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To succeed in traditional industries, sell what customers already buy (e.g., a finished circuit board), not the novel tool used to make it. Diode Computers positions its AI as an internal implementation detail that provides speed and cost advantages, fitting seamlessly into existing procurement workflows without forcing customers to adopt new software.
Founders often mistakenly market "AI" as the core offering. Customers don't buy AI; they buy solutions to their long-standing problems (e.g., more leads, better service). Frame your product around the problem it solves, using AI as the powerful new tool in your solution space that makes it possible.
Instead of selling software to traditional industries, a more defensible approach is to build vertically integrated companies. This involves acquiring or starting a business in a non-sexy industry (e.g., a law firm, hospital) and rebuilding its entire operational stack with AI at its core, something a pure software vendor cannot do.
Customers are hesitant to trust a black-box AI with critical operations. The winning business model is to sell a complete outcome or service, using AI internally for a massive efficiency advantage while keeping humans in the loop for quality and trust.
As AI commoditizes features, differentiation shifts to trust and a demonstrated ability to iterate quickly. Customers aren't buying your product as it is today; they're investing in your company's engine for solving their future problems, built on a track record of listening and shipping.
Instead of selling AI tools to incumbents (e.g., law firms who bill by the hour), build an AI-first service that delivers the end result directly to the customer. This avoids conflicts of interest and captures more value.
Instead of building AI-native companies facing intense competition, a viable strategy is to build "AI-durable" businesses. These are in real-world sectors (e.g., funeral homes) where the core service isn't disrupted by AI, but operations can be significantly accelerated by it.
In a market where every vendor claims to be "AI-powered," differentiation comes from focusing on outcomes. AI should be messaged as a force multiplier that improves existing workflows, enhances efficiency, and provides intelligence, not as a standalone product.
Frame your product's value not around the underlying AI, but around the premium insight it unlocks. The key is to instantly provide an answer—like a valuation or diagnosis—that previously required significant time, money, or human expertise.
Instead of pursuing complex, open-ended consulting projects, partners can scale more effectively by creating productized, "turnkey AI" offerings for specific business units like legal or marketing. This approach lowers the adoption barrier for customers by delivering predictable results for a defined use case, making it easier to sell into departments or smaller businesses.
An AI-native service provider goes directly to the end customer, bypassing intermediaries. They offer a superior result (e.g., faster, cheaper cybersecurity) at a lower price, making the switch an easy decision by solving the entire problem.