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The “hard tech” in AI are the LLMs available for rent from OpenAI, Anthropic, Cohere, and others, or available as open source with Llama, Bloom, Mistral and others. The hard-tech is a level playing field; startups do not have an advantage over incumbents.

There can be differentiation in prompt engineering, problem break-down, use of vector databases, and more. However, this isn’t something where startups have an edge, such as being willing to take more risks or be more creative. At best, it is neutral; certainly not an advantage.

This doesn’t mean it’s impossible for a startup to succeed; surely many will. It means that you need a strategy that creates differentiation and distribution, even more quickly and dramatically than is normally required

Whether you’re training existing models, developing models from scratch, or simply testing theories, high-quality data is crucial. Incumbents have the data because they have the customers. They can immediately leverage customers’ data to train models and tune algorithms, so long as they maintain secrecy and privacy.

Intercom’s AI strategy is built on the foundation of hundreds of millions of customer interactions. This gives them an advantage over a newcomer developing a chatbot from scratch. Similarly, Google has an advantage in AI video because they own the entire YouTube library. GitHub has an advantage with Copilot because they trained their AI on their vast code repository (including changes, with human-written explanations of the changes).

While there will always be individuals preferring the startup environment, the allure of working on AI at an incumbent is equally strong for many, especially pure computer and data scientsts who, more than anything else, want to work on interesting AI projects. They get to work in the code, with a large budget, with all the data, with above-market compensation, and a built-in large customer base that will enjoy the fruits of their labor, all without having to do sales, marketing, tech support, accounting, raising money, or anything else that isn’t the pure joy of writing interesting code. This is heaven for many.

A chatbot is in the chatbot market, and an SEO tool is in the SEO market. Adding AI to those tools is obviously a good idea; indeed companies who fail to add AI will likely become irrelevant in the long run. Thus we see that “AI” is a new tool for developing within existing markets, not itself a new market (except for actual hard-tech AI companies).

AI is in the solution-space, not the problem-space, as we say in product management. The customer problem you’re solving is still the same as ever. The problem a chatbot is solving is the same as ever: Talk to customers 24/7 in any language. AI enables completely new solutions that none of us were imagining a few years ago; that’s what’s so exciting and truly transformative. However, the customer problems remain the same, even though the solutions are different

Companies will pay more for chatbots where the AI is excellent, more support contacts are deferred from reaching a human, more languages are supported, and more kinds of questions can be answered, so existing chatbot customers might pay more, which grows the market. Furthermore, some companies who previously (rightly) saw chatbots as a terrible customer experience, will change their mind with sufficiently good AI, and will enter the chatbot market, which again grows that market.

the right way to analyze this is not to say “the AI market is big and growing” but rather: “Here is how AI will transform this existing market.” And then: “Here’s how we fit into that growth.”

Building something valuable is no longer about validating a novel idea as fast as possible. Instead, the modern MVP exercise is about building a version of an idea that is different from and better than what exists today. Most of us aren’t building for a net-new market. Rather, we’re finding opportunities to improve existing categories. We need an MVP concept that helps founders and product leaders iterate on their early ideas to compete in an existing market.

It’s not good enough to be first with an idea. You have to out-execute from day 1.

The MVP as a practice of building a hacky product as quickly and cheaply as possible to validate the product does no longer work. Many product categories are already saturated with a variety of alternatives, and to truly test the viability of any new idea you need to build something that is substantially better.

Airbnb wanted to build a service that relied on people being comfortable spending the night at a stranger’s house. When they started in 2009, it wasn’t obvious if people were ready for this. Today, it’s obvious that it works, so they wouldn’t need to validate the idea. A similar analogy works for Lyft when they started exploring ridesharing as a concept.

Today, the MVP is no longer about validating a novel idea as quickly as possible. Rather, its aim is to create a compelling product that draws in the early users in order to gather feedback that you then use to sharpen the product into the best version of many.

If you look at successful companies that have IPO'd in the recent years–Zoom, Slack, TikTok, Snowflake, Robinhood–you see examples not of novel ideas, but of these highly-refined ideas.Since many of us are building in a crowded market, the bar for a competitive, public-ready MVP is much higher than the MVP for a novel idea, since users have options. To get to this high bar, we have to spend more time refining the initial version.

The original MVP idea can still work if you’re in the fortunate position of creating a wholly new category of product or work with new technology platforms, but that becomes rarer and rarer as time goes on.

Let’s jump over the regular startup journey that you might take today when building a new product:You start with the idea on how you want to improve on existing products in a category.You build your first prototype.You iterate with your vision and based on feedback from early users.You get an inkling of product market fit and traction.Optional: You start fundraising (with demonstrable traction).Optional: You scale your team, improve the product, and go to market.

In today’s landscape, you’re likely competing against many other products. To win, you have to build a product that provides more value to your users than your competition does.To be able to do this with limited resources, you must scope down your audience (and thus your ambitions) as much as possible to make competing easier, and aim to solve the problems of specific people.

When we started Linear, our vision was to become the standard of how software is built. This is not really something you can expect to do during your early startup journey, let alone in an MVP. But you should demonstrate you have the ability to achieve your bigger vision via your early bets. We chose to do this by focusing on IC’s at small startups. We started with the smallest atomic unit of work they actually needed help with: issue tracking.

We knew we wanted our product to demonstrate three values:It should be as fast as possible (local data storage, no page reloads, available offline).It should be modern (keyboard shortcuts, command menu, contextual menus).It should be multiplayer (real-time sync and teammates presence).

Remember, you’re likely not building a revolutionary or novel product. You’re unlikely to go viral with your announcement, so you need a network of people who understand the “why” behind your product to help spread the word to drive people to sign up. Any product category has many people who are frustrated with the existing tools or ways of working. Ideally you find and are able to reach out to those people.

Once you have a bunch of people on your waitlist, you need to invite the right users at each stage of your iteration. You want to invite people who are likely to be happy with the limited set of features you’ve built so far. Otherwise, they’ll churn straight away and you’ll learn nothing.

To recap:Narrow down your initial audience and build for them: Figure out who you're building the product for and make the target audience as small as possible before expanding.Build and leverage your waitlist: The waitlist is the grinding stone with which you can sharpen your idea into something truly valuable that will succeed at market, so use it effectively.Trust your gut and validate demand with your users: Talk, talk, talk to your users and find out how invested in the product they are (and if they’d be willing to pay)

That other people tried your idea without success could imply it’s a bad idea or simply that the timing or execution was wrong. Distinguishing between these cases is hard and where you should apply serious thought. If you think your competitors executed poorly, you should develop a theory of what they did wrong and how you’ll do better.

If you think your competitor’s timing was off, you should have a thesis about what’s changed to make now the right time. These changes could come in a variety of forms: for example, it could be that users have become more sophisticated, the prices of key inputs have dropped, or that prerequisite technologies have become widely adopted.

Startups are primarly competing against indifference, lack of awareness, and lack of understanding — not other startups.

There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.

Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose “portals” and had de-prioritized search (Yahoo even outsourced their search technology).

Imagine, for example, that you were thinking of starting Netflix back when it was founded in 1997. How would content providers, distribution channels, and competitors respond? How soon would technology develop to open a hidden door and let you distribute online instead of by mail? Or consider Dropbox in 2007. Dozens of cloud storage companies had been started before. What mistakes had they made? How would incumbents like Amazon and Google respond? How would new platforms like mobile affect you?

When you’re starting out, it’s impossible to completely map out the idea maze. But there are some places you can look for help: History. If your idea has been tried before (and almost all good ideas have), you should figure out what the previous attempts did right and wrong. A lot of this knowledge exists only in the brains of practitioners, which is one of many reasons why “stealth mode” is a bad idea. The benefits of learning about the maze generally far outweigh the risks of having your idea stolen. Analogy. You can also build the maze by analogy to similar businesses. If you are building a “peer economy” company it can be useful to look at what Airbnb did right. If you are building a marketplace you should understand eBay’s beginnings. Etc.

Muse as a brand and a product represented something aspirational. People want to be deeper thinkers, to be more strategic, and to use cool, status-quo challenging software made by small passionate teams. These kinds of aspirations are easier to indulge in times of plenty. But once you're getting laid off from your high-paying tech job, or struggling to raise your next financing round, or scrambling to protect your kids' college fund from runaway inflation and uncertain markets... I guess you don't have time to be excited about cool demos on Twitter and thoughtful podcasts on product design.

I’d speculate that another factor is the half-life of cool new productivity software. Evernote, Slack, Notion, Roam, Craft, and many others seem to get pretty far on community excitement for their first few years. After that, I think you have to be left with software that serves a deep and hard-to-replace purpose in people’s lives. Muse got there for a few thousand people, but the economics of prosumer software means that just isn’t enough. You need tens of thousands, hundreds of thousands, to make the cost of development sustainable.

We envisioned Muse as the perfect combination of the freeform elements of a whiteboard, the structured text-heavy style of Notion or Google Docs, and the sense of place you get from a “virtual office” ala group chat. As a way to asynchronously trade ideas and inspiration, sketch out project ideas, and explore possibilities, the multiplayer Muse experience is, in my honest opinion, unparalleled for small creative teams working remotely.

But friction began almost immediately. The team lead or organizer was usually the one bringing Muse to the team, and they were already a fan of its approach. But the other team members are generally a little annoyed to have to learn any new tool, and Muse’s steeper learning curve only made that worse. Those team members would push the problem back to the team lead, treating them as customer support (rather than contacting us directly for help). The team lead often felt like too much of the burden of pushing Muse adoption was on their shoulders. This was in addition to the obvious product gaps, like: no support for the web or Windows; minimal or no integration with other key tools like Notion and Google Docs; and no permissions or support for multiple workspaces. Had we raised $10M back during the cash party of 2020–2021, we could have hired the 15+ person team that would have been necessary to build all of that. But with only seven people (we had added two more people to the team in 2021–2022), it just wasn’t feasible.

We neither focused on a particular vertical (academics, designers, authors...) or a narrow use case (PDF reading/annotation, collaborative whiteboarding, design sketching...). That meant we were always spread pretty thin in terms of feature development, and marketing was difficult even over and above the problem of explaining canvas software and digital thinking tools.

being general-purpose was in its blood from birth. Part of it was maker's hubris: don't we always dream of general-purpose tools that will be everything to everyone? And part of it was that it's truly the case that Muse excels at the ability to combine together so many different related knowledge tasks and media types into a single, minimal, powerful canvas. Not sure what I would do differently here, even with the benefit of hindsight.

Muse built a lot of its reputation on being principled, but we were maybe too cautious to do the mercenary things that help you succeed. A good example here is asking users for ratings; I felt like this was not to user benefit and distracting when the user is trying to use your app. Our App Store rating was on the low side (~3.9 stars) for most of our existence. When we finally added the standard prompt-for-rating dialog, it instantly shot up to ~4.7 stars. This was a small example of being too principled about doing good for the user, and not thinking about what would benefit our business.

Growing the team slowly was a delight. At several previous ventures, I've onboard people in the hiring-is-job-one environment of a growth startup. At Muse, we started with three founders and then hired roughly one person per year. This was absolutely fantastic for being able to really take our time to find the perfect person for the role, and then for that person to have tons of time to onboard and find their footing on the team before anyone new showed up. The resulting team was the best I've ever worked on, with minimal deadweight or emotional baggage.

ultimately your product does have to have some web presence. My biggest regret is not building a simple share-to-web function early on, which could have created some virality and a great deal of utility for users as well.

In terms of development speed, quality of the resulting product, hardware integration, and a million other things: native app development wins.

After decades working in product development, being on the marketing/brand/growth/storytelling side was a huge personal challenge for me. But I feel like I managed to grow into the role and find my own approach (podcasting, demo videos, etc) to create a beacon to attract potential customers to our product.

when it comes time for an individual or a team to sit down and sketch out the beginnings of a new business, a new book, a new piece of art—this almost never happens at a computer. Or if it does, it’s a cobbled-together collection of tools like Google Docs and Zoom which aren’t really made for this critical part of the creative lifecycle.

any given business will find a small number of highly-effective channels, and the rest don't matter. For Heroku, that was attending developer conferences and getting blog posts on Hacker News. For another business it might be YouTube influencer sponsorships and print ads in a niche magazine. So I set about systematically testing many channels.

The most powerful thing a product can do is give its user a premise.1 A premise is the foundational belief that shapes a user’s behavior. A premise can normalize actions that people otherwise might not take, held back by some existing norm

AirBnb. The premise: It’s ok to stay in strangers’ homes.

the idea of staying in strangers’ homes for short stays was doubted even by the founders. Crashing in someone’s spare room wasn’t unheard of, but it might be seen as weird, taboo, or even dangerous.

Bumble. The premise: It’s ok for women to ask men out.

The best way to follow through on a premise is to make it the core feature of the app. Bumble did, requiring that women make the first move on the app. A woman would be presented with a list of her matches and would have to make the first "move" before men could reply. This of course became a powerful differentiating feature and marketing hook.

Substack. The premise: It’s ok to charge for your writing.

Substack's premise aimed to normalize the hardest part of internet writing: getting paid. They aimed to show that independent authors could succeed at making a living (and subscription models aligned with this ethos). In doing so, Substack also made the less-hard parts of internet writing even easier. You could start a newsletter and keep it free until you felt confident about going paid. This not only normalized the end goal but also lowered the barrier to getting started.

A premise is valuable not only for “products,” but also for experiences.As I recently shouted, people still underestimate the power of giving a social event a premise. Hackathons, housewarmings, happy hours and the like are hangouts with a narrative. They have a good premise — a specific context that makes it more comfortable to do something that can be hard: socialize. (Side note: some of the best tv series and films are built on great premises.)

Premises work best on end consumers, prosumers, small business freelancers, and the like. Many two-sided marketplaces serving two of these stakeholder groups tend to have a good premise. For example, Kickstarter's premise for the creator might be: It’s ok to ask for money before you've built a product.

Hassabis pointed to the example of AlphaFold, DeepMind’s machine-learning system that had predicted the structures of 200mn proteins, creating an invaluable resource for medical researchers. Previously, it had taken one PhD student up to five years to model just one protein structure. DeepMind calculated that AlphaFold had therefore saved the equivalent of almost 1bn years of research time.

DeepMind, and others, are also using AI to create new materials, discover new drugs, solve mathematical conjectures, forecast the weather more accurately and improve the efficiency of experimental nuclear fusion reactors. Researchers have been using AI to expand emerging scientific fields, such as bioacoustics, that could one day enable us to understand and communicate with other species, such as whales, elephants and bats.

One key problem across the apps is the slog of self-presentation, or “impression management,” said Rachel Katz, a digital media sociologist who studies online dating at the University of Salford in the UK. “An important aspect of it is knowing your audience,” Katz said. On dating apps, you don’t know who exactly you’re presenting yourself to when picking a profile picture or composing your bio. You also don’t have physical cues that can help you adjust that self-presentation. “You’re trying to come up with something that’s generally appealing to people, but it can’t be too weird. It can’t be too unique,” said Bryce. “That’s partly why it’s exhausting,” Katz explains, “because it’s this constant labor. ... You’re not really sure of how to do it, you can’t just fit into a comfortable social role.”

When dating apps are not delivering on compatibility, Dean said, they are leading you to “believe that there’s a forever volume of people you can always like.”

Ury rejects the notion that apps should be asking people for more about themselves in writing or through extensive questionnaires. Users may match up on paper but end up disappointed in real life. “I would have rather that people understand that sooner by meeting up earlier,” she said. “Use the app as a matchmaker who gives you the matches — and then, as quickly as possible, the two of you should be chatting live to see if you are a match,” she said. “We found that three days of chatting is the sweet spot for scheduling a date.”

Despite its direct affiliation, Stripe Press provokes a distinctive, emotional feeling. It’s an example of how form affects soft power. By focusing on actual, physical books — and giving them a loving, literary treatment — Stripe shows this project is firmly outside the world of “marketing.” Rather, this is a place for Stripe to demonstrate its ideological affinities and reinforce its philosophical positioning. The affection this project has earned suggests it has found distribution.

Most obviously, they can invest in it via in-house initiatives. Even moderately sized tech companies have large marketing teams capable of running interesting experiments, especially if augmented with external talent. Business banking platform Mercury has made strides in this area over the past couple of years, launching a glossy, thoughtful publication named Meridian.

While there were undoubtedly people who came in for the food, worked 3 hours a day, and enjoyed their early retirements, all the people I met were earnest, hard-working, and wanted to do great work. What beat them down were the gauntlet of reviews, the frequent re-orgs, the institutional scar tissue from past failures, and the complexity of doing even simple things on the world stage. Startups can afford to ignore many concerns, Googlers rarely can. What also got in the way were the people themselves - all the smart people who could argue against anything but not for something, all the leaders who lacked the courage to speak the uncomfortable truth, and all the people that were hired without a clear project to work on, but must still be retained through promotion-worthy made-up work.

Another blocker to progress that I saw up close was the imbalance of a top heavy team. A team with multiple successful co-founders and 10-20 year Google veterans might sound like a recipe for great things, but it’s also a recipe for gridlock. This structure might work if there are multiple areas to explore, clear goals, and strong autonomy to pursue those paths.

Good teams regularly pay down debt by cleaning things up on quieter days. Just as real is process debt. A review added because of a launch gone wrong. A new legal check to guard against possible litigation. A section added to a document template. Layers accumulate over the years until you end up unable to release a new feature for months after it's ready because it's stuck between reviews, with an unclear path out.

Is the founder focused on a market opportunity, or a way that they want to change and improve our daily lives? It’s the difference between pitching the tool vs. the benefit. The best founders are always focused on the benefit—they’re putting themselves in the shoes of the consumer, instead of just building something because they can.

On how to identify a winning founder: “Great, thoughtful design. Great design tells you if the founder is focused, has good taste, understands the simplicity required to connect with the average consumer, and has a strong, specific point of view on what they’re building. It has always been my barometer. Great design is harder to identify than it sounds, though.”

Even Obsidian’s most dedicated users don’t expect it to take on Notion and other note-taking juggernauts. They see Obsidian as having a different audience with different values.

Obsidian is on some ways the opposite of a quintessential MacStories app—the site often spotlights apps that are tailored exclusively for Apple platforms, whereas Obsidian is built on a web-based technology called Electron—but Voorhees says it’s his favorite writing tool regardless.

We still believe that there will be a separation between the “application layer” companies and foundation model providers, with model companies specializing in scale and research and application layer companies specializing in product and UI. In reality, that separation hasn’t cleanly happened yet. In fact, the most successful user-facing applications out of the gate have been vertically integrated.

We predicted that the best generative AI companies could generate a sustainable competitive advantage through a data flywheel: more usage → more data → better model → more usage. While this is still somewhat true, especially in domains with very specialized and hard-to-get data, the “data moats” are on shaky ground: the data that application companies generate does not create an insurmountable moat, and the next generations of foundation models may very well obliterate any data moats that startups generate. Rather, workflows and user networks seem to be creating more durable sources of competitive advantage.

Some of the best consumer companies have 60-65% DAU/MAU; WhatsApp’s is 85%. By contrast, generative AI apps have a median of 14% (with the notable exception of Character and the “AI companionship” category). This means that users are not finding enough value in Generative AI products to use them every day yet.

generative AI’s biggest problem is not finding use cases or demand or distribution, it is proving value. As our colleague David Cahn writes, “the $200B question is: What are you going to use all this infrastructure to do? How is it going to change people’s lives?”

There are four signs your idea has legs:People pay you money: Several people start to pay for your product, ideally people you don’t have a direct connection toContinued usage: People continue to use your prototype product, even if it’s hackyStrong emotion: You’re hearing hatred for the incumbents (i.e. pain) or a deep and strong emotional reaction to your idea (i.e. pull)Cold inbound interest: You’re seeing cold inbound interest in your product

Every prosumer collaboration product, including Figma, Notion, Coda, Airtable, Miro, and Slack, spent three to four years wandering in the dark until they stumbled on something that clicked.