Lenny's Podcast: Product | Career | Growth
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.
00:53:06 · Peter Sellis
And so at Snap, the lesson there came from that disastrous redesign in 2018, which was the only time I think that Snap's overall DAU actually flattened out quarter-over-quarter. And what we laser focused on after that was performance, particularly on Android, existing people who are already using the app just making it much, much faster and more performant for them and that led to almost like a growth renaissance that went on for multiple years. At Discord, I think it was even more controversial because at the time, Discord has been something for a lot of people during the pandemic, during crypto, during AI, et cetera. So the time you had Midjourney being built on Discord, and Midjourney was phenomenal, just such a cool company, product, everything, and a lot of people on the outside were just like, "Wow, this is a moment. Midjourney must be huge for Discord." From a user perspective or daily active use, like a metrics' perspective, if I were to show you like, you can even look at this or online, Discord's use over time, you wouldn't be able to pick out Midjourney. The reason people use Discord is to connect with their friends while playing, before, during and after playing games. And what we did in 2024 was completely focused the team around this idea of how can we be the best place for you and your friends to play intentional multiplayer games together. It turns out even though Discord is technically, a) that technical team is phenomenal and b) it's like near-perfect in some ways when it comes to voice and things like that, there were still things we could do to make it better before and after playing games with your friends. And when we focused on gaming, which at the time everybody was like, "Everybody who plays multiplayer games, especially on PC, they already have Discord. They already use it. It's literally 100% penetration, right?" No. There were a lot of reasons that you were just on the edge and you decided not to join voice, you decided to use the in-game voice, you decided to call your friend on FaceTime instead, whatever it was.
00:55:09 · Peter Sellis, Lenny Rachitsky
As we made Discord better, as we focused on performance, we were actually able to drive some of the fastest, I think if not the fastest growth, and I'm not sharing anything that's not public, since the pandemic, obviously Discord exploded during the pandemic, and this was by focusing on the thing that everybody already said we had 100% penetration of, which was intentional multiplayer gamers. Now, from there, you have a lot of options. There are a lot of things that look like multiplayer gaming. Crypto looks like multiplayer gaming, intense coordination costs, time sensitive, et cetera. Honestly, software development looks like multiplayer gaming. There are a lot of things that you could build off of that core. But by focusing on people who play games with their friends, we were actually able to identify a lot of things that brought somebody from using Discord, let's say, 10 days out of the 30 to 11 to 12 to 13. That's actually monster growth when you think about those pockets and moving up people's L-ness, like last seven out of seven days. I think I stole that from Meta, who once again wrote a great playbook on growth. And so focusing on that L-ness of the core consumer base, I think it just ended up being so positive in both the Snap and Discord examples. [00:56:25] S0: This is a really important lesson for people trying to grow a product. The TL;DR to me is there's always money in the banana stand.
00:56:25 · Lenny Rachitsky, Peter Sellis
[00:56:25] S0: This is a really important lesson for people trying to grow a product. The TL;DR to me is there's always money in the banana stand. [00:56:33] S1: We were talking earlier about building a terrorist organization. That's a great example of a phrase that if you could ascribe, in a strategy document, you could ascribe value like there's always money in the banana stand, return to your core users, make sure it's perfect for them, like there was always money in the banana stand. I think at Discord, it had exceptionally positive externalities because the most vocal, critical, honestly like intelligent or high-IQ user base in the world are gamers, honestly. You think you've built for people who are critical about your product, who are detail oriented, unless you've built for gamers, you haven't. And to be able to turn around and say we are focused, like here's a bug thread on Reddit, show us what's messing up. We don't care how small it is, how big it is, we will fix it. It had this unbelievable positive externality of we are delivering for this community. And I honestly think this is why Discord is so great and so without pure in this specific niche is because it's so laser focused on if you play games with your friends and you care about it, this product is going to, like there are people who sit in that office who will make it perfect for you forever.
00:57:50 · Lenny Rachitsky
[00:57:50] S0: So this begs the question, when does it make sense to bet on something new and try new things? Because it doesn't always make sense to just continue refining and refining the one piece of product market fit that's worked. Any guidance to folks, and this is for consumer in particular, any guidance for when it makes sense to still make bets outside that core?
00:58:09 · Peter Sellis, Lenny Rachitsky
[00:58:09] S1: Yeah, I think there are two really incremental ways to think about it. One is if you boil down the core things about your product that are really, really great that people come to it for. So for Snap, maybe it's the camera, for Discord it's voice, and then you look to other niches, other cohorts for which that could be useful. It's a very like MBA-style, 2x2 type of thing. That's I think one method to do that and you should, honestly, always be assessing that because that's an easy one. And then, I think the second thing is one of the greatest gifts is when people use your product in a way that you didn't expect or didn't ordain because they're going through extra hoops to do what they want to do with the product. So whatever you're offering is so good that they're going through hoops to do that. For Discord, for example, a lot of it centered around communities and how people were using it to organize larger and larger communities as opposed to the 20-person gaming friend group. And when people are doing that, they're essentially voting with their feet. They're telling you, "I want to use this product for this. What can you do to make it a little bit easier for me?" So it kind of is a version of that, but it's like expanding to the next thing. And that's more like thinking about concentric circles. It's like, "Okay, we got it at the core. How do we expand, expand?" I feel like I'm doing something with my hands here that's going to be memed, but it works. [00:59:36] S0: Oh, it is. We got it.