A marketplace operator explains why early founders need to do unscalable things like Airbnb's door-to-door outreach, and why aggressive pricing matters: one founder's failure to raise prices during COVID meant they never broke even. Borrow playbooks from Uber and Lyft, then adapt them.
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Yeah, so you have some pretty incredible experience at operationally intensive marketplaces. So do you have any tips maybe for early-stage marketplace founders or even, you know, product leaders?
First thing, I would quote Paul Graham, who, for people who don't know him, he's one of the original founders of Y Combinator. He said this about Airbnb, and that line stuck with me. He said, do things that don't scale, which, you know, the Airbnb story is that, the founders, Brian Chesky and Joe Gebbia, they actually went house to house initially when they started Airbnb to actually get people to sign up as hosts on their platform. If you think about it, you know, everybody in the audience, it's kind of a crazy thing to do is to actually convince somebody to put some strangers in your house. It's an absolutely crazy thing to do. There is a real value in them being— I mean, I'm just always I, I, I, you know, I don't know how they pulled it off. They have, but there's real value. And actually, I, I can say that because I was an Airbnb host at one point, so I've been on the other side and I've experienced the product myself. Uh, but, but that— don't be afraid to, to think about problems which are incredibly unreasonable, right? Don't be afraid to chase those problems. Don't give up. Um, there are— again, I— if I think of an idea, I will always think of how did the Airbnb guys do this? Like, if they can do that, You know, you should know, you should absolutely have conviction in your idea. Of course, don't, don't have confirmation bias as well, right? At some point you have to say that, you know, your— is your judgment, is your conviction clouding your judgment? So be reasonable, but don't be afraid to think about things that are just impossible and go after them, right? So that's number one, I would say that. Um, and the second thing is, I would say this was something I heard from, uh, somebody at a talk that I gave about search pricing, coming back to that topic. This was a person from Texas, Houston specifically, and I was talking about surge pricing and how, you know, it's a way to— the idea we just discussed is how it is a way to bring equilibrium back to the marketplace. This person, they had founded a company just before COVID and during COVID they had a clear opportunity to actually be aggressive and raise prices. But they were defensive and they never raised the prices and their company never actually broke even because they never maximized their revenue given COVID, given different things. Long story short, they were just too defensive in their strategy to take a chance and the person admitted to me after that talk, he was like, for our company to sustain, we were bleeding our own money, our investment money, we should have actually just charged the customers and I'm sure they would have been willing to pay that. But we never did. We were just very defensive. We thought if we did that, the business would collapse. But hey, that's just a hypothesis. You have to try that. You have to try it on a few customers and see if it really does. Don't be scared of taking chances in the marketplace. So do those 2 things. Those are the 2 examples that come to my mind. Don't be afraid to dream big and chase your dreams. And look at some best practices. I mean, if it works at Uber, why wouldn't it work for you? If it works for Lyft, why wouldn't it work for you? Just take some of those playbooks and run with it.
