Peter Sellis on Terrorist-Org Team Design, Bad PMs, and Why Snap's Ads Business Stalled

I asked you, what are some counterintuitive lessons that you've learned that go against common startup wisdom?

I'm no longer beholden to any corporate comms team right now, so I can let it rip a little bit.

You like to design teams like a terrorist organization.

A good terrorist organization essentially has two things. One is it has this ideological culture that everyone understands why they are doing what they're doing. And then it has a very, very clear organizational structure of who can be trusted with which decision.

You like to spend time riding your best people into the ground versus improving the average people.

If you see somebody drowning, you want to save them. I did the absolute opposite. If somebody is strong and crushing it, I'm just handing them more and more rope to hang themselves with.

Something that I know you believe: most product managers are bad and are often net negative to the company.

The great product managers are exiting the system. They're becoming founders. They're becoming executives. It's kind of set up to be this profession where the median product manager is actually probably pretty bad.

Snap is quite famous for not hiring PMs for a long time.

The baseline is we should just be able to operate this product without any product manager. So, this person has to provide value over nobody.

Feels like an interesting new skill for PMs is pushing back on things AI adding to your products.

I think I saw Evan personally say no to better ideas than I've seen almost any other consumer startup launch. Exercising that kind of muscle of saying no, of restraint, is probably one of the few muscles of taste you can exercise. If a museum has all of their collection on the walls, then the curator hasn't done anything.

Today my guest is Peter Sellis. Peter is a legend in the PM community. He was the first PM at Snapchat where he spent seven years building one of the most delightful and popular consumer products in history. More recently, he was head of product at Discord, which he helped grow significantly. And now he's between gigs, which means he was finally able to come on the podcast without a comms team, without a PR team, which means that he's able to be especially honest and real about everything that he's seen and learned and has been excited to share.

We cover so much ground, from how the best teams are organized like terrorist organizations, what it's like to manage Nikita Bier, why most PMs are really bad, why Snapchat has struggled to build a truly massive business in spite of having a billion monthly active users, and it's not what you think, and so much more.

This episode is full of so much gold and that's why it went so long. I couldn't stop digging into stuff that Peter kept bringing up. A huge thank you to Jack Brody and Sriram Krishnan for suggesting topics and questions for this conversation.

Before we get into it, don't forget to check out lennysproductpass.com for a free year of the hottest and most beautifully crafted AI and non-AI products in the world, available exclusively to Lenny's Newsletter subscribers. With that, I bring you Peter Sellis.

Peter, thank you so much for being here and welcome to the podcast.

Thank you, Lenny. It feels like it's been a long time coming that you and I have known each other, but I'm really excited to be here.

You've never done a podcast before. You've been in product. You've been out there for so long. I'm very honored you chose to do this. Why have you avoided podcasts? Why have you decided to finally do this podcast?

You know, it's not avoiding podcasts. I've really just been avoiding you. No, I'm kidding. I think there are two things, to be totally frank with you. A lot of times when I saw, especially early on, because you have such wonderful distribution among so many influential people and teams, when I saw somebody going on Lenny's podcast I was like, ah, that person's probably about to get fired and they're going on and they're pimping themselves out for their next role. Which was maybe one view of it. I was like, why aren't they just grinding? Now I think when I kind of take a step back, a lot of the people I've worked with and a lot of teams I've had the opportunity to lead, I think one of the things that I generally do is show up pretty authentically every day at work. You can call it no filter, you can call it whatever you want. And a lot of the stuff that I say and do, I think it's probably better suited for behind closed doors. But as you and I have chatted about, now I'm between different roles. So I'm no longer beholden to any corporate comms team right now. So yeah, I guess I can let it rip a little bit.

Okay. Amazing. These are the best conversations. No PR people involved. No comms people.

Yeah. Nothing to promote either. I have no book coming, no other podcast, no collaboration. Yeah.

Wow. Just pure alpha.

Just pure. Yes. About to drop some pure alpha, baby.

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The first thing I want to talk about, something that stood out in our jamming on what to talk about, is the way you think about designing teams. The way you described it to me is you like to design teams like a terrorist organization.

Yeah. I should probably workshop this one a little bit. This is probably an example of the one that's better for behind closed doors, but yeah, when I actually talked to the chief people officer at Discord about this, I think she was simultaneously horrified and intrigued in a way, which, credit to her for not judging me right off the bat.

Yeah, I think it comes from essentially two primary beliefs from me. One is that there's actually a hidden cost to collaborating that no one really internalizes extremely well. Meaning you'll never hear really any executive at any company be like, stop collaborating. And to me that's kind of like a warning sign. Collaboration comes with incredible coordination costs. And coordination costs essentially assure that you're moving as slow as the slowest node in the system. And so I try and aggressively internalize the cost of collaboration sometimes.

And then I think the second thing, separately from this, is that at high-growth companies especially, and so many of the people that listen to your podcast I think aspire to be at these types of companies, product managers should be in a position where they're making decisions that the founders would have made. Sometimes six months ago, definitely a year or two ago, these are decisions that the founders themselves would have made.

And so, set aside violence for a moment, I'm not saying that I designed my teams for violence, but a good terrorist organization essentially has two things. One is it has this ideological culture that everyone understands why they are doing what they're doing. And then it has a very, very clear organizational structure of who can be trusted with which decision. And I think creating a culture where there's a very clear ideological, almost religious-level goal, essentially that the strategy is almost like a religion to the entire team, and an organizational structure where people understand who are the directly responsible individuals, who's single-threaded on something, who's the throat to choke, use whatever MBA blah blah blah-ism you want, I think the combination of those two things can be leveraged in a way such that you don't need to over-collaborate and you can be assured of achieving the results that you wanted as if you had collaborated.

And so I think the components of what is this great ideological setup, a lot of things I focus on, for example, because I think oftentimes the head of product at high-growth companies where the founders are still in charge, the head of product is really kind of like a vessel for their vision. And both at Snap and at Discord, where I had the privilege of working with the founders in both cases, I tried to take and absorb and internalize their vision and then create small phrases and language that could be used and repeated that were essentially shortcuts, or almost like synecdoches, of the whole strategy. And so yeah, I could go more into that, but that's kind of how I think of it. And obviously giving it branding, that I'm designing it like a terrorist organization, at least gets people's attention. But maybe I need to workshop that a little bit.

No, you don't. This is perfect. This is exactly what I was hoping this conversation would be. So just to be very clear about the elements of the terrorist organization that we want to keep: one is this idea of autonomy, essentially trusting people further down in case the leaders get caught or are incommunicado. So basically giving more autonomy to folks further down the chain. And then two is having a very clear mission, ideology, you might say, so that everyone's very aligned and decisions are quick and that kind of thing.

Yeah. And to be clear, I didn't start with, I'm going to build a terrorist organization.

I bet you built a great one, by the way.

That would be a great one. But when I thought about the elements of what I wanted from the organizations I was building, I couldn't help but notice that there were organizations out there operating like this, and they just so happen to be terrorist organizations. So yeah, that led to a lot of interesting reading lists. I think the Peter Sellis product reading list is almost like a banned book list at this point.

It's interesting because I've heard many people describe, you want to build a cult, and this is not that different, because cults are very effective at getting stuff done.

Yeah, you can't spell culture without cult. And so I think it is not very different from that. I think there are elements of a cult that are more about the person leading the cult, whereas terrorist organizations are more about a higher power, or kind of like religion or ideology. So that's why I tended more towards that. But yeah, I think you could read up on a couple of cults and then just take it all the way to the penultimate moment, before they do the thing that makes them well known as a cult, and you probably could learn a lot. Honestly, there's a lot of alpha in that.

Speaking of a higher power, a fun fact about you is you managed Nikita Bier, who came on the podcast, one of the most popular episodes of the podcast, quite a character. He was head of product for X recently for I think a year. Very few people have worked with Nikita. I'm curious what it was like to actually manage Nikita, work with Nikita.

Yeah, Nikita was on my team at Discord. We acquired his startup, and he was on the team at Discord for over a year, with some phenomenal engineers that came along with him. I think managing Nikita, that's a very loose use of the word manage. You don't manage Nikita, you only seek to control him or direct him. I mean, Nikita is an awesome personality and actual operator in the product space, pretty much one of one. And I have a ton of respect for a lot of the stuff that he does. I think of him a lot like Liam Neeson in the Taken movie series. Like, if your daughter gets kidnapped, he has a very special set of skills and he's going to employ those skills, and those skills are very hard to come by and very useful in certain situations. But then when you need him to raise the daughter or buy some groceries or stuff like that, all he knows how to do is just kill everybody in the grocery store or something like that. And so no, he's an incredible person to work with when you have him on the areas that he is an expert in, and truly one of one from that perspective.

How do you feel about having folks like that on your team? A lot of people talk about having very distinct, I don't know, roles for different people, and sometimes you need someone like that.

I think it's essential to be able to create an organization that can adopt that type of talent. I view it as a failure state if you have product orgs that can't essentially handle really spiky talent. I mean, Nikita took it to extremes. You remember when he was on Intro doing that thing? At one point I was trying to get a one-on-one with him, who by the way reported up into me, and I couldn't get him, so I was like, dude, if you don't [ __ ] answer my DMs, I'm going to go on Intro and book you so I can just have a one-on-one with you right now. Luckily we didn't get to that. He answered. I think I hit him up on four different messaging apps before I got a hold of him. But yeah, I think this ability to handle spikiness, to build teams that can essentially adopt the type of talent that isn't necessarily the perfect nine-to-five employee from a product perspective, is, you know, I look up a lot from a management style to Phil Jackson, the coach of the Bulls and the Lakers. I think his ability to mesh talent of very different types that literally does not get along otherwise, to create these winning teams, to have done it both as a player and as a coach in two different places, to use philosophies from Eastern philosophies and Western philosophies, to combine all this stuff, I think he's one of the most meaningful leaders from a leadership styles perspective of the last half century.

And I think the thing about product, especially when it comes to consumer and anything that involves more creativity and taste, is I think of a lot of product leaders more like bands putting out albums. You can love a band, but sometimes they have a dud album. And what you do with the band as a fan during that time: do you stay a fan? Do you still listen to the album? Do you ride it through? Do you just listen to the old stuff? That's kind of how I think of a lot of the spikier product managers that I've worked with, which is, man, sometimes they whiff on an album, but if I still believe in them as an artist, I'll stick with them.

Something that kind of coming back to

Nikita, but going in a different direction: when he came on the podcast, he had this line that he's like, "I'm honored to be on a podcast about product management as someone that doesn't believe product management is real." And it's funny that he went on to be head of product at X, but this connects to something that I know you believe, which is that most product managers are bad and are often net negative to the company. Talk about that, and just why you think the median PM is not actually good.

I feel like this might have been a contrarian take during the ZIRP era, but now I think it's kind of bleeding into the mainstream, of holding a higher bar for product management. And it is funny, because you had Tom, the CPO of Whatnot, as well say something similar, and I agreed with a lot of the stuff he said. And by the way, I think some of his most senior PMs are actually former Snap PMs from my team at Snap, which is great, because I think it kind of verifies a lot of this. But yeah, now we're a bunch of self-hating PMs who've made a bunch of money being PMs and are now like, "Oh, PMs are bad."

But no, I think there's actually kind of a mathematical explanation for this. First of all, I think with any craft, essentially when you're at the top end of any kind of skill that is normally distributed, you're at the tail end of the distribution. And so for product management, if the skill of product management is normally distributed across a population, the ones who are actually product managers are all the way on the right-hand side of the distribution. So you lop that off and it becomes a power distribution. And for any power distribution, the median is going to be far below the average. Most people are on the left side of it.

And I think this actually gets excessively emphasized within product management for two reasons. One, especially during the ZIRP era, it became essentially the most lucrative career in tech for nontechnical people. It has a very subjective definition, right, which is part of the reason why your podcast has been so valuable to people over the years, because they're like, "What do I need to do to be one?" And so once you're in it, you're being compensated essentially as if you're on a technical ladder. So you have a very high incentive to remain part of it.

If you're very good at it, the skills you develop as a product leader are almost perfect for either other executive roles, just overall leadership roles, or starting your own company. So on the right-hand side of the distribution, the great product managers are exiting the system. They're becoming founders, they're becoming executives, etc. And on the other side of the distribution, anybody who's in is doing anything possible to stay in. So the distribution just becomes more weighted like this, and I think during ZIRP you saw this, and there were memes about it and stuff like that, and maybe there's been some correction. But yeah, I think mathematically it's kind of set up to be this profession where the median product manager is actually probably pretty bad.

Do you feel like it's getting better? And there's something I think about a lot: a lot of people say that PMs suck, they're useless. And I find that that's usually the case because they've just not worked with a great PM, and a lot of people haven't worked with great PMs. And so it kind of makes the whole profession look bad and sound bad when a lot of people are, as you describe, working with these kind of mediocre PMs. Thoughts there?

Yeah, I think you're exactly right. I've also kind of noticed this. I feel like so much in the world right now is explained by some form of the midwit meme in some way or another. But yeah, I think you're exactly right. That is a second-order effect of this kind of distribution that I think governs the whole profession.

I do think it's getting better, because again, a lot of people reference the ZIRP era, but I truly feel like when interest rates go down, that means opportunity costs are lower. And when opportunity costs are lower, people are doing things like just hiring that extra person. But these opportunity costs, I think, are higher than they're internalized, because of some of the stuff we started talking about, that a lot of these costs are not internalized. And so, and we can talk about this, I've been really focused on developing a system for evaluating product managers, not just the person but the person and the place that they are at that time, to make sure that the team is actually net positive.

And in my experience, and we can talk about what some of those methods are, the way this kind of ends up is that I really don't hear great engineers complain about product managers that much, because great engineers, A, know how to bend product managers to their will. They get the use out of them that they want. And B, they just don't put up with bad ones. They don't get assigned or they don't get to work with bad product managers. I think ironically, in kind of the midwit meme or the horseshoe theory of things, really bad engineers also don't complain about product managers, because they know they can just hide behind their decisions and stuff like that. So it's really just the ones in the middle that are complaining.

I do want to ask about Snap. I feel like it's a company that doesn't feel like it lived up to the potential of what I think Evan and everyone imagined it could be. I imagine the main reason, and I had Evan on the podcast, is just that the users it's going after are just hard to monetize. Is that kind of the core of what has kept Snap from becoming a bigger success, or is there more to it?

I'll try and be as objective as possible, Lenny, because this is a little bit of my life's work, and maybe I do have some level of chip on my shoulder. Yeah, I'll try and be as objective as possible. So I'll say two things, maybe three things about Snap from a monetization perspective, at least an ads monetization perspective. And then we could talk about how they've had a lot of success with Snapchat Plus, and subscription products in general are doing well, but ads are truly the magical kind of product-market fit of consumer monetization on the internet. And there's a lot of mathematical reasons why that's true. And there are three things that hold back Snap from an ads perspective, where I think the company, we still kind of talk about how we deserve a little bit more credit maybe than we get, but I understand why we don't.

The first is, yes, the user base is extremely young. Snap appealed to Gen Z at an excessive rate early on, now even, I think, Gen Alpha as they kind of graduate from Roblox and stuff like that. And there is a step change, literally a suspicious discontinuity in advertising CPMs between 17 and 18 and between 18 and 21, in the United States and abroad. If you're under 17, the rules around how you can track and measure and target ads are extremely constraining, and justifiably so, right, to protect teenagers. That means that it's essentially much harder to drive ROI from this group of people versus an 18-year-old, versus a 21-year-old and a 24-year-old. And you can say all you want about, oh, teenagers influence their parents, blah, blah, blah. The key thing to think about is those are just harder to measure, and it's harder to build performance products around things that are hard to measure. And so, yeah, Snap's audience is definitively less valuable from that perspective versus a Pinterest or an Instagram or a Twitter.

The second thing is almost every ads business, every ad product you'll see that isn't search-based, every display ad product, opens to the screen where you put the ads. There's a lot of studies around attention, and just mathematically where you're going to get the impressions, where you need to kind of maximize that for advertising. And Snap opens to the camera. And that makes it awesome as a product, right, in terms of its ability to be the fastest way to capture a moment and share it with your friends. But in no part of that flow, the core flow of taking a snap and sending it to your friends, is there a logical place for an advertisement. It is just not a feed-based product, and it is not a consumption-oriented product. It is a creation-oriented product, a visual creation-oriented product. And there don't really exist a lot of advertising formats that go after this. And we experimented with this a lot at Snap, and probably one of my biggest failures was the ability to drive camera monetization. It was just too hard. I couldn't figure it out, or I couldn't greenlight the teams that could figure it out. So yeah, it's a very hostile environment for advertising from that initial thing.

And then at its core, it's a messaging app, and there aren't really great ad products for messaging apps right now. I think even with the monetization of certain messaging apps via subscription or via business accounts, and people will always cite some of the Asian chat apps as examples, you peel it back and, from a dollars-per-time-spent perspective, none of these are doing that well. None of these are exceptionally great at monetizing. Messaging apps are incredible utilities, are incredible to have as part of a portfolio. But Snap was trying to build a multi-billion-dollar ads business very quickly on a lower-value audience, a very tough format for ads, and a service that was more utilitarian than consumption-oriented.

Wow, that was fascinating. I think it's important to note Snap is a many-multi-billion-dollar business. I think a billion monthly active users, you know, all the teens use it. In the scheme of things, it's very successful. It's more just that everyone thought it was going to be much, much bigger, like the next Facebook.

And I think, yeah, if you were to peel apart Snap as a product, again, some of my information is dated and I haven't really looked, but it's the number one messaging app among teenagers in almost every Western country, like 70 to 100% penetration of people under 21. It's their default map. It gets used more than Apple or Google Maps by this group. I think it's the most popular astrology app for most of these. It's definitely the most common camera. So imagine if you're like, hey, there's a holding company, there's a Gen Z Berkshire Hathaway that has the number one camera app, the number one messaging app, the number one maps app, the number one astrology app. I guess TikTok would be the number one content consumption one, which is part of the problem with the ad stuff. But you peel it apart and you're like, that's an insane consumer product track record. And none of this credit goes to me at all, right? This is that OG design team that cranked out some of the biggest hits of our generation.

But I think from an ads product, maybe, yeah, the chip on my shoulder is: Snap started after Twitter, after Reddit, after Pinterest. It went public before all of them except for Twitter. It was quicker to four billion, I think, in ads revenue than all of them, despite starting later. Twitter is a global town hall. All the most valuable people on the planet are talking on Twitter. Pinterest is literally a place where you tell it what you want to buy, right? These are really great places for ads. What was Snap known for at the time? I don't want to make your podcast brand unsafe, but we can talk about what Snapchat was known for at the time.

Disappearing photos on screen.

It was still able to scale this ads business, which I think is, yeah, pretty fascinating. It's a fascinating company. And I think, just given the dearth of 100-million-DAU consumer products that have been started in the United States since then, it still kind of deserves to be studied.

Yeah. When Evan was on the podcast, I pointed out that I think it was the last big successful social consumer product to launch, which was 12 years ago, I think, other than TikTok, which is not really social. It's more of a content media sort of thing.

Yeah. Discord. Discord technically started in 2015.

Okay.

But very much a niche product, right? The world's biggest niche is gaming. But yeah, quite a different vibe.

Just maybe a final thought here. I'm curious to get your take. You could almost argue that this is an example of where more PMs would have been helpful, because it's such an incredibly beautifully designed product and experience, and so delightful, and people love it and are hooked on it, but the monetization and the business basically was not solved. And you would think that's where PMs would come in. And so I wonder if that was a hindrance, the low number of PMs involved.

I think that Snapchat Plus, the subscription product, if it had launched... Subscription products are tough because the math around them is pretty brutal. Essentially, time is your enemy with subscription products.

Churn.

Yeah. Anything you do takes a lot of time to matriculate in terms of impact. I think Snapchat Plus has actually been quite successful, and there's a lot of how it's been executed that's really, really great, but I sometimes wonder, if it had been launched four years earlier, where it would be. Just because with messaging utilities, and you see this with Discord and Nitro as well, much different than content products like Spotify or Netflix, you first kind of become acclimated to using the product daily and getting a lot of value out of it, and that's when you see the value of the subscription product. Not right when you start, right? You don't open Snapchat the first time and go, "Oh, I definitely need to pay 20 bucks a month or five bucks a month for something." And so with time, the cohorts' penetration essentially grows slowly over time, but it grows quite linearly usually. And so yeah, if Snap had had this product out four years ago, there might have been less pressure on the ads business to scale as quickly as it does. Less pressure on the ads business to scale as quickly as it does allows for more freedom on the content consumption side of things and the experience, and allows them maybe to compete more with TikTok. I don't know. It's a big-brain systems-thinking "okay, Snap needs more PMs," but yeah, interesting.

Man, systems thinking. That's like the seventh time in a row that term has been used on this podcast.

Was it the Netflix one?

Yeah, about this. That was a big one.

Yeah, sometimes people say systems thinking, then they go out and buy that book.

Yeah, with the Slinky.

Yeah, it's like, "I'm a systems thinker now." Yeah, I think actually the most underrated aspect of systems thinking is having a mathematical background to be able to describe the system in mathematical terms, to actually map it out in

terms of like stocks and flows and you know different probability, like is this bimodal or is this normally distributed, and just being able to understand, like to be able to mathematically communicate how a system works. Because otherwise, like, I think it's this famous method, it's a very like MBA-ish type [ __ ] thing but ironically it kind of works. I think it came out of like Toyota or something, like the five whys, and you're like, oh, what's the five whys, must be this super amazing systems thinking method. It's apparently just asking why five times, and like then you get to the bottom of things. And I'm like, that's how the majority of people, when they say it's systems thinking, I think they're basically just saying like, I asked why five times and I got to the first principle.

That is awesome. I was gonna ask you to help people understand what is systems thinking because it's this broad term that is hard to really know. And so I love this answer. So you're finding basically just asking why is actually a really effective way to develop systems thinking, to actually think about the bigger picture.

Yeah. But I would love it if like maybe rather than reading the Slinky book, there was more like Jay Forrester system dynamics, you know, from the like manufacturing kind of stuff from the 1970s, and then I think just like a mathematical understanding of how the system works, like if you had to model it.

Yeah, I was going to ask basically, just create like a spreadsheet model of how

Exactly. Yeah. Yeah. I think could be very clarifying from a

That is actually, okay. So that's a really good way to understand systems thinking. Model it out, put in a spreadsheet what are all the variables, what comes in, what comes out, what are the levers.

Yeah, yeah, what are the levers. What are the distributions behind those levers.

Yeah, I think it can be very clarifying even if the spreadsheet goes nowhere other than, you know, your shared drive. Like it can be very clarifying.

Feed your agent. I was going to say real quick on Snapchat+, my favorite part of the story is that Instagram launched Instagram Plus. It's just like another classic Snapchat story.

Yeah, there was early on, I remember at Snap it was so, so funny to see how aggressively Instagram was copying that they were actually copying like some of our worst features, like ones that weren't working, just because I think they just like assumed everything that we were touching was turning to gold.

Yeah, and then there are some features that on Instagram just don't make as much sense, like the map and things like that, that will take time. But when it comes to Stories, which was obviously extremely effective from a copying perspective, you'd be hard-pressed to say anything but the version of it on Instagram is now much better. Like what Instagram has done with that format, it really suits the product super well. And that team is powered by a bunch of great designers, and when they start thinking from first principles and with the taste that Adam, who was also on the pod, has, like that product is well architected from a human-computer interaction standpoint in a way that I think is actually like really admirable on many levels.

I keep trying to move away from Snapchat, but I have new questions come up as you share more. Something that came up in my chat with Evan about this is like seeing everybody copying Snapchat for 15 years or however long it's been, his takeaway basically is software is no longer a moat. You have to focus on other things. He described that's why he's spending so much time on hardware. It was his answer, and also just like the ecosystem and the network effects of a product. Thoughts on that?

I have tremendous respect for Evan and I think he's essentially been right on almost everything, just early on some stuff. Maybe early on everything actually too. Even stuff like avatars, like AI, like essentially all of the on-device AR that we were doing, at the time it was more just called machine learning, but like employed some form of machine intelligence that was like super avant-garde at the time. So I think when he says something like this, there's probably some truth to it. I think a lot of people are frustrated with Snap because it doesn't have the financial profile to be able to support the type of hardware development that he wants to do, it seems. And that like there still isn't a great answer on the monetization front, for which obviously I bear like a lot of responsibility. But from that kind of like moat perspective, like what he said, I watched the pod. Yeah, I kind of think like he's right, but that maybe investors or the world doesn't want to give him the space to be right in some ways. Which has

Yeah. Yeah. It has like artist vibes, you know, like rejected artist vibes, or on-the-outskirts artist vibes. Which like, I think there's still so many things, like it actually reminds me, there's so much talk these days about taste and things like that, and so hard to describe things. But one of the things that I learned at Snap is, like I think I saw Evan personally say no to better ideas than I've seen almost any other consumer startup launch.

And it kind of made me think of like this, like my goal as a product leader for founders at these high growth companies was always to like turn them into almost like the best museum, the richest museum curators in the world, where like whatever is in the product at any one time is just a small slice of the overall collection. It's whatever that curator thinks is right for this time and place in society.

And I think one way you can kind of like get at somebody's taste when you're interviewing them is just ask them about some of the things they built that they never shipped. Not that they tested and got bad results for, but like that literally they held it in their hands, the prototype, and they're like, the world's not ready for this, or like this thing is not ready. And if they have a lot of high quality ideas that are on the shelf, exercising that kind of muscle of saying no, of restraint, is probably one of the easiest, like one of the few muscles of taste you can exercise. If a museum has all of their collection on the walls, then the curator hasn't done anything. And so yeah, I think about this a lot, because Evan is, yeah, probably the best at it.

That is such an interesting insight, especially these days because AI is very bad at removing things from designs and from products. It always adds. It doesn't say, "Hey, maybe we should cut this piece." And so it's so interesting how this connects now to the, we talk about taste all the time with AI, and this is like an interesting element of that, of being good at understanding what to remove as AI becomes a bigger part of the building process and designing process.

Yes. Yeah. This will be hard, I think, this is a hard skill for AI to replicate. I think like in general it seems like right now it's obviously at the code level. It's getting to the design level. It's in some cases at the video and the photo level. It'll eventually maybe even get to physical level as well. But it's really going to empower anybody to be a creator. And we've seen this in the past, right? Like lowering the threshold for creativity not just kind of like enables the existing creators to do more, but enables people who were otherwise kind of like bounded out or restricted from entering the arena to enter it. But this will put a lot of pressure on essentially creating stuff that deserves human attention, in a way that I wonder if there are some analogues to this in the past. We'll have to think about it.

And it just feels like an interesting new skill for PMs is pushing back on things AI adds to your products. Engineers are like, what if we had this, whatever. So it's like it's not even on AI right now. It's on the product teams basically to cut stuff. Anyway.

Yeah. Yeah. Maybe the con— it'd be pretty funny if the conclusion of every Lenny's Podcast is basically, yeah, the world might just need more PMs. Crazy.

Oh man.

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There's a couple elements here that I think connect Snapchat and AI. Having seen the ads experience of Snap and where that has gone and not become as big as people may have thought, ChatGPT in particular is exploring ads. I imagine other AI tools will. Thoughts on that opportunity? Do you think that's actually a massive business opportunity for these companies, or do you think they're not understanding the actual business there?

I still subscribe to like the kind of Eric Seufert side of the world of like, ads are the product-market fit for the internet. And I still think that from a monetization standpoint there's a number of reasons, again mathematical, for why that is true, and why I think like subscription products and things like that are kind of overrated versus ads from a consumer side of things.

When I look at what OpenAI is doing from an advertising perspective, they are speedrunning all of the like ads infra, that it is exactly what you would want and do at Discord. I call this like last mover advantage, because we've learned so much and we're at like a certain place with online advertising. And really Meta and the team there from like 2010 through 2020 really deserves, I think, most of the credit for this. Like what drives a modern ads marketplace and auction is essentially like a solved problem, and OpenAI is speedrunning all of the components of that.

And I do think that the mechanism, the mathematical mechanism, which is essentially like a modified VCG, I think Vickrey–Clarke–Groves, kind of like auction mechanism, this mathematical mechanism is the correct way to build an ads auction in even like a chat environment in ChatGPT. And what I mean by that is I think where the innovation came from Meta was not just that the highest bidder, and I'm oversimplifying like crazy, but not just that the highest bidder wins, but that the organic value of an advertisement and an advertiser to that user should be factored into their bid, such that you essentially have to pay more as an advertiser to reach people who may not want to be reached or may be harder to reach or may not necessarily be as relevant to you.

And this also is great because it allows you to mix both content, organic content and advertising content, in a unified auction with dollars as essentially the ultimate denominator. And the reason that I say that this is good for chat is not necessarily that organic value is what's important here, like how much you like an ad or not in a content feed, but in chat it probably feels like this could be replaced or augmented with essentially trust. Like if you boil this down to something very simple, it's just like, hey, what X should I buy? What mic should I buy? And in that moment we have to decide, like should I give you the objective answer? Should I give you a set of answers? And how influenced should I be by a set of advertisers that want to get in front of you? And I think the mechanism by which how influenced I should be should essentially be how much trust I'm trading off.

And you kind of see us failing at this a little bit probably, and I really don't want to pick on anybody because I know how hard it is to build these types of things, but like a little bit on Amazon search, in terms of like the ads, the sponsored experience there. It's not threatening the product. Amazon is such a great product, but what is the great product of Amazon? It's like the selection and the next day shipping or whatever. Like it is getting a little crazy when you search for something and you have 16 ads before you get to the first thing, and you're like, "Oh shoot, is that like subtly influencing my trust in the system?"

And so that's why I actually think like OpenAI is speedrunning all the right stuff. And where push is going to come to shove is how they instantiate it mathematically in their auction mechanism to maximize trust over the long term. Because trust maximization will probably be correlated with user retention, if not causal, and with advertiser value. And then on the other side of it, it's probably a format question, like what does this format look like in chat? What if it's voice? Like we don't know.

So I think like one of the coolest jobs right now for a PM and designer would probably be like ad formats at OpenAI. That's like a societal level job in advertising right now. And so yeah, I think it'll be really interesting to see how they work on that.

Yeah, maybe one other thing I'll say is like I was kind of disappointed that they jumped right to an ad-free experience for the top tier. I feel like ads could actually be really additive to every part of OpenAI, you know, not like coding and things like that, but like actual chat. Let's set aside work and coding. And like lopping off your most valuable users so early, I was a little disappointed, but I understand why people do that.

It is so fun to listen to you talk about this as you take a swig of your vodka right there. I don't know if people

It's actually really, really fancy douchey water. So

Okay. Yeah. That you replace with vodka so nobody can tell. This is the key.

That's right. If you keep me on for another 30 or so minutes, it'll really get

Yeah.

So what I was saying, it's so fun to hear you talk about the ads ecosystem, and it shows how much you know and how deep this goes. Like I feel like we could do a whole episode on this. Probably don't need to do that right now. But it's amazing. Clearly you've spent a lot of time thinking about ads. What I'm also feeling now is OpenAI needs to hire you immediately to help them with this.

Yeah. Yeah. Yeah. I guess free agent, so, you know, maybe that's my ulterior motive of the pod, you know.

This is the interview. Well, I think you've passed. Okay. I want to go to something else. So we were chatting about what to spend time on, and I asked you what are some counterintuitive lessons that you've learned over the course of your career

That go against kind of common startup wisdom, common leadership wisdom, and there's four you shared, and I want to just go through them and get your take because they're awesome. Okay. So, the first is you like to spend time riding your best people into the ground versus improving the average people.

Sure.

I'm realizing you write this out. It's like, he's building terrorist organizations and all he does is ride his best people into the ground.

Going to be the title of the episode.

Yeah. Yeah. There's going to be like a recovery group, like a therapy group of PMs that worked for Peter Sellis.

No, you're both probably worried about that.

They're all sitting in Discord chatting.

Yeah. Oh, god forbid it's a Discord group. Oh, Jesus. Yeah, I think this actually kind of flows from the whole kind of like VORP thing, is that once you have somebody in a position, and there are a lot of tropes around this too, right? Like if you want something done quickly, give it to the busiest person kind of thing. But I think it's not necessarily counterintuitive. It's counter to like human nature, right? Like if you see somebody drowning, you want to save them. And I did the opposite, absolutely opposite.

And maybe it's, you know, right before we started the podcast, I was talking about nominative determinism, where your name kind of creates who you are, and joking that maybe I need to be a salesperson because my last name is Sellis. But there's also this, you know, MBA Peter principle where people are promoted to the level of their incompetence, which definitely could describe my career. But that's kind of what I seek to do. If somebody is strong and crushing it, I'm just handing them more and more rope to hang themselves with, and I'm pushing them as hard as possible, you know, to the point of breaking.

Because at the end of the day, one of the biggest leadership principles for me is that the people on my team I will always defend in public, like in front of execs and stuff like that. I never criticize them in front of others. And so people who are making consistently good decisions, I just want to load them up with more decisions till I start to see them make bad ones. I think there's so much kind of self-reinforcement or self-fulfilling prophecy of when you have confidence and when things are going well, you're able to do more. And so I try and really show that I believe in people.

And when I don't, maybe this is just a personal thing, I just don't have a really good mechanism for helping people improve. So I essentially let them fail on their own, which could be, I think, probably pretty frustrating for me as a leader to work for, and somewhat sad. I think the thing you need to control for when you adopt this type of management philosophy is that not paying attention to somebody doesn't mean they're failing. There are a lot of people that I've hired over the years, especially if I've worked with them multiple times, where I'm like, I know you know what to do, so go do it. And I just let them execute. But yeah, it's, you know, spend time with your winners, ride your racehorses, give a busy person something to do if you want it done quick, whatever the stupid trope is. I try to pursue it pretty aggressively.

Makes sense to me. And there's many ways to say it. Some are kinder than others. Another contrarian take you have is that collaboration is a pretty bad use of time a lot of times. You talked about this earlier, but is there anything more to add there?

I think when you're building a team and you talk about the team's principles or tenets or whatever, if you find yourself saying things that no one can disagree with, either those aren't good principles or tenets, or maybe they need to be challenged. And yeah, I think collaboration kind of falls under this umbrella a lot of the time. But yeah, I think we talked about kind of my reasoning there.

Okay. Another contrarian take you have is that growth typically comes from the core of the business.

Yeah, I mean this one was learned a couple times, both at Snap and at Discord. And this isn't to say that there aren't these wonderful growth strategies about expansion into new markets or things like that. But I think the nature of network effect oriented businesses is that they want to grow implicitly. And so what you can do to drive growth much more effectively is focus on people who are essentially already using or wanting to use the product for what it's for, or some kind of derivative nearby of that, and just making it much easier, much more performant, much more relevant, etc.

I think the way you could think about this, we're using very, you know, eighth grade math. I think almost every consumer product, maybe it's also a controversial take, needs to be optimizing for daily active use. Eventually you need to tie everything to people's natural lives and cycles, and days are real, right? Weeks, they can be real, but they're not necessarily real. There aren't a lot of things you do on a weekly regimen regularly, really effectively. But you wake up, you know, the circadian rhythm is real. Very few things are done on a monthly basis, like a lot of B2B stuff, like paying bills, etc. I guess there's some biological things that happen monthly. We could get into that. But there's something about the daily active use, or even hourly active use, that I think is essential for almost every consumer product.

And the idea, if you're thinking about a daily active user, if you're going for somebody who uses the product once a month, you're going to need 30 of those to equal somebody who uses it daily. That's very, very basic math. And so that's why I think a lot of the most effective consumer products have extremely high DAU/MAU ratios. And so a lot of growth can come from essentially moving that ratio just a few basis points versus trying to go acquire a bunch of new monthly active users and seeing if they retain. And by the way, DAU/MAU is just a form of retention. Retention can be any period. It's just the next day. Like, given you use it today, what's the probability you're going to use it tomorrow?

And so at Snap, the lesson there came from that disastrous redesign in 2018, which was the only time, I think, that Snap's overall DAU actually flattened out quarter over quarter. And what we laser focused on after that was performance, particularly on Android. Existing people who are already using the app, just making it much, much faster and more performant for them. And that led to almost like a growth renaissance that, you know, went on for multiple years.

At Discord, I think it was even more controversial because at the time, Discord has been something for a lot of people during the pandemic, during crypto, during AI, etc. So at the time, you had Midjourney being built on Discord, and Midjourney was phenomenal, just such a cool company, product, everything. And a lot of people on the outside were just like, "Wow, this is a moment. Midjourney must be huge for Discord." From a user perspective or daily active use, a metric perspective, if I were to show you, you can even look at this online, right, Discord's use over time, you wouldn't be able to pick out Midjourney. The reason people use Discord is to connect with their friends before, during, and after playing games.

And what we did in 2024 was completely focus the team around this idea of how can we be the best place for you and your friends to play intentional multiplayer games together. And it turns out, even though Discord, technically, that technical team is phenomenal, and it's near perfect in some ways when it comes to voice and things like that, there were still things we could do to make it better before and after playing games with your friends. And when we focused on gaming, which at the time everybody was like, everybody who plays multiplayer games, especially on PC, they already have Discord, right? They already use it. It's literally 100% penetration, right?

No, there were a lot of reasons that you were just on the edge and you decided not to join voice, you decided to use the in-game voice, you decided to call your friend on FaceTime instead, whatever it was. As we made Discord better, as we focused on performance, we were actually able to drive some of the fastest, I think, if not the fastest growth, and I'm not sharing anything that's not public, since the pandemic. Obviously, Discord exploded during the pandemic. And this was by focusing on the thing that everybody already said we had 100% penetration of, which was intentional multiplayer gamers.

Now from there you have a lot of options, right? There are a lot of things that look like multiplayer gaming. Crypto looks like multiplayer gaming, right? Intense coordination costs, you know, time-sensitive, etc. Honestly, software development looks like multiplayer gaming. There are a lot of things that you could build off of that core. But by focusing on people who play games with their friends, we were actually able to identify a lot of things that brought somebody from using Discord, let's say, 10 days out of the 30 to 11 to 12 to 13. That's actually monster growth when you think about those pockets and moving up people's L-ness, like L7, seven out of seven days. I think I stole that from Meta, who once again wrote a great playbook on growth. And so focusing on that L-ness of the core consumer base, I think it just ended up being so, so positive in both the Snap and Discord examples.

This is a really important lesson for people trying to grow a product. The TL;DR to me is there's always money in the banana stand.

Like we were talking earlier about building a terrorist organization. That's a great example of a phrase that if you could ascribe in a strategy document, you could ascribe value. Like, there's always money in the banana stand, right? Return to your core users, make sure it's perfect for them. There was always money in the banana stand. I think at Discord it had exceptionally positive externalities because the most vocal, critical, honestly intelligent or high IQ user base in the world are gamers, honestly. You think you've built for people who are critical about your product, who are detail oriented? Unless you've built for gamers, you haven't.

And to be able to turn around and say, we are focused, here's a bug thread on Reddit, show us what's messing up. We don't care how small it is, how big it is. We will fix it. It had this unbelievable positionality of, we are delivering for this community. And I honestly think this is why Discord is so, so great and so without peer in this specific niche, because it's so laser focused on, if you play games with your friends and you care about it, there are people who sit in that office who will make it perfect for you forever.

So, this begs the question, when does it make sense to bet on something new and try new things? Because, you know, it doesn't always make sense to just continue refining and refining the one piece of product market fit that's worked. Any guidance to folks, and this is for consumer in particular, any guidance for when it makes sense to still make bets outside that core?

Yeah, I think there are two really incremental ways to think about it. One is if you boil down the core things about your product that are really, really great, that people come to it for. So for Snap, maybe it's the camera. For Discord, it's voice. And then you look to other niches, other cohorts for which that could be useful. That's a very MBA style, you know, 2 by 2 type of thing. That's, I think, one method to do that, and you should honestly always be assessing that because, you know, that's an easy one.

And then I think the second thing is, one of the greatest gifts is when people use your product in a way that you didn't expect or, you know, didn't ordain, because they're going through extra hoops to do what they want to do with the product. So whatever you're offering is so good that they're going through hoops to do that. For Discord, for example, a lot of it centered around communities and how people were using it to organize larger and larger communities as opposed to the 20-person gaming friend group. And when people are doing that, they're essentially voting with their feet. They're telling you, I want to use this product for this. What can you do to make it a little bit easier for me? So it kind of is a version of that, but it's expanding to the next thing. And that's more like thinking about concentric circles. It's like, okay, we got it at the core. How do we expand? I feel like I'm doing something with my hands here that's going to be meme'd, but it works.

We got it. Sorry. Okay, I'll stop. But I think then the other, the more Snapchat-like, the more innovative way to think about it is to look at your company's philosophy around why it was built and then think about the future totally unencumbered by the present. No incrementality from the present, more like future casting, like backcasting instead of forecasting. And be like, okay, right now the best way to share a moment is to pull out your phone and aim the camera at it and record. That's very constrained by the existing technology. If we were to envision a future of, what does the future look like to be the best way? Something just happened, or my child just took its first steps, I'm at a concert, I just saw something really funny on the street. What's the best way to share that moment with my friends? I think that's what leads you to something like, oh, probably glasses, or you know, things like that.

So this backcasting method, I think, is what everybody wants to do. In my experience, there are very few people that have this type of blank sheet creativity to think about the future totally unencumbered from the present. Most people, even really creative people, remix versions of the present. Or I think these days most product managers go on an ayahuasca journey or travel to Japan or something and then come back and they're like, I've solved it. But very few people, I think, are very good at this version of it.

And I think a big part of this is you found product market fit, something's working. You almost take for granted how lucky you are that you found something that works. And it may be easy to think, oh, we'll find the next thing now. And very few people do. Airbnb is actually a really good example of this. Nothing beyond the original idea has worked in a big way. It's still basically the same core idea. And, you know, I've worked there for a long time, and nothing has significantly impacted the growth trajectory other than exactly what you just described, continuing to make the core experience better, more supply, more demand.

So, I think this is a really profound

point for people to take in.

It's also like you can keep teams leaner this way, things like that. The biggest risk is it's kind of like that, I think it's a Nassim Taleb meme of like 1,001 days in the life of a Thanksgiving turkey, where it's just like, yeah, everything's getting better and better and better until something comes along that's literally 10x better than what you're doing and it takes you to zero overnight.

And guarding against that, I don't have any... if I knew how to guard against black swan events like that, yeah, I think

You'd be in finance.

Yeah, definitely be in finance. I actually think like this, you know, we were talking a little bit, like SpaceX is probably a good example actually of a company that guards itself against this in some ways.

Okay. Say more. I know your wife works at SpaceX, so you have a really unique insight into how SpaceX works and what has worked there.

Yeah. No, no inside information. I'm like a second party, I'm not first party, but, you know, yeah, I sleep next to a SpaceX engineer every night, so that helps. Yeah, that's all you have to do.

But no, I think SpaceX is the greatest American company right now. Greatest company in the world. Truly phenomenal on every single level. And I'm talking more about SpaceX, like xAI is also doing insane stuff, but just that. And I think the best example of what I mean by guarding against the future, I don't think any company does anything close to what SpaceX does here, and there's a recent example, literally I think in the last week, of this perfectly, where they essentially announced some version of: they are taking the Falcon 9, which is their primary launch system, the greatest launch system in the world ever by far, reusable, most cost-effective kilograms to low Earth orbit, to geostationary orbit, that every country on the planet would give up their GDP to have this technology, to be able to launch and reuse rockets, and they're sunsetting the Falcon 9.

And this is like Cortés-level burn the ships upon arriving, because they're essentially saying, in order to reach our vision in the future, we need a heavier-lift launch vehicle, that is Starship. So, you know, starting in a few years, because they have customers and things like that, you'll no longer be able to buy rides on the Falcon 9. I don't think this is for everything, but, you know, they're gradually basically telegraphing that the Falcon 9 is the past. By the way, the Falcon 9 would be the future for literally every other country, nation state on the planet. It's an incredible machine.

And yeah, I think Elon has built this culture that, you know, Clayton Christensen is dead, but he probably would shed a tear over how happy it would make him about avoiding the innovator's dilemma, where it's just like, just because we have the thing that is the best, we're completely willing to build the thing that will compete against ourselves and make the thing that we built irrelevant.

And I wish I had more insight into what drives that beyond maybe just Elon or that whole organization, but what I've witnessed top to bottom is like, everybody you talk to there is like, "Yeah, it's going to be awesome. Yeah, we're going to do this." It's definitely part of the culture, maybe the cult, that they can do this even though on paper, and now as a public company, it kind of looks insane. And so yeah, I think that's actually a really underrated part about SpaceX, is their ability to essentially burn the ships and focus on what's next.

This to me comes back to the original beginning of this conversation, building an org like a terrorist organization. In particular the mission, like clearly the mission of SpaceX: make humanity multi-planetary, get to Mars. And with that mission, I can totally see how they may be working backwards from: in order to do this, we need this larger rocket, it makes no sense to keep investing here. So to me it feels very clear how they go about making these decisions.

Yeah. I think there's another thing about both of Elon's major companies, like SpaceX and Tesla. I know less about Neuralink, Boring Company, etc. But you look, like on the website, I mean now I don't know where it is, but they publish essentially 10-year plans. Nothing SpaceX is doing is something that they didn't talk about 10 years ago. Tesla talked about exactly what they wanted to do with the initial Roadster to fund the S to fund the 3. In some ways the product roadmap is published, right? And as a product leader, I aspire to that level of swag where it's just like, yo, we're going to do something that's so aggressive and so ambitious that we can just tell you exactly what we're going to do, because if you think you can do it better than us, you're welcome to try. But yeah, that's a mission, right, that you can publish and turn into a product roadmap, say you're going to do it, do what you say, and then say like, yeah, copy us. And in the Tesla case, like, oh, here are the patents too.

Right, I was just going to say, they released all the patents for the Tesla electric stuff.

Yeah, so next level.

It's so interesting. So one meme across this podcast over the past couple months has been systems thinking. The other has actually been ambition and how much that matters now with companies and startups, because AI is making it so much easier to build. You just tell it build this thing, it does it. And what that means is the level of ambition has to keep going up. And that's like a new habit people have to build, because we're not naturally that ambitious. We haven't evolved to try things that seem impossible. And it feels like we need to learn that skill now as builders.

Yeah. I think the status quo is the status quo for a reason. Whatever framework you're using, local optima versus global optima, opportunity cost, it's all basically just trying to build a muscle to help you gain the courage to just make tomorrow not look like today. And that's actually just not natural for most human beings. And there are a lot of systems in the world designed to stop you from doing that. The world doesn't necessarily just want to change. And so yeah, it takes a powerful nudge to beat that kind of static friction of where you are today.

And it's not just the position, it's the vector, right? Like again, the Falcon 9 is up and to the right like this. But it's like, okay, I don't want the actual position. I don't even want the speed. I don't want the velocity. I want the acceleration. And in order to get that acceleration, I need impulse, right? I need the third derivative, I guess. I need to push it. And yeah, this is just not natural. And people who can do that regularly and repeatedly, but not just disruptively all the time, like, you know, just always asking for more, blah, blah, blah. I think it became very trendy as Steve Jobs's kind of ethos grew, but yeah, the types of people who can do that within an organization, especially a large organization, are pretty rare.

I just had Tara on the podcast. She's head of product for ChatGPT Work, although they're always shifting people around, I don't know what her role is these days. And she pointed out the job of PMs now, more and more, is to elevate the ambition of the team, to remind them we could go bigger. What would it take to think bigger? What would a thousandx of this idea be?

Yeah. I mean, it's again like, if you can do that credibly, repeatedly, you know, not just by showing up to meetings and being like, "What if we did more?"

"What if we did it faster?"

Yeah, exactly. Like no, I've got white male, gray hair, you know, fancy degrees. I can just come in any meeting and be like, "Have you thought about doing this quicker?" Like, okay. Like, why do I just... Have you thought about punching yourself in the face? Like, yeah, maybe.

Oh man. So that's the skill, saying that but in a way that doesn't get you punched in the face.

Yeah. To be fair, I've been punched in the face a couple of times. You don't get a nose like this naturally. You get punched in the face a couple times.

Is this for real? Is that a real thing, that you got punched in the face?

I have gotten the [ __ ] kicked out of me a couple of times because I run my mouth non-stop.

But is there a story there you can share? Or is that off?

That's more ancient history. We like to move past these things, Lenny. Come on.

I feel there's trauma there we need to uncover. Okay, final topic. When we were starting this podcast, you told me there are some Sellisisms out there. How do you... what's the word you use? What's the phrase? Sellisisms.

Sellisisms. Things that you often share with folks that kind of become a thing that people that work with you know. Are there any that we haven't covered? Things that you think are recurring pieces of advice or frameworks or even lessons you've learned that you think are important for people to hear, that might be helpful.

I don't think there are too many. I mean, I think a few of them came up when we were talking about ads. One that I, and I don't know if I deserve original credit for this, but I've used it quite a bit, is this idea that ads is such a cutthroat, hand-to-hand combat, very revenue-goal-driven product area that it's very easy to become very short-term oriented. And one of the things, and this hearkens back to the ideological stuff from, you know, building the type of organization you want, that we really focused on over the years, both at Snap, Discord, and even some of the companies I've advised on the ad stuff, is that with ads you really want to be long-term greedy. And that was a phrase we used.

And long-term greedy is a funny phrase, but it was actually backed by essentially the mathematical realization, which again is not rocket science, that long revenue tomorrow for advertising is essentially causally related to the ROI you drive for advertisers today. So your focus should be on driving advertiser ROI. The issue is that the easiest way to drive ROI is actually to decrease the denominator, the I, so you could lower prices. Right now in modern auctions, price is an output, not an input. But the powerful learning there is that the way I will grow this business long-term, the way I will hit my goals long-term, the way I see compounding growth because of retention and increasing budgets, like net revenue retention for some of these SaaS products, is essentially by delivering ROI for people today, even at the cost of potentially short-term revenue.

And so this type of phrase gave space for a type of thinking that otherwise can get pretty tough. And people say, "Oh yeah, it's thinking long-term." Again, I'll take it back to: you're going to encounter times in your career where thinking long-term is actually really, really [ __ ] tough. And a lot of this time will be when you are a public company, when you are missing numbers, when you may have to do a layoff if certain things don't happen. And to be able to have an ideological setup which you can use as cover to think long-term, that was what long-term greedy was. It's like, we're not a charity. We're not giving this stuff away because we want to make people happy. We're making this happen today because we know they'll come back tomorrow even bigger. And yeah, that one was really, really effective.

I think the other thing was, at both Snap and Discord, we created this concept of core product value. And this is related to my DAU comment: you need to define, both from a theoretical or conceptual level as well as a metrics level, what it means for somebody to come back to your product every single day. And so Snap, I think at the time, was: Snap is the fastest way to share a moment with the people you care about. So it's fast, share a moment, people you care about, and you could actually break down what does fast mean, like time to load. What does share mean? It's like, okay, you're opening to the camera, sharing quickly. What does people you care about mean? Focus on best friends. You could actually break this thing down. And so you had the fastest way to share a moment with your best friends. So if you're building a product roadmap on the consumer side and you're like, oh, should we work on this? It's like, well, does it help us be the fastest way to share a moment with your best friends? Kind of a tenuous link to that, like maybe that's not what we should prioritize.

I think Discord was the best way to talk and hang out with your friends before, during, and after playing games. So it's like, you know, talk, hang out, games, before, during, after. You can break this thing down. And we actually had metrics definitions, which I think are kind of proprietary internal, but we had metrics definitions that we were looking for. Those metrics definitions made their way into the growth books, into the hacks, like, okay, did this impact CPV? And this whole ideological language that everybody shared, that you could onboard new data scientists to, I think just got people on the program really, really fast.

These are awesome. This idea of core product value is such a nice way to frame it. It combines mission with the levers, essentially, of the business. And basically the idea here is: come up with a phrase that describes the mission that happens to also connect with how we grow this business. And it feels like three components is a consistent pattern here.

Yeah. Maybe it's just like a rule of threes. But the way you characterize it is exactly right. And you can't overly rely on one or the other, right? If it's just metrics, it's kind of meaningless to people. If it's just a phrase, it doesn't get actioned day-to-day by data scientists, product managers, and engineers. So having both and building a story around that, and telling that story repeatedly... For core product value at Snap, we actually had an onboarding presentation, which I delivered to every single new hire for seven years straight, every week or every other week later, that was about this, because that was part of the cult, right? This is how we deliver core product value. This is why people choose Snapchat every single day in the face of tons of alternatives and a bunch of savage competitors. And I think the same goes for Discord.

And the work is coming up with that phrase that actually is clear, simple, connects to all these things. Not easy, I imagine.

And the metrics that are causally demonstrated with retention.

That's tough, too. I think no data scientist likes working with me because I'm like, "Hey guys, we've got to figure this out."

Interesting. Okay. One other take that you mentioned when we were chatting ahead of this is this idea of how a great PM is an oxymoron.

Yeah. I can't help but think this is maybe why it's so hard to come by some of them, because like

You see an overexpre, like there's basically these three. And yeah, I bet you could actually come up with this from a synthesis of so many of the amazing product leaders you've had on here, but there are these three kind of oxymorons. I think there are two wolves inside of the PM, three times.

One is, I think to be a really good PM you kind of have to be really confident, and that borders on arrogance a lot of the time, especially at certain levels. And so that has to be balanced with some form of humility, like really serious humility, where you kind of again are so confident that what we're doing is the right thing to do and that we have conviction on this path, and also personally that I will be recognized for my contribution. I can go out there and give credit to exactly who deserves it. The designer who made that last-second change that made a huge difference. The engineer that stayed up all night to get the thing out on time for the partner event. I think that this also ties to being a great leader. But having the humility and the attention to detail to know who to give credit to actually comes from this sense of confidence that you kind of know that PMs are going to get too much credit no matter what. So I think that's the first one.

The second one, which I really like and really try and test for in interviews, and I'm not the best interviewer, is you want these people who are extremely organized and very process-driven, like they understand the value of good process, not too much, not too little, etc., and then are just super comfortable with ambiguity, almost to the point of despising authority, almost like pathological demand avoidance. And so it's just like, I have a checklist for everything, but I'm also comfortable if I have to throw it out and redo it all the time, or something like that. And I think these two wolves, if you can demonstrate that through some stories or through some kind of examples, that's so attractive to me in a candidate. It's like, yeah, I'm really comfortable with ambiguity, but that doesn't mean I'm not organized or I hate process. Another one of those things where it's really trendy to just say, oh, process is useless, but I like somebody who has both those wolves.

And then I think the last one is a little more obvious, but a lot of the great PMs that I've worked with really just always have some form of long-term thinking in their mind. They just know how they want the world to look six months, a year, two years from now. And they're patient and they know what building blocks need to come into place for the system to work. But yet on a day-to-day basis, their bias for action is just borderline annoying, you know? They're just such good people at setting the pace of the entire company. When they wake up in the morning, the company wakes up, the group wakes up, the team wakes up, whatever it is. And yeah, I think that combination of urgency and bias for action with long-term thinking. Those are my three oxymorons, the three pairs of wolves inside every great PM.

Amazing description of what makes a great PM. Such a cool way to think about it. Nquille Singal was on the podcast a couple times, and it's a different way of thinking about it, but he talks about the shadow. You have a superpower, but then there's the shadow. Know what the downside of that is. It's a different thing, but I love this. It's just a really interesting way to think about what is a great PM.

Okay, one final thing before we get to a very exciting lightning round. I want to take us to Contrarian Corner, which is a recurring podcast segment where, I feel like you're going to have some good stuff here. The question is just, what's something you believe that most other people don't?

Being contrarian is tough these days. Very trendy to be contrarian, which is ironic. So maybe I should just be conformist. Can I break this into a light spicy, medium spicy, heavy spicy?

Love that. Let's do it.

Okay. So my light spicy, I don't think everyone would disagree with this, but I think as a product manager in particular, and I don't think we have time to go into everything, I think the most important career decision you make is who your partner is, like who you marry, who you spend your time with personally. I think this has both growth and just knock-on effects that are really hard to quantify. And there's no amount of Lenny podcasts you can listen to and internalize that will match finding a great partner who will help you, support you, and help you grow, and be kind of intellectually a sounding board for you. So I think that's probably my light take, because I think a lot of people would kind of agree to that to some degree. I know my super spicy one.

On the medium spicy, this is kind of related to my museum curator comment. I think a lot of people who I look up to in terms of taste, and maybe it's just being in Los Angeles, but I care a lot about stuff like art, like the art behind me, stuff like that. I've noticed that the difference, especially in wealthy people, between those who have taste and those who are seen as gauche or something like that, is the ones with taste kind of stop one step before everybody else does. Maybe they're collecting art in a certain trend, but then they realize when things are, whatever the old phrase is, jumping the shark, or when things are hitting a certain level where it's like, okay, now is the time to stop and look for something new. And I think that what you haven't shipped, what you've built and tried and held in your hands and loved but haven't brought to the world, is kind of a test for that in some ways. And so yeah, I don't know if that's super contrarian, but I think you can measure a lot. People with great taste just seem to know when to take something and get passionate about something and then kind of...

When it gets cringe.

Yeah. Maybe cringe is it. Yeah. Let it go.

My spiciest one, and this will bring it back to the start of the podcast, like why am I doing this podcast now? You and I have known each other, been in group chats, chatted all the time for a long time. This one's probably a take where I don't even know if I'd be super comfortable saying it depending on my employer. I think that to truly create great consumer products for certain cohorts of humans, of users, the product managers and designers that you put on some of those products, there are certain inalienable traits about those product managers that cannot be learned, cannot be acquired, that are essential to creating truly great consumer products. And by that I mean literally gender, race, ethnicity, socioeconomic background.

And what I mean by this is not, oh, if you want to create a product for young Black men, you need to hire young Black men. I don't mean stuff like that. And I don't know how comfortable I am giving examples, but I do think that we are not comfortable as a society admitting this, but there are certain things about how people are brought up, who they are biologically, things like that, that suit them to better working on certain consumer products. Because at their core, most consumer products, and Nikita talks about this too, are hitting against certain parts of Maslow's hierarchy of needs, and in order to understand those needs really well, I think there are certain people with backgrounds, upbringings, etc. that make them better at that. That doesn't mean you can hire for it. That doesn't mean you can judge a book by its cover, things like that. And that's why it's such a spicy take, it's not necessarily even actionable in many situations. But yeah, maybe I'll leave it at that before I give myself...

Yeah, the real spicy version would be that grid of here's who you need for this type of product, but we're not going to go there. Before we get to our very exciting lightning round, is there anything else that we haven't touched on? Anything else you wanted to share? Anything you want to double down on before we get to the exciting lightning round? We covered a lot of ground, so there might not...

No, I think we covered a ton of ground. It's really great.

Well, Peter, with that, we reached our very exciting lightning round. I've got five questions for you. Are you ready?

All right. I will admit to our viewers and listeners that I have not prepared for these, which I guess was the point of the lightning round.

That is the point, except they're the same questions to everybody except the last one.

Okay, cool. So it's not too much of a surprise.

Okay. Then I love these questions. All right.

Okay. And I love it when people aren't prepared. Okay. Two or three books that you find yourself recommending most to other people.

I'm going to butcher the title a bit. How to Get Filthy Rich in Rising Asia and When Genius Failed.

Oh, haven't heard of these. Amazing.

And then the third one. So, How to Get Filthy Rich in Rising Asia. When Genius Failed is about the rise and fall of Long-Term Capital Management in late 1998, which caused one of the crashes, or nearly averted crashes. And then my third one, which I actually give to a lot of consumer PMs, is Einstein's Dreams by Alan Lightman, the physicist from MIT.

Very unique pick. I haven't heard these on the podcast before. Favorite recent movie or TV show you've really enjoyed.

So I do not consume TV, and I haven't watched as many movies as I used to. I used to be a big movie buff. So if I could flip this to something that was closer to my heart, gaming. If you don't play video games, you should give last year's game of the year, Clair Obscur: Expedition 33, a shot. Just a wonderful indie studio out of France that constructed a story with music and sound that is just Louvre-level beauty, and really reminds you that games are a form of art that maybe we still as a society haven't yet realized how to appreciate. And I think the people behind it are phenomenal, and I think what they produced is amazing.

Wow. I want to watch a Twitch stream of you playing it. How fun would that be? That could be our follow-up. [laughter] Is that on desktop, or is that a console thing?

It's available on console as well, but I think probably the best experience is on desktop. I think it works on Mac and PC.

So cool. I think that's the first game recommended. I like how different this round is than most. Favorite interesting AI product right now.

In general, a lot of the AI products still feel like we're throwing spaghetti at the wall. I've heard a couple people actually reference this on the pod. The one that I found that changed my workflow the most at work was Hex. It was the first time that I just markedly found myself doing something differently immediately. And it was one of the only multiplayer AI experiences that worked. Literally me and the co-founder of Discord, Stan, in a meeting, in a Hex thread, interacting with Hex as we were having discussions in the meeting and getting data back and things like that. Obviously latency and inference time and stuff like that is still an issue, but I find that product to be really, really great, and it really just enabled me to feel like a superhuman.

I love how every one of these answers, I don't think anyone's ever said. Two final questions. Do you have a favorite life motto that you often find useful in work or in life?

There's this quote that I'm going to butcher because I don't have it in front of me, that is from John Steinbeck in East of Eden, I think, about the passage of time. And I'm just generally obsessed with the passage of time, because the people in my life, whether it's been personal or professional, who I've just always been literally infatuated by, like I've just wanted to spend more time, I've fallen in love with these people, they oftentimes seem to float through time and perceive time very differently than normal people.

And this quote from Steinbeck is about how time passes differently when you experience more or less. And essentially the quote is that duration has no signposts, sorry, time has no signposts upon which to drape duration. From nothing to nothing is no time at all. And I really want to get the full quote for you, because it's literally one of those things where you're like, "How could a human write this? It's so beautiful." But yeah, from nothing to nothing is no time at all. And so a life that is even scarred with tragedy, or, essentially, just do it, right? Just get out there, meet new people, experience things, because the best way to slow the passage of time is essentially to do something with it. And so I'm pretty generous, I think, with my time, and how I spend it with people, and just trying to do things that I want to do as soon as possible, because you just never know. And those time periods that really seem to pass slowly in a good way are the ones where you've just experienced a lot. And so this idea that from nothing to nothing is no time at all is so scary and motivating to me.

That is beautiful. Again, a quote nobody has shared before. Final question. Okay. So I was looking at your LinkedIn, looking at your career history. Funny enough, you were head of product immediately. That was your first product role, at a company called...

I was a product manager for a little bit, but...

Okay. You've overlooked that in your LinkedIn. So it was a company called Ustream, and you described your role as product leader for the Shiba Inu puppy cam. We need to hear more.

Yeah. Ustream is a funny company. It was one of the first live streaming companies, alongside Livestream, the company actually called Livestream, and Justin.tv with Justin Kan, and kind of a golden age of live streaming that was first enabled by essentially higher bandwidth and things like that. Sometimes we talk about failures. Ustream was essentially a failure because we should have focused on gaming. Justin.tv focused on gaming, became Twitch, etc.

But one thing about Ustream, I'll tell you really quick, I know it's the lightning round: the number one product adviser to Ustream, this is 2009, was Josh Elman. That was my come-up in product, 17 years ago, having a mentor who was Josh Elman, which was really phenomenal to learn product. And then the actual first product manager at Ustream was this guy Matt Schlicht, who had dropped out of high school, I think, to work on the product, 2008, 2009. Matt just sold Moltbook to Meta, kind of the social network for agents. And so he is one of the OG social hackers.

So it was really, really awesome to see him realize that. But yeah, Ustream became really popular from the Shiba Inu puppy cam, which was somebody taking a Logitech camera and aiming it at a litter of new Shiba Inu puppies and 24/7 just streaming these puppies growing up, acting crazy, etc.

And we should have learned. There were actually three 24/7 cams at the time. I think there was the Shiba puppy cam. Then there was the Eagle cam that showed the birth of baby eagles in Decorah, Iowa. And then there was Jason Calacanis on just like 24/7 broadcast. He was the only person who could afford like a broadcasting his This Week in Startups.

So two beautiful things and one hideous thing. No, I'm just kidding. But yeah, the Shiba Inu puppy cam, there was a lot to learn about that. People use this as their background, just to have it in the background while they worked, on their headphones, just listening to these puppies was very soothing. And we got so many emails and people being like, this saved my life, like blah blah blah. So.

Yeah. Yeah, it was really fun. Live streaming is still kind of like an uncracked product category. Still technically challenging, quite expensive, etc. But I learned a lot from like a consumer standpoint from that.

Incredible. There's also, on your LinkedIn, you worked at a company that incubated Dollar Shave Club and Liquid Death. We're not going to get into that. Peter, you mentioned briefly a second ago how generous you are with your time. I really appreciate you making time to be here. We got through so much. And this is one of the longer episodes I've done, which says a lot about just how much there is to talk about and how much you have to share. So, thank you for being here.

Yeah, it's so great to talk about some of this stuff. And you know, I haven't expressed it externally in a lot of ways, and really I think it says a lot about you and your podcast and your readership and viewership. I think you probably have done more than any person to really shape what this career looks like and how it's improved over the years. So I'm really grateful for the time. I'm grateful for everybody who listened.

Final question. How can listeners be useful to you?

I think like people, if they listen through this podcast, they probably got an idea of, like, not necessarily the contrarian takes, but just some of the aspects of how I think about product that are maybe just a little bit different than the typical product leader that came up in Silicon Valley or something like that. And yeah, if they feel like something resonates to them, or that they disagree with something and want to correct it, or they have beef with it, or they just like something fascinated them about it, I would love to hear about it. Yeah, I would just love to hear. I love disagreeing with stuff. I love hearing about stuff like that.

Sweet. And we'll point to your socials if folks want to disagree with you. Peter, thank you so much for being here.

Thank you for having me, Lenny. Really appreciate it.

Bye everyone. Thank you so much for listening. If you found this valuable, you can subscribe to the show on Apple Podcasts, Spotify, or your favorite podcast app. Also, please consider giving us a rating or leaving a review, as that really helps other listeners find the podcast. You can find all past episodes or learn more about the show at lennyspodcast.com. See you in the next episode.