Advice for Building in AI: Five Lessons from Scaling Pinterest

Advice for Building in AI: Five Lessons from Scaling Pinterest

In today's business landscape, AI has become a powerful tool that can help solve customer problems that were previously unsolvable. However, it's important to remember that the fundamentals of building a successful business still apply. AI technology may not be a moat in itself, but that doesn't mean it can't contribute to creating a lasting competitive advantage. Real power and durability still come from traditional sources such as economies of scale, network effects, counter-positioning, switching costs, and brand.

When it comes to AI, there is often a lot of hype surrounding the technology. It's crucial to distinguish between growth and hype and prioritize the former. Growth and hype are independent variables, and focusing on the former will lead to long-term success. While AI commentators may discuss alignment, defensibility, and AGI, builders should focus on the practical aspects such as where to buy affordable GPUs. Excellence in any field, including AI, is primarily about hard work and attention to detail. It's the execution that matters most, not just the initial idea.

Lesson 1: Measure the Right Thing
A common saying is that what you measure, improves. While this is true, it's essential to strategically choose what to measure. If you end up measuring the wrong thing, you may waste time and resources on the wrong initiatives. Pinterest learned this lesson when they shifted their focus from measuring monthly active users (MAUs) to increasing the number of new weekly active pinners. By measuring the core action of pinning or repinning something new on the site, they were able to drive growth in a more targeted manner. So, always ensure that you measure the right metrics that align with your strategic goals.

Lesson 2: Align Organizational Structure with Strategy
As a company scales, it's crucial to regularly evaluate and adjust the organizational structure. Execution problems often stem from either having the wrong org structure or the wrong person in a particular role. While organizational changes can be painful and distracting, they are necessary for long-term success. An org structure that doesn't reflect the company's strategy or is overly matrixed can act as a hindrance to execution. Therefore, it's important to periodically reassess and make changes to ensure alignment between structure and strategy.

Lesson 3: Listen to Data, Not Just Your Users
Your most vocal users, the ones who complain and make feature requests, are both a blessing and a curse. While their feedback is valuable, building solely based on their requests may lead to a highly engaged but small user base. To attract the next 100 million users, you need to be willing to ignore the vocal minority and focus on what the data tells you. Facebook faced backlash when they introduced the newsfeed feature, but over time, it became a core part of the product. So, listen to your users, but be prepared to go against the vocal minority if the data supports a different direction.

Lesson 4: Be Strategic with Adding Features
Adding features to your product is easier than removing them. Therefore, it's crucial to be careful with what you add. Instead of building every feature your users ask for, focus on asking the right questions that will lead to scalable solutions. Consider the "job-to-be-done" and aim to create a solution that the majority of users will find valuable. Building features based on the top user requests often results in low adoption rates, with less than 5% of users utilizing those features. So, aim for game-changing solutions that will have a significant impact on a wide user base.

Lesson 5: Focus on Long-term Growth
Once you have built a sticky product and have a strong user base, it's time to shift your focus to the next hundred million users. This may require taking risks and potentially angering your existing users. Remember that it takes five positive experiences to make up for a single negative experience, so ensure that your long-term strategy remains intact even during moments of organizational self-doubt. Stay focused on your first principles and be willing to persevere and adapt to new distribution strategies to achieve sustainable growth.

In conclusion, building in AI requires a combination of traditional business principles and a deep understanding of the unique opportunities and challenges presented by the technology. By measuring the right metrics, aligning organizational structure with strategy, listening to data, being strategic with features, and focusing on long-term growth, you can navigate the AI landscape successfully. Remember that the "big idea" is just a seed, and it's the execution that truly matters. So, embrace the power of AI while staying grounded in the fundamentals of building a successful business.