Is it AI or Bust?

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All it takes is a few clicks for you to make a difference . Welcome to the future and welcome to the Shadow Network with KP Ready .

If you're not following KP Ready so K-period , p-period , r-e-d-d-y on LinkedIn and my question for you is why not ? If you're in the AEC or CRE space and you want to know what's coming in the future , if you want to know about innovation for the built environment , you need to be following KP .

But I get the benefit every week of sitting with KP and saying KP , what were you thinking when you posted that on LinkedIn ? This is what we call unpacking KP . So , kp , happy new year , welcome back . Let's talk about a new post , happy new year . All right , so you posted actually , as we're recording this , you just posted this yesterday .

I think it's a really intriguing point , especially as we're getting ready to launch the next cohort of our incubator . I think this is really relevant in that context . But you wrote it's looking like if you are a SaaS company with no AI strategy , you may as well be pitching your novel client server technology to VCs .

Okay , so , first of all , what does that mean and why does it matter ?

So I think the reality is , if you're in tech , you have to not only understand the shifts but also constantly question your relevancy as a startup . And if you're a SaaS company , yeah we're cloud , we have a mobile app , etc . Etc . That kind of came to table stakes , right , that's like here's what . And now tell me what problem you're solving .

And I think what's shifted in the venture community , especially you know specifically to venture is they're not going to fund . This is like an absolute right . Like you can prove me wrong , you can hit me up and argue with me .

I love arguing , but I will put this in very absolute terms If you're not talking about your AI strategy to a venture capitalist , you're not going to get anywhere . Now , the flip side of that , vcs will say , well , every deck has every deck . We look at every pitch we have says AI .

And I'm like , yeah , of course , because five years ago every deck you had , every pitch said something about cloud and SaaS . Like , of course , right , this isn't a bad , this is like the next evolution of software platforms . This is not a feature , this is like a new platform move right .

So we move from mainframes to client server , to the cloud , to mobile , and now we're at AI , right . So I don't think . I think you have to shift your thinking . So if I was a startup right now , if I don't have an AI strategy , I would not actually pitch a VC . You're wasting your time , you're not going to get through the gatekeeper , yeah Right .

So I think you can't ignore it . So I think there is a retrenching of existing startups that need to retrench and rethink and repitch . The second thing is like when you think about AI strategy , people are very focused on the customer experience and the customer feature set and how your platform is leveraging AI to deliver a different type of customer experience .

That's like the obvious one , the back end of it , right . So think of it back of house . You can't ignore that AI is making software developers five , ten , a hundred X better and faster . So I think you also have to have answer the question of how is AI making you more productive and therefore more capital efficient ?

So if you said , call it , your startup two years ago was a SaaS startup , he said , oh , I need to hire 10 software engineers and I need X million dollars . You have to be able to address that .

Actually , the way our CTO has deployed AI on the back of the house is making us so much more capital efficient that I only need two engineers or I'm going to reach these milestones in twice the time with the same 10 engineers . So I think you can't , you ? There's this thing where people want to overlook the back of house productivity .

You and I were talking about this the other day , just around video editing , and audio editing for $16 a month . We can run AI to do with some vendor . We talked to some consulting vendor wanted to charge us $5,000 a month . They're with people like that's incredulous .

So if you think about it , you really have to address those two points when it comes to AI , especially to the venture community , and I think if you don't , you're a lead .

But then what we see sometimes and I'm thinking the context of our incubator that we run and granted those , those are early stage or precede stage ideas , and even my students , which are even maybe arguably earlier stage in their journey . But what I see often in those two contexts is , oh , we've got AI , we've got this AI component , but it's one .

Maybe it's not even a strategy , but it's . It's almost like , oh , we're going to , we're going to put this , this AI window dressing on , which may be client experience or customer experience , but it's certainly when they're when they're at that point , they have that , I would say , pretty shallow point of view .

They're certainly not getting to that back of house that you're talking about the efficiency , the capital efficiency , etc .

So you can have 100 X times zero and it's still zero , right ? Yeah , let's , let's go back to algebra .

So it's important that when you're communicating your strategy that you are , you do believe you can be capital efficient , and what I'll tell you is the deeper that strategy is vetted out and it starts to shift to here's the tactics and here's the process , the shift of who gets the value .

Does the VC get the value or do you get the value is what goes on in play . So , if it's all strategy and five bullet points in a In a deck , and I ask you tough questions and it's clear that you just put five bullet points down , you haven't put any further thinking , then I'll take all the value , I'm taking all the risk , I will take all the value .

Great , so you can build your app instead of a year ago , taking five million to build a product . But you're saying , because of a development tools . You can do it for a million . Well , I'll take that incremental change . Right , I'll take the delta , and that's my risk and I'll do that . But I get the benefit If you can actually demonstrate .

Here's how we approach it , here's our processes , blah , blah , blah . Here's how we're going to be able to scale software development . Then you get to take the value , not the VC , and so who gets the value tends to align with who's taking the risk , and the more the founder de risks it is , the more the value they get to keep versus what I get to keep .

Right , because I'm also taking the downside of the risk quotient . So I think it's super important . It's also so exciting what you can do now . Right , it's always tell people , if you had something like Shopify During the internet boom , you'd have been schlepping all kinds of stuff on the internet .

Right , every small business , in fact the local bookstore , may have been able to compete with Amazon If they could have done it for ninety nine dollars a month with the Shopify account . Right , right , it couldn't because it took Hundreds of millions of dollars to build up these platforms .

And I remember back in the day I was coding a shopping cart function from scratch and I had to figure out how to keep state like holding things in your shopping cart , how to do that across internet explorer and netscape and like browser stuff right , active back . So it was just like insane , right .

Just thousands of man hours in Spotify , just I mean , that's what I'm Shopify . It's like ninety , nine dollars a month . You really almost have all the functionality right . So where I think it's getting interesting is the founders . When I look at a I and people say who do you think is at risk ?

And people want to talk about workers , and all that Part of me says venture capital is a risk Because now you don't need me . If you're using a tools to build your product , to launch your product , to market your product for sixteen dollars a month , you're launching your podcast , video , marketing , all that stuff using a I .

You don't need to raise money , you don't need it . Why do I need it ? I can start my startup for zero dollars , practically right , and so I think it's super interesting .

I mean I think we're gonna look back on the cycle in this time and everybody's gonna feel like man , I should , I should have done this , I should have done that , and I think it's time for people to really take it seriously .

I mean , obviously we're here talking about the future of your startup , the future of how you're , you know how and what you're pitching to the VC , but I think we also need to do an episode coming from the other point of view , because it's you're right . I mean , everything is being affected by this and this is really both sides of the table at this

point .

They paid you upfront and they paid you a 20% a year maintenance fee for that software . You didn't know if you knew how to code . You didn't need a VC when everything went to SaaS and you had to invest in building the platform and the market paid you in an annuity .

So , in other words , I'm not paying you a million dollars upfront , I'm going to pay you $299 per month . You almost it almost pushed VC to have to support that model because we have to go build it and then sell it incrementally . The good news is they're very sticky because they're paying us every month and it's the frictionless and all that stuff .

Right , markets are bigger but you had to have venture capital to build something that could scale . And then , of course , AWS kind of helped with . Oh well , you don't actually like AWS can charge you per month , right , if you build on their platform , kind of from a platform .

So it's really interesting to see how this stuff evolves and I do think great founders are going to figure out how to use these AI development tools and not need venture capital . Yeah , I mean they'll want my check because I'm adorable , but they're not gonna need my check .

I think is is a really good one , because it's the more we see and we're gonna . Just looking at the calendar , yeah , by the end of the week , we're going to be reviewing all of our applications for the next cohort of the incubator and I fully expect that every single one of those applications is going to include some sort of AI strategy .

So we're always tinkering and so we've been using a lot of these tools as and he and he creates tools right , so it's not just using things off the shelf . I was talking to a large company CEO and they looked at all our activity like podcast , all the stuff that we do . Cal big is your team . I Was like three and and they were just blown away .

It was unimaginable to them that if you count like you count , the investing come part of our business . There's five of us , that's it , folks . Five people are running a venture fund Doing all this content like now that , I mean , are we ? Are we working five hours a day ? No , we're working , but I think there's something .

I think it's interesting as and then we're always kind of constantly challenging ourselves to Even do better there .

If , again , if you're not following KP ready on LinkedIn , if you're anywhere in the startup space the especially the AEC , architecture , engineering , construction or commercial real estate world Focused on innovation for the built environment you need to follow KP , because these are the kinds of conversations that are going on on his LinkedIn profile .

So , k period , p period ready , which is already DDY on LinkedIn , follow him and Keep following us here . Subscribe here wherever you're listening to this podcast or watching the video of this , and I'll keep showing up because I love asking KP the question what were you thinking when you posted that on LinkedIn ?

So again , this post reads it's looking like if you were a SaaS company with no AI strategy , you may as well be pitching your novel client server technology to VCs . If you're a little younger than KP or I , you may need to Google Some things there , but it'll be worth your while and I'm glad you listened along to listen to KP unpacking this post .

So , kp , thanks again for doing this with me . Thanks , jeff , absolutely .