Abhilash Rao’s Post

Found something intriguing on a Sunday morning. Which AI Products have PMF? Apart from the usual suspect, here's what stood out for me from Ramp's report on how it's enterprise customers are spending on AI: - AI spending grew 293% YOY, where overall software growth was 6% (although on a smaller base) - New AI adoption is slowing but existing users are doubling down, suggesting clear ROI. - Healthcare and finance sectors are rapidly adopting AI (and not just tech companies) - Narrow AI tools for specific tasks (e.g., sales intelligence) are gaining traction alongside general-purpose AI - Usage is not just in enterprise. Large SMBs have ramped up faster than mid-market companies in the last quarter - I've never seen a chart like the last one - OpenAI's spend per customer in month 12 is 8 time that in month 1 p.s - There maybe a sampling bias here. Ramps customers probably overlap heavily with AI early adopter personas.

Monetization in AI is getting interesting 🍿. PolyAI's is an AI application with usage based pricing. No tiers, no bundles. Here's why this matters: 1. Subscription based pricing is often the norm for consumer products (AI or otherwise)- humans who use it are less anxious about over spending. E.g chatgpt 2. When major costs are linked to usage yet humans use it, tiers with usage based caps makes sense e.g copy(dot)ai 3. Usage based pricing usually means, computers or APIs use the service. Usage is controlled by programs. E.g AWS (infra), Open AI APIs (model). This is a form of value based pricing, you get more value as you use it more. Pricing based on value delivered remains hard in AI applications. The value is improved human productivity. How does one prove that? Poly AI answers your customer calls and claims to improve productivity by ~50%. So it is a mistake to price based on usage? Not in this case. Poly is not a co pilot. It replaces ~50% of your support staff. That's quantifiable value. Per-seat 𝘀𝘂𝗯𝘀𝗰𝗿𝗶𝗽𝘁𝗶𝗼𝗻 𝗺𝗼𝗱𝗲𝗹𝘀 𝘄𝗶𝗹𝗹 𝗰𝗼𝗺𝗲 𝘂𝗻𝗱𝗲𝗿 𝗽𝗿𝗲𝘀𝘀𝘂𝗿𝗲 as AI products deliver work rather than augment personal productivity. p.s - Microsoft's just launched it's AI co-pilot for security priced at about $4 *per hour* of usage. Isn't that interesting?

𝗣𝗹𝗮𝘂𝘀𝗶𝗯𝗹𝗲 𝘁𝗼𝗺𝗼𝗿𝗿𝗼𝘄𝘀, is Khosla Ventures's prediction for the future. These three intrigued me the most: 𝗙𝗿𝗲𝗲 𝗘𝘅𝗽𝗲𝗿𝘁𝗶𝘀𝗲 - I feel challenged and a tad scared 𝘈𝘐 𝘸𝘪𝘭𝘭 𝘱𝘳𝘰𝘷𝘪𝘥𝘦 𝘢𝘤𝘤𝘦𝘴𝘴𝘪𝘣𝘭𝘦, 𝘢𝘭𝘮𝘰𝘴𝘵 𝘧𝘳𝘦𝘦 𝘦𝘥𝘶𝘤𝘢𝘵𝘪𝘰𝘯 𝘢𝘯𝘥 𝘩𝘦𝘢𝘭𝘵𝘩𝘤𝘢𝘳𝘦, 𝘸𝘪𝘵𝘩 𝘈𝘐 𝘵𝘶𝘵𝘰𝘳𝘴 𝘧𝘰𝘳 𝘦𝘷𝘦𝘳𝘺 𝘤𝘩𝘪𝘭𝘥 𝘢𝘯𝘥 𝘈𝘐 𝘥𝘰𝘤𝘵𝘰𝘳𝘴 𝘢𝘷𝘢𝘪𝘭𝘢𝘣𝘭𝘦 𝟤𝟦/𝟩. 𝗠𝗼𝗿𝗲 𝗰𝗼𝗱𝗲 - Makes me feel excited and creative 𝘖𝘷𝘦𝘳 𝘢 𝘣𝘪𝘭𝘭𝘪𝘰𝘯 𝘱𝘦𝘰𝘱𝘭𝘦 𝘸𝘪𝘭𝘭 𝘣𝘦 𝘢𝘣𝘭𝘦 𝘵𝘰 𝘱𝘳𝘰𝘨𝘳𝘢𝘮 𝘪𝘯 𝘯𝘢𝘵𝘶𝘳𝘢𝘭 𝘭𝘢𝘯𝘨𝘶𝘢𝘨𝘦, 𝘮𝘢𝘬𝘪𝘯𝘨 𝘤𝘰𝘮𝘱𝘶𝘵𝘦𝘳 𝘶𝘴𝘦 𝘮𝘰𝘳𝘦 𝘪𝘯𝘵𝘶𝘪𝘵𝘪𝘷𝘦 𝘢𝘯𝘥 𝘸𝘪𝘥𝘦𝘴𝘱𝘳𝘦𝘢𝘥. 𝗜𝗻𝘁𝗲𝗿𝗻𝗲𝘁 𝗔𝗰𝗰𝗲𝘀𝘀 𝘃𝗶𝗮 𝗔𝗴𝗲𝗻𝘁𝘀 - relieved as a consumer, confused as sales guy 𝘔𝘰𝘴𝘵 𝘪𝘯𝘵𝘦𝘳𝘯𝘦𝘵 𝘢𝘤𝘤𝘦𝘴𝘴 𝘸𝘪𝘭𝘭 𝘣𝘦 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘢𝘨𝘦𝘯𝘵𝘴 𝘢𝘤𝘵𝘪𝘯𝘨 𝘰𝘯 𝘣𝘦𝘩𝘢𝘭𝘧 𝘰𝘧 𝘶𝘴𝘦𝘳𝘴, 𝘮𝘢𝘯𝘢𝘨𝘪𝘯𝘨 𝘵𝘢𝘴𝘬𝘴 𝘢𝘯𝘥 𝘣𝘭𝘰𝘤𝘬𝘪𝘯𝘨 𝘶𝘯𝘸𝘢𝘯𝘵𝘦𝘥 𝘮𝘢𝘳𝘬𝘦𝘵𝘪𝘯𝘨. What stands out for you ?

Move over Influencers? There's a counter culture emerging & I didn't get it at first. Three contrasting examples to illustrate: There’s a bookstore in Ginza that sells only one book. “A single room with a single book” is its tagline. Every week, the owner chooses the book, presents it in the center of the shop, and curates an exhibition with artworks, photographs, or related items around its subject matter. Moving over to India, speciality Indian coffee company Blue Tokai Coffee Roasters is on an expansion spree, adding ~30 new outlets in 2023, bringing its total to 87 sites across ten cities. Curated travel is a fast emerging market. Offbeat locations, curated personas and crafted authentic experiences. Eclectic travel buffs are put together unique offerings, showcasing their taste & personality. 𝗦𝗼, 𝘄𝗵𝗮𝘁'𝘀 𝘁𝗵𝗲 𝗰𝗼𝘂𝗻𝘁𝗲𝗿 𝗰𝘂𝗹𝘁𝘂𝗿𝗲? Move over Influencers, welcome Curators. It's always there, but its getting a lot more noticeable now. Modern aspiration is not (just) about having money to buy things, but 𝗵𝗮𝘃𝗶𝗻𝗴 𝘁𝗮𝘀𝘁𝗲 𝘁𝗼 𝗸𝗻𝗼𝘄 𝘄𝗵𝗮𝘁 𝘁𝗼 𝗯𝘂𝘆. In the aspiration economy knowledge, judgement and taste are valuable. We trust curators because we believe that they spent time and effort in developing expertise & taste. p.s - I'm still thinking about the implication on this for brands & marketers. Any thoughts?

Billboard economics have always baffled me, especially for B2B brands. This contrarian story from Airtable gave me one useful way to think about its effectiveness: "𝘉𝘢𝘤𝘬 𝘪𝘯 𝘵𝘩𝘦 𝘥𝘢𝘺, 𝘸𝘦 𝘢𝘵 𝘈𝘪𝘳𝘵𝘢𝘣𝘭𝘦 𝘸𝘦𝘳𝘦 𝘬𝘪𝘯𝘥 𝘰𝘧 𝘳𝘰𝘢𝘴𝘵𝘦𝘥 𝘰𝘯 𝘛𝘸𝘪𝘵𝘵𝘦𝘳 𝘧𝘰𝘳 𝘰𝘶𝘳 𝘣𝘪𝘭𝘭𝘣𝘰𝘢𝘳𝘥𝘴", says Zoelle Egner, Airtable's 11th employee and growth leader. "They didn't seem to say anything in particular" However, those billboards 𝘄𝗲𝗿𝗲 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝘀𝘂𝗽𝗲𝗿 𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲. Says, Egner, "Our primary goal was signalling. We wanted to show some very large companies that we were a legitimate and substantial business that they could trust. Airtable had a strategic geographical focus, especially in areas like the fashion and media industries in New York. We knew exactly where the major company offices were located, and wanted to make sure that when these company employees walked to work, they saw our billboards. So, when it came time for them to request budgets to invest in solutions like ours—potentially costing six figures for Airtable—it made us seem not just like some obscure startup but a recognisable and legitimate entity." 🎯 This targeted strategy played into the perception that only significant, established companies buy billboards. Hence, they can be trusted. Any other examples of 𝗳𝗿𝘂𝗴𝗮𝗹 𝗯𝗿𝗮𝗻𝗱 𝗯𝘂𝗶𝗹𝗱𝗶𝗻𝗴 you've come across?

Surprising realisation: 𝗦𝘂𝗯𝘀𝘁𝗮𝗰𝗸 𝗵𝗮𝘀 𝘄𝗲𝗮𝗸 𝗻𝗲𝘁𝘄𝗼𝗿𝗸 𝗲𝗳𝗳𝗲𝗰𝘁𝘀. What got me thinking is their seemingly poor revenue numbers. Here is one reason why: - Writers (supply side) are primarily responsible for attracting readers (demand). ~70-80%. It's iterated recommendation feature is a step in the right direction, but not a huge needle mover. - There is no strong cross-side network effects. It is unlike say Airbnb, where both sides benefit from "network value" (a large user base). - Substack's value comes primarily from its effectiveness as a SaaS (Software-as-a-Service) business, upselling writers on additional features and services. However, it's business model is like a marketplace, with a take rate. Substack's new age competitors counter-position pricing as SaaS (e.g Beehiiv, ConvertKit). A strong incumbent is counter-positioned to help drive traffic for early writers (Medium). Interesting tangle. 𝗬𝗲𝘁, 𝗦𝘂𝗯𝘀𝘁𝗮𝗰𝗸 𝗵𝗮𝘀 𝗴𝗿𝗼𝘄𝗻 𝗿𝗮𝗽𝗶𝗱𝗹𝘆. 𝗛𝗼𝘄? A great core growth loop - readers become writers. This has led to a strong supply growth, but lagging demand growth. Summary - Growth loops are NOT moats. Two other examples I can think of, with similar effects are services like Paytm, Eventbrite. p.s - this is not the ONLY reason though. One more I can think of - GMV skewed by top writers who have stronger bargaining power, which puts pressure on take rates. I'm sure there are others.

[Case Fridays] "𝘙𝘦𝘢𝘭𝘪𝘻𝘪𝘯𝘨 𝘸𝘦 𝘸𝘦𝘳𝘦𝘯'𝘵 𝘢 𝘮𝘢𝘳𝘬𝘦𝘵𝘱𝘭𝘢𝘤𝘦 𝘸𝘢𝘴 𝘵𝘩𝘦 𝘣𝘦𝘴𝘵 𝘵𝘩𝘪𝘯𝘨 𝘵𝘩𝘢𝘵 𝘩𝘢𝘱𝘱𝘦𝘯𝘦𝘥 𝘵𝘰 𝘶𝘴" - Tal Raviv (PM Growth at Patreon) 𝗛𝗲𝗿𝗲'𝘀 𝘄𝗵𝘆: Patreon helps creators' monetise. Naturally, they attempted to build network effects - more creators, more audience and a highly defensible growth loop. But it was failing, because creators were leaving. Often creators joined Patreon without a substantial fan base, hoping to gain one. When that didn't materialise, they left the platform in a few months. 𝗪𝗵𝗮𝘁 𝗱𝗶𝗱 𝗣𝗮𝘁𝗿𝗲𝗼𝗻 𝗱𝗼? They moved away from away from simply connecting fans and creators. Instead, they focused on $1,000+ per month creators, referred to as "$1K Creators,". They built a suite of tools for them, akin to a SaaS (Software as a Service) platform. Pricing changed from a flat 10% to a tiered structure. This lead to high retention on "mid-tail" creators. Additionally a virtuous 𝗴𝗿𝗼𝘄𝘁𝗵 𝗹𝗼𝗼𝗽 𝘀𝗲𝘁 𝗶𝘁 (and NOT network effects). As successful creators promoted to their fan base, more creators signed up. 𝗪𝗵𝗮𝘁'𝘀 𝘁𝗵𝗲 𝘁𝗮𝗸𝗲𝗮𝘄𝗮𝘆? Network effects is a macro loop. It can amplify good retention and underlying growth loops. However, thinking that "stronger network effects" will improve retention is a flawed strategy. p. s- This one question is the tell - You've cracked supply, but is there demand? No ? You're not a marketplace. Not yet.

What one timeless principle does the Grand Opera, Tulip bulbs and Crypto currency have in common? Here it is: 𝗧𝗵𝗲 𝗽𝗿𝗶𝗻𝗰𝗶𝗽𝗹𝗲 𝗼𝗳 𝘀𝗼𝗰𝗶𝗮𝗹 𝗽𝗿𝗼𝗼𝗳𝗶𝗻𝗴: In 1820, pair of opera loving businessmen started a curious phenomenon. The launched a unique product- "applause" (or claques). Sauton and Porcher, under the title L’Assurance des Succès Dramatiques, leased themselves and their employees to singers and opera managers who wished for an appreciative audience response. So effective were they in stimulating genuine audience reaction with their rigged reactions that before long claques became a tradition throughout the world of opera. Leader of the claque—chef de claque—became a respected status. As music historian Robert Sabin notes, “𝘉𝘺 𝟣𝟪𝟥𝟢 𝘵𝘩𝘦 𝘤𝘭𝘢𝘲𝘶𝘦 𝘸𝘢𝘴 𝘢 𝘧𝘶𝘭𝘭-𝘣𝘭𝘰𝘰𝘮 𝘪𝘯𝘴𝘵𝘪𝘵𝘶𝘵𝘪𝘰𝘯, 𝘤𝘰𝘭𝘭𝘦𝘤𝘵𝘪𝘯𝘨 𝘣𝘺 𝘥𝘢𝘺, 𝘢𝘱𝘱𝘭𝘢𝘶𝘥𝘪𝘯𝘨 𝘣𝘺 𝘯𝘪𝘨𝘩𝘵, 𝘢𝘭𝘭 𝘪𝘯 𝘵𝘩𝘦 𝘩𝘰𝘯𝘦𝘴𝘵 𝘰𝘱𝘦𝘯. . . ." 𝗟𝗲𝘁'𝘀 𝗮𝗱𝗱 𝘀𝗼𝗺𝗲 𝟭𝟳𝘁𝗵 𝗰𝗲𝗻𝘁𝘂𝗿𝘆 𝗻𝗮𝘂𝗻𝗰𝗲: Earlier in 17th century Netherland, the 'Tulip mania' began innocuously. Tulips, newly arrived from the Ottoman Empire, became symbols of status among the Dutch elite. But soon, it spiralled into a frenzy. The prices of tulip bulbs skyrocketed, driven not by their intrinsic value, but by a collective belief in their worth as an investment. People from all walks of life, from artisans to wealthy merchants, speculated on tulip bulbs. The peak of the mania was surreal; bulbs were worth as much as houses! But as quickly as it escalated, the bubble burst. Prices plummeted, leaving many in financial ruin. 𝟮𝟭𝘀𝘁 𝗰𝗲𝗻𝘁𝘂𝗿𝘆 "𝗰𝗿𝘆𝗽𝘁𝗼 𝗺𝗮𝗻𝗶𝗮" - sounds familiar ?! Any tips on coping with this?

[Monday Morning Inspiration] No better way to pay homage to Charlie Munger, than to learn from his life. This one story resonated deeply with me. Here it is: One of the most challenging experiences for Charlie was losing one eye to cataract when he was just a child. This loss was both physically difficult (limited his physical activity) and emotionally challenging. Another profound loss young Charlie faced was the death of his father. 𝗛𝗼𝘄 𝗱𝗶𝗱 𝗵𝗲 𝗰𝗼𝗽𝗲? Munger turned to books. It was a source of comfort and learning - a habit that he maintained throughout his life. This self-directed learning fostered a deep-seated love for knowledge. Munger often credits this period of intense reading and self-education for developing the broad perspective that later became a hallmark of his investment and his wisdom. Now put's this 𝗾𝘂𝗼𝘁𝗲 from him in context: "𝘐 𝘤𝘰𝘯𝘴𝘵𝘢𝘯𝘵𝘭𝘺 𝘴𝘦𝘦 𝘱𝘦𝘰𝘱𝘭𝘦 𝘳𝘪𝘴𝘦 𝘪𝘯 𝘭𝘪𝘧𝘦 𝘸𝘩𝘰 𝘢𝘳𝘦 𝘯𝘰𝘵 𝘵𝘩𝘦 𝘴𝘮𝘢𝘳𝘵𝘦𝘴𝘵, 𝘴𝘰𝘮𝘦𝘵𝘪𝘮𝘦𝘴 𝘯𝘰𝘵 𝘦𝘷𝘦𝘯 𝘵𝘩𝘦 𝘮𝘰𝘴𝘵 𝘥𝘪𝘭𝘪𝘨𝘦𝘯𝘵, 𝘣𝘶𝘵 𝘵𝘩𝘦𝘺 𝘢𝘳𝘦 𝘭𝘦𝘢𝘳𝘯𝘪𝘯𝘨 𝘮𝘢𝘤𝘩𝘪𝘯𝘦𝘴. 𝘛𝘩𝘦𝘺 𝘨𝘰 𝘵𝘰 𝘣𝘦𝘥 𝘦𝘷𝘦𝘳𝘺 𝘯𝘪𝘨𝘩𝘵 𝘢 𝘭𝘪𝘵𝘵𝘭𝘦 𝘸𝘪𝘴𝘦𝘳 𝘵𝘩𝘢𝘯 𝘵𝘩𝘦𝘺 𝘸𝘦𝘳𝘦 𝘸𝘩𝘦𝘯 𝘵𝘩𝘦𝘺 𝘨𝘰𝘵 𝘶𝘱 𝘢𝘯𝘥 𝘣𝘰𝘺 𝘥𝘰𝘦𝘴 𝘵𝘩𝘢𝘵 𝘩𝘦𝘭𝘱..." Thank you Charlie. What's your favourite quote or story or lesson from his life? p.s - Here's a quote from him that didn't age well though: "𝘈𝘭𝘭 𝘐 𝘸𝘢𝘯𝘵 𝘵𝘰 𝘬𝘯𝘰𝘸 𝘪𝘴 𝘸𝘩𝘦𝘳𝘦 𝘐'𝘮 𝘨𝘰𝘪𝘯𝘨 𝘵𝘰 𝘥𝘪𝘦, 𝘴𝘰 𝘐'𝘭𝘭 𝘯𝘦𝘷𝘦𝘳 𝘨𝘰 𝘵𝘩𝘦𝘳𝘦."

Good leadership is not a popularity contest. However, 𝗖𝗵𝗮𝗿𝗶𝘀𝗺𝗮 𝗺𝗼𝘃𝗲𝘀 𝗽𝗲𝗼𝗽𝗹𝗲 "𝘊𝘩𝘢𝘳𝘪𝘴𝘮𝘢 𝘪𝘴 𝘢 𝘨𝘭𝘪𝘯𝘵 𝘪𝘯 𝘱𝘦𝘰𝘱𝘭𝘦 𝘵𝘩𝘢𝘵 𝘤𝘢𝘯𝘯𝘰𝘵 𝘣𝘦 𝘣𝘰𝘶𝘨𝘩𝘵, 𝘪𝘵 𝘪𝘴 𝘪𝘯𝘵𝘢𝘯𝘨𝘪𝘣𝘭𝘦 𝘦𝘯𝘦𝘳𝘨𝘺 𝘸𝘪𝘵𝘩 𝘵𝘢𝘯𝘨𝘪𝘣𝘭𝘦 𝘦𝘧𝘧𝘦𝘤𝘵𝘴." —Marianne Williamson. 𝗔𝗹𝘁𝗵𝗼𝘂𝗴𝗵 𝗺𝗼𝘃𝗶𝗻𝗴 𝗽𝗲𝗼𝗽𝗹𝗲 𝗶𝘀𝗻'𝘁 𝘁𝗵𝗲 𝗽𝗼𝗶𝗻𝘁 "𝘊𝘩𝘢𝘳𝘪𝘴𝘮𝘢 𝘸𝘪𝘵𝘩𝘰𝘶𝘵 𝘤𝘩𝘢𝘳𝘢𝘤𝘵𝘦𝘳 𝘪𝘴 𝘱𝘰𝘴𝘵𝘱𝘰𝘯𝘦𝘥 𝘤𝘢𝘭𝘢𝘮𝘪𝘵𝘺." — Peter Ajisafe 𝗬𝗲𝘁, 𝗮𝗹𝗶𝗴𝗻𝗺𝗲𝗻𝘁 𝗺𝗮𝘁𝘁𝗲𝗿𝘀 𝗮𝘀 𝗺𝘂𝗰𝗵 𝗮𝘀 𝗯𝗲𝗶𝗻𝗴 𝗿𝗶𝗴𝗵𝘁 "𝘐𝘧 𝘦𝘷𝘦𝘳𝘺𝘰𝘯𝘦 𝘪𝘴 𝘮𝘰𝘷𝘪𝘯𝘨 𝘧𝘰𝘳𝘸𝘢𝘳𝘥 𝘵𝘰𝘨𝘦𝘵𝘩𝘦𝘳, 𝘵𝘩𝘦𝘯 𝘴𝘶𝘤𝘤𝘦𝘴𝘴 𝘵𝘢𝘬𝘦𝘴 𝘤𝘢𝘳𝘦 𝘰𝘧 𝘪𝘵𝘴𝘦𝘭𝘧." — Henry Ford 𝗛𝗼𝘄 𝗱𝗼 𝘄𝗲 𝗸𝗻𝗼𝘄 𝗶𝗳 𝗶𝘁 𝗶𝘀 𝗪𝗶𝘀𝗱𝗼𝗺 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗿𝗼𝘄𝗱 𝗼𝗿 𝗺𝗮𝗱𝗻𝗲𝘀𝘀? " G𝘳𝘰𝘶𝘱𝘵𝘩𝘪𝘯𝘬 [...] 𝘸𝘰𝘳𝘬𝘴 𝘯𝘰𝘵 𝘴𝘰 𝘮𝘶𝘤𝘩 𝘣𝘺 𝘤𝘦𝘯𝘴𝘰𝘳𝘪𝘯𝘨 𝘥𝘪𝘴𝘴𝘦𝘯𝘵 𝘢𝘴 𝘣𝘺 𝘮𝘢𝘬𝘪𝘯𝘨 𝘥𝘪𝘴𝘴𝘦𝘯𝘵 𝘴𝘦𝘦𝘮 𝘴𝘰𝘮𝘦𝘩𝘰𝘸 𝘪𝘮𝘱𝘳𝘰𝘣𝘢𝘣𝘭𝘦." — James Surowiecki. Popularity is a tool, so is decisiveness. p.s - Elon Musk was wildly popular before he bought twitter.