14) Money Talks

Behind-the-scenes building Vambrace AI, a company on a mission to unlock the truth in human conversation (for now). Please pardon the stream-of-consciousness style. Subscribe to follow along or visit the site here:

(typos are to make sure you’re paying attention)

Introductory Remarks

Dear Vambracers —

In last week’s post, Self-Awareness, I acknowledged the need to reduce the length of these posts—and coupled that bit of self-reflection with a renewed focus on finding different business models that might be more compelling. I received some positive feedback on my decision to shorten these posts—which was both painful and validating. In any case, let’s move on to the topic at hand!

Market Dynamics

In recent weeks, I’ve been reflecting on my entrepreneurial journey thus far and have some tough-but-vital realizations about my approach to business-building and how I understand and interact with the market. I’ll share some of those learnings below, but it’s been an enlightening and liberating process.

The headline takeaway is that, life as a pre-PMF startup is defined by iteration and openness and near constant creative self-destruction—and I think I’m becoming more comfortable with that evolutionary process. And the most important thing is that this creative destruction is driven by market appetite for and interest in what I can offer.

Find the waterfall

I spoke with a founder recently who offered the advice: “Find a waterfall and put out a bucket.” And for some reason that specific metaphor really hit me in a deep way. I had been trying to convince myself of behavior change, which really is what would have been required for some of my past ideas to actually resonate with customers. And this metaphor helped me realize that really I need to just observe the behavior of people and companies around me and then offer solutions that more seamlessly plug into their lives or are consistent with the shifting demands of the market that they’re serving.

The world is in a state of massive change right now and people are changing their behaviors, and the nature of consumption, creation, distribution, lead generation, etc., is profoundly changing. So how can I offer products and services that don’t require additional behavioral change, but instead leverage existing shifts to drive demand?

Ego and entrepreneurial identity

And then I think there was / is deeply embedded machinations of the ego at play in any entrepreneurial endeavor. Because it is pretty self-absorbed to try to start something, and then you have to almost messianically convince others of your foresight and stuff. And so I think I fell into an ego-induced trap of trying to convince myself and others of changes on the horizon or, like, “well once they have my elegant product, then [x] behavior will change” and that’s just not how the world works.

I’ve done enough business analysis and am confident enough in my overall business acumen that I feel like I can #craftacompellinginvestmentnarrative about pretty much anything, honestly, but that’s actually a huge detriment to where I currently am in the entrepreneurial journey. Because I’m creating fantastical investment narratives that I do think are like economically and culturally legitimate and stuff—but I’m not actually just going out in the market and seeing what people are feeling, what people are struggling with, and what they’ll pay me for.

And I think a lot of that was ego-based and fear-driven, because somebody not wanting my elegant solution is terrifying to the part of me that deep down thinks I’m the second coming of christ.

Venture isn’t the goal

Somewhat consistent with the above, I was also in a spiraling loop of being stressed about capital restraints, and then focused on trying to secure venture, and so then that’s how I became more focused on crafting a compelling investment narrative than actually building a real business that serves people. I was spending more time on a fancy landing page and on a tight pitch deck when really I needed (and need) to be talking to customers and getting even more basic with things.

And even then honestly when I was talking to customers it was just so I could say I talked to them in my pitch deck, and it wasn’t really an authentic interaction with the market. Most of the time I was terrified of what the market was telling me in case it punctured my imagined state of the market.

So all of this brought me to the realization this past week that I’m not going to try to raise capital or even really talk to VCs (other than my friends) until I have a real business that is generating revenue and a clearer idea of who my customer is and the problem my solution (which, who knows what that solution will be) addresses. I put the cart in front of the horse and then like turned myself backwards in the saddle to try to pretend that wasn’t the case. But the horse was still facing the wrong way.

So then what am I going to do?

I also decided that I’m not really going to build anything too substantial until I have a clear indication from the market that they will pay me for that. And I intend to arrive at that by literally just calling a ton of companies and trying to talk to them about what they need and seeing where things go from there. I have a general problem-space that is mostly consistent with past endeavors around generative search optimization, which still plays on my passion for text analytics and stuff, and so I’ll take that to the market but then pivot as needed based on what I’m hearing.

So I’m basically aiming for more of a services-based consulting model for the near to intermediate-term future to keep me afloat personally and to learn more about the customers I like to serve and common pain points they experience. I’m also shifting my focus to more mom-and-pop type businesses starting in the Chicagoland area, with a focus on high-ticket services companies (e.g., contractors, home remodelers, flooring, windows, etc.) and pitching them a solution to help them show up first in ChatGPT search.

Consistent with all of the above, I’m not trying to convince myself or others of massive behavior change here. Search is moving to generative services, and so companies do have to prepare for this coming wave. We’ll see how businesses actually feel about this, or if they buy it, but I feel pretty strongly about it. And so now that there’s a clear wave I can see coming, that I think others can see as well, then I can start crafting the best surfboard and stretching my paddle-muscles.

Startup and tech bubble

And, last thing, I also think it’s so easy for me to get caught up in the startup and tech world where you can easily become very discouraged about like, oh well since Profound just raised a Series B then I’m out of luck. But it’s such a big world out there, and there are so many businesses that exist outside of the techno-industrial complex—and so much economic value associated with legacy “hard” industries, that I need to just jump out of the startup bubble and go talk to people.

And then I think the hope is that I can kind of position myself as a conduit to the leading-edge of the startup world, but in a way that is understandable and approachable for companies and business owners that might not care too too much about what Delian Asparouhov and Everett Randle think about gross margins. So sort of connecting my Pittsburgh / industrial / Midwestern roots with my Silicon Valley / futurist / techno-optimist ethos. Ya know?

Looking Forward

In any case, it’s been a challenging and gratifying process of learning and growth thus far on the journey—and I know there’s much growth and development and difficulty ahead. But that’s the exciting part! I can’t wait to start interacting more authentically and freely with the market and seeing where things go.

Although I have decided to take lowkey-off the next month or so, in terms of like meeting with investors and customers and stuff, and just letting myself meander throughout the world and observe people and just live a little without worrying about what’s next. And we’ll see where that takes me.

Thanks for following along and have a wonderful week!

Sincerely,

Luke