Latest / iwon™ podcast with Michael J Thomas / AI + What Every Founder Needs to Know Now | iwon podcast | Episode 13

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AI + What Every Founder Needs to Know Now | iwon podcast | Episode 13 · iwon™ podcast with Michael J Thomas

0:00
If you're a founder and you're trying to build something amazing, whatever you're doing, odds are you don't have a lot of time to keep up with everything that's going on.
0:08
My name is Michael and I'm here to help you get up to date with absolutely everything.
0:13
After all, there's a ridiculous amount going on in tech at the moment, and some of it sounds absolutely insane.
0:18
As you will also know, many AI companies are raising huge amounts of money.
0:23
And believe it or not, they're actually starting to generate some very real money.
0:27
Two at the same time, the European Central bank is asking the big question on everyone's minds.
0:33
What we're all wondering Is this going to work exactly as it is, or are we heading towards another dot com style bubble?
0:40
Even though the UK has left the eu, it can still affect any company.
0:46
If a European customer buys your software, your product might also be built around one of the best AI models in the world.
0:55
But what happens to your company if that provider changes, the price changes, the rules are suddenly whatever reason, you cannot use it.
1:03
And somehow three founders in the mid-20s looked at Nvidia and thought, yeah, so what does that actually mean for you?
1:13
That's the thing I care about.
1:14
Because whether you're a founder or CEO in the us, the uk, Europe, or you're listening in Asia or somewhere else entirely, your customers are global, your technology is global, your competitors are global.
1:26
So something that happens in Brussels, Washington, London or Silicon Valley can suddenly affect your product, your customers, or the way you make money.
1:35
You probably haven't got three hours every single morning to work out what is going on, what matters and what's just Norse.
1:43
So think of this as you and I having a coffee, going through a reliable services, no bs.
1:48
I'll give you my take and why I think it matters to use upon versus the CEO.
1:52
I digest the news, go back to the original sources and try to answer one simple question for you.
1:58
So what does this actually tell us about building and growing your company?
2:03
I'll do the digging, you make the decisions.
2:06
I speak to founders constantly through Ione and I've also spent the last 15 years helping tech companies and software companies grow through my consulting.
2:17
So these aren't theoretical questions to me.
2:20
They're the kinds of things that founders and CEOs ask me all the time privately.
2:26
And that's where I started Ione in the first place.
2:28
Because I know that most business podcasts give you just a published ending.
2:35
They're a bit bs.
2:36
The funding, the great the exit and the success story.
2:39
I want to share everything that happened in between.
2:43
Iowan stands for it was never an eye.
2:46
The more founders I speak to, the more questions they ask me.
2:49
What's happening with AI?
2:51
Should I be worried?
2:52
Should I raise?
2:54
Should I hire?
2:56
I have to keep up with this stuff anyway, so I thought, why not do some of the work for you and share it?
3:02
I'm not pretending I've got every answer.
3:04
I definitely haven't.
3:06
But what I can do is go back to the sources I trust and actually show you, work out what they're saying and give you mindset or limits.
3:15
If you want to read the original sources or watch any of the videos, I'll link them all the way.
3:21
Don't take my word for it.
3:23
Come read it.
3:24
All right, let's get you up to speed.
3:26
So I'm going to start with something I like to call the grips, the bad and the bloody complicated.
3:31
First up, AI Drew or Bubble.
3:34
Here's the question.
3:36
Can AI be completely transformational and still be massively overvalued?
3:43
The European Central bank published something with the title and on Doom, Rifle, enthusiasm or the very next.com bundle.
3:53
Let's try.
3:54
That's an interesting question because it isn't like someone like shouting, the AI bubble is about to burst.
4:03
We're talking about the European Central bank.
4:05
And the interesting thing is they're not actually saying AI is nonsense.
4:09
In fact, quite the opposite.
4:10
They're basically saying AI could genuinely change fundamentally huge parts of the economy, increase productivity, create enormous value, and yet we could also still be paying far too much for some of those companies today.
4:26
Both things can be true.
4:27
And I think that's the bit founders need to understand.
4:31
We have a tendency to talk in absolutes or about bubbles, as if the underlying technology must therefore have been nonsense.
4:39
But if you go back to the original.com period when I had hair, was the Internet nonsense?
4:44
Obviously not.
4:45
The Internet changed practically everything we do.
4:49
That didn't mean every single Internet company deserved the valuation that their investors gave it.
4:54
Maybe that's a more interesting question with aerial.
4:58
I think that debate is becoming increasingly pointless and it's certainly changing things for better and worse.
5:04
The better question is how much future success have we priced into all of this?
5:11
Because at almost exactly the same time, Reuters have been looking at interoper and what could eventually become an absolutely enormous ipo.
5:23
According to reporting in the source pack that I read, Anthropic's annual revenue run rate had reportedly $65 billion by the end of July.
5:33
That was apparently up from 47 billion in May and roughly just 9 in months ago.
5:41
So just stop and think about that.
5:43
Rate of growth and Royal separately reported forecast being considered of leaving out roughly 190 to $200 billion in annual revenue by 2018.
5:54
So when people are thinking about what anthropic could ultimately be worth as a tool and as a company, we've got two stories happening at exactly the same time.
6:05
The ECB effectively saying be careful.
6:09
Valuations are becoming very stretched when you think about on the stock market and on the other hand, this extraordinary revenue growth.
6:20
I just talked about saying, yeah, look how much money could be created here for these companies.
6:26
So which side is right?
6:28
I'm going to have to say potentially both.
6:31
First, AI companies are getting a lot of investment and they're starting to generate some very real money from it.
6:37
This isn't just type anymore.
6:38
Real companies are spending serious amounts of money on AI.
6:42
That doesn't automatically mean every AI company is worth whatever enormous value gets attached to.
6:50
If you're a founder, don't ask how do I make it sound like we're at the forefront of it all?
6:55
Before you do anything, ask where does AI genuinely make my product better?
7:01
Does it save my customers time?
7:03
Does it make them more money?
7:04
Reduce their cost?
7:05
Remove a painful bit of work?
7:07
Does it help them do something?
7:09
Maybe they couldn't be there before because eventually people will start to realize that there is a lot of hype up or 2 solving genuine problems.
7:19
That's the bit that people will pay for.
7:21
AI can be revolutionary and it festers instead of your timely carried web.
7:26
Both can be true.
7:27
We've seen it before.
7:28
And this actually reminds me of something from the episode with Sachin Goya where when he was on the podcast, he's somebody who's built a mysteriously high growth environment, Spanduel multiverse and now Clarity with one of his warnings was
7:45
about raising far too early, because raising money can feel like the goal, the validation.
7:51
But his point was rising too early can actually hurt you.
7:54
Also because you might be putting fuel into something before you've actually established that you have a real business that is worth growing.
8:03
And I think that's incredibly relevant to what's happening around AI.
8:07
Raising money is not the same thing as proving you've got a market and a value.
8:12
A good valuation is also not the same thing as a valuable business.
8:18
And hype definitely isn't the same thing as a proper business model.
8:23
If you want to do that full conversational session, I'll link that episode in the show.
8:27
Notes and stretching below.
8:29
Next, I want to dive into more about the EU and AI.
8:34
So here are the guidelines.
8:37
If you're a UK founder, you might hear EU AI act and think, by the way, I'm not in the EU anymore.
8:44
The UK has its own approach regulating AI.
8:48
Sort of.
8:49
They definitely got a ministry before every UK founder rolls their eyes and banks.
8:54
Lovely.
8:55
This doesn't apply to new work here in the us.
8:57
Not true.
8:58
Because if you're building something for customers who could buy from the European Union, you may still fall into parts of the EU rules.
9:08
And this is exactly why I'm including stories like this, because they get overlooked.
9:12
Some of you are in Britain, some of you might be in the eu, so you're more aware.
9:16
Some of you might be in America.
9:19
Nobody ever stops a company to say, I hope no one outside my country ever buys this.
9:23
You want to grow and grow, but particularly if you're trying to build an enterprise customer base.
9:29
Those customers could be from anywhere.
9:31
So something happening in Brussels, London or Silicon Valley could eventually become a real problem.
9:38
It could end up in your product roadmap, your sales process, or anywhere else.
9:44
That is why I think you should know more about Article 50 of the EU air.
9:49
Just be aware, because it started applying to companies on 2 August 2026 and the European Commission has published detailed guidance around its transparency requirements.
10:02
I'll share those links in the description.
10:04
But among other things, there are situations where people need to know they're interacting directly with an AI system rather than human.
10:11
There are also requirements about identifying certain AI generated or manipulated content, including areas like defects.
10:20
Now, I'm not a lawyer and I don't pretend to be, so please don't watch this, men.
10:24
Tell your legal team, Mike says this.
10:28
Don't do that.
10:29
If you think this might affect your product, speak to somebody who properly understands the legislation.
10:38
But there are two things here that I find really interesting as a founder.
10:42
Number one, AI legislation starting to roll out.
10:46
Number two, if you sell software to larger organizations, you're going to get asked questions.
10:54
New ones, such as what AI are you using?
10:56
What happens to your.
10:59
Where is the process?
11:00
Can we audit exactly what's happening?
11:03
What does the end user need to know?
11:06
And can generated material be identified?
11:09
What are the controls?
11:11
You see, those aren't just legal questions.
11:13
They will become sales questions.
11:15
They're procuring questions, they're product questions.
11:18
And what that means is that if you want to land a bigger customer, you need to know these things.
11:24
And then there's the second part, compliance actually become a competitive advantage.
11:29
Because if you're Microsoft, you're Google.
11:32
Odds are you have enormous teams of lawyers, security people, policy people, compliance people, whatever it is you need at that level.
11:40
But if you're six people sitting in an office somewhere trying to build something, another layer of regulation doesn't feel quite so trivial to you as a founder.
11:51
So there is a genuine tension there for me.
11:54
On one hand, regulation can protect customers.
11:57
It can also create trust.
11:59
It can force companies to behave better.
12:02
But every additional barrier also increases the cost of entry.
12:07
And when you increase the cost of entry, you potentially strengthen the businesses that are already inside it.
12:13
So I'm much less interested in is the EU AI act good or bad?
12:19
That's far too simplistic a view.
12:22
The more useful, harder question is, can you turn compliance into something customers actually choose you because of?
12:30
Can you say, no problem?
12:33
Here's exactly what our AI does.
12:35
Here's where your information goes.
12:37
Here's what happens if something goes wrong.
12:39
All of that stuff can become part of your site, so why should you care?
12:44
Because if you want bigger customers, they're going to ask questions about that.
12:51
They'll want to know, where does our data go?
12:55
Who can see it?
12:56
Can it be trusted?
12:58
What happens if something goes wrong?
13:00
You see, this isn't just a legal issue.
13:02
It can affect whether somebody buys for you.
13:04
And if you handle it better than any of your competitors, might even help you win.
13:09
On the podcast, Beth Dodson talked about this very thing.
13:13
Beth has spent years dealing with huge organizations.
13:19
She's currently the co founder of Hanzone, and before that she sold and exited a company that delivered software used around enormous projects, including NFL stadium bills.
13:30
For those of you who aren't familiar with the NFL, it's those big hundreds.
13:34
100 seat, 100,000 seat saves.
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One of the things I really liked in that conversation was her attitude towards all of the details.
13:43
You got to adopt the I's and cross the t's and protect your business.
13:46
That's going to become even more important as AI gets baked more into your software.
13:52
I'll link that episode down below as well, in case you want to have a look.
13:57
She shares so many useful tips for founders, so watch it.
14:02
Answering another question, what if your AI disappears?
14:05
Smart.
14:06
Well, what happens if the company behind your entire AI party of your product relies on the one you rely on?
14:14
Changes the rules, changes the price, changes the products?
14:18
Or what if you suddenly can't use it all?
14:21
The FC reported on this very thing.
14:25
The UK government has been urgently looking at what might happen if British companies and consumers are whilst access to the newest frontier models from American companies.
14:34
Whatever you think of the government level policies bring that right down to you.
14:38
At startup, imagine your entire product depends on one AI company.
14:44
Your workflows depend on it, your customers depend on it.
14:46
You spent months optimizing everything around it.
14:50
Your team has integrated its API everywhere, the output's fantastic, everything is lovely.
14:57
Then the price changes, the model, the terms, the access, maybe even regulation or any extreme situation.
15:09
Now you can't use it anymore.
15:11
What would happen to your company?
15:12
And that's the VIDAC era because founders have quite reasonably said should we build our own model to protect or use the companies building them 247 most startups you probably shouldn't.
15:26
It can be very expensive.
15:29
Just use the best tools available and think about it.
15:32
You should think about how you could switch provider.
15:35
How difficult would it be?
15:37
Which pieces of your product genuinely require one specific model?
15:42
And of course what happens if the provider depreciates the version that you built everything on?
15:48
How long would a migration or a fix take?
15:52
This came up in a really interesting way when I spoke to Hapsish Dakar from Pedagog.
15:57
He's not only built a large language model, he's also Pedagog is focused on educating people for the future.
16:04
The AI future.
16:05
We talked about the difference between Vibe coding and much more structured agentic engineering.
16:12
One principle he was very strong on was model agnosticism.
16:17
In simple English, don't build yourself into a corner where the entire system assumes one model will always be the answer.
16:26
Build systems that can work across things like ChatGPT, Gemini and whatever comes next.
16:32
That doesn't mean randomly swapping models every Wednesday.
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It means thinking structurally about that dependency.
16:39
I know it doesn't sound sexy, but I think it has become a much bigger strategic issue than it would have been even six months ago.
16:50
There's a huge difference between saying we use anthropic and if anthropic disappears tomorrow, our company stops functioning.
16:59
If I were investing in you, and I speak to a lot of VCs too, they wouldn't want to know exactly that if they were acquiring your company.
17:10
And I think increasingly enterprise customers will want to know that too.
17:14
So this FT story that I just shared and I will link to isn't really just about British AI policy, it's about properly planning your company.
17:22
In the AI era, single points of failure could feel completely harmless like that right up until the moment something went.
17:33
The second one is really simple.
17:35
Don't build a company that only works because of one other company.
17:39
You don't necessarily need to build your own AI either, but you do need to know what your backup plan is.
17:46
I'll put a link to Ax Issue's episode below as well, because if you're building with AI, that conversation is definitely worth listening to.
17:56
He's a really smart guy when it comes to AI.
17:59
He makes it all really simple and clear.
18:02
Now to another AI story you should consider.
18:08
AI could make your product better, but it could also make it worse.
18:14
That's the slightly uncomfortable SaaS story here.
18:19
API isn't just changing what software can do, it could change what customers pay for and what costs you to serve them.
18:29
The lovely thing about traditional SaaS in the old days was you build the software, someone logs in and someone else logs in some more people up.
18:37
You don't necessarily incur massive additional cost every single time someone signs on.
18:45
More seats equal more recurring revenue.
18:47
Happy days.
18:48
And yeah, it slightly complicates that.
18:51
And this article I'm just sharing McKinsey looked at how software pricing could change as AI starts performing more and more of the work itself.
19:02
The basic argument makes sense.
19:04
If software stops merely helping a person do a job and instead starts actually doing a larger and larger part of that job, why would the customer necessarily keep paying the same number of human seats?
19:17
Imagine like software sold into a finance department.
19:22
Say there's 100 people in that department.
19:23
Big finance department you charge per seat.
19:27
Suddenly with AI it means your department can perform the same amount of work in one seat that Thor would have required in the past.
19:36
Yes, that's an amazing productivity win for the customer.
19:39
But your revenue generating and addressable seat count just fell by 75%.
19:46
And that doesn't necessarily mean you're in trouble.
19:49
You might actually be creating much more value.
19:51
And more value equals better retention.
19:54
But perhaps the thing customers buy changes.
19:58
Maybe they hyper usage activity outputs completed work, revenue generated, money saved, risk removed.
20:06
Something a little bit closer to the outcome they're looking for.
20:10
There's another side to that though.
20:12
Your costs will change too, because AI isn't free.
20:16
Every time new customer's agent analyzes something, generates something, searches something, processes something thing or runs a workflow, somebody pays for it.
20:26
And that somebody probably is you.
20:29
So imagine a Customer pays you 100amonth per se and it costs you 25 lovely recurring revenue and great margins.
20:39
Except now with AI the usage is costing you 85.
20:45
You now are only making 15 and step 75, which means founders need to understand the usage career user Economics much more carefully who's profitable, which workflows are expensive, do you include usage, do you cap it, do you charge
21:04
extra?
21:04
Or do you build complicated tiers?
21:07
No, because ultimately there's the awkward bit.
21:12
You want to stop yourself from overspending, but your customer also wants a predictable price.
21:16
Both are completely reasonable points to come from.
21:19
So how do you build a pricing model in the AI era that is a win win for you?
21:26
I think we're going to see loads of experimentation here in the market.
21:30
So what should you do with that?
21:32
Work out what your customer is really paying you for.
21:35
Maybe a piece of work that's getting done, time saved, money made, that's where the value is.
21:40
And at the same time know what it actually costs you every time the AI does that piece of amazing work.
21:46
Because a product can be brilliant for the customer and still if you don't do it right, be a terrible business for you.
21:53
The numbers don't work.
21:55
Now if you're thinking about that before, your margins force easier.
21:59
Now I'd like to take you to a true underdog story.
22:02
An ambitious startup is taking on Nvidia head to head.
22:07
324 year olds and a bunch of others looked at one of the most powerful companies in the AI era and basically thought, yeah, well the Garrett absolutely love this story.
22:19
The company is called Etched.
22:21
The Wall Street Journal recorded that the AI chip startup is now valued at over $21 billion.
22:27
It has reportedly booked more than $1 billion from our and a lead investor in a new $700 million round of funding.
22:36
And about 15% of Edge, roughly 400 employees, came from Nvidia.
22:42
Now, I'm not going to pretend to be a semiconductor expert because I'm definitely not and I'm not qualified to tell you whether their architecture ultimately be Nvidia.
22:50
That's not actually the interesting part for me.
22:53
The interesting part for me is these are founders who looked at a market practically everyone else would describe as impossible and identified something changing underneath.
23:03
They're focusing heavily on something called inference.
23:08
In simple terms, it's not necessarily the gigantic job of training the model originally, but running the whole thing more efficiently once it exists.
23:18
So if the job changes, the hardware changes, and when the basis of competition changes, incumbents can become very vulnerable.
23:27
It's not because Nvidia are not an important company in the AI era.
23:31
Totally not.
23:33
As products develop, expectations change, value changes.
23:37
The same goes for chips.
23:40
Data centers want better and lower cost solutions.
23:44
And as we know with chips, Nvidia can't seem to come up with the demand either.
23:50
So why should you care?
23:51
The lesson isn't go and take on Nvidia.
23:53
The lesson is that big companies can look unbeatable until something shifts and the market changes.
24:00
That's when there's an opening for you.
24:02
So ask yourself some different questions.
24:04
Ask what is changing Reactor?
24:08
Is it the technology?
24:10
Customer behavior?
24:10
Pricing regulation?
24:12
The way the work gets done?
24:14
Don't try to become a slightly worse version of the biggest player in the market.
24:17
Look for what is changing.
24:20
Sachin and I talked about startups like this on the podcast.
24:24
We both thought of it like speed boats compared with oil tankers.
24:28
The big company has scale, resources, process, brand, existing customers, all of that.
24:34
But the small company can shift quickly, listen better, adapt more quickly, build better relationships with customers, and respond much more quickly if the market itself is changing.
24:45
Speed is everything.
24:48
Now let's test some of the strong advice that gets repeated over and over as if it's gospel, not what somebody said on LinkedIn.
24:57
What does the evidence actually say?
24:59
First factor fiction.
25:01
An MVP isn't enough to raise money anymore.
25:03
An MVP?
25:05
You probably know this.
25:07
The VCs don't tell that you've built an MVP.
25:10
You need clear ICPs.
25:12
You need exciting and realistic revenue projections.
25:15
You need retention to be bet.
25:19
Nobody funds ideas.
25:21
But it's certainly very rare anymore.
25:24
So the fact that fiction isn't MVP isn't enough.
25:28
I'm going to go with it depends because Stage matters enormous Cardi's latest precedent investment data says US startups on Friday raised $3.9 billion across more than 11,500 BC investments in Q2 of this year.
25:47
So clearly people are still investing early precede investments are still out there, but the market is changing.
25:55
If you move towards Series A or beyond, the evidence changes.
25:59
Investors start looking at things like how quickly ARR or annual recurring revenue is growing, how much money is left after you deliver the product, how profitable is it and how much does it cost to acquire a customer and
26:13
do this thing.
26:14
Also your burn rate is very important comparatively correct whether the whole thing is becoming more efficient or less.
26:23
Not just look everybody it works.
26:26
But look.
26:26
Customers buy it, they stay, some of them buy more from us and the economics make complete sense.
26:33
Non VP can help answer can we build this or envision this?
26:36
Series A requires and beyond to start answering some gas.
26:41
Can this become a seriously profitable business that can adapt when and if needed?
26:46
That's a very different question.
26:47
And this is where Christian's comments about funding early matters.
26:51
Again, money can allow you to scale, but if you haven't established what you're good at, money can also run out much faster than you think.
26:59
So my verdict is, you cannot raise without MVP as fiction.
27:03
Because in MVP alone, Chris, you're more ready, but also know where you're really at and what it is you're promising.
27:12
Factor fiction number two.
27:14
Solve your own problem is really bad startup advice.
27:18
Here many versions of this classic thing.
27:22
One side says, scratch your own itch, build something you desperately want to exist.
27:27
The other says, no advice your sample size of 1.
27:32
So which one's right?
27:33
I'd say solving your own problem is absolutely not a bad place to start.
27:37
You'll know the problem well, assuming, of course, that the problem represents a much bigger market than just you.
27:43
And that's the dangerous bit.
27:44
Product board is a great example of that.
27:47
His founder had lived the problem as a product leader.
27:50
He'd experienced teams losing focus, struggling to arrive.
27:54
Customers really wanted that frustration gave him the idea of a product board.
28:00
Your frustration alone, as I said, doesn't validate the market.
28:03
Other people do.
28:04
Will strangers talk to you about the problem in your industry?
28:08
Will they use a similar solution that they hate?
28:11
Will they actually change their behavior?
28:14
Are they enthusiastic about a solution?
28:17
So enthusiastic that will science something okay.
28:21
And will they stay around?
28:23
I think the sentence I'd remember is, your own problem can be a great starting point, but it cannot validate a whole market answer.
28:30
I think we massively underestimate the difference between these two statements.
28:35
Yeah, that's quite annoying.
28:36
And where do I sign them?
28:38
Pay?
28:39
They're not.
28:39
Same thing.
28:41
And I share this because I don't want you to listen to this and either build a product or new feature before you really know for sure people will value.
28:49
Ah, the next factor.
28:50
Fiction.
28:51
Founder, audiences.
28:53
Everything drives sales.
28:54
Building a bigger audience will drive sales.
28:56
I do that all the time.
28:59
This is a particularly dangerous one to talk about because I'm literally sitting here making content.
29:05
My audience is growing.
29:07
I host a podcast, I post on LinkedIn.
29:10
I now also create YouTube videos.
29:12
I obviously would like some of that to have commercial value at some point.
29:17
But does having a gigantic audience automatically create revenue?
29:22
Well, this is mostly fiction, because the more niche the audience in the beginning, the better in many ways.
29:29
Truthfully, a low percentage of your followers will become your paying customers.
29:33
So if you go wide, it's quite hard to be specific.
29:37
For them, audience size, that was almost meaningless, especially the way algorithms are structured.
29:42
Now, if the audience has no relationship with what you actually sell, it doesn't matter how big they are good.
29:49
Thought leadership can absolutely influence and help with buying decisions and LinkedIn Adam did some research that I'll share down below.
29:58
They found that buyers often consume content in more places as a part of evaluating vendors than they did before.
30:05
And those buyers coming across you, however, they do really do matter and they may never comment or interact with you.
30:13
So whether your audience is in finance, procurement, operations, legal, C suite people, often key stakeholders, never touch the software, but they can still be part of the deal.
30:27
So content can matter enormously.
30:29
The important question isn't how many followers have I got, it's am I building trust with the people who matter?
30:36
And where is your life?
30:38
100,000 followers consisting of the wrong audience.
30:42
People who may just enjoy your jokes.
30:45
They could theoretically produce zero pipeline for you, but you also never know who is paying attention.
30:52
2000 followers with 300 of them being potential buyers, partners or even investors could be a fantastic audience for your startup.
30:59
So I wouldn't optimize to go viral unless your product has a huge tenant, heavily addressable market.
31:08
Instead, optimize it for the right people.
31:11
Make useful things for people whose opinion matters to your business.
31:15
And actually that's probably what I'm trying to do with ion.
31:20
I'm not particularly interested in making content that goes viral, I just want it to be helpful.
31:25
I want you to finish an episode having learned something or thought about something new.
31:30
And when somebody gives you that much of their time, that means the world to me.
31:34
That's massive because it means the conversations are actually worth listening to for that.
31:39
And that was the goal from day one.
31:42
Useful conversations, real founders, the stuff that happened between the beginning and the success story.
31:48
And interestingly, that experience has also led us into helping other founders start conversations and podcasts that are on.
31:58
Because then properly podcast isn't just content, it can help build relationships, build trust.
32:05
But all of it only works if the thing is genuinely worth somebody's time.
32:12
Usefulness first.
32:13
Everything else comes afterwards.
32:16
Next factor Friction.
32:17
Always go niche with your tech business or SaaS.
32:22
People often say smaller niche software companies are always that are business or put another way because every company needs to be gigantic all in one platform.
32:33
Can you solve one horrible problem for one very specific customer and build something fantastic?
32:40
I know there simply isn't evidence that every single niche SaaS business will automatically win, meaning they get better retention or becomes a much better company.
32:51
That's too generic when it comes to advice for founders, but there are some fantastic vertical examples like Mango Events which I will share with you.
33:01
It focuses specifically on stones and spas.
33:04
And it is reportedly reached around 110% net revenue retention, while growing towards roughly $20 million in AR.
33:16
One success story doesn't create a universal rule, but the strategic logic is interesting.
33:23
A horizontal product says we can up any business.
33:27
Really good vertical product says we understand exactly how your weird wonderful world works.
33:35
That means the terminology, the workflows, the reputation, the scheduling, the payments, reporting, integrations, whatever the stuff outside the industry that large companies won't even consider, but everyone inside it knows it's an absolute pain.
33:52
And once your software becomes deeply embedded, switching gets more difficult because you're great at solving an astonishingly awful problem.
34:02
But you still need enough market, even if it's just 47 possible customers.
34:08
Clearly you haven't become the next salesforce, but you might have created a moat and a globally specialist software company in the age of ar.
34:16
And there's absolutely nothing wrong with that.
34:18
I think venture pro culture has occasionally distorted this.
34:23
Not every great company needs to become a $10 billion platform.
34:28
There are plenty of founders who can create extraordinary wealth, freedom and impact by being incredibly valuable to a relatively narrow market.
34:37
Smaller isn't automatically better.
34:40
Bigger isn't automatically better either.
34:43
But clearer is always a winner.
34:47
So whatever clearer is to you, hope that answers next question.
34:52
Should you pre sell without writing a single line of code?
34:57
You should.
34:58
Okay, this gets treated like scripture.
35:01
I hear this all the time.
35:02
Don't build anything.
35:03
Create a landing page, pre sell it, get money, then write code.
35:08
But is that the safest way to validate a startup?
35:11
I think it's mostly fiction.
35:12
Pre sounding can be a brilliant way to see if you're on the right track.
35:17
But it's one of many validation methods and material security is a great example.
35:23
The founders at least the possible third of ideas ability to sell products that didn't yet exist.
35:30
The commercial response helps them filter things down and really decide what to build.
35:36
And that's powerful because money is an incredibly strong signal.
35:40
Because people say yes to free things all the time, commitment changes the conversation.
35:45
There are loads of other legitimate validation methods you can consider.
35:49
You might interview partners, customers, prototypes, communities, and obviously free some.
35:56
So the rule is never write a single line of code until somebody pays.
36:01
My version would be don't invest too much before you have collected meaningful evidence that the primary matters and your chances of success are higher.
36:12
And the closer that evidence gets to genuine behavior, the stronger it becomes.
36:17
I love the idea.
36:19
It's fine.
36:20
I joined the waitlist.
36:22
Okay, I'll tell what it seemed that we want to build it with you.
36:27
Right?
36:28
Here's a chunk of money, very bloody useful information.
36:32
So pre selling is a fantastic tool, but it's not the only way.
36:36
Okay, so here's founder question number one.
36:40
When should I actually hire a sales leader?
36:45
This one comes up very often.
36:46
A founder gets some traction, investors start saying we need scale.
36:50
Now we're driving the go to market strategy and revenue.
36:54
The founder's knackered, burnt up.
36:58
I'm spending too many plates already.
36:59
So the solution might seem an obvious one Higher VP of Sales Problem solved.
37:03
Right?
37:04
Except what exactly are they supposed to scare?
37:09
This is one that I've come across many times and actually was was the reason behind one of my podcast conversations that genuinely changed the way I think about it too.
37:19
So Alexa would be has spent years helping GTM team scare and on the podcast we talked about what I think is one of the biggest hiring mistakes.
37:31
Sorry to make the assumption that the impressive VP from the massive company is automatically the right person to scale your early stage company doesn't necessarily make sense because imagine what that person had around them before recognized by the
37:48
marketing team.
37:49
Budget data, sales enablement, maybe a really large customer base in terms of proof.
37:58
Then you bring them into your startup and you say brilliant, here's your laptop.
38:04
But if you're much earlier on in your company, odds are you don't really know how to build that sort of operation or who the best ICP is.
38:16
Maybe you haven't quite nailed the marketing or the first 2000 customers.
38:21
2000 is just a number and that's a completely different job.
38:25
He needs to be a different type of person to do it.
38:27
Alex's argument was to think more carefully about aptitude, attitude and resilience and the ability to build from the ground up.
38:35
He even talked about potentially hiring a much more junior generalist GTN associate and keeping them very close to user founder while you figure out everything together.
38:46
I think that's fantastic advice because before somebody scales sales, you need to understand what it is they're scaling, who buys, not who might buy.
38:55
You'll need to work out much more than who you need to understand.
39:01
Why did they act?
39:03
What's the most painful trigger?
39:07
Where do your best customers and opportunities come from?
39:10
Referral, outbound, inbound partnerships, and what objections appear constantly.
39:16
Is it security?
39:16
Is it pricing?
39:17
Is it implementation?
39:19
Do they feel like it's not the most important thing?
39:23
Or it could be any incumbent supplier has tied them in, they won't let them leave for everything.
39:29
You need to consider what does a successful sales journey actually look like how long, how many conversations?
39:36
Who needs to be involved?
39:38
What evidence moves them forward?
39:41
You can't answer any of that.
39:42
You might not be hiring somebody to scale your sales.
39:46
You might be hiring someone to discover your business for you.
39:48
And that's a very expensive investment in time and money that I don't want you to mess up.
39:55
If this is something you're dealing with, go and watch my full conversation with Alex.
39:58
It's totally free.
39:59
I'll link it below.
40:02
Next founder question how do I stand up in a crowded market?
40:07
I'll try and answer it as specifically I can without knowing much about your business.
40:13
So for me, it's about research.
40:15
Because founders should make research a continuous thing.
40:19
Competitors, all the usual stuff.
40:23
And sometimes founders find a really strong one in their industry and it might make them think, oh no, somebody's already done it.
40:33
Okay, that's not necessarily the worst news.
40:36
Competition proves people are willing to spend their money to solve a problem.
40:41
No, competition might also mean that you find an enormous, untouched market.
40:46
Or it could be that the problem isn't the one they're willing to pay you for.
40:51
The more useful question about standing out is why should somebody choose you?
40:57
And please come start by making a 47 row feature, spreadsheet or table.
41:04
Customers don't respond to that stuff.
41:06
Nobody says, I really need to see 999 features today.
41:11
They think I've got a problem.
41:13
This takes us six hours.
41:14
My team hates doing that.
41:16
We keep losing money.
41:18
They don't know what's happening.
41:20
This all feels risky and I need to fix this.
41:24
Those are just examples.
41:25
So why does the right customer for you genuinely prefer you?
41:31
Is it better service?
41:33
Better user experience, Better pricing?
41:37
The trust they built with you?
41:40
Perhaps it's because you have a much stronger understanding of their specific industry.
41:44
And Beth Dawson talked about this really nicely in the podcast.
41:48
When it works with insurance companies and mortgage partners, for example, which they do do, they must turn up showing they extend them.
41:57
That means thinking about what does the insurance company care about?
41:59
Risk, retention, et cetera.
42:02
And remember, you're not marketing yourself.
42:06
I know that you think it's great, but I do see this mistake.
42:09
Often companies obsess about how to sound different before working, why the customer cares, and the language they use to express that.
42:17
If a customer sees a meaningful difference, eventually price becomes the only thing that they say they care about because it's all they can compare.
42:27
And personally, that's not a situation I want a founder like you to find themselves in.
42:32
Okay, next question.
42:34
The product works, but I have absolutely no idea how to sell it.
42:39
Founders do ask me versions of this question all the time, and I have enormous sympathy for them because building and selling are two very different skill sets.
42:48
Software is completely logical.
42:50
You write something, you test it, it works or it doesn't.
42:53
People, much less predictable people, don't always tell you why they're saying no to you.
42:59
Sometimes they don't know, sometimes they say, I'll think about it.
43:02
What that may actually mean is, I just want this meeting to end.
43:08
So for me, the first mindset shift I make is this.
43:12
Customers deny the effort they buy, what changes for them.
43:17
You might have developed the most beautiful AI orchestration layer anybody has ever seen, or whatever technical jargon you might use.
43:27
Fantastic.
43:29
But as the customer, so what?
43:31
What gets cheaper?
43:32
How does it make my life better?
43:34
Or perhaps what can my team do tomorrow that they couldn't do to them and why should I do anything about that now?
43:42
That's what they care about.
43:43
So as a technical founder, I think instead of saying, we built the best AI powered orchestration architecture by.
43:50
Your finance team spends 8 hours doing this every Friday.
43:54
We can get that down to 20 minutes.
43:56
That sounds sexy.
43:58
Now they're listening.
43:59
And again, speak their language, not yours.
44:01
Your technical skills are valuable, but the customer doesn't need to understand all the engineering in order to understand the value to them.
44:09
So if you're a technical founder who says, I hate marketing, forget marketing for a moment.
44:15
Just talk to 10 customers.
44:18
What is their life like?
44:19
What problems are they facing?
44:21
Why is it annoying?
44:23
What are they doing currently to fix it?
44:25
What does it cost?
44:27
What have they already tried?
44:28
And why did it work?
44:30
Of course, what would need to happen for them to actually make a change?
44:35
You'll learn so much more useful marketing from those conversations than copying somebody's viral LinkedIn framework that you had to kind of the word guide for.
44:48
So the final founder question today is a marketing sales one, apparently.
44:53
Okay, so finder question.
44:55
Marketing says the leads are good.
44:58
Sales says they're rubbish.
45:00
Okay, he's right.
45:02
Possibly both or long or neither.
45:06
Without knowing more about your business, this is one of the arguments that's been happening since, I guess, electricity was invented.
45:14
Marketing says, hey, we generated 400 leads.
45:17
Sales says, yeah, they're rich.
45:18
Marketing says, we did it.
45:22
And then sales says, bond is somebody who actually wants the buys.
45:26
Meanwhile, as the founder, you're looking at the forecast, wondering, why the numbers?
45:30
Dennis, I hear this all the time, so I'll share it with you.
45:36
Start by defining a good opportunity.
45:39
Get your marketing and sales teams together.
45:41
Odds are you'll get so much from it about the customer, the problems they face, how much they care about.
45:48
So I'll be getting crucially the questions that help you understand who will actually buy and who wants what has to be true before sales actually has to invest time, then work backlisting that.
46:02
Because if marketing is rewarded for just generating more, guess what?
46:05
Marketing will produce more volume.
46:08
Equally, if sales says the only acceptable lead is somebody who's already chosen the product, gotten approval, has the budget, and is standing in front of you waiting a purchase order, that's not a realistic thing either.
46:22
That's with Mark B one of who's on the podcast.
46:29
He said this brilliantly.
46:30
So Mark is a chief finance analysis.
46:32
Very little patience for the imaginary numbers in this world.
46:35
He talked about the difference between a nice chat and an actual sales qualified opportunity.
46:40
That's why I think founders need to hear this.
46:43
A 60 minute conversation isn't necessarily lead.
46:46
Some people just love talking on the phone, so it isn't necessarily intent.
46:51
Someone liking you isn't the same as somebody being very divided from you with a bug view a buying process.
46:57
No reason to do it now.
47:00
Mark urged founders to cut out the waste from their pipelines.
47:03
And that's a brilliant way to describe it.
47:05
Be as objective as you possibly can.
47:08
Think about things like is that really an opportunity or are you just seeing what you want to see?
47:15
I know you're probably optimistic as a founder, we all have to be.
47:19
Nobody starts a company thinking this probably won't work, but I'll give it a go anyway.
47:25
Optimism and determination against everything keeps, well, gets the company going.
47:30
But the optimism can be a dangerous thing too.
47:33
So you get marketing and sales together.
47:34
Ask the stupidly simple question, who are we trying to help and why should they choose us?
47:41
And take one if 5, 10, 15 people around the table, how many there are, give you 5, 10, 15 different answers, that's probably where I'd start.
47:52
Before the CRM, before attribution, before lead sourcing or scoring or buying another bit of sophisticated software.
48:00
Get aligned with the customer and the problem, the value and what good looks like for both parties.
48:07
Because pipeline isn't a marketing or sales number, it's the key to your growth.
48:12
I'm looking forward and I hope you found this very useful.
48:15
Please do like comment and subscribe.
48:17
I'm trying to grow this channel very quickly to bring on many more guests after the summer break, which this is.
48:25
If you have any questions, comment below.
48:26
And if you'd like to be a guest.
48:28
Scan that QR code on screen up there.
48:31
Have a wonderful day.
48:32
Thank you for listening.