Lenny's Podcast: Product | Career | Growth
00:54:34 · Lenny Rachitsky, Brian Balfour
[00:54:34] S0: So going back to that amazing quote that you shared at the beginning of the conversation by, I think it was Alex Rampell Yep. Of that startups win by finding a distribution channel before the incumbent copies of them. And what you're saying here is this is the opportunity for startups to disrupt an incumbent. This is the opportunity for someone to disrupt Salesforce, I don't know, ServiceNow, all these guys that have been around for a long time. Yeah. It's gonna be one of [00:55:00] S1: the major ones. Now look. You've already seen players that are... Have been able to hit this escape velocity, you know, the the cursors and stuff of the world. And and so there... Once again, there's multiple ways to hit that escape velocity, but this is gonna be one of... This is one of the major ways to do it is to basically hit yourself to a new platform. Look. You did it yourself, actually. You hitched yourself to sub stack super early. You took a focus bet. Yeah. Yeah. I was like, I don't know why that just hit me, but you took a focus bet, and you've benefited from it in a disproportional way than those that kinda came later. And I think that's actually a great meta example here as as I sit here and think about this. Yeah. That's actually the way [00:55:45] S0: I thought about when I was moving to substack. Just like, I feel like there's this wave rising, and I wanna ride this wave even if it... Maybe it's not the best place or may... You know, they take a cut, all that stuff. Yeah. But it worked out really well. That's right.
00:55:45 · Lenny Rachitsky, Brian Balfour
[00:55:45] S0: I thought about when I was moving to substack. Just like, I feel like there's this wave rising, and I wanna ride this wave even if it... Maybe it's not the best place or may... You know, they take a cut, all that stuff. Yeah. But it worked out really well. That's right. [00:55:56] S1: And I think it worked out very well. [00:55:57] S0: It worked out really well. And to be honest, it it felt like it was too late the... When I started When [00:56:03] S1: you when you entered? It felt [00:56:04] S0: too late? [00:56:05] S1: Yes. Oh, same work. [00:56:06] S0: What's that? It always feels too late, I think, to people that join. Like, Silicon Valley... Or sorry. Marc Andreessen has this famous quote. He's like, I came to Silicon Valley in the eighties. I thought it was over. It was too late. I missed all the opportunities. That's fair. Yeah. So... Yeah. There were just a lot of newsletters that were doing really well. Million subscribers. [00:56:23] S1: I'm like, wow. And what do you say to people now who wanna join Substack? [00:56:26] S0: Let's learn from this example. A lot of times when people think that it's too late, it's it's definitely not too late, it's always only just getting started, especially if you're, like, on Twitter all day listening to podcasts like this where we're surrounded with this bubble of everyone talking about something when in reality, like, 1% of people know anything about what you're hearing about every day. [00:56:45] S1: Yeah. Yeah. That's so interesting.
00:56:45 · Brian Balfour, Lenny Rachitsky
[00:56:45] S1: Yeah. Yeah. That's so interesting. [00:56:47] S0: Okay. So coming back to the advice, say someone is sitting there and talking to their manager, Brian just shared all this mind blowing advice. We gotta pick our battles. We gotta pick our platform. What would your advice be for them to decide where to where to place their bets?
00:57:05 · Brian Balfour
[00:57:05] S1: Yeah. So I think this is a great question because once again, you know, put my personal prediction aside for a second, and and I would encourage everybody to think about it from... First principles from their... Like, who their audience is, what their product is, what stage of company they're at, like, all the... All those... There's current strengths and weaknesses. You gotta take all this into account. But if I had to boil it down to a few criteria, the main things I would think about is when you're looking at new distribution channels and new platforms to choose on, one, kind of going back to what we said before, is the better signal is retention and depth of engagement of the users on this platform than it is like pure kind of user level, like, some some other, like, number of sign ups, know, one of one of those vanity metrics. So look at that number one. Number two is there's some element of user quality and ability to monetize the users on this platform. I think the starkest example here would be iOS and Android. It's like even though... Even today, it's something like Android has seventy seventy some percent of devices, but only 30% of the market share by dollars, and it's the exact flip, for iOS. So it kinda goes back to what we were talking about earlier, which was if you bet on Android only, you probably lost. But if you bet on iOS only, even though smaller user base, you could... You you were still able to parlay that into a win, later. The third thing to look at is as these platforms emerge, just analyze what the value exchange is. Right? So what are they giving you to incentivize you to develop on their platform? And, and, like, all these platforms are a bit of a... It's a bit of a game of whoever understands the rules and how to arbitrage the rules the best, right, tend to be the ones with the with the edge, and figure that out. And then and then finally, fourth on my criteria would be pure scale. Right? Obviously, even if you have those other three, but there's, you know, 200 x difference in in scale and and momentum, then, like, obviously, you probably opt to choose, the the bigger platform. But last but not least is as you go through these criteria, this is... This... These are how you think through entering the game. You know?
00:59:25 · Brian Balfour
And once you enter the game, then you immediately need to move to starting to think about how do you exit the game. Knowing once again that that that last step is going to come at some point in the future that there's gonna be some closure for monetization, then that's where you have to start thinking through your strategy to exit. And that comes down to things like, okay, well, how are you going to own a important part of the user experience or workflow? Or how are you going to accumulate specialized data in context that the major platforms don't have? Or how do you create different types of micro network effects? Like, all of these types of things. So just once again, though there is the entrance criteria, but once you figure that out and you feel like you're in the game, you immediate... Immediately need to move towards, okay. You know, what what... What's my exit plan here knowing this is all coming?
01:00:22 · Lenny Rachitsky
[01:00:22] S0: It's interesting that another way to think about this model you've described is building... The strategy of building on top of LLMs and becoming a GPT rapper. Because essentially, this tech allows you to say, create a cursor that is incredible. And then you could argue, oh, you're just gonna be this rapper and why wouldn't anyone like, they're getting all the money here. Everyone can copy you. Like, what's your defensibility long term? And the answer is what is the moat you will build over time sitting on top of this thing that will make you more and more valuable long term and not have to rely on this thing. So it feels like you could use the same framework for building a GPT wrapper business. Yep. To use that euphemism. Yep. Say someone is sitting there today, is there anything they can do to start making a bet? Is it simply creating an MCP that allows LMs to suck in your data? Is that the one thing you could do today? Is there anything else that's available today to start using these platforms, or is it just a little too early and they haven't released the good stuff yet?