Lenny's Podcast: Product | Career | Growth
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
01:02:51 · Elena Verna
[01:02:51] S1: functionality available. So that piece is I've never been in a company where the fundamental capabilities are still changing so rapidly. And that's the product part. So the product can leap to the new expectations. But let's not talk about the market part as well. Consumer expectations have never changed this fast before. What we expected to chat GPT to be able to do an answer and how we wanted it to talk to us eight months ago versus now is night and day. And like the deep thinking mode and how how how deeply you can go into answering questions and what is capable of being building on top of it. So consumer perception has never changed this fast too. It's this unprecedented time of a consumer's all stand like in a month saying, oh, it's not doing this yet. Like, I'm bouncing before. Again, consumer perceptions would be years to take. It's actually technology would sometimes be able to already address it, but consumer perception has not been changed yet. So it would take a long time. So we're like in this really weird part where both product and market is shifting so rapidly that every three months, I feel like we have to recapture our product market fit. And not just recapture on the same technology and with same customers. It's both of those pieces of the equation change every three months. And it's terrifying in a way. It's also very confusing in a way because we're $200,000,000 company and we're not solely focused on marketing and sales because we still have to recapture our product market fit. And you know that the team that finds your product market fit is very different than the team that usually scales your company. Yet we have to find the team that is capable of doing both on ongoing basis. Now, I think every AI company is on this product market fit treadmill. Hopefully that treadmill speed slows down. If not, I think we're going to come up with like crazy things of what this LLM and AI will be able to do if it's going to continue at this cusp. But it's a weird place to be in because every three months we have to throttle on our scaling efforts and just reinvent and then scale again. But it's like short blitz of growth, not these long year long commitments.
01:05:07 · Lenny Rachitsky, Elena Verna
[01:05:07] S0: What makes this very real is just this week, apparently, OpenAI had this whole Code Red moment where even though OpenAI, by far, the leading AI assistant over almost a billion, I think, monthly active users, like, basically synonymous with AI around the world, With Gemini three launching, their market share just started to dip really quickly. I think they lost, like, six something percent in, a week. And so even OpenAI, like ChatGPT, the original, the one that everyone uses constantly is is is in danger. [01:05:40] S1: It's like nobody's nobody's future is bulletproof yet. And ten years ago, if you asked me if a $200,000,000 company was at risk in losing product market fit in the next three months, it's experiencing 10% month over month growth, I would have said you're crazy. And now that's the reality that we live in. And I I don't know. I... It's fascinating to world and what a time to be alive. [01:06:04] S0: What a time to be alive. And very stressful, but the prize at the end is massive. That's the, you know, that's why this is worth doing. Not just, you know, monetarily, but just the impact it's gonna have on the world, the way we people build and ship [01:06:16] S1: and live. Exactly. The ceiling of what is possible has been raised so massively that we haven't even became too closest to even see it, I believe. So I think that that's the exciting part of it.