Lenny's Podcast: Product | Career | Growth
00:06:35 · Nikita Bier
[00:06:35] S0: Yeah. So when I was in college, I was really interested in this kind of, thing that American voters do, which is, like, they they vote against their own financial self interest. Like, people in New York and San Francisco, you know, vote for Democrats for higher taxes. People in Kansas, vote for Republicans for low taxes and not... And they, you know, they make less money and so that fewer got government benefits. And I wanted to build this tool that would help communicate the financial impacts of these policy proposals of presidents. And I I built it in, like, my last year of college, and we... It was just a web app that we put out, and it would it would calculate their tax proposals, the government benefits that they were proposing, and you would enter in your basic personal information, how many kids you have, if... Your age. And then it would just tell you in dollars what the impact would be. And it'd also tell you, we simulated those policies also against, the tax returns of every ZIP code so you could see how it impacts your community. We went super viral. Like, I think very few people thought of politics that way, and I think we got, like, 4,000,000, users on it, during that season of the... During that election. And, like, it was just a... Kind of like a project that we raised some grant money for, but ended up feeding into this company that we, spun up. And that was called Outline, because we had a bunch of governments reach out to us asking, can you build this for our budget? So the governor of Massachusetts actually reached out, and I I flew out there to meet with them, and, that was gonna be our first customer. And so I... We, we raised some money. We got a... We won a government contract, and, we joined Techstars, the accelerator. And we ended up getting... We we got a contract in the pipeline with the Obama administration. And then we we got this contract, and we started building it. And the government shutdown happened in the middle of, like... As we were building it, and we had one of our contracts canceled. And I realized, like, I I actually really don't like selling software to governments. And my core competency all along was making things that go viral on the Internet. Like, that was that was what we had built, not this policy simulation tool.
00:09:10 · Nikita Bier
And so, you know, we we went to our investors and we said, look, this this isn't actually what we're excited about doing anymore. And we we offered to give the money back and said, we're we're we're gonna be building consumer apps, here's a few ideas that we have. None of them took the money back. And so then we spent the next, like, four or five years building a variety of different kind of consumer, consumer apps. So we we had a a few, like, kind of mild successes during the course of those four to five years. And one of them was a, an app called Five Labs that ingested your Facebook posts and determine your personality based on the language you use. And it used this exact same model that Cambridge Analytica used, And that was super viral. I I think, you know, we had, like, tens of millions of profiles in it, and, this all... It went viral in, three days. And so we raised some more money based off the success of that. And we we started focusing a lot more on mobile after that first app five labs, and we we launched, you know, basically every type of app you can imagine. We launched mapping apps, chat apps, event meetup apps, any... Like, basically every kind of consumer app on mobile that you could think of. And that actually helped us kind of build a muscle to understand what people want and how to actually make things grow and how to test them. And over time, we started, focusing more on teens. And a lot of people ask why Silicon Valley is so fixated on building apps for teens. And one of the reasons is their habits are pretty malleable. Like, as we get older, we, like, kind of get kind of fixed fixed into our our habits of using certain communication products, and we don't really adopt new things. And then the other thing that we discovered was that adults don't really invite people to new apps. We found that as a user got older from age 13 to 18, like, the number of people that they invite to an app just declines almost exponentially. And finally, and the most important thing is they they see each other every day, and that is so critical. Like, consumer app developers sometimes say smokers are great for, like, targeting an audience because they actually, like, hang out, you know, serendipitously a lot, outside of, you know, buildings. So... But not not to say, like, social apps are cigarettes. I I I don't really like that metaphor.
00:11:50 · Lenny Rachitsky, Nikita Bier
[00:11:50] S1: Just on the note of you talking about why teens are important, I I have this quote actually from you that I love where building on the point you made that for every social app I've ever built, the number of invitations sent per user drops 20% for every additional year of age from 13 to 18. So if you build for adults, expect to acquire every user with ads. And I love that you have a very clear heuristic of per year. The amount of people they invite to the app is 20% lower. [00:12:17] S0: If your users aren't inviting people to your app, you're gonna have to find another way to acquire them, and that most likely means ads. And, if if if you're targeting, older cohorts like adults, you're gonna have to, raise a huge amount of venture capital to finance that user acquisition pipeline. And it's gonna be extraordinarily expensive. As a seed stage startup, it's gonna be basically impossible to, to to grow that, user base, especially to get density if you need, actual network effects among users. Mhmm.
00:12:55 · Lenny Rachitsky
[00:12:55] S1: So, basically, you're building this, help me decide who to vote for app that turned into a real business with, like, government contracts coming to you, trying to help you... Pushing you to build something that you end up realizing. I don't wanna be doing this. Why am I building this app selling government contracts? And so what you did is you... And this is a really interesting lesson to take away is you just realize, don't wanna be doing this. Investors don't force me to be working on this. I'm gonna stop this. I'm gonna go work on some other stuff that I'm actually excited about that I think has a bigger chance of success. And that's where you transition to this startup studio where you're just trying a bunch of apps. And I think it was called Midnight Labs, you said, something like that. Right? Yeah. Awesome. So, basically, I think that's an really interesting insight of just, like, if you're working on something you don't enjoy, you can change that. You can pivot. You can tell your investors, wanna work on something else. Is there anything there that you wanna add along those lines?
00:13:48 · Nikita Bier
[00:13:48] S0: It was really hard for us to pivot to mobile. I think that was one of the most challenging things for me personally because it was a completely different paradigm. Like, I actually have been building web apps since I was 12 years old, And I I, you know, I I I built a, full ecommerce business selling pirated games on the web, and I knew everything about, like, growing a website. But as I... As we pivoted to mobile, I I had to, like, recalibrate my whole brain on how to how to do that. Mobile apps have such a low margin for error when it comes to designing them because I I I have this, like, dogmatic view, that, like, every tap on a mobile app is a miracle for you as a product developer. Because users will churn and bounce to the... Their next app very quickly. If you actually sit behind someone and watch them use their phone, they actually switch between apps at a pretty high frequency. So every tap that you get, every single one is so scarce that you should be optimizing everything. And so I had to change my whole brain when we started pivoting to mobile and building these mobile apps, and it took a lot of failures. Like, we we, you know, we we we... Four... Like, 14 of the apps that we launched were basically duds. And then we started fixating on teens and and building apps for them. And, eventually, we figured out an interesting heuristic for identifying consumer product opportunities that ultimately led us to TBH.
00:15:26 · Lenny Rachitsky, Nikita Bier
[00:15:26] S1: You spent four or five years trying a bunch of different ideas. I think people see this headline and will get into TBH of just, like, nine weeks after launch sells for $30,000,000 to Facebook, and everyone's like, oh, okay. That's amazing. I want that for my life. Nobody knows there's this, like, four or five years of trying, you said 15 different apps before you got there, learning the things that actually work and don't work. [00:15:49] S0: We built, like, 15 apps over that... The course of that pivot to consumer. And we built apps for, like, every single app, you know, map apps, chat apps, you know, to do list. We we just built every type of consumer app you could possibly think of. And, also, we built for every audience too. We built for college students. We built for, you know, post college, and it was always very difficult to get the flywheel spinning for anyone after, like, 22 years old. That that was, like, the cutoff of when people just have... Give up on adopting new products. And and that was a... We kinda... Like, it it took us a few years to really internalize that. A lot of failures to realize no one needs another app after that age. [00:16:44] S1: So the thing that you found there, which is really interesting, because most people are building for people older than 22. That's like a profound insight you had there. Like, every consumer app I see is, like, trying to build for adults. And your lesson there is basically if you're trying to do that, you're probably gonna need to raise money and spend a lot of money in pay downs.