"There’s clearly skill in how you play the game. What game are we playing, and how do we keep score?" - Adam Nash

First Round Capital’s Brett Berson invited Adam Nash to share insights on the podcast In Depth.

Adam is a product leader who worked closely with Reid Hoffman, cofounder at LinkedIn. He says it’s hard for him to imagine what his product thinking would be without having those years learning from Reid. He admires Reid for being a systems thinker who recognizes that imbuing a sense of moral authority in employees, leadership, and the board, was a problem worth prioritizing.

Adam currently holds the role of co-founder and CEO at Daffy, a platform for charitable donations that manages over $130 million in assets. Prior to Daffy, Adam was CEO of Wealthfront, VP of Product Growth at Dropbox, and held product leadership roles at eBay and LinkedIn.

Grow the Pie

Brett finds the durability of businesses counterintuitive because there is an expectation that newer companies would disrupt and replace the older ones. However, many older software companies, like Oracle, Salesforce, and Microsoft, have remained remarkably valuable and relevant, which goes against this expectation.

"It feels like there's been less disruption over the last 10 years… that it’s almost been more grow the pie than the classic Blockbuster / Netflix dynamic in technology businesses.” - Brett Berson

Adam thinks we are seeing an increase in "large platform companies," but he warns of brutal dynamism in the market, noting that companies who fail to capture a sizable market share usually cannot downsize quickly enough to survive. He points to Clayton Christensen's Innovator's Dilemma.

Successful companies can focus too much on their customers' current needs, neglecting to adopt new technology or business models that would meet their customers' future needs.

"How much of the S&P 500 has turned over in the last 30 years? I think it’s over 80%." - Adam Nash

Adam suggests that we have survivorship bias. This means we tend to look at companies like IBM and Google that are still doing well, and forget about companies that didn't survive

"The truth is IBM is still around. They've been around a long time and they create value for a huge number of customers." - Adam Nash

Macro-Cycle & Market Timing

Adam compares market timing to a recurring poker game where all of the actors (competitors, employees, founders, investors) are engaged in several rounds.

“Just as surfers need to be patient and choose the right wave to ride, investors need to be patient and wait for the right market conditions before making a move.” - Doug Leone

‍

Adam shares his experience of meeting former Webvan employees at eBay in 2003. Webvan, which failed due to overbuilt capacity, was actually profitable at its San Francisco location. The company couldn't unwind its investments fast enough when capital was cut, leading to a rapid implosion.

“One of the takeaways is that you had to build a global platform from day one. There were enough people around the industry who knew that a regional build-out could work." - Adam Nash

Creating Durability

Absorbing innovation was critical for creating durability. Amazon was impressed by the wide variety of products and prices eBay was able to offer. eBay was amazed by the service that they could provide when controlling everything top-down.

"eBay looked like an amazingly high margin business as a marketplace. And Amazon looked like an amazingly low margin business." - Adam Nash

It took Amazon several years to establish a marketplace. “That wasn’t an accident… there were so many things they tried (becoming the outsourced infrastructure Toys R Us)" he says.

Delight & Surprise

The best leaders build organizations to last. That means getting clear on strategy. Adam often thinks of it as a stack:

• Strategy: What game are we playing, and how do we keep score?
• Prioritization: What are we doing and in what order?
• Execution: Your product or feature had a goal. Did it meet that goal?

‍

Solely focusing on metrics-movers often leads to losing trust with users.

"There's a bunch of places where metrics-movers make sense. But it turns out if you build products that way, they end up missing a few things. The customer doesn't care about your problem. They care about their problem." - Adam Nash

Adam suggests a framework for prioritization:

• 70% on metrics-driven tasks
• 20% on addressing customer requests
• 10% on creating delightful experiences

‍

Apple serves as a prime example of a company that challenges the metrics-based approach. Apple's core philosophy champions the idea that user delight isn't purely rational. They are renowned for pleasantly surprising their users.

The danger in a competitive market is the risk of losing to competitors who prioritize delighting users over merely improving metrics.