Lenny's Podcast: Product | Career | Growth
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.
00:47:23 · Peter Sellis
[00:47:23] S1: Yeah. God forbid it's a Discord group. Oh, Jesus. Yeah, I think this actually flows from the whole VORP thing, is that once you have somebody in a position... And there are a lot of tropes around this too, right? If you want something done quickly, give it to the busiest person kind of thing. But I think it's not necessarily counterintuitive, it's counter to human nature, right? If you see somebody drowning, you want to save them, and I did the absolute opposite. And maybe... Right before we started the podcast, I was talking about nominative determinism, where your name creates who you are, and joking that maybe I need to be a salesperson because my last name is Sellis. But there's also this NBA Peter Principle, where people are promoted to the level of their incompetence, which definitely could describe my career. But that's kind of what I seek to do. If somebody is strong and crushing it, I'm just handing them more and more rope to hang themselves with. And I'm pushing them as hard as possible to the point of breaking. Because at the end of the day, one of the biggest leadership principles for me is that the people on my team I will always defend in public, in front of execs and stuff like that, I never, never criticize them in front of others. And so, people who are making consistently good decisions, I just want to load them up with more decisions until I start to see them make bad ones. I think there's so much self-reinforcement or self-fulfilling prophecy of when you have confidence and when things are going well, you're able to do more. And so, yeah, I think I try and really show that I believe in people. And when I don't... Yeah, maybe this is just a personal thing. I just don't have a really good mechanism for helping people improve, so I essentially let them fail on their own. Which could be, I think, probably pretty frustrating for me as a leader to work for, and somewhat sad. I think the thing you need to control for when you adopt this type of management philosophy is that not paying attention to somebody doesn't mean they're failing. There are a lot of people that I've hired over the years, especially if I've worked with them multiple times, where I'm like, "I know you know what to do, so go do it." And I just let them execute.
00:49:47 · Peter Sellis, Lenny Rachitsky
But yeah, it's spend time with your winners, ride your race horses, give a busy person something to do if you want it done quick, whatever the stupid trope... Just give a busy person something to do if you want it done quick. Whatever the stupid trope is, yeah, I try to pursue it pretty aggressively. [00:50:07] S0: Makes sense to me. And there's many ways to say it. The one, some are kinder than others. Another contrarian take you have is that collaboration is a pretty bad use of time a lot of times. You talked about this earlier, but is there anything more to add there? [00:50:21] S1: I think when you're building a team and you talk about the team's principles or tenets or whatever, if you find yourself saying things that no one can disagree with, either those aren't good principles or tenets or maybe they need to be challenged. And yeah, I think collaboration falls under this umbrella a lot of the time. But yeah, I think we talked about kind of my reasoning there. [00:50:50] S0: Okay. Another contrarian take you have is that growth typically comes from the core of the business.
00:50:56 · Peter Sellis
[00:50:56] S1: Yeah. I mean, this one was learned a couple of times, both at Snap and at Discord. And this isn't to say that there aren't these wonderful growth strategies about expansion into new markets or things like that, but I think the nature of network effect oriented businesses is that they want to grow implicitly. And so what you can do to drive growth much more effectively is focus on people who are essentially already using or wanting to use the product for what it's for or some kind of derivative like nearby of that and just making it much easier, much more performing, much more relevant, et cetera. I think the way you could think about this like using very eighth-grade math where if you want to... I think almost every consumer product, maybe it's also a controversial take, needs to be optimizing for daily active use. Like there are very few things in... Eventually, you need to tie everything to people's natural lives and cycles and days are real, right? Weeks, they can be real, but they're not necessarily real for, there aren't a lot of things you do on a weekly regimen regularly, really, really effectively, but you wake up, the circadian rhythm is real. Very few things are done on a monthly basis, like a lot of B2B stuff, like paying bills, et cetera. I guess there's some biological things that happen monthly, we could get into that. But there's something about the daily active use or even hourly active use that I think is essential for almost every consumer product. And the idea, like if you're thinking about a daily active user, if you're going for somebody who uses the product once a month, you're going to need 30 of those to equal somebody who uses it daily. That's like very, very, very, very basic math. And so, that's why I think a lot of the most effective consumer products have extremely high DAU/MAU ratios. And so a lot of growth can come from essentially moving that ratio just a few basis points versus trying to go acquire a bunch of new monthly active users and seeing if they retain. And by the way, DAU/MAU is just a form of retention. Retention can be any period, it's just the next day. Like given you use it today, what's the probability you're going to use it tomorrow.