20VC Roundtable: Spotify, Adobe & Linkedin CPOs on How AI Changes The Future of Product, Why AI is Now the Product, How TikTok Changed Product, Why Cost is the Biggest Barrier to LLM Usage & Why Incumbents Can Adopt AI Faster Than Any Prior Innovation Cyc

25:01He was like, no, it's not all cool. We don't need to. Actually, I think that's sort of the right answer is you should build models if you're the best company in the world to build them. And so, you know, for us, it was like, who's going to build a better imaging model? We've got the advantage in terms of understanding the customer's use cases. We have the data. No one should build a better imaging model than Adobe. And so we're like, okay, we need to set out and make sure we hold ourselves to that level. But when it comes to building a massive LOM to Gustav's point, let's partner with the LOMs of the world that do this as a business.

25:36And I think it's as simple as that. So when we're looking through all the different vectors, we want to build the models that we believe are competitive advantages to be able to build and be best at. And then those others we should partner with. There's a junction there, at least for us, giving just the amounts of data and notes and the graph, is that rebuilding is an integration model with the models to be really powerful. So today, many companies will just push all the information to the prompt. More of, like I would say, like an interim solution until you have your own integration with the model on the first step.

26:08So imagine the prompt already knows to reach the dispatcher or the router, and that will basically grab both of the machine. There will be conflation at the tier level that the prompt can also be masked from. And I think that's actually really powerful. I don't know if I want to compete with the next developer developer conference from OpenAI, despite us being some siblings to an extent. For a Microsoft standpoint, that's what they'll do best, but what we do best is understanding how it works for the X. But Gustav Duves amazingly well is understanding the idea of audio and media. What Scott will do really well is the idea of design and visuals.

26:41Building that asset for me is a massive differentiation, competing for, which I think would be also super hard to compete, and you're competing for technology, and I think you're competing for really solving problems. I don't think is the right solution. I don't see anybody winning there, really. Does it change how you do anything with regards to data collection, data treatment, data cleansing? I love that. Okay, I have to take this one. I'm gonna start. It was keen for me. This is a big one for me. It's been a pet peeve of mine for a long time. So when I was, I've been preaching AI first, mentality for a long time and really trying to push both design and product folks and we're engineers to think about data collection and quality data.

27:23For a long time. Again, this has been like a father being like some of us like somebody else will do it. That assigns will figure out how to just collect it from the signals and like you don't understand this is this is the limit. This is oxygen. This is what feeds if AI is at the center but basically brings it to life is data. I remember like early on at LinkedIn I used to literally like spend so much time filtering by myself data so I can basically say this is good food. This This is good diet. This is what you should eat for like, this is what the algorithm should eat. But somehow people gravitate towards the UI or they gravitate towards the specific individual elements of it.

27:56Not understanding that actually feeds the algorithm is the data. My opinion as a product leader, a designer or an engineer or a product manager, data is literally according to your second most important job in your role. It's understanding how do you basically start to infuse all of data collection and make sure it's high quality. The first moment for the job is understanding the objective of the algorithm, which most people also. People outsource this stuff, it drives me insane. They outsource what is the objective of the algorithm to do. They kind of create some kind of spec, not nowhere in the spec is it ever written.

28:28What is the algorithm supposed to do in a nuanced way? And the outsource this stuff? But data is a massive, massive pet peeve of mine because most people just disregard it. Or they just assume it will be there. Somebody is going to create it and collect it. We just always have to be very careful because we're so focused on for the purposes of generating content The commercially viable and safe nature of the model matters a lot. We're always trying to learn how customers use our tools But we don't ever train our models off of the customers' creations So like what the customer makes unless they submit it to stock and want it to train our models You know, it's interesting like when we first launched our models like there were there were some people who went in and you know typed in Spider -Man doing something and said, oh my god, this is sucks.

29:11Like, you know, Firefly doesn't even know who Spider -Man is. And we're, we had to explain, like, that's actually, that's a feature. You know, it shows that we didn't train on copyrighted content and you can trust the way that these models are trained as opposed to some other models. So the data policies matter, matter a lot. But one thing I should say, you know, Adobe's always been two businesses really. It's like the digital media business and digital experience business, which is a set of tools that big companies use for their marketing and whether you go to Nike or any of these other brands, like a lot of them will use our tools to manage their customer experiences at scale.

29:43And I've always felt like in some ways, Adobe was two different companies sometimes. And in the last year, suddenly it makes so much sense because the digital experiences you're delivering, like the marketing, the content, you know, your experience on the Nike website or whatever, can be informed by the company's relationship with you. And the sizes of shoes that you've purchased before and where you live and things like that. So for marketing purposes, companies are going to leverage their own data to dramatically personalize digital experiences in ways we can't even fathom right now. That's really cool for the future of digital.

30:17From our point of view, we had the same journey that Tomere had about data. We did realize the value of data early on with all the playlists we had, which was the basis for our first simple embeddings. For us, obviously, the usage data, how you play less, how you listen is very important. We had that journey as well. I think the best example is actually Scott and Firefly where you're solving an IP problem. You're also solving a technical problem of I won't paint in and so forth, but you're also solving a business problem. By the licenses and the rights we have to the data, that's a very important angle that you may forget.

30:51You can solve many problems for a consumer or a user. In general, we've seen the first wave of AI now where the technology is very impressive, it's starting to do useful things. But we still, usually, the big changes come when that technology enables a new business model somehow. And that hasn't really happened yet. I'm absolutely certain it's going to happen, but so far it's like mostly sustaining innovation. What do you think that business model is like, your stuff? I don't know yet. I think one example is Firefly. It was trying to solve a business problem as well. Most of these things are not yet trying to think about it, but business models can change completely.

31:27and they probably could. But I think before that happens, this will be sustaining innovation that largely accrues to bigger players. Usually when the business model is challenged, there's some encounter positions like a big business model, that's when things really change. That hasn't really happened yet. You said innovation in the Vanioa Crew and to bigger players there. I think that's kind of what everyone's asking, which is like who wins, is it incumbents or startups and all startups say, well you know the incumbents they can't move very fast. And I mean respectfully, all three of you move really fast.

31:54My question is like, Is it kind of old BS that incumbents can't move fast? How have you guys been able to move so fast to embrace it? Scott, you talked about kind of the Cambrian explosions or Cambrian waves and jumping to, how do you move so fast at scale? And is it BS that incumbents can't? Well, here's the thing. I mean, every platform shift is not the same. They're all different. And if you're going from on -premise software to delivering in the cloud, that is a major, major transition that I can imagine many incumbents would struggle to do in a way as fast as a startup could do. And maybe that's why startups totally led the pack in terms of cloud alternatives to on -premise software in the past.

32:38And then you mobile was probably the same sort of thing. Different stock of developers, totally different go to market in some cases, different relationships with Apple app stores, and like, you know, there were so many differences. But with AI, I'm not actually sure that as a platform shift, which it certainly is. There are as many differences in how company facilitates and leverages that platform shift. Because when someone comes into Photoshop and they have an image that they want to change, right? If I can just give them a default bar that just shows up where they can just articulate what they want instead of using all the knobs and bells and whistles of Photoshop that have accumulated over the last 40 years, right?

33:17That is like a very incredible way of disrupting Photoshop to some degree. I don't have to build a net new company and a net new product from 0 to 1 in order to reimagine the capabilities of Photoshop using AI in this instance, right? Now people might not want to even download Photoshop in which case that's why we brought these capabilities to Firefly as a standalone app as well. On the off of Adobe, I'd love to take the credit of like moving super fast, you know, and I do think we executed well, but I also think that there's some nuances of this platform from Shift in particular that do favor those companies that know their customer well and already reach them.

33:53It's always easier to analyze other people's companies. I think like the risk for Adobe was before they moved the subscription model. Like the subscription model works with this as well. So that's why it's not disruptive. I think what has to happen somehow, someone has to figure out a business model that is disruptive to someone. Some people think that it will be disruptive to Google's business model. The ads model won't hold up in a conversational world. Not so sure that's actually what's gonna happen, but something like that would need to happen, I think, for Spotify, for example, when we started, it was the business model of streaming, that was the disruptive thing.

34:25The technology was a bit of peer -to -peer and stuff, but it was a business model that took Apple eight years of collateral damage to follow. That's kind of what needs to happen, I think, and we haven't really seen that yet. It could also be that this is just more productivity for the existing players. I appreciate the push on the business model, because I don't think we often talk about it, But you can play the regular like SaaS model based on seats. And if your technology really makes the organization much more successful than your seats volume model, does not work anymore. Yeah, that's a good point.

34:54Is it really just price that you increase? It becomes like a really big conversation to have around what's the business model when your product makes the organization more efficient? You're kind of realizing your own seats model. There's a brilliant piece by Sarah Tavill at Benchmark, actually, which is taught about selling the work and not the seats. Exactly. You actually need to still look because the idea of like, you're hiring, we talk about hiring, and we immediately imagine hiring people, but you're really hiring task completion. I love this question about what business models will be disrupted by AI.

35:23It's something we probably don't talk about enough. I mean, think about how many people in the world get paid on an hourly basis for what can be achieved in an hour. I mean, even lawyers charged by the hour still. Designers charged by the hour, and now you see these new technologies that are readily available. It's like, how does it even work? You know, you're really paying for, of course, right? is like the depth of experience and judgment that one applies to their work. You know, your lawyer's ability to know based on their like, you know, 30 years in practice, like what's likely to happen to advise you in the right decision.

35:55If that's made in three minutes, like how do you compensate them? And I think the same goes for the seats part as well. The functions of so many businesses are collapsing now. And so the idea of selling seats function by function, like how many people in procurement, how many people in financial planning, I mean, I mean, it's such an old, antiquated way of building a business to some degree in the age of AI. So I'm excited about this new value -based innovation vector for a business modeling. Is that challenging for you buying software then? When you think about buying new tools today, does it change how you think about buying tools?

36:26We're all huge buyers of tools internally as well. Like, you say antiquated, it's got to mean it nicely, but I'm sure like, we hope by a huge amount of seat -based tools like... What we do, and at some point, probably sooner than later, again, we're early in the days of AI, but at some point, when there are more tools in the organization that do many different things, I think that the idea of buying seats function by function will just evolve. It's a good question, Harry. When is that really going to be material and how is it going to manifest? Yeah, I think your next podcast is with a bunch of CFOs and how they're making mistakes.

37:01Because this is actually, this is where everybody Come on, give me a break again. Yeah, this is gonna be the next productivity layer. And I think like for many companies, I don't think coming and saying I wanna deploy this program for 20 ,000 employees is gonna work anymore. People are gonna stay like, wait, wait, what's more productive? How much output are we gonna get? But those are phenomenal questions we never used to ask. You're in a half a go. That's like an innovation catalyst. Again, speak to many people. Everyone says that AI development progression technology stellar cannot attend with any great job.

37:32Enterprise adoption, but a negative 4 out of 10. Noggot, I think as a start 32 % of European corporates do not know what slack is. That's concerning. How do you think about enterprise adoption keeping pace in any way with AI development? I think it's probably good news that we're so early in the adoption curve, because that means that there's a lot of potential ahead for these companies. And I also, it doesn't happen linearly. I think that the adoption happens in moments where there's like a step function, you know, breakthrough or people just suddenly realize that, and a lot of enterprise selling also happens because of who else is buying it.

38:10When I'm trying to work with customers who are thinking about, are we ready to change the way we do this? It's much easier when they hear about that company that has already changed the way they do this and how, you know, they're saving money and they're producing better output. It's like, oh, okay. But you know, I think that the part of this is always about getting small teams in big companies to start to play with something You know, that's where I think enterprise sales can fall flat sometimes and you have to have design partnerships with early customers as opposed to traditional Cells you know to go into early customers and say hey, I'm not even trying to sell you on this I just want a small team that can start to play with some of our technology We have this two -year -old model capabilities now for Firefly where brands can use some of their own IP and make a version of the model for them.

38:56And we've been going to some specific companies and saying, hey, be our partner, and let's play with it. And then of course, like that play becomes utility, and then that utility becomes a reference point. And eventually, you know, when we're ready to sell it, we're broadly. So I agree with Scott, both that it is early. Yeah, maybe it's our job to start using these things ourselves internally first and get them to work. But I also agree with Scott that I think it's going to go much faster than moving to cloud. I know we actually were on -prem companies that old. It wasn't possible to just also be on the cloud and try a little bit.

39:27It's incredibly hard. I don't think this will be that hard. I think you can try these things in parallel. It's going to be an S curve, but I think it's going to be a sharp risk curve once it happens. You've spoken about the seismic change needed in product and designer minds. If you were to sit down with young designers, young product people, we have like 700 ,000 that listen to 20 products. What would you say to them in terms of what they can should do to equip themselves for the changes that we're seeing so that best placed in that career is. I'll start with a quick stat for this we're gonna receive a trucky very closely at LinkedIn they're just looking at talent overall for the world like the job is changing on you whether you like it or not so like I think this one mindset for us I think everybody here on the call and for every generation to come like your job is gonna change much faster than you think but it might even change titles the tasks will change it's really about how you more for that.

40:21We looked at like the last five years, obviously AI plus playing a big role, but the skills that necessary to do a job change by 25 % in the last five to six years, by 2030 they're gonna change by at least 65%. Where do you want it or not your job is changing? So the necessary to learn and to really start shaping your understanding of the task you're trying to do, how the task is more thing is critical. For me I would put it under the umbrella of growth mindset, just the ability to learn. Then there becomes like more of a question around how should I think about beyond being AI literate and be beyond being focused in an AI first mindset, but should I do, I think there's two aspects that come to mind to me.

41:00One is like a more of a t -shaped perspective where I would assume you should have more broad skills than you have before the ability to activate or to that angle I would still build expertise around a specific domain or specialty. We talked about disruption before, we've been incumbents and startups. Usually we talk about tech. There's so many industries yet to be disrupted that nobody talks about but those could be remarkable areas to focus on and lastly I think it's innately what makes us human things like soft skills interpersonal dynamics and Imagination like just focusing on those those are not going anywhere guys hit me They're granular.

41:36What do I actually do my job's changing treating yourself as a business is something also everyone should always do It's you know how you organize your your ideas and information how you track your own spreadsheet for your own budget. Like we're all, we all have our own business called ourselves that we also manage part of being a human being. So embrace these tools. A lot of folks used Google Apps for themselves before they introduced them to their companies. You know, a lot of us used Evernote or Notion or other things and then we said, wait, I want to use this with my team. Have some embracing novelty precedes utility.

42:11Playing with something gives you ideas of how you can maybe pilot it with something you do in your day job. And then if you have a pilot, that's how you learn as to whether or not it's relevant for actual practice. So that's how we stay on the edge. And it's interesting. We all know people who are those early adopters who love playing with new tools. And then we all know people who are the total pragmatists who are just like, I don't use it until I'm told I have to change my tool. And you can rip this old tool out of my hands at the last minute that it's supported within the company. If you're listening and you're early in your career, you can be the person on your team that introduces new practices.

42:48That's your advantage in a company, especially working with a lot of people that have been around a lot longer, is you can be the one who pioneers new practices. And I think in general, like the one we think about big shifts, that's actually when the opportunity rises, this calls point, a lot of people are slow to change. So it usually is the case that one of the advantages of coming straight out of school is that the disadvantage is your new experience, but the advantage is usually you have the latest and greatest knowledge, where someone who worked in a company for 10 years, they're using the old tools.

43:18So I think that's still true. You can have that advantage, but even if you're in a company, the only advice is to educate yourself. And as we said before, in this instance, it's actually simpler than ever. You don't have to ask for permission to learn how to prompt and how to use these things. Education is only internet is basically free now, it's very cheap. I think it's easier than ever, more democratic than ever, to Tameras Point as well. It's just going to keep changing. There's actually the risk is if you're in a company that you don't develop fast enough. I think if you're fresh, you're going to have those later skills.

43:50Listen, I want to dive into a quick fire. So I say a short statement, you give me your immediate thoughts. Scott, I like your newsletter. What's your biggest lesson from running applied to product? Oh, from running. There are a lot of lessons that I have attracted from running. I'll tell you one of them, which is when I'm running, I often have ideas. And I'm obsessed with capturing ideas and I'm always worried about forgetting ideas, but when you're running I just like force myself to keep running because I don't want to give myself an excuse to stop running to capture an idea And that period that I am forcing myself to keep thinking about this idea as opposed to writing it down It always gets better.

44:25I think about that now in my like every day work I'm so impulsive. I'm always like trying to be decisive. I feel like that's one of the best practices of being an executive is decisiveness, but if you can like sit with something a little longer than comfortable, oftentimes you end up with a better approach to how to say it, you know, to how to give the feedback to the person, you know, how to like solve that problem with the product. I have this like mantra of wait for it that I've learned from running. The cadence of running actually, I think, is almost like a process you're forced to iterate the idea.

44:55It's is almost like in a, you know, in the trans. I totally agree. Having the force to be It's something and something and you have this clock going tick tick tick for an hour. It certainly helps to add in. Tomah, if you could change one thing about the LinkedIn product today, what would you change? What's interesting right now, we talked about the idea of UI and complexity. There's this great law that I'm, I really like it was really helpful or that it might correct to think about how to build products which is the conservation and complexity. The idea that every product has an inherent amount of complexity.

45:22Ideas, you can use solve it in the product development side. I do actually put it on the user to solve by themselves. And I think we're in this phase right now where there's so many use cases and audiences that people come to the LinkedIn main app for and That just had inherent complexity because there was so many you know you come in the morning You're trying to see what's happening in the world later in the afternoon your interview somebody You want to check out their profile then you know your bus Upset it you later the day and you want to see what's out there for you This is all three use cases in the same like 24 hours now with the eye and I would claim probably this would be more or generalized statement, the more complex your product, the more impact the I could have in terms of simplifying it for your user base.

46:01So one thing that we're already underway for us is really take away the complexity and solve it with the idea of bringing in more of this new, large language models. And in general, this new brain that can exit on top of it. So instead of adding more features, it's the same experience, we just morph stores your need. So more TVD on that one. I think you should call it a name like Einstein. Then you love Einstein as a name for Salesforce. We call it fighting the entropy in Spotify. Tell me, Scott, what if you changed your mind on the last 12 months? Well, I think within a big company, you know, I've changed my mind on the need for centralization.

46:38Where things shouldn't be centralized. Like, I always go back and forth, honestly, on this. You know, there have been periods of time where I felt like design needed to be in different organizations because people had to prioritize and properly resource design for their business. and then recently I recentralized design in one organization because our strategy you know required it and I guess one of the things I'm learning is that sometimes you know you make a completely opposite decision at different times in the same business because the playbook is different and we typically don't think that way we like when we make a huge decision and it's like this is the way it's gonna be we just stick to it because we almost think like it's first principles but you just have to be willing to discard the playbook consistently Okay, let's go for you, Tomah.

47:21Can product leaders not be trained in AI today? Can you be a CPO and not have really spent hard yards in AI? I would not hire you to my org if you don't have the willingness and the aptitude to go deep again. I don't need you to be the engineer working on the model, but I need you to understand one, the objective you're trying to build and how to build it. Otherwise, what are you here for? And two, all the underlying principles that come with it. The idea of it's not being deterministic, so how do you build the knobs so elegantly that the experience is great in any shape or form? To how do you think of data collection in a way that's responsible, but really fuels what you're trying to build?

48:01And to be it's that velocity we just talked about, if you don't have the velocity of learning, I don't think you'll last. Guest our final one for you. What are you most excited about when you look at AI in the coming years, what it can do for everyone, but also for Spotify. Just what excites you most. For me, we experienced the shift to mobile. It was very scary. Our business model had to change. Could have disrupted the company. It was also by far the most exciting time I had. And to be honest, it was a little bit too stable for a few years there. And I feel like we're back to that kind of change.

48:31I'm secretly hoping for that business model challenge. And those things happening, that everything changes again. I don't know if you agree Scotland to me, but if you're a designer product person, those are the exciting times. We're right right there now. I don't think we're at the end of it. I think we're at the beginning of it. Sound kind of back to like more excited than maybe in the last seven, eight years. It's unclear now what's going to happen. We were on a little bit of an iteration track for a while there. It's not an iteration anymore at all. So that's what I'm excited about. Thank you so much for this.

49:02This has been fantastic and I so appreciate you putting up with my questions. Thanks for having us and I'm very good I'm good to see you guys.

49:12I cannot state enough how much I love doing that show. If you want to let me know on Twitter at Harry's Steppings what you thought and feedback on the format itself of the show I'd love to hear your thoughts there. Likewise you can check it out on YouTube by searching for 20BC, love to hear your thoughts on that format also. But before we leave you today, HMC or Harvard Management Company, they're constantly seeking out the next generation of truly great investors and entrepreneurs. HMC has managed Harvard University's endowment for nearly 50 years and was one of the first institutional investors in venture capital.

49:44Their experience and long -term investment horizon make them ideal partners to get world -changing ideas on apart the viability and success, they work as a true partner, providing insightful perspectives to help managers succeed. I personally have had the pleasure of working with the HMC team and can say that they're truly exceptional partners and just great, great people to work with. Whether you're launching your first fund or your fifth, HMC welcomes the opportunity to partner with both developing and established managers. Have an idea you want to share with the team? Just send it to ventureathmc .harvard .edu.

50:18As always I so appreciate all your support and stay tuned for a fantastic episode this coming Friday.