Lessons from scaling Uber and Opendoor | Brian Tolkin (Head of Product at Opendoor, ex-Uber)

Brian’s background rel="noopener noreferrer" target="_blank">(00:00:00)

• Brian Tolkin has a background in both product and operations, having worked at Uber and Opendoor. He believes in the importance of combining these two areas, comparing them to twin turbine jet engines that work best when operating together. His experience in operations gave him a deep understanding of how businesses function, which helped him become a better product leader.
• Brian is known for his calm demeanor under pressure, which he attributes to his experience sleeping on the floor in China while launching Uber Pool. He believes that reflecting stress onto teams can create tension and hinder productivity.
• Brian joined Uber as employee number 100, before the company had Uber X, Uber Pool, or any shared ride services. He started on the operations team, transitioned to product, and eventually led the product and launch of Uber Pool, taking it global. He also established the product operations function at Uber, a role that was not widely recognized at the time.

Career beginnings at Uber rel="noopener noreferrer" target="_blank">(00:02:14)

• Brian Tolkin began his career in operations at Uber, starting on the Ops Team before transitioning into product.
• This is notable because both Uber and Opendoor, where Tolkin has also worked, are tech companies with significant operational components.
• It's uncommon for someone to start in operations, move into product, and ultimately become a Chief Product Officer at a successful company like Opendoor.

Transitioning from product operations to product management rel="noopener noreferrer" target="_blank">(00:02:49)

• Experience in product operations provides a deep understanding of how a business actually functions. Working in operations provides a hands-on understanding of the day-to-day operations, including the impact of external factors like weather, and direct customer interactions. This close proximity to the customer and the business's inner workings is a valuable foundation for transitioning into product management.
• Product operations experience fosters a strong understanding of customer needs and business drivers. Directly interacting with customers, onboarding drivers, and responding to support tickets provides a deep understanding of customer pain points and the factors that drive business success. This knowledge is crucial for making informed product decisions.
• Product operations experience can be undervalued by product teams. There is sometimes a perception that product operations work is less scalable or impactful than product development. However, this perspective overlooks the valuable insights and understanding gained from working directly with customers and the business.

Product and operations synergy rel="noopener noreferrer" target="_blank">(00:06:47)

• Product and operations teams should work in synergy, like two engines of a jet plane. Brian Tolkin emphasizes that while each team can function independently, they operate most effectively when working together. Operations teams, especially those in local markets, have valuable insights from customer interactions and can iterate faster.
• Operations teams provide valuable insights for product development. Product teams, often centralized in a single location, lack the firsthand experience of local markets. Operations teams can bridge this gap by providing feedback and insights based on their direct interactions with customers.
• Product operations emerged as a solution to improve the feedback loop between product and operations teams. At Uber, a centralized product team and a globally distributed operations team struggled to effectively communicate and share insights. The creation of a product operations function, which reported to operations but worked closely with the product team, helped to bridge this gap and improve the flow of information.

Surge pricing at Uber rel="noopener noreferrer" target="_blank">(00:10:00)

• Surge pricing at Uber initially involved significant human intervention. General Managers (GMs) in each city controlled the parameters of surge pricing, including when it would be active and the price cap. This meant that surge pricing was often manually activated during specific times, like Friday and Saturday nights, and deactivated during the week.
• The decision to use human control over surge pricing was likely due to a combination of factors. These included the novelty of the concept, a desire to ensure understanding of its impact, and the belief that local teams had better knowledge of their cities and could anticipate events like sporting games that might require surge pricing.
• The technology for fully automated, dynamic surge pricing was not yet advanced enough at the time. Building a system that could constantly adjust prices based on real-time demand and location was a significant technical challenge.

Scaling challenges, and stories rel="noopener noreferrer" target="_blank">(00:12:18)

• The origin of Uber X: The name "Uber X" was initially a placeholder name for a product that was intended to be all hybrids. The name stuck due to the company's rapid growth and the cost of rebranding.
• Launching Uber Pool in China: The launch of Uber Pool in China was a stressful experience, with the matching algorithm failing just hours before the planned launch. The team worked through the night to fix the issue, launching just in time.
• The power of shared experiences: The speaker describes how the stressful experience of launching Uber Pool in China, despite the lack of sleep and the pressure, became a fond memory and a story that they cherish. This highlights how shared experiences, even stressful ones, can create strong bonds and lasting memories.

Opendoor and Covid adaptations rel="noopener noreferrer" target="_blank">(00:15:47)

• Opendoor's Covid-19 Adaptation: When the Covid-19 pandemic hit, Opendoor, a company that buys and sells homes, had to adapt quickly. They temporarily shut down their core business because in-person home visits were no longer safe. They used this time to virtualize their entire process, which was a stressful but ultimately successful endeavor.
• Opendoor's Business Model: Opendoor is a digital platform that buys and sells real estate. Their primary product is a seller-focused service that allows homeowners to receive an all-cash offer for their home, providing certainty and simplicity in the selling process. This is particularly appealing to those who want to avoid the hassle of traditional home sales, which can be stressful and time-consuming.
• Lessons from Scaling Uber and Opendoor: Brian Tolkin, who has worked at both Uber and Opendoor, emphasizes the importance of mutual respect between product and operations teams. He also stresses the need for product and engineering teams to understand where technology can be leveraged to create the most impact. This involves prioritizing investments in areas where technology can drive significant efficiency gains, while being transparent about areas where investment is not a priority at that time. He also highlights the importance of building products that are flexible and resilient to real-world challenges, as humans are not always predictable. Finally, he notes that companies evolve over time, and what might be a priority in the early stages of a business may shift as the company grows and matures.

Product reviews and Jobs to Be Done rel="noopener noreferrer" target="_blank">(00:25:38)

• Product reviews are valuable for all companies, but especially for operations-driven companies. They help bridge the gap between operational cadences and product strategy, ensuring that product direction is considered in the long term.
• The primary goal of product reviews should be to improve the product. While accountability and informing the audience are important, the focus should be on fostering intellectual conversations about the work and how to make the product better.
• Product reviews should not feel like firing squads. Leaders should create a culture where team members feel comfortable sharing their perspectives and contributing to solutions. This involves asking probing questions, providing context, and recognizing that the team has a deeper understanding of the product than leadership.
• The size of the product review group should be kept small, ideally under 10 people. This allows for more focused and productive conversations. However, the artifacts created from the review should be widely distributed to ensure everyone is informed.
• Jobs to be Done (JTBD) is a valuable framework for understanding customer needs. It forces teams to think from the customer's perspective and consider the context in which they are using the product. This is especially important for companies like OpenDoor, where transactions are infrequent and complex.
• OpenDoor uses a template for product reviews that includes a section for JTBD. This helps to ensure that the framework is consistently applied. However, the company emphasizes cultural internalization of the JTBD concept, encouraging team members to think about the customer's job to be done in all aspects of product development.
• It's important to avoid being dogmatic about JTBD. While it's a useful framework, it shouldn't be the only tool in the toolbox. Teams should be able to adapt their approach based on the specific context of the product and the customer.
• OpenDoor has learned that experimentation is crucial, even with low sample sizes. The company uses A/B testing and other methods to gather data and iterate on its product.

The challenges of A/B testing rel="noopener noreferrer" target="_blank">(00:40:30)

• Brian Tolkin, Head of Product at Opendoor, acknowledges that A/B testing is the gold standard for experimentation, but it can be challenging to implement effectively, especially for companies that don't have the same volume of transactions as Uber.
• He emphasizes the importance of conducting power analysis before launching an A/B test to determine the sample size needed to detect statistically significant results and the duration of the experiment.
• Tolkin also highlights that some experiments, even if they require a longer runtime (e.g., six months), are crucial for gaining valuable insights and should be conducted despite the extended timeframe. It's important to be realistic about the time required for an experiment and avoid making decisions based on premature or insignificant results.

Increasing conviction in solutions rel="noopener noreferrer" target="_blank">(00:42:23)

• Experimentation is about increasing conviction in solutions. The goal of experimentation is to gain confidence in the effectiveness of a solution, even when traditional A/B testing isn't feasible.
• There are multiple ways to build conviction beyond A/B testing. These include talking to more customers, using observational data, comparing similar markets, adjusting statistical significance thresholds, and conducting long-term holdouts.
• Trusting intuition is sometimes necessary. When traditional methods fail to provide statistically significant results, it's important to trust your gut feeling and ship the product. Spending too much time chasing false precision can be detrimental.

Leveraging intuition in product decisions rel="noopener noreferrer" target="_blank">(00:44:33)

• Leveraging intuition in product decisions requires a balance between data and gut feeling. While data-driven approaches are valuable, it's important to acknowledge that customers and products can surprise you.
• Humility is key when relying on intuition. It's always best to test your assumptions and hypotheses whenever possible. However, when testing isn't feasible, you need to assess your conviction level in your intuition. If it's low or medium, seek feedback from customers and other team members to validate your thinking.
• Establish a feedback loop to assess the effectiveness of intuition-driven decisions. Even if you can't conduct a traditional A/B test, you should have a system in place to gather data on customer response and product adoption to determine if your intuition was correct.

Partnering with Zillow rel="noopener noreferrer" target="_blank">(00:47:07)

• Opendoor and Zillow initially competed as "frenemies" when Zillow launched its own iBuying service, but eventually partnered. This partnership was beneficial because Zillow has a large online audience, while Opendoor offers a strong home selling solution. This creates a synergy where Zillow's audience can be directed to Opendoor's services.
• Zillow underestimated the complexity of the iBuying business. Opendoor's success stems from its vertically integrated model, requiring expertise in pricing, product, operations, risk management, and capital markets. Zillow, being primarily a software company, lacked this expertise and struggled to compete effectively.
• Opendoor focuses on its core customer base and the vastness of the real estate market. Despite competition, the majority of homebuyers and sellers still use traditional methods. Opendoor's focus on its core customer base and the overall market size allows it to remain confident and competitive, even in a dynamic environment.

Staying calm under pressure rel="noopener noreferrer" target="_blank">(00:52:55)

• Staying calm under pressure is crucial for effective leadership. When leaders are stressed, it creates a tense atmosphere and hinders productivity.
• Maintaining an even keel is essential for clear thinking in stressful situations. Brian Tolkin emphasizes the importance of remembering that things are never as good or as bad as they seem, which helps maintain perspective.
• Exposure to stressful situations is necessary for developing the ability to stay calm. Tolkin suggests that facing challenges head-on, rather than avoiding them, allows for learning and growth. He emphasizes the importance of reflecting on past experiences and identifying effective coping mechanisms.
• Learning from the experiences of others can also be helpful in developing this skill. Tolkin recommends seeking out stories of entrepreneurs and leaders who have faced similar challenges, as it can provide valuable insights and build resilience.

Finding the “kernel of truth” in product management rel="noopener noreferrer" target="_blank">(00:56:25)

• Finding the "kernel of truth" in product management involves discerning what truly matters amidst a sea of signals and suggestions. This means identifying the core issues that need to be addressed and prioritizing them over less critical concerns.
• In the early stages of building tech and operations companies, it's crucial to focus on the core tech leverage that uniquely solves the problem. This means identifying the essential elements that the technology can address effectively and prioritizing them over other, less critical aspects.
• Brian Tolkin uses the example of Uber's early days to illustrate this point. He emphasizes that Uber's initial focus was on connecting riders and drivers, pricing transactions, and issuing receipts. Other aspects, such as customer support and marketing, were considered less critical at that stage.

Failure corner: Early days of Uber Pool rel="noopener noreferrer" target="_blank">(01:00:21)

• Early Uber Pool launch in San Francisco focused on company-based commuting, but quickly realized that liquidity was the key factor for success. This strategy proved ineffective, as there wasn't enough demand to support it.
• Uber Pool launched a $1 promotion for rides anywhere in San Francisco to test the limits of liquidity and understand the product's potential. This promotion, while costly, helped Uber understand the importance of driving liquidity and identify sustainable ways to achieve it.
• The early days of Uber Pool also saw the implementation of creative marketing campaigns like ice cream and puppy deliveries. These campaigns, driven by local marketing managers, were successful in generating excitement and growing the user base.

Lightning round and final thoughts rel="noopener noreferrer" target="_blank">(01:06:11)

• Brian Tolkin recommends four books: Shoe Dog, Black Swan, The Design of Everyday Things, and Shantaram. He enjoys sports documentaries on Netflix, particularly Full Swing, Draft to Survive, Break Points, and Drive to Survive. He also recommends the Nike documentary featuring Ben Affleck.
• Tolkin's recent favorite products include: the FI collar for his puppy, the news aggregation tool Particle, and the V wife's business app. He is excited about the upcoming arrival of his first child.
• Tolkin's favorite life motto is "stay curious." He credits Jeff Holden, former Chief Product Officer at Uber, as a significant influence on his career. He shares a story about his wild interview at Uber, which involved a five-hour gauntlet interview on July 4th, including a conversation with Travis Kalanick.
• Tolkin can be found online on Twitter and LinkedIn under the name "Brian Tolkin." He encourages viewers to use Opendoor if they are selling a home and to provide feedback on the product. He also welcomes feedback on the topics discussed in the interview.