Lenny's PodcastThe hierarchy of engagement | Sarah Tavel (Benchmark, Greylock, Pinterest)
At a glance
WHAT IT’S REALLY ABOUT
Designing enduring products and marketplaces through focused engagement hierarchies
- Sarah Tavel outlines two core frameworks: the Hierarchy of Engagement for consumer products and the Hierarchy of Marketplaces for marketplace businesses. Both are meant to strip away vanity metrics and refocus founders on what actually creates durable value: deep engagement and genuine customer happiness.
- For consumer and social products, she emphasizes identifying a single core action, making the product better with each use (retention), and then building self-perpetuating loops (network effects and growth loops).
- For marketplaces, she argues that chasing GMV and TAM is misleading; instead, founders should first tightly focus on a small ‘thimble’ market, then tip that market via growth and happiness loops, and only then blitzscale to dominate.
- Across both frameworks, she stresses ruthless focus, intellectually honest metrics, choosing markets with strong ‘currents’ of change, and never resting on perceived network-effect moats.
IDEAS WORTH REMEMBERING
5 ideasDefine a single core action and make it your true north.
Every successful consumer product has one foundational action (pinning on Pinterest, subscribing on YouTube, sending a message in WhatsApp) that both reflects user understanding of the product and strongly predicts retention. All onboarding (NUX), product decisions, and success metrics should ladder up to increasing the frequency and breadth of this core action.
Retention comes from products that get better the more you use them.
To be retentive, a product must both improve with each use and create ‘mounting loss’ if a user leaves (e.g., saved content, followers, history, notes). Use your core action to personalize experiences (like Pinterest’s ‘Picked for You’ feed) or accumulate user-specific value so that leaving feels increasingly costly.
Build self-perpetuating loops instead of relying on paid growth.
Level three of engagement is about turning user ‘kinetic energy’ into loops that feed back into the product: network effects (user actions improving the experience for others), growth loops (invites, sharing, SEO, collaborative use), and re-engagement loops (notifications tied to user-to-user interactions). Without these, you’re stuck buying growth, which is usually unsustainable for consumer products.
GMV and MAUs are vanity metrics unless they reflect true happiness.
Marketplaces optimizing only for total GMV, like consumer apps optimizing for MAUs, can grow in ways that don’t build durable value. What matters is ‘happy GMV’—transactions where the buyer and seller are satisfied enough to retain and return—measured via retention cohorts and repeat behavior, not just volume.
Start marketplaces in a tiny ‘thimble’ and create a white‑hot center.
Successful marketplaces begin with extreme focus: a specific geography and/or narrow vertical where they can make both sides very happy (e.g., DoorDash starting in underserved suburbs, Etsy focusing on handmade goods). This constrained ‘thimble’ lets you reach saturation, refine the playbook, and create minimum viable happiness before expanding.
WORDS WORTH SAVING
5 quotesI have an allergic reaction to vanity metrics.
— Sarah Tavel
When a user completes this core action, it's clear they understand the utility of the product and are likely to come back.
— Sarah Tavel
Customers don’t care how big you are. They care how happy you make them in each transaction.
— Sarah Tavel
The most ambitious founders don’t try to warm the whole ocean. They focus their ambition like a laser beam on a thimble.
— Sarah Tavel
I actually think that the most interesting markets, you have to think of them like currents, not bodies of water.
— Sarah Tavel
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