Dan Hockenmaier: evaluation

Transcript context

…Right, because you're just taking a cut and you're not selling software. And then the acquisition channels, retention, monetization, marketplace have those three things just broadly and then plus these additional two elements. Yeah. I think one warning I would give ... so I built these for many businesses. I built them for Thumbtack, at Faire. Many of the companies I worked with, at my consulting firm, they break down in a few places. As soon as you start stacking assumptions, you're highly sensitive to how many assumptions do you have to make and do you know how to make that assumption. And marketplaces kind of create complexity on both of those because for the first piece you're modeling both sides of the business. There's a lot of assumptions. And second, there's a few pieces which are very hard to understand how they work. So the interaction between supply and demand is a big one. Take Amazon as an example. There's a category manager at Amazon who's running their pets business and he decides that he wants to go add a bunch more pet supply to the business. So he's going to go find pet food brands, pet toy brands. Those businesses will generate a bunch of revenue on the Amazon marketplace. But how much of that was actually incremental? Maybe there's a bunch of existing pet supply that customers would've bought anyway. And does having a bunch more supply create a happier customer who retains longer and drives those cohorts up? These things are very hard to decide, something we've spent a lot of time thinking about in various marketplace businesses. And so if you're not careful, you can have a junk in, junk out problem with marketplaces. So the thing that I have gravitated to more as I've done more of this is one very basic high level conceptual model, so that's like the building blocks you talked about, which as simply as possible describes how the whole system works. And so you start to get a feel for which levers are important. And then for each area of the business, so each product pod, each go to market team, they should have their own kind of mini model which describes the piece of the business they're working on. So that team typically has a north star and they should know what are all the inputs that drive that and a little model to articulate how that works. And you'll never kind of stitch this up into one master thing. I think that's a very difficult task. But you have the dual benefit of understanding how the business works broadly and then understanding if you zoom in on this piece, what are the levers i need to be pulling to move my metric. To make that last point a little more concrete, what's an example of that? What's a team that would have their little model? I imagine every team has their own understanding of how the lever works, but what's an example?…

Stored transcript either side of the excerpt. The highlighted words are the published quote; the surrounding text is unedited source, never generated.