Lenny's Podcast: Product | Career | Growth
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.
00:38:40 · Brian Balfour
[00:38:40] S1: Yeah. I'm glad you mentioned this because this brings up something that we skipped, which is there are smaller platforms that have existed and will also emerge in this environment as well. And and that's kind of like what you're alluding to is that this tends to happen is like things end up, know, growing into more niches. Even if you look at social, right? Like LinkedIn emerged as a subset of the social world. But even on these smaller platforms, these new distribution channels, they they go through the same cycle. I'll I'll give something, you know, really, a a very opposite example of the ones that I gave. Like, look at the platform Udemy. Right? They they are a platform for course creators. Right? I don't know if most people know this, but when they started, their rev share to creators was something like 80% to creators. They started very high. And that brought on all the course creators, got their whole marketplace going, like so on and so forth. I believe it was about a year ago they announced that they're essentially pushing that rev share down to something like somewhere between 1520%. They're somewhere at like 2530%. So another example of they closed down organic distribution in order to monetize all that kind of stuff. And the same thing will happen in this AI world. I believe you know, Cursor... It's very clear, like, Cursor is on a path to also probably create some type of agent platform, right, for developers. So that'll be like a smaller ecosystem to play in for, some some products. There's all sorts of... It feels like everybody has the same strategy at this point as everybody wants to launch an agent platform. I imagine some of these other horizontal productivity tools will do the same thing, maybe like a Notion or an Airtable or like a monday.com or or something like that. So there there are... There will be smaller platforms that will emerge, and they will follow the exact same cycle that I am... That I'm also discussing. But, yeah, in terms of, like, the biggest kind of consumer one that... That's where I think ChatGPT has probably the the most escape velocity. And, and, yeah, others will focus on different areas. And and just to be clear, I love Claude. I actually use both Claude and ChatGPT all for for different things. I I have lots of love to go around for all these tools. I'm not...
00:41:02 · Brian Balfour, Lenny Rachitsky
My prediction has no no bearing on which which product I I like the most right now. [00:41:07] S0: I also love Claude. So I think with... So the key point here you're making is that there's almost a a number of distribution channels emerging. Many of them will be niche. So I think of LinkedIn if I wanna... Like, LinkedIn for me is a very targeted audience for folks that listen to this podcast. So even though it's not, I don't know, Google or Facebook or whatever, it's still incredibly valuable for this specific thing that I do. For sure. So I think this is even more interesting that there's gonna be a number of distribution channels that emerge out of this whole AI wave. The other thing I'll note real quick, you mentioned this idea of everyone's building agents. I just had Bret Taylor on the podcast who's building Sierra. And we actually... He made me realize why everyone's building agents partly. One is because the the outcome based pricing that you can charge with agents is incredible because one, you can actually attribute their impact on your business' ROI. You can actually see this is saving an agent $15 because it solved the case. And it's attributable and it's autonomous. It's just doing it on its own. So with that, you can charge per outcome. You can say, We'll charge you a dollar every time it solves an issue. So the monetization opportunity is huge and the margins go up like crazy.
00:42:18 · Brian Balfour, Lenny Rachitsky
[00:42:18] S1: Do you... Can I just ask a question about that? Do you think that has longevity, in the sense that, that makes sense in the current environment that we're sitting in right now because people are kind of comparing these outcomes relative to what it costs them today with pure humans. But once again, competition comes in at some point. And so that feels like that creates a pretty ripe opportunity to, you know, undercut and come into... And then then you have, like, whole... All, like, the disruption theory kind of playing out as well. And so, it obviously depends on like the infrastructure costs and compute costs to to to run these things. But I just wonder how much of that is, temporary versus versus something that'll be long term. [00:43:06] S0: So you're saying that dollar will come down to, like, 50¢, 25¢, or are you saying someone's gonna come with a whole new business model and disrupt that whole approach? [00:43:15] S1: More the first. Yeah. Like, it's just competition erodes that away, essentially. Right? Yeah. [00:43:19] S0: Yeah. That's a good point. So margins will be higher for a while, and then they'll come down. [00:43:23] S1: Yeah. In there's, something else that, creates, like, durable pricing power. [00:43:31] S0: Right? I wonder if that... Yeah. So I wonder if what [00:43:34] S1: that is. The second piece of this. Yeah. Yeah. That's probably the second piece of that hypothesis, I I feel like. Yeah.
00:43:34 · Brian Balfour, Lenny Rachitsky
[00:43:34] S1: that is. The second piece of this. Yeah. Yeah. That's probably the second piece of that hypothesis, I I feel like. Yeah. [00:43:38] S0: Yeah. I think... I guess the opportunity there, the moat would be the data, like, similar to how Cursor is collecting more feedback on what is... People want in their code suggestions. Maybe in theory, CRF and has more and more data over time, and there's kind of this network effect. Yeah. That's right. [00:43:54] S1: Yeah. So so let me revise that. Yeah. It's like, I believe in that as long as it's paired with Samote. This this second piece. Otherwise, it gets competed away. [00:44:02] S0: Yeah. Mhmm. Good tangent. Okay. One more question. What's the... What is your prediction on timeline for when things... When the opportunity appears? And what do you predict as of the day we're recording? What do you predict will be the next couple things that open... That ChatGPT, and let's just focus on that releases to start to open up this platform to get everyone in there?