🤓 Ben Evans' annual presentation, love as a substitute for MVP, and why most AI startups are doomed
Migranotes s1e15. Seven useful materials for entrepreneurs for all days of the week
It's time to pour yourself a cup of coffee and delve into a selection of helpful resources for startup founders and entrepreneurs. And remember, if you find any useful links, don't hesitate to share them. Sharing is caring!
Here we go 🚀
1. Productivity: Boost.Space - like the baby of Zapier and Airtable
I've been using zapier for a long time to create automated processes for combining different web applications. I like their progress, they've done a great job with AI, and they seem to have a good relationship with OpenAI. However, they still have the age-old problem of creating their own data warehouse. Yes, they have launched "tables", but so far, this is the first step in the direction.
The authors of Boost.Space seem to have brought their product to the market for this reason: they saw a gap (there is also Make) in which they could build automations around their own data warehouse.
2. Report: Annual presentation on the technology sector by Ben Evans
Ben is a legendary figure. His report is one of the things I look forward to every year. For me, Evans is the one who talks about trends in the simplest way, often noticing things that others don't. This year, of course, he is talking about "AI and Everything Else" (the title of the presentation). On the website, you can both watch the slides and watch a video of the author talking about trends.
Here are a few things I took away from the 87 pages:
AI startups now account for more than half of YCombinator's participants
About three quarters of Nvidia's money comes from data centers
Bundling and unbundling - still Ben's favorite concept - will be the main monetization models for Genuine AI.
A period is coming when links and click-throughs will die
https://www.ben-evans.com/presentations
3. Startup development: Find true love for your product
An old article (2014) from Lawrence McCahill that I keep recommending to those who are just starting to develop their product. Here I have to quote Sam Altman (the same one), who back in his days at Y Combinator said: "It is better to create something that a small number of users love than something that a large number of users love."
McCahill talks about the concept of Minimum Loveable Product as an alternative to the popular MVP and gives the following definition:
MVP - The version of a new product that delivers the maximum amount of validated information about your customers with the least amount of effort.
MLP - The version of a new product that brings the maximum amount of love from the first members of your tribe with the least amount of effort.
So at the first stage, I advise you not to worry about conversions and cost per acquisition. It is important to find those who will fall in love with your product at any cost. This will be the first true confirmation that you are doing something that is really needed.
4. Useful services for startups: Swit - a new working environment
Once again, let's remember Evans with his concept of bundling - combining several products into one. Swit is exactly about that - it's a real, full-fledged environment where you can work on projects together. The closest analogy is ClickUp. The difference is that Swit is not a single tool, but an environment. Therefore, it can also be compared to Google Workspace.
Josh Lee, Swit founder: "We've been working on moving from one feature-rich product to multiple integrated products, giving you a collaboration experience that brings your teams, the tools you need, and your workflows together."
Swit was originally conceived as a solution to minimize the inefficiencies that come from constantly switching between single-function work tools. Swit 2.0 takes this mission one step further by minimizing tab switching within our product to ensure that everyone in your organization is on the same page.
5. Relations with VCs: What metrics do investors look at?
Taos Edmondson has done a great job and created an extensive list of metrics that investors look at when analyzing an early-stage startup. There are 7 different categories that cover unit economics, marketing effectiveness, market size, and much more.
With all this diversity, Taos names two main, vital metrics. And while the first one is clear: the classic LTV/CAC ratio, the second parameter is the rating on TrustPilot (or Capterra), which shows the level of customer satisfaction. If you do not do well with these two parameters, the investor will not even look at the data.
And don't forget, don't get overwhelmed by metrics. As a rule, if you have a few (up to 5) key indicators that are "healthy", everything will be fine with the rest.
6. Video: How to make learning as fun as social media. Luis Von Ahn, founder of Duolingo
7. Opinion: James Wang, General Partner at Creative Ventures. Why most AI startups are doomed
I’ve met numerous startups who essentially glue together a few generative AI APIs, do some prompt engineering, and slap a front-end user interface on it. Some of these products are quite impressive in terms of polish and what they can do.
These companies are also all doomed to either be perfectly ok businesses (but not startups, by Paul Graham’s classic definition) or die.
Obviously, if you built it over a weekend, someone else can do the same. Now, let’s say you’re a coding genius. A veritable 10X programmer prodigy! It might take everyone else in the world several weekends… but it’s going to get built.
If you basically give your project’s product away for free and are just having fun, no big deal.
However, if you start charging for it and customers start relying on it a lot, others can come in and just slightly undercut you. Maybe yours is still nicer. Being nicer does often drive product adoption and choice of one over another.
But if it’s actually important (i.e., commands a high willingness to pay and is used frequently), this is where the curse of economics and competition come into play. People are going to copy you and compete away your profits.
No defensibility and no differentiation = no profits. That’s basic economics.
P.S.
