Lenny's Podcast: Product | Career | Growth
00:36:51 · Lenny Rachitsky, Peter Sellis
[00:36:51] S0: That is such an interesting insight, especially these days because AI is very bad at removing things from designs and from products, it always adds, it doesn't say, "Hey, maybe we should cut this piece." And so, it's so interesting how this connects now to the... We talk about taste all the time with AI, and this is an interesting element of that, of being good at understanding what to remove as AI becomes a bigger part of the building process and designing process. [00:37:20] S1: Yes. Yeah. This will be hard, I think, this is a hard skill for AI to replicate. I think in general, it seems like right now it's obviously at the code level, it's getting to the design level, in some cases at the video and the photo level, it'll eventually maybe even get to physical level as well. But it's really going to empower anybody to be a creator, and we've seen this in the past. Lowering the threshold for creativity, not just enables the existing creators to do more, but it enables people who were otherwise bounded out or restricted from entering the arena to enter it. But this will put a lot of pressure on essentially creating stuff that deserves human attention in a way that I wonder if there are some analogs to this in the past. We'll have to think about it. [00:38:22] S0: And it just feels like an interesting new skill for PMs is pushing back on things, AI is adding to your products, engineers are like, "What if we had this?" So, it's not even on AI right now, it's on the product teams basically to cut stuff. Anyway.
00:38:22 · Lenny Rachitsky, Peter Sellis
[00:38:22] S0: And it just feels like an interesting new skill for PMs is pushing back on things, AI is adding to your products, engineers are like, "What if we had this?" So, it's not even on AI right now, it's on the product teams basically to cut stuff. Anyway. [00:38:36] S1: Yeah. Yeah. Well, it'd be pretty funny if the conclusion of every Lenny podcast is basically, yeah, the world might just need more PMs. [00:38:43] S0: Yeah.
00:38:45 · Peter Sellis
[00:38:45] S1: Crazy. I subscribe to the Eric Seufert side of the world, of ads are the product market fit for the internet. And I still think that from a monetization standpoint, there's a number of reasons, again, mathematical, for why that is true and why I think subscription products and things like that are overrated versus ads from a consumer side of things. When I look at what OpenAI is doing from an advertising perspective, they are speed running all of the ads infra that is exactly what you would want and do. At Discord, I call this last mover advantage because we've learned so much and we're at a certain place with online advertising... And really Meta and the team there from 2010 through 2020 really deserves, I think, most of the credit for this. What drives a modern ads marketplace and auction is essentially a solved problem, and OpenAI is speed running all of the components of that. And I do think that the mechanism, the mathematical mechanism, which is essentially a modified VCG, I think Vickrey-Clarke-Groves auction mechanism, this mathematical mechanism is the correct way to build an ads auction in even a chat environment, in ChatGPT. And what I mean by that is I think where the innovation came from Meta was not just that the highest bidder, and I'm oversimplifying like crazy, but not just that the highest bidder wins, but that the organic value of an advertisement and an advertiser to that user should be factored into their bid, such that you essentially have to pay more as an advertiser to reach people who may not want to be reached, or may be harder to reach, or may not necessarily be as relevant to you, and this also is great because it allows you to mox both content, organic content and advertising content, on a unified auction with dollars as essentially the ultimate denominator. And the reason that I say that this is good for chat is not necessarily that organic value is what's important here, like how much you like an ad or not in a content feed, but in chat, it probably feels like this could be replaced or augmented with essentially trust. If you boil this down to something very simple, it's just like, "Hey, what X should I buy? What mic should I buy?" And in that moment, we have to decide should I give you the objective answer? Should I give you a set of answers?
00:42:24 · Peter Sellis
And how influenced should I be by a set of advertisers that want to get in front of you? And I think the mechanism by which how influenced I should be should essentially be how much trust I'm trading off. And you see us failing at this a little bit probably... And I really don't want to pick on anybody because I know how hard it is to build these types of things. But a little bit on Amazon search, in terms of the ads, the sponsored experience there, it's not threatening the product, Amazon is such a great product, but what is the great product of Amazon? It's the selection and the next day shipping or whatever. It is getting a little crazy when you search for something and you have 16 ads before you get to the first thing, and you're like, "Oh shoot, is that subtly influencing my trust in the system?" And so, that's why I actually think OpenAI is speed running all the right stuff, and where the push is going to come to shove is how they instantiate it mathematically in their auction mechanism to maximize trust over the long term, because trust maximization will probably be correlated with user retention, if not causal, and with advertiser value. And then on the other side of it, it's probably a format question. What does this format look like in chat? What if it's voice? We don't know. So, I think one of the coolest jobs right now for a PM and designer would probably be ad formats at OpenAI. That's a societal level job in advertising right now. And so, yeah, I think it'll be really interesting to see how they work on that. Yeah, maybe one other thing I'll say is I was disappointed that they jumped right to an ad-free experience for the top tier, because I feel like ads could actually be really additive to every part of the OpenAI, not like coding and things like that, but actual chat. Like, let's set aside work and coding, and lopping off your most valuable users so early. I was a little disappointed, but I understand why people do that.
00:45:32 · Lenny Rachitsky, Peter Sellis
[00:45:32] S0: It is so fun to listen to you talk about this as you take a swig of your vodka right there. [inaudible 00:45:38]- [00:45:38] S1: It's actually really, really fancy water. [00:45:39] S0: Okay. [00:45:41] S1: Yeah, yeah. [00:45:42] S0: That you replace with vodka so nobody can tell this is the key. [00:45:46] S1: That's right. If you keep me on for another 30 or so minutes, it'll really get ugly. Yeah. [00:45:51] S0: Yeah. So, what I was saying, it's so fun to hear you talk about the ads ecosystem, and it shows how much you know and how deep this goes. I feel like we could do a whole episode on this probably. Don't need to do that right now, but it's amazing. Clearly you've spent a lot of time thinking about ads. What I'm also feeling now is OpenAI needs to hire you immediately to help them with this. [00:46:16] S1: Yeah, yeah. I guess free agents, so maybe that's my ulterior motive of being on the pod. [00:46:22] S0: This is the interview. Well, I think you've passed. Okay, I'm going to go to something else. So, we were chatting about what to spend time on, and I asked you what are some counterintuitive lessons that you've learned over the course of your career that go against common startup wisdom, common leadership wisdom, and there's four you shared, and I want to just go through them and get your take because they're awesome. [00:46:46] S1: Okay. [00:46:47] S0: So, the first is, you like to spend time riding your best people into the ground versus improving the average people. Share more.
00:46:47 · Lenny Rachitsky, Peter Sellis
[00:46:47] S0: So, the first is, you like to spend time riding your best people into the ground versus improving the average people. Share more. [00:47:00] S1: I'm realizing you read this out as like, he's building terrorist organizations and all he does is ride his best people into the ground. [00:47:06] S0: This is going to be the title of the episode. [00:47:10] S1: Yeah. There's going to be a recovery group, like a therapy group of PMs that work for Peter Sellis. But honestly there probably should be. [00:47:18] S0: No, [inaudible 00:47:18], I'm not worried about that. They're all sitting in Discord chatting.