Avoid the Wrong Customers

Hey y’all — I’m launching a podcast this summer.

I’ll be having candid conversations about fundraising and the founder journey with founders I admire.

The first few episodes are already done and I think you’re going to like it.

My ask for you — reply and tell me 1 founder who’d be a good guest to have on (and why).

Anyway, here’s today at a glance:

🔗 Houck’s Picks

My favorite finds of the week.

• 97.77% of website visitors leave without clicking on a CTA. This AI agent helps them find what they need instantly, increasing your CTA clicks by 3X. (Link)*

• A list of people who are actively leading pre-seed rounds of $1-$2M (Link)

• The 10-slide pitch deck this AI startup used to raise $35M (Link)

• 9 lessons from 20 years of building successful software and hardware companies (Link)

• 3 big mistakes on SaaS landing pages (Link)

• Why founders should start with something insanely simple (Link)

• A few design principles to steal from AirBnB (Link)

💡 Opportunity: Native S3 Applications

I saw this X post last week and my mind immediately went to Shopify. See if yours does too:

The reason?

Shopify enabled teams to build an entire ecosystem of tools on top of itself. These platform-native tools:

• Increased the value of the Shopify ecosystem

• Made it easier for new sellers to get started

• Increased lock-in / retention

More decisions than ever rely on your choice of a cloud provider due to AI. It’s an opportune time for a similar boom in native tooling to be built (not just limited to S3, and not just limited to the tools described above).

🧠 Framework: Amazon’s Meeting Agenda

Amazon’s meeting culture is famous for a few reasons:

1. The two-pizza rule → Meetings should never have more attendees than can be fed by two pizzas.

2. Memos → When a meeting starts, everyone reads the same memo (written by the person who called the meeting).

3. Their meeting agenda template → Simple, and to the point. It works. Use it:

📈 Trend: Seller Financing for Employees

The amount of startups not taking investor money is rising, and will continue to.

AI is a deflationary force that makes a larger number of startup ideas become actually viable businesses, and getting one off the ground no longer requires VC money.

But bootstrapped founders tend to not set up as generous employee equity pools as VC-backed founders (in my experience).

For bootstrappers who want to offer equity to employees after a certain amount of tenure, they have a choice:

1. Include it in their original offer to the employee to join

2. Let the employee decide what percentage of their salary they want to take via equity with Flexile

3. Offer seller financing:

💬 Quote: Avoid the Wrong Customers

Not all revenue is good revenue.

And not all customers are good customers.

Charlie Munger explained (below) that Costco could have increased customers by removing their membership fee and instead raising prices, but the subscription acts as a quality filter against shoplifters.

I’ve battled with this idea as I’ve built Megaphone, too.

If we removed our subscription fee, and only take a commission on dollars spent in the network, our user count would go up dramatically.

However, that structure would attract users who’d share low quality content with our creators. A huge increase in low quality content would predictably lead to lower creator engagement and higher creator churn, which would kill the product.

So what’s the answer?

Add value to your product.

The more value the user gets, the less bothersome that subscription becomes.

We’re working on this for Megaphone right now, with a big v2 launch planned for later in the summer.

In the meantime, here’s Charlie:

💡 How I Can Help

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