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Rishabh (00:01)
Okay, now, alright, we have to talk about something totally different now.
Jeremiah (00:04)
You guys were just a Shoptalk?
Zach Murray (00:06)
I'm still still here. They're trying to kick me out of this room, but we got a podcast to record.
Jack (00:12)
Yeah
Jeremiah (00:13)
So I didn't make it this year. I actually don't know if I've told you guys this yet, but I have a baby due on Monday. So I didn't go because I was like, what will inevitably happen is if I go, my wife is going to go into labor while I'm in Vegas. And that's just not going to go over well. Just imagining the stories of my wife constantly telling my child for the rest of her life that her dad wasn't there because he was in Vegas when she was born. Which didn't happen, obviously. She's not here. But yeah, I'm sure that's exactly what would have happened if I had gone.
Zach Murray (00:46)
Is this your first or?
Jeremiah (00:48)
This is my third. Yeah, it feels like it's funny. I mean, everything in life is like this, right? Like once you go through it, like the first time you do something is like the most exciting, the scariest, the best, whatever it is, right?
And then every time you do something after that, it's like the emotions around it are just a little bit more muted, right? So having a third child, I feel bad about this, but the reality is that like, it's not as much like, there's not as much excitement. There's not as much like, like it's exciting for sure, but it's just like not like the actual, having a child part isn't as scary, isn't as exciting. It's just like a little bit more normal feeling, I guess is a good way to describe it than the first one. And then the second one felt more normal. First and the third feels even more normal. So three, yeah, I don't want more than that to be clear, but like, I can imagine you get to.
Rishabh (01:36)
Why not? Dude, you gotta...You gotta buy... You gotta buy... I've been telling my wife, you know the Volkswagen bus?
Jeremiah (01:44)
Yes. The new looks sweet.
Rishabh (01:47)
Yeah. Dude, I've been trying to get her to say yes to us buying that. And she is not on board.
Jeremiah (01:54)
Yeah, my, my wife, I was like, we need a minivan, we literally cannot fit three car seats across the backseat. So we went back and forth for a while, and we ended up buying a Kia Carnival, because it does not look like a minivan. It looks like a like a suburban or something.
Rishabh (02:14)
Dude, okay, okay, all right. I am comfortable with this being public. I cannot understand this phenomenon. The number of men who I talk to who say they want a minivan is 100% of men with kids. And somehow their wives do not agree. That number also appears to be 100%. And so I want to be proven wrong about this, but...
Every friend of mine who I talk to, whether it's the wife in the relationship or the husband, it turns out that the wife is attached to an SUV. And I cannot understand it.
Yeah.
Jeremiah (02:58)
Yep.
Zach Murray (03:01)
I want a minivan and I don't have kids at all, but I did a, I did like a random road trip once, uh, cause I missed a flight and then there was a flight. It was like a really hard flight to get like five hours away. So we all hopped in, rented a car and then drove to the other airport fly five hours away. And I was like, we were driving this minivan. I was like, this is awesome. Like a big group of people. It's like, so like social and compared to like an escalator or suburban. It's just like, it's, it is fun.
But I always thought I wanted three kids because the most that you can fit into like a performance SUV and still like go to dinner as a family.
Jeremiah (03:32)
Yeah. Totally, yeah, but you gotta wait for like 10 years, because they gotta get old enough where they don't need car seats.
Zach Murray (03:40)
Yeah, that screws up my entire plan now, now that I know they can't fit three car seats.
Jeremiah (03:43)
Yeah. I mean-
Rishabh (03:46)
Volkswagen bus.
Jeremiah (03:47)
Yeah, you could definitely get Volkswagen, I think to like, once you get out of like the full size car seats into more of like the booster seat style, that I think that changes the equation a little bit. But to be determined, I'm not at that point yet. So we'll see. the the mini vans are so nice that like just a quick aside on that, like, dude, I can click a button and the doors open and then my kids run into the car buckle themselves, well, one of them can buckle herself. The other one can't quite yet, but like, this is all like brand new things. I can literally just like go and sit in the car seat. I don't have to like worry about all those things. If you needed to open the back to put groceries in or whatever, you just hit a button, opens up. You can rearrange the seats, fold things down. Like you could, you could do the road trip with a minivan by yourself or with like one other person you wanted, and you could have a bed back there. Like it's so much better than the alternative. Yeah, I'm all about it.
Zach Murray (04:37)
Kia Carnival is such a good name. That is such a good name for like a, for like an everything van. That's a good, really good name.
Jeremiah (04:46)
Yep. Yep. It's, it's a, it's a great car. Yeah.
Rishabh (04:49)
All right, and now we should talk about SAS. Because the topics are really good, actually. No, I really like the topics.
Jeremiah (04:56)
I agree. Yeah. This is a SaaS pays for my Kia Carnival. That's the -
Jack (05:00)
This is a really good segue, a car that you can do everything with the push of a button into software that you can do everything with the push of a button.
Jeremiah (05:06)
Yeah. All right. Yeah. What do we want to start with?
Jack (05:10)
I feel like the whole industry just changed overnight with this OpenAI ad generation stuff. What are you guys seeing on your end?
Jeremiah (05:12)
I mean, I want to know, Zach, how you're thinking
Jack (05:13)
Am I being dramatic?
Zach Murray (05:23)
I mean, yeah, no, I mean, it definitely feels like we are living through like a change here. Um, but again, some of that is echo chamber. And so it's like multiplied for me because I'm like, I'm in this space and I have a tool. mean, it instantly sparked a bunch of like product ideas that the team is literally executing on right now, which I'm really, really excited about. Um, you know, like I think the really cool thing here is that it's like actually changing the way in which communication on creative is even happening, right? The previous way that you used to iterate things was one way. like, and now it's gonna be completely different. I think the interesting thing here is that there's this classic meme where it's like, clients never tell a designer what they want. And that truth is still gonna exist now with prompting.
And so what I think is going to be like really interesting to see is just like how people's like skills evolve. and I think the people that were really good at generating creative without AI are going to be the ones that are really great at it. Cause like, they know what they're asking for. They know how to like iterate on things and prompt things properly. And so, yeah, I mean, I think that the key here is going to be consistently learning from a prompting point of view. the big opportunity for us is that the, the best way to like generate stuff and like it's attached to the core of why I always built Foreplay, which is like a picture is worth a thousand words. If you want to communicate what you want to get, something visually, give a visual example. And the exact same exists here for the new image generation model. And so right now it's just for us, figuring out how to make this exciting transition happen. And then I also think it introduces like...
You know, I have never positioned foreplay as steal your competitors ads. It's get inspiration from a market and be able to communicate with someone to create something that new. think those lines are getting very blurry now where it's like, it's going to be very easy to like completely copy. because you don't even need to engage like a talented designer in a lot of these cases or a talented photographer. I think the people I'm the most worried for is like really high end product photographers.
Like my background was in like video production and, and, you know, and commercial production and stuff like that. Like getting small tweaks to lighting or tonality of color and things like was hard. Like you'd have to act, if you were taking like a net new photo, like you'd have to completely tear down the lights and change them. And that's like, not the case anymore. And it's doing really good at that kind of stuff. So it's going to be very interesting to see, what happens and it's going to be very interesting to see what happens and then going to be what you need to do to arbitrage against the new bar that just raised, right? Because all this does is it creates a new baseline. It creates a new status quo and performance doesn't exist within a status quo,
Rishabh (08:09)
Yeah. Dude, I just think that the ads being AI generated, I think if your natural conclusion is not, okay, that means Facebook is gonna launch this in four months, then I think you're like totally missing the point. Like if your conclusion is like, oh, like I now have leverage because I can use some third party tool to it into Facebook. It is going to put it inside. they're going to, they're just going to say like, like you tell us what you want to do. We can do it within the tool and we can automatically test against all of those variants, just like we do with like your creatives that you manually import today. like that's what's going to happen to advantage plus campaigns. And so, yeah, actually Zach's point is even more important because it's going to baseline in no time. Like, because if it's inbuilt to the platform, then by definition that will become the bar.
Zach Murray (09:24)
Yeah. Yeah.
Rishabh (09:25)
Right, like it's not like using advantage, I use advantage plus you use advantage plus like we're going to be able to get different outcomes. that's not how it works. So.
Jeremiah (09:33)
Yeah.
Zach Murray (09:33)
Yeah. I think the other place that's interesting now to look at is like a lot of the dynamic ad type platforms that were kind of just like adding layers on top of product imagery. It's like, now product imagery can be completely different studio shoots based on, you know, your feed from Shopify. And so I think that's going be interesting and they have to figure out where to add value, I think in the process, like a management and measure point of view, but it's exciting.
Jeremiah (10:03)
Yeah. I mean, I think the big thing here is going to be you need the right information to tell you what those ads should be. Right. like if you're going to automatically build creative, and this is where it may be Facebook can do this, but, you need to know like who, should your model be? What's the, like, what does that model look like? What do they do? How do they spend their time? Like those are the kinds of things that matter, which for me, like that's my opinion on this.
Which is perfect for capturing survey data and review data and all of that. Because I think in that context, there's a really interesting ability to say, well, why do people actually buy this and what do those people look like? And that's what determines a lot of what these ads look like. So I'm actually very, very interested in how this plays out from where I sit with the data that I'm looking at.
Rishabh (10:31)
Yeah, I mean, I think Facebook has some set of data, but I think it actually makes the set of data that Facebook may not have even more valuable if they have a way to ingest it. But it's totally non-obvious that they have a way to ingest additional forms of data right now. if I'm sitting, I mean, like Facebook, the one great thing about Facebook, these are not dummies. Like these are smart people. Like they're already there. feel like I'm 100 % sure that they know that, hey, we know everybody who we like. We know everybody's behavior inside the platform. We know whether they transact or not.
Jeremiah (11:29)
We know what they're reading, we know what videos they're watching, we know all this kind of stuff, right? And so in that context, you have a very good idea of who somebody is and what matters to them.
Jack (11:38)
I want come back to your point on leverage and what Zach was saying about not being able to tell the designer what you want, right? And people probably still struggling to do that with image generation. I don't think people are getting leverage here. I think they're losing leverage. People are making stuff with AI that they could make with designers. And it's the most important person who's making it and waiting for AI to generate it. They're sitting there waiting for three to five minutes when that could have been made by a designer and their attention could be paid somewhere else. That doesn't mean that I don't think the tech is awesome. I think it's heading in the right direction. But what I'm seeing right now is actually the opposite of leverage. Everyone's excited by the tech, but then burning minutes, making stuff that they didn't need AI to make. And they're not actually accelerating the speed of time to product. They might be accelerating cycle time because you don't have to go to a designer, wait for three to five days to get it turned around and brought back to you. But they're the ones doing it not the designer.
Rishabh (12:36)
Dude, so I want to be clear. This is AI makes everybody B+. Like the single, the single thing that AI has done from an organizational perspective that I think is completely underappreciated. I just have my company offsite, like I think three weeks ago or something. I can't remember when it was, but like three to four weeks ago, Jeremiah is laughing because did you see the video of the Steve Bomber? Yeah.
We can save that for later if you want. the broader point is that AI does this dangerous thing where everybody is like sort of good at everything. Like I'm all of a sudden a sort of good designer, a sort of good programmer, a sort of good, like I'm sort of good at everything. And so now my ability to meddle has like a hundred acts and CEOs are meddlers anyway. So you give a meddler this tool.
Jack (13:30)
Yeah
Jeremiah (13:32)
Yeah.
Rishabh (13:35)
And we're gonna fucking metal. Like, I'm gonna be in everybody's shit all the time saying like, what about this? What about that? And people are just gonna be like, how do you even know that? And it's like, well, I connected Claude to Slack. I looked up the Slack channel. I asked what you guys were working on. And then I said, me something smart to say.
And now I said it. You know what mean? Like, you know, it's like kind of easy
Jeremiah (13:55)
You can actually do that. That's so funny. yeah, I have to.
Rishabh (13:59)
This is what I call management by walking around in the digital world.
Jack (14:03)
And in that process meddling, you've just completely lost all leverage, all organizational capital. You don't have team members doing this stuff for you. You're the one poking around. I think that it's important to have somebody trailblaze and find the new way and identify it, but then you've got to get out. You can't be the one that's in chat GPT prompting, especially for one ad at a time and one mediocre ad at a time to come back to your point. That's a change.
Zach Murray (14:30)
Yeah, that's gonna change. It's going change.
Yeah, no, I think it's interesting. At the end of the day, I think the biggest thing to think about here is when the baseline raises, what is the piece of input that can raise you above baseline?
Rishabh (14:44)
Exactly.
Zach Murray (14:49)
But it's really cool. Like I even love the idea of if someone's trying to, like I actually spend a lot of my time at foreplay more than I should in almost like an art direction role, which is gonna care about like design so much. And I spend a lot of time like talking with designers, talking with like 3D artists. I, know, traditionally use mid-journey a lot to like convey what I was saying in a Slack message a lot better. And...
Yeah, I think this is just like great for efficiency across the board of someone being like doing three prompts being like, yeah, it's very close, but like these are the things I want to change. and it means people can actually spend time doing like meaningful stuff, or more stuff, which I think is, which is cool.
Jeremiah (15:24)
I mean, I will say like as a CEO, and I think this would be applicable for anybody in a role like this. if you are, let's say you're working at a DTC brand and you are in charge of the CMO, right? Like maybe you have an idea for something and you're probably not the one actually executing on that idea. but you can give you, you're going to give your thoughts, right? And so being able to use AI for that or me as a CEO, this is what I do. Like I'll go and I'll, I'll look at something. I mean, even with the image stuff, I sent some things over to our team where I just did a few prompts, literally just like created a link with iGBT and said, hey, we should be looking at how we incorporate this into an upcoming product launch and specifically looking at a couple pieces of that. And so that was, for me, it took me 10 minutes to say like, hey, here's what I care about. Now you go figure out how to actually like make this a thing. And I think that's, know, a CMO in that role can do the same thing to your point, Zach. Like they don't have to actually get the fine detail and spend two hours prompting to get the 10 images they want, but they can at least say like, hey, here's the direction I want to go. And here's visually how to get there.
Jack (16:35)
Yeah, I couldn't agree more with what you were saying, Zach, on the quality of the inputs is going to matter so much. And then the strategy, Actually the plan to get from A to B as opposed just making stuff that you could make without AI in the equal amount of time, right? Like right now for me, X is full of beautiful AI generated ads that could have been made by a designer in the exact same amount of time. And to me, that seems like a bit of a letdown in terms of product photography.
You could do beautiful things there that would have actually cost a huge amount of time for photographers to put into place if you had the strategy in place as opposed to just text above product that didn't require a designer.
Rishabh (17:14)
People like feeling like Superman. Like, I also think that the other thing that people are totally missing about all of these AI tools is like, utility is not important. Like, the feeling is what's important. And like, so Jack to like the point of like, could have given it, it's like, yeah, you could, but then you don't feel like Superman.
Like that's the part of the emotional part of these products that is, I don't think is being done justice when you say something like, you could give it to a designer. But the thing is that people have this insatiable desire to add all five infinity rings, and they're just going to collect them, right? It almost doesn't matter.
And so, like, just that's what lovable is. Like lovable is like, you can make an app. Can you name a single app that is made entirely on lovable that makes any money?
Zach Murray (18:00)
Mm-hmm. I know this one guy that has one. has a couple of them and I think the portfolio of them is around 2 million ARR actually. He had like an AI product studio before and then Loveable came out and they started making like small little tools. I mean, these are also things that people say on Twitter. So who knows the validity of everything. I also have a friend that like...
Rishabh (18:17)
You do?
Zach Murray (18:37)
He runs sort of weekly men's groups and we were skiing together a couple months ago and I showed him Loveable. And he's like, dude, I've been like looking to like build, like I needed like a platform to allow people. So he runs, yeah, like these like men's sort of like hangout things, community-based stuff, like in person. And he was like looking for a platform to allow people to book, purchase.
and then get notifications and then inject it into the community for these weekly events. And I showed them lovable on the ride to the airport. And then by the time we had gotten off the plane, it was like a five hour flight. He had it all built out. It looked great and it worked. And I was just like, okay, this guy just has like a little side business. There wasn't like a point solution SaaS. And he now has like a custom thing that you'd have to like hack together 30 different platforms for. And it looked incredible. It looked incredible. So yeah.
Rishabh (19:32)
Dude, that's amazing. I'm so happy to hear that. I'm glad I asked it too, because I've actually been looking for examples of this happening in the real world. It's inspiring. There's no way to hear that and not feel inspired.
Zach Murray (19:35)
Yeah.
Rishabh (19:46)
Right? I mean, a person has built out a stack, or whatever, somebody is just building apps and making $2 million by prompting things into lovable.
Like you feel like Superman. Like I mean that's one of the that is beautiful. That is beautiful. There's no other way to say it.
Zach Murray (20:07)
Yeah. The only thing that I've had, like I would consider a success with lovable so far is I was working on a feature for some sort of like tagging rule type stuff and I visually understood it in my head and like, I don't know, I designed pretty well. Like I, I'm usually not bad at getting ideas out of my head onto paper. but I was hitting like a bit of a sticking point when it came to like an actual, like interaction point of view. And so I started just prompting this into lovable.
And I got to a place where was like, connected the dots for me. Like this is not just how it looks, but how it's going to interact on like a user basis. And it was less, it was less sort of like energy load going into the prompt to make some of these little iterations that weren't complete and final. then it was for me to drag and click around in Figma. So that's, that's the only like, yeah, it's accessory I have personally with Lovable, but, I think it's like a cool weekend thing to even think like what does my family need or like, or something like that and just like try to make something. Cause I think it is really, really sweet.
Rishabh (21:13)
This is, I think, an awesome segue to product market fit. I don't know, Jack. What do you think?
Jack (21:18)
Yeah, for sure. I think there's a common thread between what you've been talking about in terms of feeling like Superman, the feeling of using a tool or something new, and then the outcome. Because if you're using a tool that doesn't click a button, make something fun happen, it has to feel good. It has to be rewarding in these bite-sized doses. But then we are trying to achieve something in the end. We're trying to get something done. And if you can get something done, it doesn't have to be everything.
If you can get something done that is pretty awesome, that is impressive, then I think that's part of that feeling. It's not just nice to use. It's nice what you get out of it at the end as well.
Rishabh (21:58)
I think like magic moments add up very fast. then ultimately though, like, yeah, you need to have some outcome because that's sort of like, that's sort of like the meat and potatoes, so to speak, of the, yeah, of the software. And that's where, yeah, like churn comes in.
Cause like if all you have is a magic moment, like the Apple vision pro, right? It's like, I can't remember the last time anybody even said those words out loud, right? So it's like all you have is the flash in the pan and then it's like magical for a moment and then it's gone. So.
Jeremiah (22:42)
Yeah, that's actually, it's, it's interesting when we talk about, sorry, jumping out on churn a little bit. think there's an interesting thing that happens in SaaS when you're talking about somebody paying every month for something, where you have like, you have to have that sort of wow moment. Every, I look at it as about every six months, right? Like you need to wow somebody every six months. Like what, what does that look like? What's the thing that you can give them? I think we actually touched on this last time too, but the challenge with that is once you sell somebody on a use case for your product, getting them to do something new again is actually really challenging.
But you also kind of have to do that in order to keep them engaged with your product. And so yeah, I don't think it's exactly six months, but I think if you get somebody every six months with a new like aha moment, then you're going to keep them with you typically. That's kind of the cadence at which I look at, but it is exactly that definitely have to have that moment where you're getting somebody excited about what you're doing and then they have to keep happening. can't just a one-time thing or ultimately they will turn, even if like you're delivering exactly what they expect. Exactly the same. had that wow moment around that, that, I mean, dopamine, guess, like it was ultimately what it is, right? Like that's what we're to carry for so long. And then there has to be another dopamine hit even in the context of B2B SAS in order for that to that relationship to be maintained.
Zach Murray (24:10)
I think we might be, in the way that we're talking about the wow moment, I think we might be being a bit dramatic about how big that wow needs to be. I actually think like the best ones are when you just like align your product with inherent action or thing that someone is already doing. And if it just even aids in the thing that they've already committed to doing, or it's part of the their day to day already. And it's like, yeah, we accounted for this thing that you do.
Like they're not, wow. Like I think sometimes you can think like, we're to do this, this and this. And then you get an email once a month and it's like, it, it, solves your life and all that kind of stuff. think if you're like a SaaS founder listening to this, you're like, well, like product market fit seems so hard. And I think when you start a software company, you think of these like grandiose visions and ideas of what you can do. And it's like, well, actually like everybody does about a hundred things a day. And if you can align with like 50 of them of like the things they're going to do no matter what. and have like a touch point in that process.
Like, I think those are like more impactful, like wow moments, especially when it comes to retention versus like, you plug in all your data and then we give you this and then you don't need to do anything. and I think like our product is like a very, clear example of that. It's like our spear from day one has always been save ads from the Facebook ad library, which was just like this thing that people were trying to do and the marketers were trying to hack this thing that was meant for compliance and then they were using it for marketing. It's like, we just like inject a button on the page and it saves it. it's like, it's not really a wow moment because like people were already saving them. but it kind of just like aligned with like a very simple thing that was like a natural human action for them.
Jeremiah (25:52)
Yep. And that's actually a really good point. I think where, where I was going with this was thinking about it from a certain viewpoint, but there is a difference between there's like workflow oriented solutions where like to your point, you're aligning with something that somebody is already doing. And just by like making that process better, you are going to be sticky in that process, at least until there's a better solution than what you offer in that.
Right. and I think the risk there is that sometimes newer, flashier looking things may come along, oftentimes actually aren't going to be better. Right. But some people will take a risk on that and go try that thing.
Zach Murray (26:33)
Yeah, for sure. Or the core thing they're doing changed, right?
Jeremiah (26:37)
Or - yes. Yep. Absolutely. Yeah. So I think there's, kind like the workflow style of, of solution. And then there's more, there's other types of solutions. I don't even know the best way to categorize this, but like, so a good example of this is like surveys versus reviews. Cause now I have these two products, right? Surveys somebody turns on a survey and they immediately are like, Oh, cool. I'm learning something new. And then you get to a certain point where it's like, if, if, unless you're inputs that are driving those outputs are changing.
So for example, if you're asking attribution surveys and you're constantly changing the channels that you're spending dollars on, you're going to see different results come out of that survey, right? So like that survey doesn't have to change. You don't actually have to do anything different. You're going to get different information and there's going to be constant feedback on that that's valuable. But if you're not in a context where you're getting that new information coming out of the back end, then you get the point where it's just like, okay, well, why am I even doing this thing? Right. And that's because it's different than a workflow tool.
It's more of like an insight tool, whereas like reviews, the other product that I think about a lot, there's this idea of like, Hey, I have to have this thing on my site. I'm not going to ever replace it. It's just a matter of like, is there a better version of this or a cheaper version or whatever it is, but you kind of accept this idea of like, this is a thing I have to have, and I'm going to use this thing unless there's a better solution to it. And so there's a couple of different categories here.
And I think, yeah, to your point, Zach, like it's a bit dramatic to say like, hey, you have to deliver something new. You don't always, but there has to be like a, the if not, and if it's more of like a workflow thing, then it has to be aligned to your point of like with the workflow. And if that changes, the value of the tool changes, or if something better comes along, then that's gonna change.
Rishabh (28:25)
Yeah, I think that's exactly right. I mean, I think the other reason why, why people will like stop using something is that they're not the one who was using it and the person who is using it left. there's like, I think that there's like a bunch of stuff on like the vendor side, which is true, which is what we've been talking about. It's like, Hey, you got to fit in the workflow or you got to give them a magic moment or whatever it may be. But I mean, sometimes like, you know, life is kind of simple and like you lose the customer because the person using the tool just leaves.
There's like a big lesson in that that I was listening to another podcast recently with there's a woman investor who I like really like and respect and she was saying that the single biggest indicator that she knows that a product is sticky is that multiple people at the company are using it. And it's like designing for multiplayer is everything. Like I have learned this like the hard way over the last nine months. And now I like swear by this design principle basically.
Jeremiah (29:26)
Yep. Yeah, I mean, this is part of the reason why we don't do seat based pricing, because I want as many people as possible using the product. And what we see is that actually translates to people going to other organizations too. So even if, even if your primary person is using it stays here, but five other people have been logging in using this as well. And one of those people moves on. They're likely to, to, if they like it, at least they're likely to go advocate for this product and they're in their new role. And that's always a time when somebody is changing roles for positive or negative, if your contact is in that point of view, it's just a spot where change is likely to happen, right?
Either you might get pulled out because somebody has something else they wanna do, or you might get added in because they're moving into a different org and they wanna do something. yeah, very much, like that's, like seat-based pricing is like an easy pricing lever, but it's something that we've never done because of the fact that like I just want as many people as possible using it that then has like compounding effect over time. And it does take time to see that to be clear.
Like I didn't see any impact from that in the first two to three years. Now I see it constantly. A lot of the biggest brands we work with are because somebody moved from one of the brands we work with to go work at this, at a, at a really large brand. And they say, I like this tool. I, can I go get it and bring it here?
Rishabh (30:57)
Jeremiah try seat-based discounting, don't increase the as you add people, reduce the price as you add people.
Jeremiah (31:12)
That's interesting, actually.
Zach Murray (31:15)
Yeah, we were see based pricing and I don't like it. but I think that there's like one true thing about pricing is that some people are going to love your pricing model and some people are going to hate your pricing model. And it really depends on the way that their business is structured. Right. there's like other tools in our space that, you know, scale with the amount of like ad spend, right.
And so it's like, there's a lot of cases where like that is like an inverse value correlations. Like, we actually just went to a growth mode in our business. Our net margin is actually down and now you're going to charge us more to tell us that our net margin's down. right. And it's like that those people for us love seat based pricing. and, then there's, you know, smaller teams that aren't spending a lot of, we, we cheap on a note. We do be cheap on one of these, ad spend, but we have like a big team or something and like they hate seat based pricing. and so it's definitely like a hard, a hard thing.
I think anecdotally, and this was probably like a, a, this is probably a view that I hold too strongly is that like, I generally like seat based pricing as a customer. because like cognitively for me, it's like, like it's an employee, they're like a cost center in a lot of ways. And I can like cognitively think about it like that versus like I hate it when people are like, you can only do this many actions or this many things. It's like, I just want to use your tool to oblivion. And if another person is using it, I'll pay you. So it's, it's a hard one to like figure out what.
Jeremiah (32:41)
Yeah. Yeah. The counterpoint to what I just said, and I think it lines up well with what you're saying here is that people will also value the thing that you charge for.
And so if you charge for this, there's a value that happens there, like a valuing of that thing that happens. So for me, the way that we are, the way that we're trying to grow our business and the way that our product operates and all that, like the value isn't, there isn't any like real value associated with a seat. Like it doesn't do anything really. Like everything is at the company level. But like in your context, Zach, like there's probably like individual people being able to save things individually and have that still be tied to the company. It's very much like Slack or Notion or any of those things, right? Where it's like, there is actually value in the individual person and also like the aggregate of those people's things that they're doing. And in the context of my products, that's not the case. All the value is within the company itself. So I do think that it is very product dependent.
Rishabh (33:46)
Yeah, totally. Like, GCP would never charge you seed-based.
Zach Murray (33:50)
Right, right.
Rishabh (33:52)
Yeah, like, I mean, I'm purposely choosing like a frivolously like ridiculous example. the yeah, I mean, Jeremiah knows my views on on pricing. I think price is the indicator of value. Like, you know, a lot of your value is like described exactly in your pricing model.
And I actually think that DTC brands understand this the best because if you look at how brands price their products, like prices literally used as a way to get the consumer to believe something about the product in like almost every case, right?
Like luxury are priced in a certain way. You're per they're purchased in a certain way. like medium tier products are purchased and priced in a certain way. You go to a grocery store, like the olive oil section.
Like you always buy the middle-priced olive oil. mean, consumer goods are like the epitome of evidence that pricing is exactly correlated to the perception of the product.
Jeremiah (35:05)
Yeah, absolutely. And clearly, like at the end of the day, it's people buying B2B software. Like the pricing psychology that works on a consumer is still going to be the same for somebody who's buying B2B software.
Jack (35:17)
Yeah, people don't buy unless the value of the thing that they're buying is worth more than the price. That's the only way that trade happens. But I think something that's integral to SaaS businesses as well as e-commerce businesses that have any sort of lifetime value, Maybe not an engagement ring business. You ideally aren't buying more than one engagement ring. But for, I don't know, consumable replenishable products, you have to continue serving your customer in order to see value over time, right?
If you have, I don't know, a cookie brand, you sell cookies or...protein or cosmetics and you only get the first sale, Then it could be 100 bucks, could be 50 bucks, could be 25 bucks. Value is limited, right? But if you're able to keep that person hooked for a year or for a lifetime, then that's significant. And I think that that's one of the things that, in my opinion, chasing those light bulb moments without thinking about those two pieces that you were talking about, Jeremiah, before.
A workflow that feels nice when you're using the tool or a solution that actually solves.
Right? some tools, people just want to turn on and do the thing, and they don't have to think about it again, like reviews, syndicated, so on and so forth, right? You don't want to actually feel good using the tool. You just don't want to use the tool at all. I think that one of the things that we miss chasing those light bulb moments that are evidence of market demand, meeting market demand with something that's really salient, is the ability to continue serving that customer over and over again. I see it all the time. SaaS brand, SaaS products that just do not actually solve a problem, do not actually feel good to use, but they max out on that magic moment and then just lose customers by month or two.
Zach Murray (36:54)
Frequency is, is really important depending on, what your product is. Right. Like I don't log into GCP, but it's consistently serving me. And so I don't need to, ideally I never log into GCP. Every time I've logged into GCP, there's a big issue and I never want to log into it. A product like ours. remember there was a moment when I realized we were like growing and it was the moment in which, the time delay between us having like a core like a usable bug to where intercom chat blew up was like seconds and not like a couple hours. Like there was a time, right?
When like we would have a bug, you know, it would happen on Friday. We'd fix it by Sunday and everything was fine over the weekend. And then there was like a moment, I think like an early 2022 where we hadn't had a bug in a while. had grown a decent and it was like, we identified the bug and then our customer service just like our chat is blowing up.
And then the moment I was kind of felt good for me. was like, like people can't do their job because you know, our tool isn't doing this thing. but I think free and like, you know, if you logged into something yesterday, you're probably not going to churn today. If you did something yesterday, it's when you haven't logged in and three months and you get the Amex notification and you're like, okay, this is the third time I've got the notification for the charge. They haven't even went into the thing. And so I think frequency of like when people are getting value is almost more important than like how much value they're getting at, at that because I think it just like compounds. You're like, I'm using that, I'm using that. It's like, how are people compartmentalizing your tool in their brains in relation to when they're looking at their credit card statement?
Jeremiah (38:29)
One thing I was thinking about as we're talking through this is, I think a lot about like in the world of, DTC products, I'll just use like a CPG brand, for example, when you find a product that you like, you actually don't want that thing to change. But in the world of software, you find a product that you like, and you want that thing to change and to grow with you. And I think that is like one really interesting distinction between, like, if you were to look at subscriptions on a DTC product side of things it's actually all about just execution of not all. A lot of it's just about execution of like, can you actually deliver the exact thing that somebody wanted the first time every single time? Can you get to them on time? Can you make sure that like the quantity is right? Can you make sure that like they're, getting to use it the same way first time. And I think software is different than that. And that like, you actually want the way that you use it to change a little bit over time as your needs change.
Going back to your point, Zach, like maybe you don't have to always have an aha moment, but like if the way that you're doing something shifts, you also need that to shift alongside you, otherwise it's not useful anymore. I don't know if that's how, if you guys think about that much, or if that even makes sense, but I think this is something I think is a really interesting of the way like all this stuff comes together in terms of like our customers and how we serve them versus what we have to execute on our end.
Rishabh (39:52)
I'm sort of with you. I'm not quite with you. I'll tell you why. All of those like whatever box companies, so like they send you a box of stuff every month. It's the promise of something new and something like seasonal and whatever else. Apparel, it's the promise of staying up to date with fashion.
Accessories, it's the promise of staying up to date with fashion. I understand the underlying premise, but I just think that it is not as simple as D2C versus SaaS because there's tons within physical world e-comm that actually must be constantly updated also. In fact, that is Zara's entire business model. That is Shein's entire business model.
Jeremiah (40:39).
Yeah
Rishabh (40:53)
And I mean, like, I'm not even, we should not talk about the sort of like, hey, is fast fashion good for the world or not? I'm just saying that that is the promise, right?
Jeremiah (41:06)
Yep. Yeah, that's really, really good point. I hadn't thought of it in those terms, but yeah, that's exactly true actually. In the context where there's a consumer world that you love and you want that thing to be the same, then yes, what I said would be the case. But yeah, in this context, the value prop is actually new, innovative, whatever that is, and that exists in the consumer world just like it in software.
Rishabh (41:29)
Jack, do you want us to talk about AI, the role of AI in PMF in the doc? Speaking of keeping up. Yeah. Yeah. How do you want to, do you want to tee it up? I like the general framing of the topic, but I'm curious what you were thinking.
Jack (41:32)
Yeah, I think we got pretty close to it. mean, I think that a lot of the buzz, all of the hype in AI is because we're in a market, well, tell me if you disagree with me. We're in a market where people are early adopters, right? And they're looking for arbitrage. I think that's the entire marketing enterprise is where can I find a distance between input and output? And AI kind of promises low input, maximum output. It's like the ultimate representation of profit. I don't know if it follows through on that a lot of the time.
Don't get me wrong. I thinkwe're progressing or making steps towards it in this last development is obviously impressing a lot of people. But yeah, I wonder what the role is of AI in product market fit. Is it just for that light bulb moment or is it something that we can build on top of? And I think a lot of people are building on top of it and then over promising and under delivering. Why is that happening? Why are people dropping the ball? And then how do we do that in a way that satisfies customers that actually solves their problems and keeps them alive.
Rishabh (42:49)
So I have one general comment on this, which we haven't touched on yet, which is there is in, especially in enterprise SaaS, there is real budget for AI. There's like from a C level, from the board and from the C suite, there is like budget that has been created to like AI-ify the company. And that plays a massive role in product market fit, because like budget to experiment is how you find the thing that actually ends up having fit. so, my characterization of this is actually like, Jack, I agree with you that there's like a bunch of things that like don't end up working out, but from a system level, I think that's exactly like the best thing to happen is we have this like massive tailwind that has created experimental budget. If that experimental budget didn't exist, we would never have these experiments.
And we would not find the things that actually work versus don't work. And so most innovation cycles are really slow because you don't have this exogenous force that's so strong that it creates new budget in all of these enterprises. But we have an exogenous force right now that has created budget for cycles to go really fast. And so if you're a founder who's going to build a SaaS company, that's AI native.
That is how you should think about it. You should lean into the fact that there's experimental budget and take advantage of it.
Zach Murray (44:22)
I think another thing here is that, so product market fit is usually just like the way someone thinks and feels about a product. You know, I go back a lot to like the blog post written by the founder of Superhuman about them finding product market fit and this iterative approach that they had to it. And you'll notice about their product market fit survey. It's all emotion based about how like you feel about the product.
Jeremiah (44:23)
Yeah.
Zach Murray (44:48)
But part of that comes down to like, okay, what's product market fit do for you on the acquisition side and then the retention side? And the one thing that exists right now is that there is a surplus of hope and desire that the thing that you don't want to do anymore can potentially be done by AI. So there's, or someone's already bought into the idea that this would be good for them. And all they kind of need is something to be put in front of them. Like you don't need a lot of convincing. They have to use the tool after that. if from an acquisition perspective, people are like, I believe in AI.
I really don't want to do these things anymore, or I think it can make me do them better. so aligning your messaging with that surplus of like hope and desire, I think is like a fast track to like finding product market fit. On the retention side, actually needs to do what it needs to do. But in the fact that there's a surplus in the budget, and then also like, think cognitively in human beings making the decisions.
And then there's also the piece where people are potentially looking at software tools and the budget allocated to them as like labor and cutting into like the labor side of their business. And so I think convincing them of value, if you can then just prove that there is less labor going into the task is enough to make this.
Jeremiah (46:11)
Yeah, absolutely. mean, I was talking to somebody the other day about some solutions that would help with, I mean, not not in terms of replacing people necessarily, but like, looking at this thing as a, as a multiplier on a, I don't even know what the exact number is, but you know, $1 million a year worth of labor, like that, if you can figure out how to make that labor twice as impactful, for instance, that tool is worth so much money to you, right? Like I don't, it's hard to say exactly what that's worth to organization, but like you probably at that and say, okay, well, if this is going to make a million dollars worth of labor twice as effective, would I pay six figures a year for this?
Absolutely. Like there's, there's no question about that. So yeah, I think that's a really good point on the labor side of things and how that fits into all of this. And that's always existed, right? That's always been the promise of software, but AI really compounds that in a different way.
Rishabh (46:58)
Correct. I want to comment on one thing Zach said, because he said, like, hey, you know, you're selling like the hope and the belief. Zach, you want to know what Americans love to buy? Hope and belief. that is like, yeah, hopes and dreams, hopes and dreams selling. mean, like, look at every I mean, there was a literal presidential election where what was being sold was hope. Right. Like that was the tagline.
And so I don't think anybody should shy away from selling hopes and dreams because that is highly culturally aligned to this country. That's what YC is. mean, examples are infinite to selling hopes and dreams. I think that you don't want to sell hopes and dreams that you cannot fulfill progress against. That's the dangerous thing because then you're a fraudster, right?
Like that's the difference between like, you know, good business and fraud. But, but, but like, but I don't, I, I actually think that the single best thing to do is to, is to lean into like hope, believe dreams, like, like get people excited to do something that they didn't think was previously possible.
Jeremiah (48:27)
What do you guys think about the threat side of this too? There's a few people who working on things like AI generated ads recently, then OpenAI comes out with this massive improvement. I want to say it's a business killer for those people, right? Because obviously there's ways that they can... they can iterate and change and still be like better ultimately.
And like this probably makes their end product better. However, like the, the, the value gap there shifted quite a bit very quickly. Right. And that's happening like with, with how fast these bigger AI players are moving. That's happening extremely quickly. where the value, that value gap of like, Hey, I'm going to go build this like AI solution to do this thing, but now open AI launch or something, or, or any of our businesses really have a bit of a risk there. Like how do you how are you guys thinking about that?
Zach Murray (49:22)
I mean, the one thing to think about is the value capture of AI right now is on like raising additional rounds and everybody is essentially, there's a bunch of people betting on the cost of AI going to zero. And I think everybody should be betting on that. know, open AI is doing that at the largest level and everyone building on top of AI is doing that on a fractional level of that, right?
If you look at the margins of like AI first sort of generative they don't look like SAS margins, traditional SAS margins. And so where the value capture actually happens and at the time in which it happens, I don't think anybody a hundred percent knows yet. If Chad2BT was capturing the value they should be capturing, they wouldn't be charging $29 and $200 a month for it.
And on the back of that, the same thing for the wrappers that are built on top or the platforms that have that as the foundational model. So all that to say like, it's hard to tell because we don't know what the actual cost of this stuff is going to be in the medium or long term.
And at the end of the day, like if, open AI cost goes to zero, then it's going to, in a weird way, we're going to come cyclical to where people are going to just be buying the products again. And it's almost going back to traditional SaaS, right? Like it's the same thing with video. Right. Like. Yeah.
Rishabh (50:47)
For sure that's what's gonna happen. Dude, this is like the yeah, that's for sure. What's going to happen? Like we stopped calling it cloud SaaS
And we're going to stop it agentic SaaS and we're going to stop calling it AI SaaS. And it turns out it's just software. like, you know, life is like quite simple. You know, like I, I, I, I, I buy what you're selling Zach, like a hundred, a hundred out of a hundred times. Yeah.
Jack (51:20)
I think there's something interesting that you touched on, Rishabh and Zach, in the different centers of demand, like demand from enterprise orgs with an insatiable desire for AI. They recognize the value, and they see that the arbitrage is around the corner. And then there's that demand from consumer sentiment, the feeling that you're falling behind, the feeling that this revolutionary tech could change your business or your life, right? Could change your life. But bringing it down to the ground, there are consumers left, right, and center signing up for AI services signing up for, I don't know, AI ad generation services.
And these are SaaS products that have found product market fit. They're funded, but the consumer hates it because it's goofy and it doesn't work. They sign up, they get a subscription, they try it out, and they're like, this doesn't work. And even if just like, Hopium gets them through, they launch it, it doesn't work in the market. It doesn't meet their expectation, doesn't meet the market's expectation. Then OpenAI solves. And I think the only reason there's so much noise about this is because the promise is actually getting followed through on problem is getting solved and people are impressed. feel like a superhuman.
So I think I think there's something in that, right? We're fulfilling market demand by providing that supply. But man, when you follow through on the promise, I think that changes things.
Zach Murray (52:31)
Well, it's the difference. It's not product market fit, right? If you, if you sign up for a thing and it doesn't fulfill, it's not product market fit. It's met it's messaging market fit. And there's a lot of companies that have marketing market fit, not product market fit. Um, and you know, God willing they find product market fit, but there's a big gap there. There's a massive, there's a huge gap between messaging market fit and product market fit. And I would say like the people that feel this the most in like our circles are people that started an e-comm and then try to transition into SaaS where product market fit actually matters a lot more in SaaS than it ever did in the e-comm.
And you can't rely as much on messaging market fit for a sustainable business as you could in e-comm. And so, yeah, I think we're just going through a process right now where people are seeing a lot of inflated growth based on messaging market fit. But the true test here is, yeah, run your customers through Superhuman's product market fit survey, which we do every six months you'll actually get a pretty solid score on like what your actual product market fit looks like, regardless of what growth numbers look like and, and your message.
Rishabh (53:35)
Yeah. Yeah. I would just share one additional idea because we actually just did this. So one of our investors, we asked them to help us run an anonymous survey on our users. like, don't tell our users that like we are asking for the help, but like as a third party survey people and ask them how they feel about the tool and what they're getting value from it. And it was like, it was eye opening. Like there was a set of things that I just like did not expect.
Jeremiah's like, Rishabh, I run a survey company. You didn't tell me you were running a survey? What is a man gotta do?
Jeremiah (54:04)
No, no, no, I think- as somebody who runs surveys, it was very familiar surveys, like that's a scary thing to do to go like, because what you did is you said, don't even like take your bias of how much you like us out of this. And answer these things, honestly. So anyway, I just want to say that's a that's a very brave thing to do. And it's good that you did that. I that is inspiring. I need to something similar as well.
Head of Marketing
