Value-based pricing can be a trap for early startups

2024-10-03

Founders are often told to price based on the value they are providing to their customers. For example, if you’re saving your customer 1 million dollars, charge a 10th of that. Here’s Kevin Hale at YC advocating for this approach: In startups, and almost pretty consistently across all businesses, everyone will tell you, you should strive for value-based pricing. It allows you to charge a whole lot more. It allows you to manipulate this incentive to buy.…

Reading Sqlite Schema Tables the Hard Way

2024-09-25

Parsing a Sqlite database file is a nice way to brush up on data structures, bit manipulation, and recursion. I know this because I recently implemented the read_schema_tables function below such that the following test passes: import sqlite3 def test_read_table_names(db_file): con = sqlite3.connect(db_file) assert list(con.execute("SELECT * FROM sqlite_schema;")) == list(read_schema_tables(db_file)) read_schema_tables doesn’t use the sqlite3 python package. That’d make for a trivial test case and would be too easy. For comp sci fun, we have to do it the hard way.…

Which developers care most about security?

2024-08-06

We’re thinking about building a product for developers that enables them to build applications that operate on encrypted data via homomorphic encryption. We think developers have seen enough data leaks to want a product like this, but we’re worried we’re wrong. Even if we’re right, we’re worried about finding specific devs who can be early adopters. Where do these devs live? What languages do they use? What kind of companies do they work for?…

We Need Another Code Copilot

2024-06-21

I’ve been an programmer for a decade, and I can’t believe how much wasteful code we write. Even more unbelievably, many of us “justify” our waste with vague appeals to “clean code” or “best practices.” I used to do this all the time. These vague appeals — and the religious fervor that often accompanies them — betray a common lack of serious thinking about what makes code useful vs. wasteful. Instead, we have lots of shouting:…

On OpenAI's supposed "scientific certainty" that GPT-5 will be better than GPT-4

2024-05-13

When we were raising money for ATLAS, I often told investors that my cofounder and I were probably the most skeptical GenAI founders they would meet. Sam Altman’s recent hyperbolic claim that Open AI has “scientific certainty that GPT-5 will be better than GPT-4” at Stanford University fuels this skepticism: I’m impressed by OpenAI, we use their models, and I’m sure Sam is a nice guy, but I cannot imagine that whatever evidence they have to think GPT-5 will be better than GPT-4 would be enough for “scientific certainty.…

How AI Startups Can Beat Incumbents

2024-04-12

There are lots of takes on where value will accrue as LLM-tech proliferates. Here’s one more. “Where will value accrue?” — in case you’re not tuned into VC-speak — translates to “When can LLM startups beat incumbents?” My answer: Startups with LLM-enabled, counter-positioned pricing will beat incumbents. They have the giant-defeating potential that David did. What’s “counter-positioned pricing?” It’s a pricing model that incumbents can’t copy without losing money. The classic example1 of counter-positioning is Vanguard index funds.…

Under Appreciated Benefits of Selling to Startups

2024-04-05

Unusual’s Startup Field Guide says: We’ve found startups to be less optimal design partners…While they have extreme urgency and can certainly move quickly, they lack the stability and consistency that a [larger] company has. In addition, they often have small budgets and a high propensity to “DIY.” They are often consumed with their own challenges and feedback so you can easily get lost in the shuffle. We’re trying to make startups our design partners and early customers in spite of advice like this.…

What Your MVP Says About Your Market

2024-03-12

Tuomas Artman, Linear’s CTO, recently claimed that increasing SaaS competition is raising the bar for what’s required of MVPs. Mocks, demo videos, and even ugly prototypes aren’t enough anymore. Others have made the same claim.1 They’re wrong. There are lots of markets where minimal MVPs are good enough, and if you aren’t in one of those markets, you may be better off pivoting instead of building a fancy MVP for picky customers who are flush with alternatives.…

Look for billion dollar mistakes

2024-02-28

Successful startups grow so quickly that incumbents can’t catch up. Google couldn’t catch Facebook. Facebook couldn’t catch Instagram. Instagram couldn’t catch Snapchat. From each of these incumbent’s perspectives, the competitive startup’s success is actually a $1B+ strategic mistake. This incumbent perspective leads to a novel approach for finding startup ideas. Instead of generating ideas by trying to be creative or visionary, we can just focus on flaws in human reasoning and knowledge and ask which of those flaws are likely to lead to $1B+ strategic errors.…

Dont Get Into the UX Business

2024-02-20

We built an LLM-powered product that improves software help UX. Although there are a few exceptions, generally speaking, no one will pay for it. Below I discuss the headwinds I encountered while trying to sell this product, headwinds that will affect anyone in the business of helping other software companies improve the UX of their product. These headwinds aren’t worth fighting. Unless you’re offering a UX improvement that very obviously leads to more revenue, don’t get in to the UX business.…