Lenny's Podcast: Product | Career | Growth
01:01:26 · Lenny Rachitsky, Mark Pincus
[01:01:26] S1: There's a whole discussion I want to have about the abyss, which you talk a lot about in the book, about how that's such a source of good ideas. But I want to touch on distribution just as we're on this thread. Something that's come up a lot on this podcast is just how with AI making it so easy to build stuff. One of the biggest challenges becomes distribution. Always been a challenge, always been hard, harder than ever, because there's so much happening in the market constantly, so much trying to get your attention. All the channels are full paid and SEO. What's your just advice to founders? What do you think needs to be true for a startup to break out? Because it's so hard now. [01:02:00] S0: Let's start with talking about consumer distribution, which I understand better. [01:02:06] S1: Yes.
01:02:08 · Mark Pincus
[01:02:08] S0: There's one question we got to back up and really explore, which is AI a new platform? And I would argue that it is not yet a new platform. It is an important technology. We have a new kind of portal to that in GPT or whatever chat we use, AI chat, but it's not in my mind a platform. A platform in the traditional sense of it was a hardware platform. Well, it's definitely not a hardware platform at the consumer side yet. People are trying to explore that, but it is not yet. And then it became at least an interface platform, whether it was a Windows interface or a browser interface or a social network that opened up. And in the case of mobile, it was both hardware and an interface. We're not at that point yet. I believe we will get there. I don't know how I have ideas, but we're not there yet. And it's important to acknowledge that and say we're still in the mobile and web era. We still use a browser. And even though we're in this chat app, it is not a platform for other apps and experiences and developers. It could be. I hope it becomes one, but it's not yet. And we're kind of like halfway to a platform. We are in a point of discovery. New technologies that break through at the consumer level unlock discovery. That's really important. Discovery means when we first got our phones, we were installing new apps all the time. Now we don't ever install new apps. The average app installs per user per month is zero. So it's really important to think about that, that not only are we not in discovery, but even when we are, it doesn't stick. There was something like 40,000 new games launched last year in the app store and zero became top 10 hits and zero even sustained top 25 or 50. So your odds are bad. Okay. So it's not an ideal moment to be ... You can't launch consumer right now with high confidence. And that's just something that we have to acknowledge and it makes consumer and consumer categories like social and games almost not investible. They're still getting investment, but it's very hard. It's much easier to be prosumer or enterprise now, but for good reason because we're seeing those companies scale revenue ARRs very quickly. So I do think it's a great time to be working on consumer ideas. And you asked about distribution.
01:05:09 · Mark Pincus
Distribution is just so crucial and core to any consumer, any business idea, but any consumer idea, and it can't be an afterthought. It's not, I'm going to build the best mousetrap and they're going to come. Distribution has to be part of your product and part of baked into the strategy deeply and proven from the beginning. And if you're just building this product and hoping they will come, hoping it'll spread virally or word of mouth, that's hope strategy, not a belief strategy. And it doesn't mean you shouldn't keep experimenting and now is a great time to experiment. And in fact, it'll be a hundred times more expensive to try to get the same things in the market in a year because it'll be a hundred times more noise. And once there is distribution, there'll be a flood of competition. But when distribution is this broken, it is even more core to your product and your strategy. And I think we're seeing many more successful companies that find a prosumer approach, they go after their power users, their whales, the people who care enough to find it, care enough to spend money on it upfront to sustain a business long before we can get out to consumer. There is a great idea that Garry Tan had that I'll repeat here because I loved it so much this week, that if we get in the mindset of basically intelligence on tap, free tokens and if we think that the amount of tokens that we're buying today, that will basically be free in a year or two, that the token supply is going to go up so much. Our demand will too, but if today we start building, re-imagining consumer services based on free tokens, I think that's such an interesting innovation zone and it could sound like a dot-com business plan when I remember ordering pig ears from my dog, Zynga, and wanting to send thank you notes to the VCs because they were cheaper than at Petco. That's not a good business plan. So giving away tokens at a loss isn't a good business plan, but it might be in a phenomenal business because what the dotcom thing had wrong was the price of pig ears wasn't going to come down or delivery wasn't going to come down, but the price of tokens will.
01:08:01 · Mark Pincus
And so I think that's another kind of Easter egg of an insight that I'm intrigued by and I think founders are going to do something really interesting with it because games don't work, freemium games and freemium apps that have to go and hit the AI that even if you wanted to spend on it, you're hitting token limits. So getting around that today might unlock really interesting innovation. And also just another Easter egg thought on the social cocktail party. I love the idea of the agent being in the middle on brokering our social relationships and getting back to that lead gen, dating, jobs, general listings. But I love the idea that the agent has our context and knows my context and your context and we have this membrane, I call it the social membrane, this intelligent membrane of trust and it gets smarter and smarter at knowing when to change dynamically change that trust or change that attention level that it's going to take from us like a great chief of staff and it could share less information with both of us than it knows. It could be you're in Marin and I'm like, "Lenny, let's hang out." You're like, "Mark, I'd love that." So okay, let's have our social secretaries work on that. There's going to be an asymmetry in your interest and my interest in any given weekend and hanging out and how do we broker that without hurting one of our feelings or going into ... There's some really interesting spaces that the AI and the agent can broker between us in ways that start to give us both productivity. They find ways for us to get together without getting in a bad place of you see me on your calendar for Saturday and you want to be with your kids.
01:10:15 · Lenny Rachitsky, Mark Pincus
[01:10:15] S1: I love all these ideas you're sharing. What I'm hearing there, there's this always this idea of why can't we just, here's my calendar, here's your calendar, let's just find time. And the issue there is you don't want to ever feel like you don't want to look like you've got nothing going on and you're like the most boring person. You don't want the other person to know. [01:10:29] S0: Yeah, it's totally open, available to you. [01:10:29] S1: Yeah, exactly. [01:10:34] S0: And even worse, you don't want it to schedule you for a meeting that was not your party. [01:10:41] S1: Yeah, that's right. Just to close the loop on the distribution part, what I'm hearing is we might be on the verge of a new distribution platform, a way to get out and for people to discover you. It's not there yet.
01:10:53 · Mark Pincus
[01:10:53] S0: I'm somewhere between belief and hope in this because I don't have enough evidence to believe it and it's a little more likely to me than just hope. I think right now there's a obvious race and competition around coding between the major LLMs. I think they're going to get back to consumer and prosumer and developers' hearts and minds. And I think they are interested in developers' hopes and minds, but first they're competing on this coding front. But I think where we will get to one way or another is that there will be some kind of consumer facing platform for AI apps and agents. I can see so many consumer facing agentic services that make so much sense to me that I think consumers will want, but they're not going to get it because if it's just buried in ... I doubt they're going to get it buried in the mobile app store. And I think it's going to be in OpenAI's interest, Claude, Grok to see these apps, consumer facing agentic service apps happen and see them be successful with their LLM baked in. And the more it's uniquely instantiated to OpenAI, the more it drives their consumer value proposition. One example that is my number one is my Easter egg on this is I think there should be an agentic travel agent. So a perfect example to me of a place where I think there is latent demand and the only reason we don't have it is because it doesn't make economic sense to offer it to us because we won't pay enough for it is a travel agent. I believe if I offered you a free 24/7 travel agent that was always there for you, knows your travel context, knows you, and will actually not just book travel, but I think the most valuable part is when you're in the middle of a travel, a trip, be ready to rebook your flight and be on top of your travel logistics as they're happening and often failing. And I think that's valuable to all of us but not available to all of us because travel agents couldn't make a living. They weren't getting enough commissions and we weren't ready to pay enough. So the internet has grown through us getting a better deal, but I think that the next area of growth probably will include deals, but I think it's going to be about getting amazing services and that's my prime example. But if someone built the best travel agent today, maybe we'd find out about it, but it's a tough road.