Lenny Rachitsky: belief

Transcript context

…Yeah. I mean the answer is obviously both to some extent. I think you can't ignore either side. I do think though that on average when you hear advice about where to focus, people over rotate on supply and actually are under focused on demand. And I think there's a couple of reasons for this. One is supply is disproportionately important early on because it is the product. Until you have enough supply, you don't have anything and so you do have to focus on it to a high degree early on. And two is often the supply side of marketplace is using the product more deeply. There's more product surface area and you need more product resources on the supply side. However, I think this tricks people into thinking that that's the optimization function or you think you should think more about supply. I think ultimately demand is the only thing that matters. If you are successful at aggregating the demand in your industry, you will have the winning marketplace. Because if you go to a supplier, a restaurant or an electrician or a driver and say, "I have this customer for you that I can give to you at a rate that's going to make you money," they're always going to say yes. And so demand is the currency. And so when you think about trade-offs or how to optimize a business, I think taking the perspective of the customer or the demand side is always the right one. I think there's a really important nuance here, and there's actually a little mini Twitter debate with Bill Gurley I think a while ago where he made the same point that in the end, the most important thing you got to get right is aggregate all the demand. You need to become the place people come to transact in that space. But oftentimes the way you do that is acquire supply that is hard to acquire. And so would you agree with that? Often it's just, yes, prioritize the customer experience, but that may be you need to spend most of your time acquiring supply so that they're happy. Absolutely. And the culmination of those two points is you only should acquire supply to the extent you understand how it impacts demand. So, for example, if we go back to this liquidity metric, there is some point for a market for Uber where you don't want more supply because you're no longer reducing wait times or doing something that improves the customer experience in a meaningful way. And similarly to the kind of pet store example on Amazon, there's some amount of supply where you're probably no longer incrementally improving the pet buyer's experience and so it's probably not worth investing those dollars. So supply is critically important, but it has to be framed from what is the customer benefit that I'm driving.…

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