Lenny's Podcast: Product | Career | Growth
00:11:26 · Lenny Rachitsky, Hector Serrano
[00:11:26] S0: Yeah. Talk about Trybe, it's t r y b e. Right? [00:11:29] S1: Yes. T r y b e. So Lukas Pakter, he's this guy who started Trybe, but before that, he actually started SquidHaus, which is a clothing brand, and he grew it really fast through TikTok shop. But there wasn't really a way to do the same thing on Meta, So he made this internal tool where they could run creators ads and pay them based off performance, and then he basically made it available for everyone. And we were one of the first companies to hop on, and when I saw it, I was like, this is a no brainer. It's like the TikTok shop method, but for meta ads. And since SaaS companies aren't able to use TikTok shop, it's like now they've unlocked this sort of... This new channel for SaaS companies to be able to run performance based ads. And, yeah, we hopped on there, built out our program, and, I mean, if you fast forward to now, we're now launching, like, 500 to 600 ads every single month, and it's been a great process. Obviously, that's kinda skipping a lot to where we're at now, but just wanted to kinda give an idea of what we tried, how it worked but also didn't work, and then how we ended up on the performance based model that we have now for paid UGC. [00:12:30] S0: Okay. Amazing. We're gonna go much deeper, but just to make sure everyone understands what we're talking about here. So when you talk about organic UGC, it's not free. It's basically you're getting influencers, creators to create a pitch basically for Wispr. You take their video, you put it on your channel, and you pay them per views.
00:12:30 · Lenny Rachitsky, Hector Serrano
[00:12:30] S0: Okay. Amazing. We're gonna go much deeper, but just to make sure everyone understands what we're talking about here. So when you talk about organic UGC, it's not free. It's basically you're getting influencers, creators to create a pitch basically for Wispr. You take their video, you put it on your channel, and you pay them per views. [00:12:48] S1: No. So so they post it on their channels. [00:12:50] S0: They post it on their channels. [00:12:51] S1: Yeah. Yeah. So it's a CPM based. So let's say, again, we bring you into the group, and then you make your own channels on TikTok and Instagram, and it'll be like Lenny whispers or Lenny talks. It can be anything really, but it... You wouldn't post it on your main Instagram. You'd post it on an alternate, and then we would pay you a per... CPM based. [00:13:10] S0: Okay. So the big difference here is instead of CPM based, which is basically views based, it's... They take a percentage of spend or Yeah. [00:13:20] S1: Percentage of spend or GMV, depending on if you're in SaaS or if you're e com, something like that. [00:13:26] S0: Awesome. Okay. Cool. Yeah. So you've shifted to this model. It's basically performance based UGC. Just to be very clear about what this... How this works, you find... I think you have something maybe like 50 creators right now? [00:13:40] S1: Yeah. Right now we have 50.
00:13:40 · Hector Serrano, Lenny Rachitsky
[00:13:40] S1: Yeah. Right now we have 50. [00:13:41] S0: Okay. And we'll talk about the progression that you recommend starting with a couple. So you find creators, you... They make a video talking about how awesome Wispr Flow is. You use that video as an ad on Meta and TikTok and other platforms, and then they get a cut of [00:13:56] S1: how that ad performs. Exactly. [00:13:59] S0: And then you have two kind of approaches to the cut they take. Talk about that.
00:14:03 · Hector Serrano
[00:14:03] S1: Yeah. So, obviously, we don't wanna just pay creators just off percentage base, especially early on. Because if you come into the group, you make 30 videos, and you only make a $100 off of commission, then it is pretty demoralizing. And a lot of times we see with our best creators, they're our best creators because they've stuck around for the longest and they've understood how the model works. So one thing we actually have included is is it's it's called a smart retainer. And what this is is basically like us saying, okay. We're gonna back you as a creator, and let's say we're gonna we're gonna do 25 videos, and we're gonna pay you a thousand $500. As long as you hit that quota of videos, we'll pay you that money. But depending on how much they earn in commissions, then we might top them up, or we might not even add that swai retainer in. So here's to make it a bit more clear. Let's say that you're in our program and you hit the 25 videos and you only make $500 in commissions, then we will pay you an additional thousand dollars because you hit that quota. But let's say that you also hit that quota and you make $3,000 in commission, then you strictly keep commissions, and we don't add any smart retainer. So it's kind of us saying, as long as you hit these videos and you hit these metrics, we will pay you x amount, and it makes this so that creators that join in the group month one, month two, month three, maybe they're not able to reach over that amount in strictly commissions, but they're able to make some sort amount of money so that they actually stay dedicated and keep growing. And then three or four months down the line, you see these creators start to break out and make purely commission space, which for me as the guy running the program or if you're a brand owner, that's like the best thing because you're paying them pure profit or or pure of the best performing videos instead of paying out of pocket. Also, I think some good background is I'm a creator myself. So I found that a lot of companies... And even at Wispr, we were doing this sometimes as well. It's like we would give briefs to these creators to make ads for us, and we would give them this whole sheet where it's like, don't say this. Say this. Use these hooks. This how is we want you to talk about the product. This is how you need to film the product.
00:15:56 · Hector Serrano
And it's like when you send the creator a 10 page guideline on how they need to shoot their content, what they need to talk about, you end up removing the creative aspect that creators have, and there's nothing more demotivating than that. And I know as a creator, like, if I have a brand that trusts in me, brings me in for a reason, and just opens the doors for me to create content, how I see best fit for the product, you're gonna get better content out of me than if you just put me in this box. So that's one of the main reasons that a lot the creators wanna work in our group, and we also keep it really tight knit. So it's like this tight knit feeling. We bring the best of the best, and then on top of that, we keep it really open for them to experiment, do whatever they see fit. They're all fans of the product, and then on top of that, they're not capped at their earnings. We're not paying them a $100 per videos. We're not paying them $50 a video. It's not a thousand dollars for the month. It's like it's truly uncapped. If they have really good videos and they put a lot of effort in, we have creators now that are making like $13,000 a month, and that's not really possible with other forms of UGC or even influencers. They're making more money than than full time influencers, and they might have like 1,000, 2,000 followers on on their own Instagram accounts. But this has just been a way for any creator who's talented to be able to make real, like, money.
00:17:06 · Lenny Rachitsky, Hector Serrano
[00:17:06] S0: Awesome. And the way you do it is if it's a shopping sort of product, you give them percentage of GMV, and then if it's the b to b SaaS product, you give them percentage of spend. [00:17:15] S1: Yeah. Especially if you have, like, a freemium product where it's hard to track direct conversion because we also don't wanna get in a place where, I don't know, maybe people are converting off their ads or maybe they're not, maybe they're purchasing, and then we're running those ads and profiting off those ads and they're not getting, like, like, they're not they're not getting paid what they're worth. And with a product like Wispr where it's kinda hard to track those attributions or it might take a week or two, it's best if we just keep it at percent of ad spend. But, obviously, if you're, selling, I don't know, a water bottle or a t shirt, and it's, like, really easy to track whether the person came from this ad or that ad. And if they purchase or not, then it makes more sense to do a percent of GMV. [00:17:49] S0: So the innovation here that has worked really well is giving the creator a kind of a piece of the action of the success of their ad. [00:17:58] S1: Exactly. [00:17:59] S0: Awesome. And then also capping the downside so that they can actually spend time doing this versus being worried that they... They're not gonna make a living.