Category creation is a dangerous place for startups.
Most category creators fail.
Ironically, many end up retreating back into the established category they came from.
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The playbook is usually much simpler:
1. Find a growing market
2. Build the best product in it
You don’t need to create demand, just capture it.
Your odds of success just increased 10x.
What should you do if you’re young and ambitious but don’t know what to work on?
Meet as many business owners as you can.
Every industry, company type, and business model. Find one that interests you. Find one you can see yourself waking up for. Diving into. Where you’d be so pumped to win that you can’t lose. Where losing would still be a win because you can’t imagine a better way to spend your time.
Expose yourself.
You’ll probably find it.
You can raise millions and fail.
You can raise almost nothing and win.
Investors are not validation.
They don't know whether your idea will work.
Fundraising is not traction.
The market decides.
Not investors.
Don't confuse it with progress.
During a pitch a prominent VC once told us the market size for global logistics was only $6B.
My CFO’s response: “So you’re saying it’s smaller than the market for USB cables?”
The AI-native services I’m seeing crush it right now:
• Law firms
• Bookkeeping/accounting
• Tax preparation
• Insurance back-office operations
• Medical billing
Notice a pattern?
None are sexy.
They’re all industries where businesses already spend thousands per month on human labor to move information between systems, review documents, and complete repetitive workflows.
The AI playbook isn’t:
“Build software and hope people buy it.”
It’s:
> Sell a service people already buy.
> Replace labor with AI.
> Improve margins.
> Productize the workflow.
> Slowly become software.
That’s why some of the most interesting AI companies today look more like service businesses than SaaS companies.
If you’re looking to build a startup, build an AI Native Service.
my favorite AI playbook by far.
Instead of selling AI products, use it yourself.
You’ll reap far more benefit that way:
> higher prices
> larger market
> better product
> more defensible
These days it’s
If you’re looking to build a startup, build an AI Native Service.
my favorite AI playbook by far.
Instead of selling AI products, use it yourself.
You’ll reap far more benefit that way:
> higher prices
> larger market
> better product
> more defensible
These days it’s hard to tell what companies will stand the test of time.
These companies will.
Some of the biggest companies of the next decade won't be software businesses. They'll be services companies like insurance carriers, law firms, and tax practices rebuilt from scratch with AI doing most of the work.
In this episode of Startup School, YC Visiting Partner
Successful founders are rarely good at just one thing.
When you look at their life you’ll find several areas in which they excel; often being in the top 5% of that field.
It’s never JUST business.
They’re successful in anything they take seriously.
Ex:
> D1 athlete
> world class gamer
> top-tier programmer
> top performing student
> exceptional salesperson
> competitive poker player
> military special operations > nationally ranked chess player
—
There are exceptions to every rule.
But if you've never been great at anything, it's hard to believe you'll suddenly become great at startups.
I’ve been spending more and more weekends with SMBs, helping them adopt AI.
So far I’ve helped:
1) a law firm save thousands per month and 2x case load capacity
2) a small business identify 50 franchise worthy locations worth >$1m
Who should I help next?
I helped an SMB owner make $1M this weekend.
here’s the story 👇
A small business owner was looking to expand to 4 more locations.
if successful, this would net him $1m/ year.
The problem?
If it fails he’s millions in debt and he was relying on:
> gut feel
> personal experience
> randomly clicking thru google maps
So I helped build an AI agent that scouts locations.
We combined:
> his 10+ years of industry knowledge
> data across population, demographic, income, competitor, comparable businesses types
> 30+ factors from a decade of experience.
Then ran it across every subdivision in the United States.
The result? We overshot.
By a lot..
We ended up finding 50 exact-match expansion opportunities.
The exact profile he was looking for.
He was stunned.
4x locations makes him one million/yr
this list is closer to $10M.
But here’s my favorite part:
These capabilities used to be reserved for large companies but are now rapidly becoming available to those with less resources.
This kind of sophistication you’d normally expect from a company like Starbucks.
Now available to a small business owner.
Giving opportunities to people who didn’t think they had them.
The type of scale he didn’t think was possible.
Pretty damn cool.
Common fundraising deck mistake: using boring slide titles like "Team" and "The Problem".
Instead, state the conclusion that you want investors to take away from the slide, and use the body as supporting evidence.
If an investor only read the titles on your slides, would they
A founder kept saying "if only we had money we'd do X."
Money is not the fire. Money is gasoline you pour on a fire that already exists.
You don't have a funding problem. You have a "people don't want it yet" problem. Go make the first fire.
Don’t be scared of crowded markets.
Empty ones are far worse.
Competition usually means:
• real demand
• real budgets
• an unsolved problem
Empty markets are empty for a reason.
@charliermarsh Sometimes they're a good reason to work on something. When people say a market is "crowded," what that often means is that there's a real problem and none of the solutions are good enough yet.
Seeing this trend in a lot of successful YC companies.
The playbook:
1) approach a traditional business
2) find a repetitive revenue-driving workflow
3) build the solution (often leveraging AI)
4) showcase proof of revenue increases
5) sell solution to to PE companies
Some companies don’t even sell the solution.
They acquire the company, implement the improvements, and capture the full value themselves.
Either way.. lot of opportunity outside of tech.
—
What businesses do you think gain the most from AI?
We built an AI agent for an HVAC company in the southeast last month.
They were doing around $3M a year and growing fast, but their CSRs couldn't keep up with the lead volume.
Form fills were taking 4-6 hours to respond to. LSA messages and Yelp inquiries went 12+ hours
@christophersaum It's pretty easy for YC to find you without sleeping on the street..
1) they take applications
2) it's their job to find good companies
so build a good company and fill out the application..
@stochtinkerer Smart and hard worker, unfortunately aren't the characteristics associated with success.
It's more along the lines of grit and perseverance.
If you can hang in long enough, your odds start to change.
Tech startups are NOT the only way to build wealth.
In fact, it may be one of the worst ways:
- low success rate
- long time horizon to success
- difficult to exit / capture monetary value
It’s not the most efficient but it is the most popular.
And most folks haven’t seen the alternatives.
Here’s one👇
Appreciate the perspective but personally? I don't hate SMBs at all, I quite like them.
That's coming from someone who's not only built a career in tech but also owns SMBs.
(it's worth stating that being the owner of a construction company is far different than working in one - I probably wouldn't like being a construction worker in all fairness)
69 Followers 1K FollowingCo-founder & CTO @ Acel Cortex. AI-native back office for property management. Building in Toronto. Ex PM operator (200 doors)