--:-- Host: We need to try to get back to fundamentals and how do we actually iterate and ship fast. We have to build products that are constantly evolving and that are constantly learning and evolving from those learnings.
--:-- Bryan Kim: The only way really to stay ahead of that curve on that consumer side is get the lightnings keep hitting. I mean that sounds hard. Be real, that's incredibly hard. Second product hitting, so rare. Third product hitting, you're a generational company.
--:-- Host: It's like there's this big wave coming and it might hit your ship. Is there a way to avoid the wave?
--:-- Kieran Flanagan: I don't think so. I think it's kind of a tsunami. If you sit there, it's just going to wash you away. People will want to talk to people. So community becomes much more important. Referral becomes much more important. Word of mouth becomes much more important. The new limiting factor is possibly creativity. That's a very, very fun place to be.
--:-- Host: Despite it being easier than ever to build a product, it may actually be harder than ever to grow one, especially sustainably. With many tried and true channels no longer working as they once did. Paid platforms were hit with app transparency tracking. SEO is now threatened by AI chat. Social graphs have moved to interest graphs. Product-led growth is easier than ever to copy. And virality is just as transient, if not more transient, than before. And those are just a few of the examples that founders are facing.
--:-- So what growth green space still exists, especially in an era of austerity? How do you balance efficiency and profitability while still growing? And what channels matter and how do you master them in 2023? These are just a few of the questions we address in this episode, together with three people that have successfully grown companies through similarly confusing waves of the past.
--:-- First off, we have Gina Gotthilf, now leading Latitud, but perhaps most well-known for her impressive reign as the VP of growth at Duolingo, growing them from three to 300 million users with no paid budget. We also have Kieran Flanagan join the conversation, longtime SVP of marketing at HubSpot, where he was a founding member of their international business, all the way up to HubSpot hitting over $1 billion in ARR. And finally, we have our very own Bryan Kim, partner at a16z, who also held several leadership roles at Snap, from their hyper growth days, all the way through IPO.
--:-- All right, I won't keep you waiting any longer. Let's dive in. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any a16z fund. Please note that a16z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com slash disclosures.
--:-- What are you seeing in terms of growth that still works in 2023? Are there white spaces that companies can tackle?
--:-- Kieran Flanagan: What's happening is really interesting because there may be like AI is somewhat of a tailwind for maybe 12 months or 18 months for the best people. And then who knows after that, maybe a headwind across everything. So I think certainly in search, I've really dug in there. And there are lots of examples of the click-through rate decreasing and the amount of traffic you get from Google search pages decreasing. But I still think there's a lot of value in that. Paid ads are very similar. I still think there's a lot of value in that.
--:-- What really happened with the popularity and growth of the internet is that marketing growth became much more measurable. And they could have a seat at the revenue table and they could say, I put a dollar in here and I get $3 out here. And the growth that's starting to happen today or where things are starting to shift is a little bit back to this indirect causation. These channels, like if you look at the platforms that grow and it's short form video, TikTok, YouTube, these kind of media channels. If you look at where I think things will go with the evolution of AI, people will want to talk to people. So community becomes much more important. Referral becomes much more important, word of mouth becomes much more important.
--:-- All of these things are going to shift us back into a place where we have to be okay doing things where you can't measure everything directly all the time. And I actually don't think that's a bad thing. I think the over-index of measurements forces everyone into the middle and everything becomes mundane and lacks creativity. So I think there are some pros and cons to this happening. But there's certainly a change in terms of how you are able to do your work and actually relay the value of that work to the founder, who for the most part is still going to be stuck in the binary: give me $3 for the dollar that I give you.
--:-- Gina Gotthilf: We're almost going back to the origins of advertising. There's that saying that you need to hit someone seven times before they convert. And Facebook maybe changed that. Maybe it was two times. And it feels like we're sliding back in the other direction.
--:-- Bryan Kim: I think it has always been the case that people need repetition to really notice something. And yes, more and more, there's more media, there's more for us to watch and listen to, and we're more distracted. So I think that becomes even more the case. But I may be simplistic, but I don't think that much is changing because to me, thinking about growth is about the framework for understanding what makes people tick, what people care about, how to reach one person or one media outlet or one channel that will reach a lot more people in the most efficient way possible.
--:-- What are the moments in your product that people really, really care about? Meaning the number of people who actually encounter that moment. And if you actually make some sort of A-B test or change, you'll actually see significance of the school results on the other end, because people really care about that one moment. It could be a notification, it could be a screen.
--:-- We keep seeing these trends and things grow and ebb. SEO rules are constantly changing because we're at the whim of algorithms. And so we're just constantly trying to adapt. Places become saturated. At one point, it was really trendy and cool to do ads inside the subway in New York City. Someone discovered that in 2012, which is funny because it feels pretty obvious. Then suddenly everyone was doing it. Everyone's testing with notifications and everyone's saying there's too many and it doesn't matter.
--:-- I think all of those channels are still very relevant. It's about finding how to actually impact how people feel and finding new ways of impacting people that are cheaper because less people are using it over and over. So I think that will continue to be the case. And it just depends on what's the trendy channel and what are people paying attention to. But if you think a priori like that—how do I reach one that can then reach a lot, or what are the things that I can modify that actually make a difference—then I don't think that much has changed.
--:-- Kieran Flanagan: I have a slightly heretical take. So this is going to be fun. When we talk about growth, especially I know a16z, we're all Silicon Valley stalwarts. But when I think about growth, this growth tactic, growth channels, and even the word growth hack became very popular. There's this prevalent theory that Kieran touched on where you can put in a dollar and get back Y, put in X dollar, get Y back. And I think that certainly became true. And there became so many channels and so many wisdoms and tried and true tactics, whether it's SEO or ambassador program or community building, where everyone's trying to learn from each other. How do I hack this thing?
--:-- Gina said something interesting about how I think about it, where moments in the product when people go, aha, this is great. At the end of the day, I think growth, we're sort of conflating two things. One is the actual product. Is it sticky? Does it enable you to continue to come back? Because growth at the end of the day is how many people continue to use your product. It's not a singular metric of on day X, how many people showed up. That's useful for today. But for a company that is an ongoing concern, what you want to know is how many people consistently show up. And how does that grow? It's a cumulative concept, which means that the fact that people come back day in, day out is probably one of the most important factors in assessing the growth potential and growth of it, which to me goes back to product.
--:-- When people first come on, we all know this, but the biggest drop off is typically day one or day zero. When people come on, they do onboarding, and maybe they didn't get to the aha moment quickly. So why would they come back? If they don't come back, then your game as a growth person is how do I get more acquisition? Because growth to me is also sort of a numerically almost an equation. There's people who showed up yesterday plus new people that you acquired minus the churn people plus the resurrected people. That's sort of like an equation.
--:-- When you think about how to get the retention, I think it all goes back to product. Why, as founders and operators, is there growth in your product? Why is it useful for more people? And is your product constructed in a way, as Gina said, that helps people understand what your product is about when they first use it? Can you deliver that product value again and again consistently? I think now we call it product-led growth, but it's honestly core product value and how you actually define that is one.
--:-- And a lot of things that we're also talking about here is distribution. So there's the product and the distribution side of it. And if we think of distribution, I think the panel is exactly right. There are areas where it's less good now and there are areas that are continuing to be good. You talked about advertising. There's that saying that you never know where half of it goes. And maybe we're going back to that. But I think there are many other areas that continue to work well, whether it's subway ads or remnant TV ads or radio. It depends what your product is and what your intended audience is. If you're marketing or appealing to a young generation of gamers or communities or niche areas, then Reddit and Discord are actually pretty good places.
--:-- I also think ATT did kneecap a lot of the paid advertising side of things. But the AI, like Kieran also talked about, can also be used for that purpose. Facebook or Meta is investing heavily on the AI side of it so that sometimes all you need to do is just say, hey, I have this idea. Here's the base creative. And now they're able to change how it looks, add different copy, change the thing to see what works automatically at scale with AI and deliver higher value. And that's also a very promising direction that we're seeing where the efficacy of the paid side may also be restored.
--:-- Host: Yeah, I mean, I like the breakdown between there is product and there is distribution. Those ladder up to growth. But maybe if we just attack this idea of building a good product, that's not a new idea. But it does feel like, at least to me, maybe we are in a different era where it's easier to copy products. And so is it just about being a first mover in an era where things are easier than ever to build? And maybe Gina, you can speak to that because Duolingo kind of famously grew with no marketing budget. Is that correct? Or very little marketing budget. And it was exactly product-led growth that resulted in that company becoming so big.
--:-- Gina Gotthilf: Yes. So what I think has really changed with tech is that people could say, oh, my product is really good before, but it wasn't as easy to know whether a product is good or not as it is now, because you can actually see that in metrics in terms of, as Bryan was saying, retention and people coming back again. So now that defines what a good product is. But it's not just about building a product that's good, but also the fact that with tech, we have to build products that are constantly evolving and that are constantly learning and evolving from those learnings.
--:-- But the main thing I think that when you talk about Duolingo, what we're trying to do at Latitud now, which is my new company, is the importance of not just building a great product but understanding really clearly what your moat is. And your moat needs to be something that makes it really hard to replicate your product. And it can be anything. For example, if Kim Kardashian launches a shoe, that's exactly like every other shoe that exists out there, the moat is Kim Kardashian because her brand and her audience and the fact that she is an influencer. She's not telling people to buy the shoe. That's a moat. It means that it's the thing that makes it really hard for you to go and just do that again.
--:-- With Duolingo, the product is the moat. And that's the most incredible thing because of what I just said about the iteration and the iterative practice. Anyone at any particular moment in time, and many did try, could actually go and copy exactly what Duolingo was doing. They, in fact, use the same font. In many cases, they use the same design colors, the same format. You can do that. But you don't have the data and the team behind it that knows how to use that data, that is constantly learning from every single day of all of the usage that we're getting and understanding what's leading to every single decision and why we're modifying things in a particular way. That's impossible to catch up to.
--:-- So at every moment in time, even if you mimic exactly what Duolingo is, there's no way you're going to get to the next day of Duolingo because you don't have all of that history or the knowledge of how to use that history. So you could just spend all your time trying to copy Duolingo every single day, but that doesn't actually get you to solve a problem for a consumer and understanding how what you're doing is actually solving a real problem, which is at the core of, as we were saying, a retentive product that people actually like. And that defines a good product. So it's not as easy as it sounds. It's definitely not as easy as it sounds.
--:-- Host: Kieran, I want you to tap in here. You now are the CMO at Zapier, which I feel like actually is a great parallel to what Gina just said. I mean, Zapier has so many clones or competitors. I've used many of them. Many of them are cheaper. How do you think about that differentiation and building a product? And to Gina's point, getting the right data and involving it in a way that you can stay ahead, you can have a moat.
--:-- Kieran Flanagan: Yeah, I think first mover advantage is useful if you can build a healthy retention curve and that retention curve helps you make that product much better over time. And so you're just making it much harder to compete with you. And that can be in all manner of things. Zapier's moat for some time was just they had much more expansive coverage of apps and the amount of things that you can automate with. And then more recently, it's how do we integrate AI? How do we make automation much, much easier for companies? How can they actually do natural language within their apps?
--:-- One of the things that's super interesting about the AI part, just going back to the distribution and then the product part and the product-led growth. AI is a phenomenal unlock for product-led growth because product-led growth will get naturally built into every single product because every single product will have a natural language interface. And so you will actually be able to onboard products and use products without any human intervention. And I think that's an incredible augmentation of how apps work in general.
--:-- But I think the moat part is going to be much more complex. I'm talking through the lens of B2B, not through consumer apps. But certainly for B2B, it's going to be somewhat more complicated to figure out over time because AI does commoditize things and make things much easier to replicate. And we've seen AI may be one of the few platform shifts that actually skews towards the monopolies and conglomerates versus these individual companies who just get sucked up and their features become part of these existing platforms. It kind of skews towards if you have distribution, you might win. Because I think AI features might be more of a retention play than an actual new acquisition play. If you build the AI features into a platform, no one will leave you to use all these different point solutions.
--:-- So moats will exist in similar formats. They're maybe just companies with less of them. And I do think distribution is a moat. Retention is a moat. Network effects will still be a moat. Community is a moat. And so I think of all of those things in relation to Zapier, like how are we touching on all of those things as we continue to grow as a company?
--:-- Gina Gotthilf: One thing I want to respond to what Kieran said. At Latitud, I would say the community is our moat. But the reason why the community is our moat, in addition to the distribution aspect of it, is the trust building. So trust can be a moat because that takes a while to build. So for B2B product, I think that's also super relevant because if someone can come into the market and just offer the same product, but you built a brand on the Zapier side that is super trustworthy, people will continue to trust new features or new solutions that you put out there instead of trying a new product. I think that's another aspect worth considering.
--:-- Host: By the way, Kieran, how many times a day do you get asked if it's Zapier or Zapier? I don't even know if I say it correctly. I say Zapier, but maybe Zapier.
--:-- Kieran Flanagan: I heard one of the founders say it's Zapier. It rhymes with happier because it makes you happier.
--:-- Host: I learned something about the company. That's how I thought about it. It zaps.
--:-- Bryan Kim: Yeah, yeah. The main reason I joined is just I like saying the word zaps. It's just a cool word.
--:-- Host: I know we talked a little bit about B2B. Just talking about more of the consumer side, growth and thinking about distribution, it has changed. I think a long time ago already, Mark Zuckerberg at Meta already said it's a battle for the home screen. And more and more, even recently, people are downloading less and less apps over time. Part one. Part two is it's harder and harder to get discovered in the app store. App store ranking is hard to get discovery now. So now you have this issue of, one, people are less willing to download brand new things. And two, even if they sort of heard about you, it's harder to get discovered.
--:-- So I think part one of the consumer side, the platforms have, for lack of a better word, ossified. There are two distribution platforms, Google Play and Apple Store. And they just distribute apps and people re-download a ton of apps. They retry a lot of things, but brand new things, not so much, or certainly less than before. So now you have this conundrum of it's just harder to break through the noise. And we talked a little bit about, especially Kieran talked about, maybe AI is an accelerant for retention, maybe less of an acquisition. I think that's correct.
--:-- And that's interesting where also we have a lot of these incumbents. Especially in the consumer side, incumbents come with incredible moats. They already have the network effect. They already are synced to everything. They already have login for everything. They already have all your data. They know what you bought. They know you. So you talked about how do you stay ahead? It's very, very, very difficult, actually. Even if you have a clever hack, all these companies come up with incredible new consumer products and they enter the zeitgeist. And through entering the zeitgeist, they're able to solve the first order question: how do I break through the noise and get distributed initially and have more people to try it out? That alone is a feat. That's incredible. If you have a highly retentive product on top of that, legendary. That's amazing. Fantastic. And all these products that we talked about did have that.
--:-- Now the question is, okay, copying. Gina, you talked about people copying down to fonts. I understand that so deeply. I have that at Snapchat for four or five years. Down to the font and every single UI level. Yes, they copy everything. And how do you actually fight that as a new entrant? Especially when incumbents come bearing a lot of these weaponaries, if you will, that have retention and data and everything. It's hard. And I think actually, and this is a sort of difficult answer, the only way really to stay ahead of that curve on that consumer side is get the lightnings keep hitting, which is so, so, so hard. I think getting the first hit is so hard. Second product hitting, so rare. Third product hitting, you're a generational company. So it's sort of that innovation curve that I think is very interesting.
--:-- So for the companies that are newly entering and building new product, and we're on the side of the builders, companies may have all the advantage, but we want to see new products. We want to see new hungry founders that are building for the next generation. And they're not happy with the current set of solutions. So the only way potentially is, there's a series of things. Step one boss game is how do you get through the distribution noise? Step two boss game is how do you get a retentive product? Great. Step three, and this is the holy grail in my mind, is how do you get that lightning to hit? Continue to enter the zeitgeist. And for that, I think it's thoughtfulness. I think it's the structure of the company. I think the culture of the founders and the team of wanting to continue to put out the best and brightest work that they have continuously versus potentially resting on laurels or optimizing for things that have worked in the past and thinking that their first iteration product is what is going to bring them to the next level, because it may not be due to the distribution advantage of the incumbents, as well as the difficulty of getting further discovery.
--:-- Host: What's an example of that? That sounds really hard. Is there an example of a company that you've seen execute on that hard mode really well today?
--:-- Bryan Kim: I mean, one of the last examples I've seen, and one of our portfolio companies, BeReal, has done that too with certain features. But if you think about, I'll talk about Snap since that's the name I know well, and it's been copied so many times. The first hit one may think is the disappearing images. That was revolutionary that people thought of images as something to keep on your phone for recording and for keepsakes. You turn that into a disappearing thing, which made the medium itself a message communication method. That's revolutionary. Very interesting. Sexting was the first use case, but it catapulted the company to new heights. Great. So that was going really well.
--:-- Then the kicker is they then started to add stories. Stories of these disappearing photos linked together that shows you a day in time in your life in a passive way but also goes away. Revolutionary in that sense. Then that to me is a second zeitgeist hit. Which by the way, what a great example of something being copied too. Everyone has stories now. LinkedIn has stories. No dig on LinkedIn, but everyone has stories now. So it's a medium and a thing that worked really, really well and potentially even burst the short video type thing that's trending. So to think about the second innovation, that's a huge innovation.
--:-- Third also is they did AR. It was like, okay, we are seeing more and more people abandon the front result of the front facing camera. What is the problem? Well, they don't like what they look like. Well, let's add dog ears on people's face. Let's add rainbow pukes on people's face. And again, that's another thing that everyone copies. Everyone has lenses now. It's very, very TikTok, puking rainbows, blue eyes, what have you. But these augmented reality effects are now prevalent in consumer product. So this is one example where I think each subsequent hit has essentially catapulted the company to new heights. And that I know from inside was very difficult, very long term with several bets going at the same time and being very thoughtful of what to kill and what to put out there. So it's that system of innovation, that hunger and continuous push that I think is very important. That speed and hunger and being able to implement all that at a fairly large and established company I think is a very difficult thing.
--:-- Host: So I think there's a cultural aspect. I think there's a founder's mentality of always wanting to be ahead of the curve, always implementing and looping in the new products that the users are looking for. How do you foster that culture? I think especially in 2023, where maybe budgets aren't as big, maybe some of the talent you had before is not used to that austerity or that idea of having to ship really quickly, maybe spend less money and just figure it out.
--:-- Kieran Flanagan: I've talked to a lot of companies this year that were CD, public. I feel like a lot of founders are actually excited to get back to shipping. I think we went through this ballooning of companies during COVID. And everyone's like, wow, I don't really know how this company even works anymore. And we need to try to get back to fundamentals. And how do we actually iterate and ship fast? But I think what really is exciting in tech is getting back to the reason that people were excited to get into tech. Certainly I was as a failed software engineer. To do work. Not to figure out how to coordinate hundreds of people. But I actually like to get back and do work and ship things. And I think the faster you ship, the more you learn. So I think it comes from the founder.
--:-- I guess it's a long-winded way to say, I think you'll have some founders that embrace this and at their heart, they actually thrive in the kind of chaos. They actually enjoy this period of time, especially a lot of founders who are building with AI. I've met lots who are like, this is the best time to be a founder because we have no idea how this is going to go. And they love that. They love not knowing what the end result is rather than just tweaking the dials and trying to eke out little bits of growth each and every day. And that trickles down from them.
--:-- Host: They set the tempo and it's up to the rest of us to up-level to meet that bar. This comes from two places. One, as Kieran said, from the founders, so from the top. I think that what the founder can do is come up with artificial deadlines. For example, we have to launch in September because we're doing an event for 4,000 people and that's when we need to launch and that's it. Or like at Duolingo, we'd be like, oh, you know, we told Apple that we're actually going to make this sprint and now that's there, so we just have to do it. Suddenly it's not something that can be pushed because there's this external deadline. A lot of times it was artificial because you kind of created it, but now it's set in stone. So I think you can help from that perspective.
--:-- The other one, I think, is actually creating a culture from the very practical point of view of a process. Like sprints. You have two-week sprints and that's the cadence at which things happen. Maybe that's the cadence at which you're doing A-B testing, making sure that you are prioritizing as part of that sprint and that you're not just shipping to ship, because then you can just spray and pray. You need to really be learning from everything that you're shipping and iterating. That has to be part of the process, whether it be retrospectives or having accountability. Our product team at Latitude has a show and tell every two weeks and the whole company is there expecting to see what's evolved.
--:-- At Duolingo, we had a practice of making sure that every experiment had a proper write-up in the beginning with all of the hypotheses and what we actually expected. Then two weeks later, we'd come back and look at all of those, because otherwise we'd be running around thinking about the next test and we'd forget to go analyze, think about what we learned, and apply. I think all of those little levers create the culture from a practical standpoint so that you can set and forget and not have to, as a founder, keep watching and seeing if people are moving fast and iterating.
--:-- Bryan Kim: Funny you mentioned the artificial deadlines. I was thinking about this recently, about how when you go through college, you have exams and projects with due dates. Then when you enter the workforce, especially over the last few years, you have those, but they feel very, very gray. It's a funny acknowledgement about how sometimes that works in the workforce.
--:-- But you spoke to experimentation. How do you think about that in 2023? Should companies, especially when things are tighter, be leaning more into experimentation? It's like, okay, we got to figure this out. Like Kieran said, we don't know where AI is going. Or should they be really drilling down on the one or two channels that they know work?
--:-- Kieran Flanagan: I always think of your growth initiative as a portfolio of bets. Your portfolio is very similar to how you think about investing. You want to have a spread across things that you have a high degree of confidence in. The thing you have a high degree of confidence in is where you have historical context to say we've done something similar before and it will likely work. And I can measure that against what's the potential upside. But you definitely want to take some things that are more speculative guests. All my speculative guests in terms of investing from 2020 to 2022 are all down by 80%. They definitely do lose. I've lost a lot of money. But in terms of your growth portfolio, you want to take those big swings.
--:-- I think one of the things that happened, to your point, Steph, that phenomenon of "this is kind of a deadline, but it's not really a deadline." I've been in tech for a while. That definitely was not always the case and became the case when tech was ballooning. I think it's good to get back to actually having this stuff truly matter and hitting these dates truly matter.
--:-- But I think the other thing that we've gotten away from is having people in the company who will take risks, who have deep conviction about things, who will say, "Hey, we think this is the right thing to do. Give me a couple of people and I'll either prove this on weekends or nights and I'll figure out if this is worth doing or not." I don't have any historical context to say this is a good idea, but I've talked to customers and I think this is the thing that's going to work. I do think that we need to have experimentation across the entire spectrum, from high degree of confidence, high impact to really game-changing thing. Not a lot of context to say this works, but it's a real thing worth doing.
--:-- Gina Gotthilf: If you are at the point where you can have statistical significance because you have a lot of users, then everything needs to be an experiment, even the things that you already know, like the channels that are already working. If it's not an experiment, then you are not looking at it from a very scientific perspective and gaining data that will actually tell you whether you can replicate this when you launch it to a lot of users.
--:-- I agree 100% with Kieran on the portfolio approach. It's not either or, it has to be and. But I do believe in being as data-driven as possible. Of course, there are exceptions and there's an art to things, but to be as data-driven as possible, and that's where you find experimentation to be super important. If you are an early stage startup, you need to take big swings because if you get incremental improvements, you're just not going to get anywhere. You can improve things 2% over and over and no one will notice you.
--:-- The way I would approach it from a very tactical perspective is I would list all of the ideas of things that I would like to work on, whether it be tried and true channels that I want to iterate on or big swings. I would just try to rank them based on ROI. How hard is it going to be to do this? What do I think the return is going to be? Then just try it. That's the information I would use to make a decision about the portfolio of things we'd be working on as a team.
--:-- Kieran Flanagan: Yeah, just to give one example on the big bets, because I think sometimes we think of these things as the kind of A-B test. For HubSpot, acquiring The Hustle for us was a bet. We had deep conviction about the future of B2B content needing to be much more engaged and needing to be part of the everyday presence of how people interact with content. But we had never bought a media company before. You can't A-B test that. We had never had media talent that we had to figure out how to integrate into the company. We used that talent to build a podcast network. You built the creator program for our staff. We built all of this stuff, a really incredible presence on YouTube. We got incredible talent that I think is a real moat against most B2B companies because they do not have this talent within the company. That's an example of a sizable bet mapped to something that we had deep conviction about.
--:-- Bryan Kim: It's a fun matrix of important and urgent and important non-urgent, a two-by-two type thing. Some of the bets are both important and non-urgent, important and urgent. But then you have these other ideas where you have this inkling. Especially on the consumer side, it's nearly impossible to predict how something would do, especially if it's a fairly large bet. There's a little bit of an intuition where you sort of rank a couple of options and say, "Look, I think there's a big product bet and that could be one of the experiments or projects that you work on."
--:-- Kieran, you said something earlier I really loved: at the end of the day, the founders and operators do what they do because they want to ship things and ship things that people use. Back to the fundamentals. I keep thinking of one line: "The calm sea never made good sailors." We're not in a calm sea. What are good sailors made of? They're probably made of a lot of experience, but also knowing how to do the basics really, really, really well. Going back to those fundamentals is really interesting because there are two different ways to deal with this: "How do I get out of this?" and "What do I do?" There are all these tactics and hacks that you might be able to do. But there's another point: no, actually, the way we become an important, generational, endearing company is to get back to the foundation and fundamentals and build stuff that people want to use and that is genuinely helpful to them. I think that constitutes some of the ways people can think about making big bets.
--:-- Host: Totally. Maybe one topic we could just address directly is AI. On one hand, you're all speaking to this idea of the fundamentals, focusing on what really matters. But then you have this big wave. To use your sailor analogy, Bryan, it's like there's this big wave coming and it might hit your ship and you got to figure out how to integrate it or avoid it. How are you seeing companies really intelligently and creatively thinking about the distribution side or how companies can grow?
--:-- Gina Gotthilf: Look, this is very new and I'm very new to understanding AI, so I'll just put that there. But I think that from a distribution perspective, there are two ways to approach AI. One, what are the ways in which we can use AI to reduce the work that we're putting into things? When we're talking about ROI, that's the investment: reduce the amount of time spent on things like copywriting or image generation. I am a purist when it comes to copywriting. I think that everything needs to be Pulitzer Prize-winning copy, so I don't actually like copy written by ChatGPT. But it's actually 75 to 80% of the way there. I think you can probably use that to benefit your company in many ways, either by helping organize ideas or coming up with a V1 of copy. I think you may be able to do that with image and potentially video as well. So I would think about how to leverage AI to reduce work, to automate things, and just make things cheaper from a time and spend perspective.
--:-- Kieran Flanagan: Gina, by the way, you got to incorporate that into your prompt. You got to say, "YouTube title written by Pulitzer Prize-winning writer."
--:-- Gina Gotthilf: Yes, I'm sure. I think maybe we'll get there. But here's why I don't think it will get there: human emotion and the ability that humans have to understand each other and how to make each other feel is going to be really hard for AI to pick up on. We are able to come up with just that one word or just that one punctuation that really drives a message. That's going to be hard to replicate unless it becomes a little bit of a recipe, at which point it stops impacting people because people become a little bit numb to it.
--:-- But that drives me to the second point where I think we can use AI interestingly. People are very impressed by AI right now, which means they're more likely to pay attention, which means they're likely to think it's funny, which means they're likely to think it's moving or shocking. Those are all things that help your brand become remembered. Ultimately, that's what marketing and brand work is. I would leverage AI as much as I can to accomplish that.
--:-- Kieran Flanagan: When I think of AI for distribution, I split it into two categories. Gina covered one of them: there are a lot of people just using AI to replicate the things they do. That really is just cost saving. Marketing might move from more of a channel domain expertise to more of a generalist. We have generalists in early startups, and I think that will actually be true of late companies because these generalists will be able to stitch together these micro apps to create customer experiences by just using data sets and using AI modeling.
--:-- Bryan Kim: That will suit operators and technologists. That's great news, by the way, because so many of us are generalists and I'm like, "Oh great, I'll have a job."
--:-- Kieran Flanagan: Yeah, yeah. I think if people enjoy data, enjoy learning how to use apps, and are able to think like product builders, marketers and growth people need to think like product builders. "How can I use this to stitch together some sort of experience for someone? And how do I creatively do that with these apps and data?"
--:-- So there's the replicating what we already do. You see a lot of this with outbound sales. That's the number one use case you see right now: "Hey, I can drag in all this content and use ChatGPT to create very, very cool outbound sales." The stuff that I'm interested in is maybe that's 90%. The 10% is what are things you can do with AI that are not possible today that help in distribution?
--:-- I'll give you one quick example. If you come into Zapier, it's 6,000 apps. There are millions of different variations of what you could actually automate. How would I ever know to figure out what I can onboard you to or what you need to do when you actually sign up as a user? The best way I could do that is build an automation guide just for you. Today, the way I would do that is get someone to reach out, talk to you about your tech stack, figure out what role you are, and then contextualize workflows in a language you understand that are contextual to your job. "Hey, Steph, you're a marketer. You want to generate more leads. You want to send leads to the sales team. You want to enrich them. You want to make sure they can close more customers." You understand that language and why that's valuable. Today, a human would need to reach out and write the automation guide for you. Not economical, not scalable.
--:-- One thing I've been testing is using ChatGPT to do this: grab data from something like Clearbit or TechStack, feed in your role, feed in contextual information about your company, and then have it write an automation guide for you and actually be able to surface that through sales, through chat, through all these different mediums. It's really good, surprisingly good. The first time I did it, I was like, "Wow, this is something we cannot do at scale today." That's the 10% that I think if you do as a fast mover, you get this little window of time before everything gets commoditized and everyone just does the same stuff. If you have good retention, you actually get meaningful growth there because you have that retention curve. You can get those users to stick, upsell, cross-sell, and that's really, really valuable. So there's the 90% that most people are trying to replicate, but that 10% is super interesting: what are the things we can do at scale today that we could not do previous to having this technology?
--:-- Bryan Kim: I'm smiling because I heard this quote once: "The best growth hacks are never shared." So you've got to be careful, Kieran, sharing that 10% on the podcast. I need to keep the rest of them to ourselves.
--:-- Kieran Flanagan: This is true.
--:-- Bryan Kim: I'm smiling because this is such a fun conversation. Gina and Kieran, you both hit on the non-replicability of human. I'm thinking about this Nikon ad that came out a few days ago: "Don't give up on the real world." It has these unbelievable images of real places and a fake prompt that would generate such a real image. It was a very powerful message: "Yes, AI can do a lot of things, but don't give up on the real world." It was very creative. Can AI come up with that? I don't know. It's very interesting.
--:-- On the consumer side, a couple of things. Going back to your question, Steph, about what companies can do to use it to their advantage. One is the willingness to try, as Gina said, is quite high. For the first time in a while, consumers are willing to give it a shot. They're willing to actually download and use the product and try it out. For the first time, you have this window of opportunity where people are willing to give it a shot. On the acquisition side, you have this potential window where you can appeal as either a first mover or a great product to get a lot of usage.
--:-- Kieran shared a Zapier example where you could also use it very strategically to deepen your core product value. Why are people using the product that you have out there? How do you use this new capability, this new wave, to further strengthen and deepen the reason why people use your product? Sure, you can brand it AI and make it sexy and more people will be excited. But I learned one thing from Snap: the Lens product was a state-of-the-art AR product. We did not call it augmented reality for four years. We actually implicitly banned calling it augmented reality inside the company because that's technology. That's not the point. The point is for users to giggle and use it and have that emotion.
--:-- As you think about these new technologies being enabled, and Kieran talked about the 90% and 10% net new things, there are ways to deepen the core product value of why your product exists. You can call it AI, you don't have to call it AI, it could be abstracted away. It doesn't matter. If it makes the job that you do much easier in two ways—either take care of the rote things you're doing in a mechanical way, or deliver value that wasn't possible before because it was cost prohibitive or net new—that's incredible.
--:-- People talk about whether there's a way to avoid the wave. I don't think so. I think it's kind of a tsunami. If you sit there, it's just going to wash you away. You do need to respond. How you respond is important. Rather than saying, "Oh, there's a new shiny thing, we're going to bolt it on," I think it's going back to the fundamentals to say, "Why does our product exist? Why do customers use our product every day? How do I use this new capability to augment that and make it even easier?" I get very excited about existing companies as well as net new companies because they both now have a new thing. For existing companies, there are ways to deepen your moat and use this product, abstract it away, to make it so much more useful than before. New companies, all of a sudden, you have this moment in time where people are willing to give it a shot.
--:-- On the consumer side, what I also get really excited about are these net new behaviors. I know we talked about how we'll never fully rely on computers for creativity. But the cost of creation has nearly gone to zero now. The post-production of this podcast, the actual creation, the ums and ahs and the eye movement, everything, you can pretty easily do that through AI with a lot of new products out there. All of a sudden, maybe you don't need a huge studio. Maybe you don't need all these amazing fancy gadgets to do what we do. The bar is lower. The entry point is lower. The marginal cost of creation overall, whether it's image or video or prompt, may be quite low. That means the new limiting factor is possibly creativity. That's a very, very fun place to be.
--:-- Host: Speaking of creativity, I wanted to end this with a little bit of a challenge, a prompt for the three of you. We talked about a lot of different things: product and distribution and how those come together. One product that I work on is the A16Z podcast. If we think about austerity and trying to grow in turbulent times when maybe budgets aren't as high, if we had $10,000 to grow the A16Z podcast, given all the channels that you could invest in, how would you think about that? Please don't just tell me to build a better product, because we're working on that. But on the distribution side, how would you use that money?
--:-- Kieran Flanagan: Well, from someone who has tried to build two podcasts, my favorite word for podcast growth is "grind." There's not a lot of meaningful things that work for podcast promo. So I'll just give you a wacky idea instead that may or may not be usable. One of the things I would do—and this has kind of been done before, but it might be a more novel way to do it—is get your audience. Pick 10 entrepreneurs from way back in the past that are no longer with us, all the way back to Henry Ford and all these incredible entrepreneurs. Get your audience to vote on what's the number one person you would like to hear interviewed on this pod. Get them to vote. Whatever the top one is, use the $10,000 to give to someone to create an AI version of that person. It's pretty easy to create a deepfake version. Then you should just interview them for half an hour and put that out into the interweb. That's probably a good way to get interest in the podcast through something that will hopefully get a lot of social traction.
--:-- Bryan Kim: I have an equally wacky idea. Being of consumer mindset, I think one of the distribution channels that works these days is TikTok. $10,000 is not a lot. But maybe the way to do it is find an intentionally quite controversial topic. We talk about it. Use AI to splice it up so that it's entertaining and very easy, to the point. The callout is "Fight us." Stitch incoming, fight us. A hot take, fight us. They'll use that remix culture of the internet to let that do what it does. The reason the dollar would be interesting is sometimes it's interesting to seed these things. Have one or two influencers or founders who we can invite over, give them a piece of content, and say, "Now go debate that." Be pretty brutal because people love a good fight. Put it out there and see how that does.
--:-- Host: I actually kind of love this idea. Even just the tag "Fight us" is so strong. It's cool.
--:-- Gina Gotthilf: I thought about it and I have a very boring idea, but this is what I would do. I think that your bet here would be to try to increase your audience by looking at places where your audience isn't, but you have a huge potential audience. For me, that would be people in older demographics that are very business savvy and have been very active their whole lives and kind of get technology, but are a little bit out of the loop and don't know what A16Z is. I have had conversations with brilliant people in finance who are maybe in their 60s, maybe even 50s, who have no idea what A16Z is, which in my world is crazy. Those people read the Wall Street Journal and the New York Times. So I would go and do something with one of those massive publications to reach those audiences.
--:-- The thing about growth is that it's not just about growing, but you have to grow in terms of the right people. One way to game your question, which is something that growth teams do all the time, is I'm just going to go to a country where buying a user or buying a listener is super cheap. I'm going to go to Southeast Asia or Latin American countries and do some sort of massive campaign because $10,000 goes so far. Then I get a bunch of people to listen to A16Z, but it won't actually matter because they're not your core audience. That would be a gameable response, which I just want to leave here because I think it's really core to growth. In order for you to actually come up with a good growth strategy, you have to think about how can you game this problem. If you can easily game it, then you're looking at the wrong thing.
--:-- Host: Totally. Thank you all. This was so fun. Thanks for listening to the A16Z podcast. If you liked this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at youtube.com slash a16z underscore video, where you'll find exclusive video content. We'll see you next time.
