el producto #331 🚀

Google's AI announcements, How to execute Product expansion, Uber partners w/ Hopper to sell flights, New Twitter CEO, The CAC trap, Airbnb's no-code user workflows tool & more

May 13, 2023

Hey team,

Happy weekend and welcome to a new edition of el producto!

🎰 The week in figures

1.76B: ChatGPT has experienced remarkable growth over the last six months, going from 266M visits in December 2022 to 1.76B visits by April 2023; however, its growth rate slowed down in April to only 12.6%, noticeably less than its 55.8% growth in March and 62.5% in February

$250M: Byju's, India's most valuable startup, raised $250M, with a further $700M expected at a $22B valuation, as it prepares for the IPO of its subsidiary Aakash

$140M: 8fig, an Austin-based startup building an AI-powered C-suite for e-commerce businesses, has $140M in fresh capital after raising a $40M Series B and $100M in a credit facility

$100M: UVeye, an Israel-based startup building an automated vehicle inspection platform, raised a $100M Series D at an ~$800M valuation to expand North American operations

$3k: Apple is expected to charge $3,000 for it upcoming mixed reality headset, which resembles ski goggles and will be an experimental product

-98.9%: NFT marketplace Art Blocks saw a 98.9% drop in sales volume from August 2021 to April 2023, dropping from $587M to $6.5M

💸 Q1 results

Airbnb: revenue: $1.8B (+20% y/y), gross bookings: $20.4B (+19% y/y), net income: $117M, FCF: $1.6B (+32% y/y), shares were down 10%+ due to lower-than-expected Q2 projections

Affirm: GMV: $4.6B (+18% y/y), revenue: $381M (+7% y/y), active merchants: 246K (+19% y/y), net loss: -$205.7M; shares were up nearly 5% after beating on top-line, despite growing losses

Disney: Disney+ lost 4M subscribers in Q1 2023 but cut its streaming losses by ~$400M (-26% y/y); CEO Bob Iger also announced Disney+ would integrate Hulu content later this year; Net income for the quarter was $1.49B, or $0.69 per share, compared to $597M, or $0.26 per share y/y

Robinhood: revenue: $441M (+47% y/y); revenue breakdown: options: $133M; stock trading: $27M; crypto: $38M; net interest: $208M; net loss: -$511M; MAUs: 11.8M (-25% y/y, +400K q/q); shares were up 4% after beating on top-line

📰 What’s going on

Uber rolled out a flight booking feature to its UK app in partnership with Hopper, which will enable customers to book end-to-end trips across multiple modes of transport; Uber’s long-term strategy is to become a travel "super app"

Microsoft has invested an undisclosed amount in Builder.ai, a no- and low-code builder startup that uses an AI assistant called Natasha to help users create apps; their new partnership will see Natasha integrated into Microsoft Teams, where users could ask the bot to help create custom business apps within the platform

Anthropic enhanced its AI chatbot Claude by expanding its context window input from 9K to 100K tokens, surpassing GPT-4's 32K token threshold

Meta announced an AI Sandbox for advertisers, which will help with ad copy generation, background image creation, and auto aspect ratio-resizing for Facebook and Instagram campaigns

Amazon is building an AI team to develop tools that generate photos and videos for merchants' ad campaigns, aiming to diversify its ad business

Amazon announced "Amazon Anywhere", an immersive shopping experience that will allow customers to buy physical products from virtual worlds; Amazon Anywhere will allow customers to purchase real products inside video games, augmented reality, and mobile apps

Amazon rolled out Inspire, a TikTok-like in-app shopping feed to all US customers; users can browse personalized content based on their interests and shop directly from the feed

Amazon Inspire displayed on 4 smartphone screens

IBM introduced Watsonx, a suite of AI services with a handful of pre-trained models for enterprise users to build and fine-tune AI features; Watsonx aims to compete with Amazon's SageMaker Studio and Microsoft's Azure AI platform

ByteDance delayed the US launch of TikTok’s shopping platform until at least June, partially due to merchant concerns over the app's future and slow adoption of live-streaming e-commerce; TikTok says the launch has not been delayed

Elon Musk has hired Linda Yaccarino, former head of global ads at NBCUniversal, as Twitter's new CEO; Yaccarino will focus on business ops, while Musk handles CTO duties and oversees product

Twitter rolled out encrypted direct messaging, available for Twitter Blue subscribers and members of verified organizations

📚 Good reads

The Cost of Acquisition trap, by Elena Verna.

Focusing only on CAC reduction can be misleading:

Cheap acquisition channels may attract low-intent users who don't generate enough revenue to break even within the expected timeframe
Shutting down a high CAC channel may result in losing the most profitable channel
Optimizing for CAC/LTV ratio can result in a long payback period that is not sustainable

Payback period is a superior metric:

Payback period measures how fast and long it takes to recuperate acquisition costs
Revenue made post-payback period is profit that can be reinvested into other growth loops or product development strategies
Payback period can be optimized by reducing CAC, increasing paid conversion rate, increasing ARPU, and reducing paid conversion time

The unbundling fallacy. Dan Hockenmeier shares a new essay providing a counterintuitive reading of the current mantra that prescribes that the future of marketplaces is in verticals. Unbundling a horizontal market - Hockenmeier explains - is not an always economically viable task and depends on how much difference and how big is the size of the new vertical. He looks at the cases of LinkedIn, Ebay and Facebook

3 steps to strategically execute Product expansion, by Reforge. What are the key things to keep in mind when looking into product expansion? Irem Metin explains that you need a product that is mature enough and devoid of technical debt. Furthermore, you need to be able to allocate the right capabilities to the expansions, which normally involve different skills such as research and strategy. More insights in the piece cover how to assess if your existing capabilities in product, channels, operations, and more overlap with the ones you’ll need for product launch

Journey Platform: A low-code tool for creating interactive user workflows at Airbnb. The platform reduces the time required to develop complex notification workflows and allows users to iterate faster by allowing self-serve workflow creation

Are you doing Product Management or Bullshit Management? David Pereira argues that you should provide the correct context to tech teams, empower them to make decisions, and encourage them to talk to business stakeholders whenever needed. Having a team of problem-solvers is better than having a team of rule followers.

🔮 Emerging trends

Google is testing generative AI capabilities in its search engine

Google is experimenting with generative AI in Search to answer questions, generate summaries, and offer follow-up questions and links to relevant web content
Unveiled during I/O conference today, the new AI search capabilities are generated by Google's large language models, including PaLM 2 and MUM, and sourced from the open web
The AI Search is starting out as an experiment within Google's new Search Labs, where users can test it and offer feedback
To try out the AI snapshots, users have to opt in to a new feature called Search Generative Experience (SGE) as part of the Search Labs feature
Search Labs is now open for signups and available on Chrome desktop and the Google App (Android and iOS) in the U.S
The AI snapshots will launch to Labs users in the "coming weeks"

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