Lenny's Podcast: Product | Career | Growth
00:30:02 · Brian Balfour
[00:30:02] S1: So look. Like like, let's go through this cycle. We are right now. We're in that competitive environment. Like we said, like, all those players we talked about, ChatGPT, Claude, Gemini, all these folks, they're... They are battling it out. Right? And and we've seen this with, you know, the talent awards, especially over the past, you know, month month or so. And and so there's no clear winner yet, but there's consensus around, the category. The second thing is then, okay, what's the moat? Has the moat been identified and who seems to have identified it the first or is furthest along? I think there's... My hypothesis, and I think there's a lot more consensus around this now than there might have even been three months ago is that the moat is really about is about context and memory. You know, these models, you know, by themselves, if you compare them side by side, you know, they they kind of generate the same results. And so that the actual difference maker is which one has more of your context and and and because it's the context plus the model that produces the best output. And then and then that kind of starts to accrue to this loop around memory. The more you use it, the more it's able to store memory around you, which kind of feeds more personalized context, which produces better outputs. Right? And it ends up being an... You know, another one of those flywheels, another one of those another one of those loops. And so if you look at who's farthest on this, it definitely is ChatGPT. Right? Like, were kind of the first ones to memory. They've been investing a lot in these different types of data connectors, essentially context connectors, you know, gathering all of this context. And so you can really start to see it in the usage. But the second thing is in one of the pushbacks I've gotten on my prediction has been, well, what about Google and Gemini? They have so much distribution through Chrome and all of this other stuff. Right? But it was Deedy Das, who's a VC at Menlo Ventures, actually published some good data on retention of all of these different ones. And, I think the second reason I predict ChatGPT is, like, if you look at history once again, it was never the person who had the biggest distribution at the moment of time. It was the one that had the best retention and engagement.
00:32:15 · Brian Balfour, Lenny Rachitsky
Google had the best retention and engagement over the others. Facebook had... Was smaller but had way better retention and engagement over the others. Right? So on and so forth. And so, the the data that Deedy published, clearly showed that both the retention curves, which I know you and I have both written about at, you know, at exhaustion, level off at significant portions higher than all the other platforms as well as those retention curves have been shifting up dramatically over time. You can start to see the effects of of memory, and they have the very elusive smile curve. Right? The ones that you just like... And the only other times I've seen, you know, all of those dynamics very few times in my career, and they tend to be the folks like Slack and and, like, all of the big winners. It's... There... It's just, like, so elusive. [00:33:04] S0: And the smile curve just to... Just to have people haven't done with that is essentially retention goes up over time. It goes down a little bit, and then you come back to it and you use it more.
00:33:12 · Brian Balfour
[00:33:12] S1: Yeah. That's right. And it's usually the result of, some type of network effect or or something else. And and it... And it's it's a early indicator that these folk... That that that platform is on a trajectory to to hit escape velocity. The third piece is that... And they haven't really hidden these, but there's all sorts of signals that they're about to launch a third party platform. They've they've been hiring for a bunch of roles. I've seen multiple postings on, like, product manager, engineering roles, all that kind of stuff for, you know, quote, unquote, agent platform and all those pieces. And so it feels pretty inevitable that they will... One of these players will need to launch a third party platform in order to, you know, serve all the possible use cases, you know, on these tools. There's gonna be some value exchange, which is like, hey. For your agent to be effective, you probably need access to the context and memory and distribution. Right? So there'll be some value issues of integrate to us, and we'll give you those three things. Right? Is going to drive more users and more usage. And and we're going to go through the steps of we're going to go through the steps of the cycle. And you can already see this, right, like, you know, they're starting to form preferred partnerships, right, with some of the bigger players, which paves the way for smaller third party players. It kinda gives Lens credibility to the platform. It's like, well, if HubSpot and x y z are doing it, then I should probably do it too. It's it's like that type of that type of mentality. But that's why I think out of all of these platforms, ChatGPT has, the the best shot right now. And then and then a bunch of folks are always like, well, what about Claude? I really like Claude. I use Claude. Well, the problem with that is, like, I think ChatGPT at this point has, like at least a 10x difference on MAUs. So if you're a developer, right, and you're comparing those two platforms and you're saying and you're looking at it you're like, well, ChatGPT has 10x the number of users and better retention engagement. It's like, what's the logical choice of which one you're going to prioritize your scarce resources on? Right? And so those are just some of the reasons that my prediction is on ChatGPT.
00:35:24 · Brian Balfour, Lenny Rachitsky
And in in the blog post that I wrote about this, I actually then played my own devil's advocate and said, okay. Here are some reasons why it might not be a ChatGPT. But but I think we're in that part of the cycle. That's my prediction. I might be wrong in the prediction of ChatGPT ChatGPT, but I really think... I feel very confident we're gonna see this cycle play out again. [00:35:45] S0: Two follow-up questions here. One is what's your... What would be the backup if it's not ChatGPT? Sounds like it might be Gemini, Google.
00:35:51 · Brian Balfour, Lenny Rachitsky
[00:35:51] S1: My hypothesis of who's best positioned but is not executing on it right now would actually be Apple. Through the the devices, they basically can see everything. So they have the ultimate view into your context. Right? They're they're they're sitting at that they're sitting at that level. But I don't know what they're doing. It's like from an execution standpoint, maybe they're gonna surprise us with something crazy magical. But I haven't... We haven't seen any external signals around this. So so that's probably just based on on what real estate and where people live in the stock would own. And then I think right behind that, I would probably put I would probably put Google, because of owning the context of things like email and the distribution points of search and Chrome and Android and and those types of pieces. But, and a lot of people point to them. But my experience with all of their products is, like, going back to the retention engagement thing is is that if we could take a look inside their metrics, I think what we would see is a bunch of flyby users in their mouths. Like, they're kind of sprinkling the Gemini bucket everywhere. And I'm... I've I've, like, literally clicked on it accidentally multiple times. And so my guess is a huge portion of their mouths is is exactly that, of, like, what... What's happening right now. And so, you know, look. They just just acquired a very talented team from from Windsurf. [00:37:30] S0: Just the team. Just the team.
00:37:30 · Lenny Rachitsky, Brian Balfour
[00:37:30] S0: Just the team. Just the team. [00:37:31] S1: Part of the team. Yeah. We'll see. And and things are things are changing dramatically, you know, on a on a week to week basis. So we'll see if they're able to press those advantages in a very clear way, but I think the window is very small for them if if if ChatGPT plays their cards right because they clearly have the escape velocity right now. And, if they just keep pressing that advantage in in the right way, I think it's going to be very hard for Google to, counter in in the amount of time that's left. [00:38:00] S0: On the Claude piece, I'll just throw this nugget out. I had, Mike Krieger on the podcast, head of product CPO at Anthropic, and asked him just, you're you're losing to ChatGPT. What do you... How do you approach the future of anthra... Of Claude? And he very specifically said, yes. They've caught lightning in a bottle. This is just going to win based on what I've seen at Instagram. And so we are specifically focusing on what is Anthropic and Claude incredibly good at, which is developer tools, coding, backend stuff. So they're actually leaning more and more into that. And if you've seen their revenue recently, they're making, I don't know, like approaching 10,000,000,000 a year or some crazy amount of money. So they're actually doing super well just in a different use case.