40) Making Bets (or Burning Tokens?)

Behind-the-scenes building Vambrace AI, a company on a mission to figure out its mission. 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, Agentic Tooling, we revisited the Digital Bazaar and considered the implications of an agent-first bit-existence. I specifically reflected on opportunities to equip agents with the “picks and shovels” necessary to better compete, transact, and behave in this digital facsimile of society. I’m pushing to launch my first foray into this digital world by end of next week-ish, and will keep you posted as I have more to report.

Making Bets

Situation

The intro tees things off well for today’s reflection. If we take a step back, I currently think of the business in two core sleeves: (1) consulting, and (2) incubation. I have two consulting clients and those engagements are going pretty well. The second was a referral from the first; and the first—after a 4-month pilot—recently agreed to a 6-month extension. On the incubation front, I built and launched a working application, AskMyStack, which has 3 users (growth has since stalled), and I’m working on launching a second application, soon-to-be-announced, in the devtools / productivity space.

Tension

The fundamental tension in my current operating situation is that consulting effectively scales linearly (yes there are some scale economies but realistically those are marginal) while incubations have theoretically unlimited upside. So the risk-taker in me says I’m an incubation-zebra-with-consulting-stripes. But then the risk-mitigator in me says actually who knows if incubations will ever make any money, and why go through all the trouble to build and grow a startup when you’d need 300 users to generate the same revenue as a single consulting client?

Resource Allocation

So then resource allocation and portfolio management become challenging daily decisions.

• Marketing — How do I spend what little marketing spend I have? Right now this is pretty much just instantly leads and human / agentic efforts to identify leads, put them in an Airtable base, and then reach out to them cold. And then cold channels have like a 1-2% hit rate or whatever and so then it’s just a pretty disheartening numbers game. Then the solution is looking at different channels, but:

  • Organic takes so much time because you need to authentically engage to build a loyal following—and how can I authentically engage if really I’m just there because I’m sick of cold outbound? (I’m joking a little)

  • Paid channels are paid (duh), and I just don’t have the resources to commit to those channels. I’d love to sponsor a newsletter or something, but with that we’re still looking at probably $1K-$5K, and I just can’t justify that investment right now (but hopefully can soon).

• Technology / Building— How do I more effectively allocate my only abundant resource, time?

  • Incubations — I think I’ve currently focused on building as a way to almost numb the discomfort associated with stagnating top-of-funnel action and my failure to market. But then I also do genuinely believe that some of my ideas have some legitimacy. I also don’t necessarily need to pursue unicorns right now, but it’s more about how to do I hit ~$20K in scalable MRR that I can use to give me a cushion and then make more incubation bets? But I also could be totally spinning my wheels—and you don’t really know until you know.

  • Consulting — It is fun to build real-world AI applications with and for my clients, but I think there’s also somewhat limited intellectual upside there, which is probably a “beggars-can’t-be-choosers” thing of me to say. And there’s also this concept from Shopify’s CEO of main quests vs side quests, and I do sort of view consulting work as more side quest-y stuff while I figure out what my main quest is (which is why the intro to these newsletters says “a company on a mission to figure out its mission”). But it’s difficult to be in a situation where the side quests are actually the most immediately rewarding quests I can do right now—when really my heart wants to find my main quest.

All the while broader AI narratives threaten to demotivate with tales of universally bespoke software and/or complete and total societal collapse (which might happen, but, like not soon, right??). And then also I want to move to NYC in the Fall, so, like, I don’t know how I expect to be in a position to actually make that move without figuring all of this out. But I’m ~manifesting~. And, most importantly, I need to find a wife! That’s really the only reason I’m doing any of this. So: much to consider; a lot to balance.

Immediate Resolution

I’ve started thinking more critically about resource allocation and time management across a portfolio of different “bets” with different risk/return profiles. I think the immediate resolution is something like: get the second incubation “launched” (by March 12th) and then put low-cost marketing resources behind it; and then orient my efforts towards consulting client acquisition and growth there. If I can get to 4 clients and $15k-$20k-ish/month, that’d be the near-term goal. Then, once I have more of a cushion I can think more critically about how to allocate marketing $ to incubations and/or more consulting acquisition. I guess that’s the plan?

Looking Forward

Sort of tactical today, but I really needed it. There’s been so much going on in the AI world and it’s hard to keep up, while also keeping your head down and continuing to build things and do things that are constructive and value-additive. Particularly because who really knows what will be valuable one or two years from now? And therein lies the fundamental tension of building in AI.

But I also wouldn’t really have it any other way. It’s such an exciting time to be in and around technology. Have a wonderful week!

Sincerely,

Luke