|#410 MWAVC| — Reverse Engineering
Hi,
Welcome to MWAVC, a newsletter about finance, investing, venture capital and all that jazz. My name is Ato (more about me here) and I try to write every single day. Most of it is stuff I find interesting that I’d like to share and hear your thoughts on. If you’d like to sign up, you can do so here. Or just read on.
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Read this post on LinkedIn from a Lenny whose company was acquired by $ABNB. He put together 7 lessons from his time there and discussed them here. I’m a big fan of reverse engineering so his point #4, Start with the ideal and work backward, is definitely a favourite. Full article here.
A variation of Amazon’s working backwards methodology that I’ve seen work exceptionally well at Airbnb is starting with what the perfect user experience would look like and working backwards from that.
A classic example that I got to witness right as I joined was a project codenamed Snow White. Inspired by the approach Disney took in developing the original Snow White film, the founders began looking at Airbnb not as just a website or a service but as a story, with a beginning, middle, and end. Snow White was one of the first films to use the technique of storyboards, and thus the team developed a set of storyboards of the ideal guest and host experience, identifying key emotional moments along that journey. These storyboards quickly became a key tool in identifying our biggest gaps and opportunities, and informed the early company strategy. You can read more here and here, and watch this great video of the team discussing the process.
Another more recent example was when we wanted to make it significantly easier for guests to book a home on Airbnb. The booking process had many steps, including an unexpected waiting period where a host manually reviews the guest request. Instead of spending months/years micro-optimizing individual parts of the funnel, we took a big step back and explored what an ideal booking experience would look like. In this case it was unquestionably a guest being able to instantly book any home they want, without having to wait to be approved. Initially, it seemed impossible to convince every host to allow guests to book without approval (only about 5% of bookings were instant at that time). Nonetheless, it became very clear very quickly this was where our business needed to go long-term, so we put all of our team’s resources behind this bet. Over the course of a couple of years, we ended up transforming the marketplace to where the vast majority of all bookings are now instant.
A few key ingredients to this process:
Write out or draw out what the ideal experience looks like, feels like. In our case, before diving into any short-term optimizing, we sketched out the ideal booking flow on paper, and wrote a sample blog post to describe what we’d announce if this were to become real. This makes it very concrete in a matter of days.
Create a framework. To make the problem more tractable, figure out a way to break it down into manageable chunks. In the case of instant book, the biggest gap was giving our hosts much more control over who could book their home instantly. We broke that gap into two types of problems — what we called CAN problems (am I able to use it?) and WANT problems (do I want to use it?) — and worked through them in priority order.
When it feels uncomfortable, get more data. Often times a change this significant is scary for your colleagues or for some of your users. Before you give up, I strongly encourage you to look at actual data. Validate your assumptions through a quick experiment, user research, or looking at historical data. As one data point, many people internally and externally assumed a trip booked instantly would lead to a significantly lower trip quality (e.g. less communication, more transactional), hurting long-term growth. A quick data dive clearly showed us otherwise, and that, along with a few other key data points, cleared the path for internal buy-in.
Main takeaway: Look for opportunities to make a step-function change by imagining the ideal state and working backwards from that.
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📱📱Quote of the day
“Those who tell the stories rule society.” – Plato
Remember: “Until the lion learns to write, every story will glorify the hunter.”
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