Real Problems We Tackle: Pricing #1
If you're curious about the interesting problems that the Clipboard Product Team solves day to day, here's one!
Image by Gino Crescoli from Pixabay
(Clipboard’s marketplace has mechanics similar to Lyft's ride-scheduling business, in that our users also “book a transaction in the future.” So we use the Lyft analogy below to leverage the understanding many people have about their business when describing a very real challenge for us.)
Pretend you’re the pricing product manager for Lyft’s ride-scheduling feature, and you’re launching a new city like Toledo, Ohio.
The prevailing rate that people are used to paying for rides from the airport to downtown (either direction, one way) is $25. The prevailing wage that drivers are used to earning for this trip is $19.
You launch with exactly this price: $25 per ride charged to the rider, $19 per ride paid to the driver. It turns out only 60 or so of every 100 rides requested are finding a driver at this price.
(While there is more than one route to think about in Toledo, for the sake of this exercise you can focus on this one route.)
Here’s your current unit economics for each side:
Customer acquisition cost (CAC) of a new working driver is roughly $500
At the prevailing wage, drivers have a 5% monthly churn rate and complete 100 rides / month
CAC of a new rider is $10 to $20 (it’s sensitive to the rate of acquisition, since existing marketing channels are only so deep)
Each rider requests 1 ride / month on average
Churn is interesting: riders who don’t experience a “failed to find driver” event churn at 10% monthly, but riders who experience one or more “failed to find driver” events churn at 33% monthly
You’ve run one pricing experiment so far: when you reduced Lyft’s take from $6/ride to $3/ride across the board for a few weeks, match rates rose nearly instantly from 60% to roughly 93%.
Your task is to maximize the company’s net revenue (the difference between the amount riders pay and the amount Lyft pays out to drivers) for this route in Toledo for the next 12 months. Let’s assume that you cannot charge riders more than the prevailing rate.
The core question is: how much more or less do you pay drivers per trip (by changing Lyft’s take)? Your goal is to maximize net revenue for the next 12 months on this route.
This scenario is very similar to some of the marketplace pricing and liquidity problems the Clipboard operations and product team works on day to day. We dive deep into the numbers and we have a bias toward action. We have real fun finding answers to these sorts of questions. :)
Output for the Case Study
In line with our actual work, the ideal output from this exercise is a written document backed by analysis. As mentioned in our blog, we do not think longer cases are “better” and value clarity far more than length.
The Clipboard Health Product Team Interview Process
First of all, thank you for applying to Clipboard Health. We’re very excited at the prospect of you joining our team and want to provide visibility into our process. To give you a view into how we think about recruiting we produced this post. We also recommend that you poke around the blog here to get an idea of how the Product Team works and our Team Standards.
Case Study 1: Lyft Toledo Case (above prompt)
Case interview + preliminary behavioral interview with a member of the Product Team
We will always give you the chance to ask questions during this stage as well, and if time allows we may go into your background
Case Study 2: Working Backwards Document Case
This is based on a scenario within our marketplace and mirrors the work we do as a product team.
Case Study 2 Review Interview
Meet with President / COO (Bo Lu)
We recognize that this is a time intensive process. We have found this as the best way to assess whether there is a mutual fit. If you're looking for room to grow problem-solving skills in a feedback-rich environment where your thinking will be challenged, we think you'll have fun in both our interview process as well as when you join full-time.
Note that we don’t always follow this process exactly and sometimes we’ll move stages around depending on the candidate and what we think is best, but in all scenarios you should expect 2 cases (starting with the above) and 3-4 conversations with members of our team. We have found that cases are the strongest indicators of performance within our team and weight them heavily during the process.
As a general rule, we do not give rejection reasons or feedback for case studies that do not progress to the interview stage. We unfortunately have limits to how many candidates we can interview and get to know. We have members of our team take time from their day to evaluate cases we are unable to provide individualized feedback to every case. Of course, we’re continuously evolving our process to improve the candidate experience and will update here as we learn from our own experiences.
All prospective members of the Product Team will speak with George Markoulakis (Head of Product) and Bo Lu (President and COO) prior to an offer.
Members of the Strategy and Operations Team (which sits within the Product Team) will always speak with Wyatt Amaral.
We’re excited for you to get started!
Edit: Some clarifications & a correction, July 2021. v2 published Oct 2021. v3 published Aug 2022. v4 published October 2022. v5 published November 2022. v6 published January 2023.