Sarah Tavel: evaluation

Transcript context

…Awesome. Okay, let's talk about layer two around tipping the marketplace. So layer two, I think, will actually illuminate again the importance of that constrained focus for layer one. You're doing all these things that don't scale, that you've written so much about, Lenny, about kick-starting, the marketplace, all those things that you can't just keep on doing forever. Now, layer two, level two is about figuring out how to do things that do scale. And really, you're doing it in service of this kind of mythical moment of a tipping point. And the tipping point is this idea that you often reach some kind of saturation point in a market. You've reached an experience, you've kept on working on the product experience, you've taken a lot of friction out, and you keep on growing, growing, growing. And you're doing that in service of increasing happiness. And this is a really important thing. The growth that you're doing, you should have a lot of clarity on your flywheel at this point, and know that you're growing in service of accelerating your flywheel. And people talk about the flywheel as liquidity. You could think of it as happiness, which is that the more the flywheel spins, the more you're able to make both sides of your marketplace happy. And what you're doing is you're growing into a greater percentage of your market. And as you're doing all these things again that don't scale, then you reach this moment where things start to get a lot easier. You've kind of pushed the boulder up the hill and it starts to slide down. And what you notice first, I think, is you start to see it on a micro level where you might have suppliers that start to tip to you or buyers that tip. You might see your cohorts get a little bit better. You start to see some organic growth. And let me give a story or an example of a company that I got to see where the marketplace started to tip. So we're investors in a company called REKKI. And REKKI is a marketplace for restaurants and their suppliers. And it's, imagine in the beginning, this kind of app that you could use. It almost looked like WhatsApp, that a chef could use instead of doing a voicemail at midnight when they're leaving the restaurant or typing something into WhatsApp and texting it to their supplier, an email, whatever it is. They could use this REKKI app and it would make it a lot easier for them to do that. And then of course the marketplace elements is that then they'll be able to discover other suppliers on REKKI if they need them. Now in the beginning, REKKI had to have their own sales force and they were going to London, knocking on the doors of these restaurants, finding and cornering probably the chef in the kitchen to show them the app, to get them to change to this new app called REKKI. And it's a very high cost of sales effort to have, as you might imagine. But then what started to happen is that every time they got a new chef onto REKKI, that order would then go to the supplier that that restaurant normally ordered from. t to have, as you might imagine. But then what started to happen is that every time they got a new chef onto REKKI, that order would then go to the supplier that that restaurant normally ordered from. And so instead of getting the voicemail, the supplier would start to see a nice order form that was from the restaurant and provided by REKKI, powered by REKKI. And what would happen is that as REKKI grew more and more in London, these suppliers started to get more and more of their restaurants ordering via REKKI. And then some of the early suppliers started to be like, "Well, this is so much easier for me. I would much rather get this order form from REKKI than have to listen to an hour of voicemails from chefs with different accents and different ways of ordering their food in the morning when I come in. And so then the suppliers would reach out to REKKI and be like, "Hey, here's a CSV of all of our customers. Can you reach out to them and onboard them to REKKI because I'd much rather have my orders come via REKKI than the way I'm getting them." And so you go from this moment of the hard high cost of sales, pounding the pavement, to getting a list on a silver platter of restaurants to onboard. And that's that feeling of tipping, where all of a sudden something goes from being really freaking hard to so much easier.…

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