Jul 20, 2023·edited Jul 21, 2023Liked by Demren Sinik

Thank you for sharing these thoughts!

More questions founders can ask:

1) If incumbent develops a similar porduct to mine, will it hurt it? (For example, google didn't release ChatGPT like product before being forced to)

2) Are there any beachheads sub-markets that are important yet hard for incumbents to focus on?

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100% agree Itamar! I also anticipate a wave of successful strategic exits as a result of #2. Founders that can find ways to build complex, technically defensible products in the era of Software 3.0 (will be hard for many, but possible for some - especially as time goes on) will see more downstream paths to successful outcomes.

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Aug 8, 2023Liked by Demren Sinik

Thank you for a thoughtful article! I think we are looking at a classic case when reality will turn an “OR” (A or B) into an “AND” (A and B). Yes, AI brings new capabilities within the boundaries of organizations. On the other hand, there is always an opportunity cost and the fact that building something may be far outside the organization’s core competencies.

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Impeccably well-written post but I take a different conclusion from it. In aggregate, this is all probably a threat to VCs more than fouders (or more accurately, VCs and founders with venture scale ambitions) since your definition of software 3.0 wildly expands the aperture of who can become a SaaS founder and how fast they can do it.

The threat of incumbency/competition in this mold is most prescient for essentially a B2B SaaS company following the last decade's venture path. I expect that market to decline (and yes, prob fewer generational SaaS businesses) but for a golden age of 1-3 man, bootstrapped tools that rocket to six figures in ARR to emerge, aided by the wave of AI but less held back by the headwinds you mention.

From there, all kinds of fascinating ways the capital structure of software investing could radically shift-- anyone's guess is as good as mine

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Thanks Mike. Appreciate you reading. I think you could be right, although I would consider the following:

1) I would distribute the risks equally between VCs and founders. Maybe it's the world that I live in, but I don't often come across budding entrepreneurs who are ok w/ building a 6- to 7-figure, profitable software business. The founder mindset in tech is to build the generational VC-backed unicorn.

1.5) If you're right, will founders be willing to take the risk of entrepreneurship for a small financial / impactful outcome, when the salary they can take at an incumbent is derisked and not much lower? (this ofc ignores the impact of AI on employment and salary - which is an entirely different beast).

2) The factors driving market consolidation that I mentioned in my article are inimical to a market consisting of highly fragmented, small-scale tools

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1.5 is a fascinating question especially in light of Shopify basically nerfing ~10 companies that were well posied to do $20-50M ARR and have nice exits today.....because they now can thanks to the dynamics you point out in the post (https://twitter.com/danpantelo/status/1684280827557847040)

Still think there will be a ton of "not big enough TAM" problems for Shopify and other huge tech ecosystems (Amazon, Facebook, Microsoft) to go after and <$10M ARR type things that can maybe be built with very lean teams.

But to your point, it's all for naught if the would be builders take $300-400K/yr product director gigs at the big tech companies and do it that way.

Reason I don't think this comes to pass is the profile of who these companies hire is still largely unimaginative and hopefully software 3.0 empowers a lot more renegades

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