Lenny's Podcast: Product | Career | Growth
00:18:29 · Lenny Rachitsky
[00:18:29] S0: Do you feel like it's getting better? And do you think... There's something I think about a lot that a lot of people say that, "PMs suck, they're useless," and I find that that's usually the case because they've just not worked with a great PM, and a lot of people haven't worked with great PMs. And so it makes the whole profession look bad and sound bad when a lot of people have, as you described, are working with these kind of mediocre PMs. Thoughts there?
00:18:59 · Peter Sellis
[00:18:59] S1: Yeah, I think you're exactly right. I've also noticed this. I feel like so much in the world right now is explained by some form of the midwit meme in some way or another. But yeah, I think you're exactly right. That is a second order effect of this kind of distribution that I think governs the whole profession. I do think it's getting better, because I think, again, a lot of people reference the ZIRP era, but I truly feel like when interest rates go down, that means opportunity costs are lower. And so when opportunity costs are lower, people are doing things like just hiring that extra person, doing stuff like that. But these opportunity costs I think are higher than are internalized because of some of the stuff we started talking about, that a lot of these costs are not internalized. And we can talk about this, but I've been really focused on developing a system for evaluating product managers, not just the person, but the person and the place that they are at that time, to make sure that the team is actually just net positive. And in my experience, and we can talk about what some of those methods are, but in my experience, the way this ends up is that I really don't hear great engineers complain about product managers that much, because great engineers, A, they know how to bend product managers to their will. They get the use out of them that they want. And B, they just don't put up with bad ones, so they don't get assigned or they don't get to work with bad product managers. I think ironically in a midwit meme or the horseshoe theory of things, really bad engineers also don't complain about product managers because they know they can just hide behind their decisions and stuff like that. So, it's really just the ones in the middle that are complaining.
00:20:50 · Lenny Rachitsky
[00:20:50] S0: I do want to ask about Snap. I feel like it's a company that doesn't feel like it lived up to the potential of what I think Evan and everyone imagined it could be. I imagine the main reason from, and I had Evan on the podcast, is just the users that it's going after are just hard to monetize. Is that the core of what has kept Snap from becoming a bigger success, or is there more to it?
00:21:14 · Peter Sellis
[00:21:14] S1: I'll try and be as objective as possible, Lenny, because this is a little bit of my life's work and maybe I do have some level of chip on my shoulder, or... Yeah, I'll try and be as objective as possible. So I'll say two things, maybe three things about Snap from a monetization perspective, at least an ads monetization perspective. And then we could talk about they've had a lot of success with Snapchat plus and subscription products in general are doing well, but ads are truly the magical product market fit of consumer monetization on the internet, and there's a lot of mathematical reasons why that's true. And there are three things that hold back Snap from an ads perspective that I think the company, like we still talk about, is we deserve a little bit more credit maybe than we get, but I understand why we don't. The first is yes, the user base is extremely young. Snap appealed to Gen Z at an excessive rate early on, now even I think Gen Alpha as they graduate from Roblox and stuff like that. And there is a step change, literally a suspicious discontinuity in advertising CPNs between 17 and 18 and between 18 and 21 in the United States and abroad. If you're under 17, the rules around how you can track and measure and target ads are extremely constraining and justifiably so, right? To protect teenagers. That means that it's essentially much harder to drive ROI from this group of people versus an 18-year-old versus a 21-year-old and 24-year-old. And you can say all you want about, "Oh, the teenagers influence their parents, blah, blah, blah." The key thing to think about is, those are just harder to measure and it's harder to build performance products around things that are hard to measure. And so yeah, Snap's audience is definitively less valuable from that perspective, versus like a Pinterest or an Instagram or a Twitter. The second thing is, almost every ads business, every ad product you'll see that isn't search based, every display ad product opens to the screen where you put the ads. There's a lot of studies around attention and just mathematically where you're going to get the impressions, where you need to maximize that for advertising. And Snap opens the camera and that makes it awesome as a product, in terms of its ability to be the fastest way to capture a moment and share it with your friends.
00:23:33 · Peter Sellis
But in no part of that flow, the core flow of taking a Snap and sending it to your friends, is there a logical place for an advertisement. It is just not a feed-based product and it is not a consumption oriented product. It is a creation oriented product, a visual creation oriented product, and there don't really exist a lot of advertising kind of formats that go after this. We experimented with this a lot at Snap, and probably one of my biggest failures was the ability to drive camera monetization. It was literally just too hard. I couldn't figure it out or I couldn't green light the teams that could figure it out. And yeah, so it's a very hostile environment for advertising from that initial thing. And then at its core, it's a messaging app, and there aren't really great ad products for messaging apps right now. I think even the monetization of certain messaging apps via subscription or via business accounts, and people will always cite some of the Asian chat apps as examples, you peel it back and from a dollars per time spent perspective, none of these are doing that well. None of these are exceptionally great at monetizing. Message apps are incredible, utilities are incredible to have as part of a portfolio, but Snap was trying to build a multi-billion dollar ads business very quickly on a lower value audience, a very tough format for ads, and a service that was more utilitarian than consumption oriented. ... service that was more utilitarian than consumption-oriented.
00:25:03 · Lenny Rachitsky
[00:25:03] S0: Wow, that was fascinating. I think it's important to note, Snap is doing, it's a many multi-billion dollar business, I think a billion monthly active users, all the teams use it. In the scheme of things, it's very successful. It's more just everyone thought it was going to be much, much bigger like the next Facebook.