplace and I know this question is something you get a lot and so just a question for you does this work are there examples where they've added this additional way of making money and which
direction do you find is most often successful and not successful you know the canonical example that a lot of these Founders use is OpenTable and that always felt really unfulfilling to me um because it's very old at this point probably the younger people listen to the podcast are like what's open table and I think you know that business has
incredibly underperformed the market it operated in so it had a good exit it sold for 2.6 billion dollars I think to booking.com by booking subsequently wrote that value down like below a billion so you know that's not really the outcome I think we're looking for traditionally in marketplaces and maybe explain like what
it was initially the SAS tool versus oh sure so so Open Table promised both a SAS tool that would help you understand like what tables are open and where to see people so for like the host in the front of the house in a restaurant but also bring in additional reservations to fill up your restaurant right because I
think what people misunderstand about restaurants historical these restaurants are these incredibly low margin businesses and it's like yeah they are because they're paying the rent no matter what happens so once you're already paying the rent no matter what happens you're incentivized to pump as much food out
the kitchen and to get as many people seated in-house as possible so people would say like oh GrubHub and doordash you're charging too much uh and it's like no like delivery orders and Catering orders are basically pure margins restaurants the chefs are already there the you know the rent is already being paid the more
things we pump out uh the kitchen the more money we make um which is why you know restaurants are willing to pay higher fees like these restaurants are not stupid they're not being like misinformed right so OpenTable well before there were any delivery startups was like we're gonna fill up your tables and
we're gonna give you the software that helps you manage your tables most effectively to to make the most profit got it okay great so keep going so that's open table so look this is definitely the strategy we are working on with Eventbrite where we started with something that was more sas-like you know enabling uh EG payments and you
know certain tools to make event creators business more efficient and we're layering in more of the traditional Marketplace value prop of demand you know driving more ticket sales for these event creators and you know I would say it's got a ways to go to be working really well and what has worked you really well look like it's
when the marketplace model unlocks those cross-side Network effects that make it easier to grow so you know event creators when Eventbrite started they would just go do their own marketing to bring people to Eventbrite to transact on their events that they had listed there and now Eventbrite drives you know
25 of the ticket sales itself and you know that percentage is growing a lot faster that's amazing yeah it's growing faster than the rest of the business which is great but it probably needs to be closer to like 50 to unlock those real cross side Network effects and that would mean that creators start selecting
Eventbrite because of all the demand Eventbrite has versus the quality you know of the SAS tools so that's obviously something we're working on um fair is a company I advise more recently that I think is unlocked this model in like the reverse where there is a wholesale Marketplace between independent retailers and Brands so that
you can sell products at these retailers like a you know a boutique you know in in your local neighborhood so fair built the marks place first and then it later built a SAS tool that allowed the brands to onboard their current you know retailers into the platform and get better turns uh on payments and and free returns and it
didn't charge anything to use the SAS tool for any rebookings that happened through that platform but what that did is it onboarded more independent retailers that they could cross sell to other brands without you know needing to use a sales team and when they cross-sold of course there did you know take their percentage on those
transactions so I think that model has worked out really well well and fair has grown quite quickly and so the examples you gave Ben bright was a SAS tool trying to add a Marketplace yep fair is an example of a Marketplace adding a SAS tool and is the takeaway there that it's in your experience it's generally more you're
gonna have a better time if you're a Marketplace adding a SAS tool versus the other way around yeah I think that's right so I think you know uh I don't know when it was just maybe like 2015 or whatever a bunch of investors started writing about SAS the marketplace Transitions and like that's the transition eventbrite's going
through it's going to work but it's hard and it's not replicable for a lot of other SAS businesses you need to have a direct relationship with your customers customers first off those customers need to have needs beyond that single supplier usually it's like a discovery value prop you know for other suppliers
and you need to build like this totally new skill set uh to build tools for your customers customer who is very different from your current customer um whereas you know marketplaces that add a SAS component you know it's a customer acquisition tool like there or a workflow or retention tool to you know increase retention or reduce
disintermediation I think you'll see that be a lot more common approach and much more replicable is this just rooted in the fact that marketplaces are incredibly hard no matter whether you start with them or whether you add them like is that the root of the issue here I think that's a good way to frame it it's so if you know
if you're building a startup in 2023 and you're like oh I'm going to build the SAS business and then five years later I'm going to build this Marketplace business on top of that it's kind of like it's going to take a long time for you to de-risk the hardest part of that strategy whereas if you get the hard
part done up front it opens up a lot of amazing you know adjacencies different ways to grow so I think there's definitely truth in that statement so kind of the takeaway here is if you're trying to add a Marketplace uh it's gonna be very hard you shared a couple things of a couple attributes that kind of tell you that maybe it
might work maybe just share those again real quick so take square or sub stack or patreon or like Eventbrite right right all of these are examples of SAS businesses that in providing the SAS service deal with the customer and the customer's customer right that makes it a lot easier because you already have a
relationship they already know your brand whereas like stripe when we buy things we don't know if we're buying it through Stripe Right like it's just a SAS tool that's white labeled in the back end we have no idea so I think that's the first element right there's a lot of businesses that look like that
but it is a subset obsessed businesses that look like that and then secondly those customers that you're you're building a relationship with they need to have a reason to transact with more than one of your current customers on the supply side right so if you're always going to use that same supplier there's no need for me to show you the
rest of the inventory and basically all marketplaces win on like we mentioned selection and you're needing selection yeah there's and then there's of course the marketplaces that win with like standardization of like I can get it at any time it might be from different people but I know the Uber car is going
to be there in five minutes or whatever I don't care as much who the driver is so one of those has to be there and you just find in a lot of these examples like ah there isn't really that much of a discovery need for for you know who the demand side would be in this theoretical Marketplace when you when you dig into it it might be
helpful just to Define like what makes it a Marketplace in my eyes it's your driving demand to supply that's like the Nuance right because otherwise you're just the tool that they're using to do something yeah exactly right it's like the primary value prop of Y Supply signs up is that you're going to bring them
extra business and if you have you know customer buyers and sellers but the primary reason Supply signs up is for tooling or payments like how Eventbrite started that's not really a Marketplace you know I call it a SAS like Network some people might just call it a SAS business a payments business whatever the case may
be but it doesn't really have those cross side Network effects that we associate with marketplaces what this makes me think about is patreon and sub stack and interestingly when I was looking at early patreon days what I understand is they want it to be a Marketplace they wanted to be a place where artists come they collect payments
and then people can discover artists to patronize and what they found is nobody needed that wasn't a problem I'm not looking for other people that don't hate money too same with GoFundMe right um and so with that story in mind when I was chatting with a sub stack people early on I was like this is exactly what
you're going to run into no one's like sitting around looking for more newsletters to subscribe to but shockingly they've actually pulled it off yeah they have a really wild Network effect going now and uh I've been very impressed with what they built I don't know if I'd call it you know a Marketplace yet yeah but the
I I think they were able to abstract away the version of what you just said to something that was actually useful which is yes I don't want more emails to subscribe to but I do I am fundamentally interested in more articles relevant to my interest and no one has really solved that super well Twitter was a very hacky form of
that you know where I follow you and then I see when you post a new blog because you you tell everyone on Twitter you post a new blog but it isn't built for that whereas you know the sub stack reader will now allow me to be like oh yeah sure I'll subscribe so I really like what they've done it'll be interesting
to see you know how big a business that is and how it all plays out but I think their execution has been really solid awesome I feel the same way and it is I also wasn't sure whether it makes like it's worth calling a Marketplace but for whatever it's worth eighty percent of my new sign ups are coming from sub Stacks
Network the recommendations feature and their onboarding things like that but do you think that's unique to you because you are already a top one percenter sub stacker or is that a meaningful number for newish players like if I finally switch my email list to sub stack which has been on my list for a long time uh
uh you know that probably won't be the same percentage for me right absolutely not yeah now I think there's definitely if you're there first and people know of you more people will recommend you but I think over time more and more people start to recommend you I think they released a stat that something like 40
of their new users are coming from a recommendation or new signups or something like that so it's pretty widely happening but I don't know how much I said it's just the top ten so it's pretty incredible it was a really Innovative feature and good job sub stack and we had uh there had a product on this podcast talking about that exact
feature for a whole for a whole hour if you're interested okay final question and then we have a very exciting lightning round and this is around consumer companies and consumer subscription companies I know you worked with a lot of Founders that are building consumer subscription companies and just consumer startups in
general yep you often tell me how they're incredibly hard to build into thriving businesses you just talk about why consumer subscription startups are so American products or something I feel like you're making this quite a downer podcast Lenny but this is people need to hear the uh the truth you
know there's a lot of happy talk out there a lot of posts here's how you do this sure and sometimes you can't I think in order to understand these businesses you have to start with why do investors like B2B SAS why do they like B2B subscription and I think the way most people respond to that question is like oh predictable
Revenue right and it's like ah sure I mean that's cool and all but I I think that's actually not the most important so I I'd argue there's two great attributes of B2B SAS one is that businesses are more predictable in how well they're routine they're rational you can understand who are good versus bad businesses for your product as well
as which ones are going to grow versus go out of business and more importantly the second thing that great about B2B SAS is net dollar retention so what is net dollar retention if you don't recognize well as a SAS company some of your customers are gonna churn some of your customers are going to stay and normally outside
of potentially current macroeconomic conditions with all the layoffs when customers do stick around they tend to spend more either they buy more seats if you're a seat based model or they use the product more if you're a usage model so the SAS company just makes more money in year two year three Etc
so consumer subscription just doesn't have any of these benefits consumers are way less predictable they tend to retain worse than businesses and they also don't have net dollar retention characteristics so if the user retains paying you in year two you probably making the same amount that you made from them in year one not more
what that means is you need higher user-based retention than a B2B SAS businesses with more unpredictable users and it's a lot higher than I think you know Founders tend to think we're talking annual attention that needs to be North of 60 perhaps even 70 percent so you look at who's actually been able to do that at scale
and it's a really small list Netflix in the US Amazon Prime Spotify Duolingo I think is emerging as one of these players that's making it work and when you look at how they do it they're either doing it with massive op-x and economies of scale or through a network effect or some other bespoke growth Loop that's not that easy to
replicate so Duolingo has a strong Data Network effect the lessons get better the more people use it you know beef the company I'm on the board up has a cross-state network effect between creators who create the content and the listeners and the creators bring a lot of distribution from their existing you
know uh social networks to bring you know new people in the app to listen Netflix and Amazon they spend billions of dollars you know on content so I think the default path of like I'm gonna spend money on paid acquisition I'm gonna retain half of my audience year over year that's just a path to going on eventually and I think what's
interesting about these businesses is you can model it so you can learn when it's gonna happen you can learn like you know when the retention dips and when you can no longer let your profitably acquire users and if you want to look at like a model in real time just look at Blue Apron the company raised 300 million dollars in an
IPO that valued it at two billion dollars it's worth 50 million dollars today on the New York Stock Exchange and I think people understand now if they didn't before that paid acquisition tends to get worse as you scale you know you target the best customers first they have great conversion great retention
and then as you expand you're targeting of new customers every one of those metrics gets worse until it's no longer profitable maybe two years from now it may be five years from now but eventually it'll be no longer profitable and what network effects allow you to do is they allow your product to get better
or faster than the customers you target get worse normally through increased selection like you know some of the examples we gave you know with word Ash and others such a cool topic I actually have a post about this that I recall now as you're talking about it and just to kind of double click on the retention point and
it's like freaks you out when you really get into it that say your retention is like 70 like cohort retention for a year I forget the math but like every three or four years you basically have to rebuild your entire user base because it just keeps trickling out so your growth just has to continue mind-boggling you
run out of humans like it's yeah it's really hard so like if you can retain people incredibly well meaning those people just never churn yeah you've got a great business but look at the effort the companies that have done that are doing to do that Spotify doesn't make profit Netflix Amazon to spend so much money to try to
do that and how replicable is that for a startup I'd rather say like let's try and get some Network effects involved here let's get our customer acquisition cost to zero you know um let's think about other ways to monetize because this alone feels like heart and this is also why a lot of these
companies pivot to B2B they realize uh there's they're not going to get anywhere with b2c the other lesson I took away because I interviewed a lot of these early b2c subscription app Founders employees and I think about companies like uh grammarly Duolingo NuMe forget there are a few more one of the other Trends across the mall is
they're all very efficient and very small for a long time because they needed time to figure out how to make anything work and then just continue to stay small and super Scrappy I think that's a great point it was an interesting case study between calm and headspace because calm remains like 10 people forever wow and you know
headspace had gone into like you know hundreds of people and calm like basically never lost money and that allowed them to be you know allowed them to Pivot easier during you know massive changes like you know app tracking transparency like through a wrench into all paid acquisition so if you're not losing money like cool you
have time to figure out how to like grow again but if that increases your Burn by like 100 million dollars you have a lot more of a panic on your hands so maybe just to tie the loop tie the knot close the thread on this uh topic if you're a b2c subscription founder what would be some takeaways that you
would want to put in their head to think about how to maybe survive yeah so if what your plan is is to use paid acquisition on top of a freemium model to get a percentage of people to convert and hopefully stick around forever I'd pivot right now it's like I just can't see it working so how do you pivot well how do you make it social so that
people are bringing in other people how do you get a supply side to the you know content or education or whatever you're building and make it in the supply side's interest to refer people like you have to do something that's either you know building some more organic growth Loops into the business or building Network effects
into the business or else like we could go spend two hours and model out exactly when you're going to run out of money like it's just that predictable and you know a lot of Founders do like to hear it when I tell them that but I rather them here right now than learn it three years from now well we've reached our
very exciting lightning round I'm just gonna Dive Right In what are two or three books that you've most recommended to other people definitely the goal by Elijah who gold Rat um which explains how my brain works pretty well uh Thinking Fast and Slow by uh Danny conman I took a lot of the behavioral economics classes in
um my MBA program and and then his book came out like the year after so I just like absorbed it as quick as possible wait was that you're a professor that was just the the topic uh some of his like pupils were professors of mine yeah amazing um very cool and then the third is a book called profit from the core by
Chris Sook amazing that's a new one I love when there's new books being added to the collection here we go okay next question favorite recent movie or TV show uh well well party down just came back uh and that's like I've been watching it's one of my favorite never heard it's one of my favorite comedies of all time
yeah go back cool I like to watch the first couple Seasons that's what I've been doing that's what I've been doing great uh other things like the The Last of Us is great and you know I really enjoyed the the video games Severance is great station 11 is great I loved the book too but I thought that was really good
movies there there haven't really been a lot of great movies lately but I I did re-watch uh Kicking and Screaming from the 90s and it really holds up well it's uh I don't know how many you have heard of it but it's about a group of college kids who graduate but they just decide not to leave campus and start their lives and
they just stick around campus um so I I really enjoyed that one amazing we have a drinking game anytime and someone mentions Last of Us so if you're driving to work listening to your podcast on your commute take some coffee or whatever you got two more questions what's something relatively minor you've changed in your
product development process or maybe that you've recommended people change that has had a tremendous impact on people's ability to execute you know I preach like cross-functional teams and Alignment pretty aggressively so how do you get people from all the different functions a lot on on the same okrs and working together and I used to
say like look if someone in that cross-functional team is playing rank it means you know something's up on the team but something we started doing more recently at both Eventbrite and whatnot is just designating the person on the cross-functional team who drives the project uh at an Eventbrite we call
it the driver what not we call it the dri directly responsible and well but once that person makes the call it's disagree intimate time there's no escalation path like if you're not the dri and you're on the team and they made the call all right it's time to sign up and and go forward on that decision uh and if they made the wrong decision
later okay we'll learn you know once once we ship final question something I left that you do in your own newsletter and blog is you share what you're listening to what are you listening to these days sure colella recently came out with her second album Raven um which is really great I've been listening to
that orbital came out with a new album called optimal delusion that's been pretty good and then an oldie but goodie is uh de la Soul's music finally came out on Spotify and the stakes as high as like one of my favorite hip-hop albums ever so I've been jamming to that amazing where can folks find you online if they want to
reach out learn more and how can listeners be useful to you alright blog not near as frequently as you at Casey accidental.com you can find me you know on Twitter at onecaseman and yeah just pay it forward help help your companies build better products and better businesses that's all I care about Casey
thank you so much for being here I feel like we're building some kind of network effect you and I doing these podcasts hopefully you'll be back for a third time someday thank you again really appreciate it yeah thanks for having me hopefully they don't get sick Maybe by then bye everyone thank you so much for listening if you
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