AI's Impact on Software

Hey y’all — here’s today at a glance:

🔗 Houck’s Picks

Light week for me on the picks front. So much of social media is focused on politics right now.

• How to set aside space in your Series A for your customers and evangelists (Link)

• The amount of active investors is trending down (Link)

• Fun recap of “tech drama” of the week (Link)

• How to build an AI side project (Link)

• Stay informed about the latest market trends and consumer insights with our weekly updates, featuring data-driven analysis of emerging trends across various industries. Subscribe now to stay ahead of the curve. (Link)*

• A helpful tip when hiring at an early-stage startup (Link)

💡 Opportunity: Custom Evaluator for Buying a Business

Buying a business is a big decision, and it pays to have someone watching your blindspots.

But getting those people to evaluate a deal can be expensive, especially if you want to cover all your bases.

With OpenAI’s o1 model, you could create an agent that does it at a thousandth of the cost (and might even do a better job).

This is something that a site like acquire.com could build or, ironically, you could sell it to them.

🧠 Framework: Smallest Enterprise Strategy

Marc Andreessen said that startups shouldn’t sell to enterprise customers because deals take too long, require too much time and functionality built right away, and can go south for reasons outside the startup’s control.

So how can b2b startups who know they’ll be able to anticipate the needs of enterprise customers, or even know they’ll be able to service them in the future at all?

The Smallest Enterprise strategy says founders should identify the smallest companies with comparable problems, processes, and tools that larger (true enterprise) customers have.

This can help founders frame the opportunity in front of them — if your smallest enterprise is still quite large, the opportunity is that much riskier to pursue.

📈 Trend: AI’s Impact on Software

I’ve written a lot about how AI is already disrupting SaaS, to the point where questioning the role of SaaS in the startup ecosystem is not as crazy as it would have sounded a few years ago.

But that’s not the only opportunity that’s emerged:

I like Tanay’s framing of the two viewpoints but disagree that they’re divergent — it’s likely some version of both will occur.

In the past, customers wanted software to make them more efficient — now they don’t really care about incremental efficiency gains and, instead, just want to pay for the work itself to be done.

Whether that work is done by an AI agent or personal, on-demand software is irrelevant to the end user. As a result, the right solution will depend on the problem.

The struggle will be between startups that try to tackle either end of a market with one of these two approaches, and the incumbents who have an inherent advantage in terms of training data to build them themselves.

Startups will need to move fast in order to actually cause disruption.

💬 Quote: The Personal Touch

A change happened in San Francisco around 2017-2018.

I was living there at the time and remember that, all of a sudden, billboards around the city started popping up for this startup called Brex.

I didn’t really know what they did (I was working at Airbnb at the time and had no need for a startup credit card) but I distinctly knew them as that company with the billboards.

This wasn’t uncommon, and the billboards are legitimately a big part of their early story that many startups have tried to copy ever since. Go around SF now and every billboard is for a startup or big tech company.

Anyway, it turns out Brex was just as thoughtful with sales as they were with marketing:

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