Startups often fail to displace incumbents because they become successful 'point solutions' and get acquired. The harder path to a much larger outcome is to build the entire integrated stack from the start, but initially serve a simpler, down-market customer segment before moving up.

In crowded markets, founders mistakenly focus on other startups as primary competition. In reality, most customers are unaware of these players. The real battle is against the customer's status quo: their current tools like spreadsheets, hiring a person, or using an old system. Your job is to beat those options.

Prepared realized it couldn't win against GovTech incumbents on their terms of sales relationships and lobbying. Their strategy was to fundamentally shift the competition. By offering a free, easy-to-use product, they forced the purchasing decision to be about technology quality, an arena where they could excel.

Economist Bernd Hobart argues that large enterprises are too risk-averse for early AI adoption. The winning go-to-market strategy, similar to Stripe's, is for AI-native companies to sell to smaller, agile customers first. They can then grow with these customers, mature their product, and eventually sell the proven solution back to the legacy giants.

In the previous SaaS era, emulating giants like Salesforce was a common but flawed strategy for startups. In the new AI era, there is no playbook at all, forcing founders to rethink go-to-market strategies from first principles rather than copying incumbents.

Startups often fail by making a slightly better version of an incumbent's product. This is a losing strategy because the incumbent can easily adapt. The key is to build something so fundamentally different in structure that competitors have a very hard time copying it, ensuring a durable advantage.

Pursuing large "whale" customers for early validation is risky because they often come with heavy demands that can derail the product vision. Instead, seek out innovative, mid-level companies who are early adopters. They provide better feedback, and building traction with them opens doors to larger clients later.

Large incumbents struggle to serve newly-formed startups because these customers offer low initial revenue but require significant sales and support. This P&L constraint creates a protected 'greenfield' market for new vendors to capture customers early and grow with them.

Disruptive infrastructure products shouldn't target customers for migration. The key go-to-market strategy is to capture developers at the precise moment they begin building a new application and are evaluating their tech stack. These first inbound users then define the use cases for future outbound sales.