Lenny's Podcast: Product | Career | Growth
00:56:35 · Elena Verna
[00:56:35] S1: Yes. And six months ago, we had 30 people working at Lovable. So we tripled. So for us, it's a really big deal. We tripled our company size. Going to quadruple it by the end of... I know. We're big boy and girls now. But perspective of the headcount costs, it's minimal. So we have very little in that going on. We are not spending a lot on paid marketing, so we're not a big paid marketing driver. Yeah, we're spending on influencer marketing, but it's not majority of our growth. It's low double digits, to to be fair, because it's it's not why we're successful. It's amplifying our success and it's helping us reach new audiences. We don't have really large sales team. We have only a couple of sales folks and they're just starting to ramp up their enterprise efforts. So we don't have like really big enterprise demand gen costs as well. So from that perspective, if you like look at the equation and you say, well, okay, if you're not going to do a lot of paid marketing, if you're not going to do a lot of sales, because we're really only working on hand raisers of people that are saying right now that they want to buy Lovable, then where is you don't have big costs so you can spend it on product. And that is the beautiful part because you're not... When we're giving our product away to our customers, we're not competing with other companies in that space because they're just going to use Lovable in their hackathon on their own. And we're competing on AdWords or like in paid Google where everybody's buying real estate for eyeballs. So from that perspective, think about it more as a shift of where we spend and cost. And honestly, it's more efficient way to do paid marketing almost in a sense because of the cost per eyeball that we get there is quite a bit lower compared to if we were trying to compete it on the Google. So yes and no to your statement because it actually does not deteriorate margin profile. We're just shifting of where we're spending it.
00:58:30 · Lenny Rachitsky, Elena Verna
[00:58:30] S0: That is an incredibly important point you're making there. So it's not like you're generating an incredible amount of revenue. So there is money available to spend. And what you're saying is because it's been spreading through word-of-mouth mostly, you're not spending tons of money on salespeople, you're not spending tons of money on paid ads. This is just an amazing way to get more people to use it. So it's kind of like a marketing cost. [00:58:54] S1: This is product led growth. Yeah. Supercharged. Max. Supercharged. Yes. Because you literally using your product to drive that awareness by giving it away to the agents in your ecosystem that will do that distribution for you. [00:59:11] S0: So fascinating. What a a wild world we're living in. Free stuff for everyone. [00:59:16] S1: Yes. Yes. I mean, it's great for consumers. This is a great time to be a consumer. You have so many options like everybody's throwing themselves at you, giving your product away for free. So it's great to be in the market right now. I think it's the power should be with consumer always. But with software power has not been with consumer previously because we were forced to use some solutions because of either how they were chosen for us or what was available in the market. And now that supply is almost infinite, the demand from the consumers can be very picky and the one that serves the best will win.
00:59:16 · Elena Verna, Lenny Rachitsky
[00:59:16] S1: Yes. Yes. I mean, it's great for consumers. This is a great time to be a consumer. You have so many options like everybody's throwing themselves at you, giving your product away for free. So it's great to be in the market right now. I think it's the power should be with consumer always. But with software power has not been with consumer previously because we were forced to use some solutions because of either how they were chosen for us or what was available in the market. And now that supply is almost infinite, the demand from the consumers can be very picky and the one that serves the best will win. [00:59:51] S0: And I think, again, it's important to highlight. This is not some kind of VC subsidized bubble ish sort of thing. Like, there is a lot of money being generated that you are spending to help it grow faster. It's not like some kind of... We're just raising more money to give away more money. Like, you're actually making your own money. It's not driven by VC money. [01:00:07] S1: I I can't comment on specific margin details But for at the same time, the money that we're raising on VC is for future development and hardening our business, not because we will not be able to survive without it.
01:00:07 · Elena Verna, Lenny Rachitsky
[01:00:07] S1: I I can't comment on specific margin details But for at the same time, the money that we're raising on VC is for future development and hardening our business, not because we will not be able to survive without it. [01:00:22] S0: Awesome. Okay. Great segue too. I want to talk about product market fit and competition. You had this really interesting post that I don't think people grasp yet, which is that product market fit is no longer this like, we've done it. Product market fit, and we're up into the right. Now we just grow, grow, grow. Now we hire salespeople. It's gonna be great. You've written that just product market fit is no longer this like, you've done it and you're good. It's this endless fight to keep it. Talk about what you're seeing there.
01:00:48 · Elena Verna
[01:00:48] S1: So I'll first start with what I've felt at least before when people were talking about product market fit that, yeah, obviously always product market fit is an evolving thing. But the rate of that evolution was measured in years. What is it that you need the next product market fit step function change, which often was called second horizon or third horizon, sometimes five, ten years, sometimes even longer that you'd need to that you depending on how good you are and how your initial product market fit was. But you'd spend years scaling the original product market fit. It was like blitz growth stage, marketing sales growth was very important that you just try to get it to as many people as possible. And then once you have saturation or the cost to getting the marginal people becomes too high, you start thinking, okay, what else can I offer to help me reach additional people or sell more to existing users that I already have? And again, the main point here is it would take years to get to that stage where it became a question that you had to face really hard face to face. Now it's three months and all of a sudden you have to face that question again. And it's happening because of two things, in my opinion. Number one, in AI technology of what LLM is capable of doing changes still very rapidly with new model release, with each new model release. So I think we'll stabilize at some point and it was going to become more marginal, but we're not there yet. So every three months or so, every single AI LLM provider creates a step function change in what is possible with that LLM. And when you have this new possibility in just the underlying technology that opens up in front of you, then it creates another ceiling of what is possible to build on top of it. And the tricky piece here is that it's not enough to just wait for that technology to get better and then start building on top. You have to build beforehand to like make a bet and then it's the LLM to catch up because when that model releases, you already need to have
01:02:51 · Lenny Rachitsky
[01:02:51] S0: that