Casey Winters says the chief product officer role is hard to hold long term because executives never admit they are crushing it.
Winters argues Grubhub should have bought DoorDash early, citing Nassim Taleb's view that overreaction is the only rational response to an existential threat.
Winters says consumer subscriptions need 60 to 70% annual retention to thrive, a bar only a few giants like Netflix and Spotify clear, so consumer founders reliant on paid acquisition should pivot toward network effects or organic growth.
Casey Winters on why judgement and network effects beat frameworks
Casey Winters argues that product success comes from judgement and network effects, not from filling in frameworks. Frameworks are tools, and the era of cheap money let teams behave as if they had Google's resources. Network effects are the strongest defense, yet a well-funded rival that expands selection can break them, as happened to Grubhub.
Takeaways
Frameworks are tools, not a substitute for thinking. Winters calls frameworks tools in a toolkit, not a coloring book. Cheap money let teams act like Google with endless resources, and PMs researched instead of shipping. Many times the fastest way to learn is to ship.
Network effects break when rivals expand selection. WhatsApp shows direct network effects and Grubhub cross-side ones, while Pinterest relies on data. Social networks must become cross-side or data businesses to make money. Network effects are disrupted mainly when a disruptor dramatically expands selection.
Founder intuition should lead until hires prove better. Founders who reach product-market fit build intuition that is hard to articulate, so they should direct senior hires until those hires show better judgement. On disagreement, Winters says build a case through experiments or advisers, then disagree and commit or leave.
Marketplaces adding SaaS is easier than the reverse. OpenTable sold to Booking.com for about $2.6bn and was later written down. Eventbrite drives about 25% of its ticket sales and needs nearer 50%. Faire added a SaaS tool to its marketplace, which Winters sees as more replicable.
Consumer subscriptions need 60 to 70% annual retention. Few companies such as Netflix, Amazon Prime, Spotify and Duolingo reach that. Blue Apron fell from a $2bn IPO valuation to about $50m, while Calm stayed small and avoided losses. Founders reliant on paid acquisition should pivot toward network effects or organic loops.
AI helps with tedious work but errs confidently. GPT-4 and Notion AI can state wrong answers with confidence, and Notion AI falsely placed Winters at Google. He recommends them for spreadsheet formulas and Zapier setups. PMs who only fill in frameworks are at risk.
How Grubhub lost its network effect
Grubhub ran an asset-light marketplace and assumed managed delivery startups such as DoorDash, Postmates and Uber Eats were structurally unprofitable.
About a year before Winters left, Postmates, DoorDash and others began raising large private rounds to build delivery networks.
They expanded selection through national chains, which undercut the advantage Grubhub's network had built.
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On this episode 2
Show 1
The pandemic turned DoorDash's margins positive for the first time, while corporate ordering through Seamless stopped mattering as offices emptied.
Winters argues Grubhub should have bought DoorDash early, citing Taleb that the only rational reaction to a threat is overreaction. Raising debt would have cut its stock 90%, and the play is harder to repeat in 2023.