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  4. <title>VC Cafe</title>
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  6. <link>https://www.vccafe.com</link>
  7. <description>Founded in 2005, VC Cafe covers early stage startup and VC news, founder advice, and resources for tech entrepreneurs with a spotlight on Israel and Europe.</description>
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  23. <title>Breaking the mold: Pattern Breakers book review</title>
  24. <link>https://www.vccafe.com/2024/11/18/breaking-the-mold-pattern-breakers-book-review/</link>
  25. <comments>https://www.vccafe.com/2024/11/18/breaking-the-mold-pattern-breakers-book-review/#respond</comments>
  26. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  27. <pubDate>Mon, 18 Nov 2024 10:26:11 +0000</pubDate>
  28. <category><![CDATA[Book Review]]></category>
  29. <category><![CDATA[Mike Maples Jr.]]></category>
  30. <category><![CDATA[book review]]></category>
  31. <category><![CDATA[Floodgate]]></category>
  32. <category><![CDATA[Innovation]]></category>
  33. <category><![CDATA[Pattern Breakers]]></category>
  34. <category><![CDATA[venture capital]]></category>
  35. <guid isPermaLink="false">https://www.vccafe.com/?p=10871</guid>
  36.  
  37. <description><![CDATA[&#8220;The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world&#8230;]]></description>
  38. <content:encoded><![CDATA[<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  39. <p>&#8220;The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man&#8221;</p>
  40. <cite>George Bernard Shaw</cite></blockquote>
  41.  
  42.  
  43.  
  44. <p>Mike Maples Jr., the famed seed investor and founder of <a href="https://www.floodgate.com/" data-type="link" data-id="https://www.floodgate.com/">Floodgate Ventures</a>, presents a compelling <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span> of entrepreneurship in his book &#8220;<a href="https://amzn.to/3Cwp79P" data-type="link" data-id="https://amzn.to/3Cwp79P">Pattern Breakers</a>.&#8221; He starts with the importance of being unreasonable and going against the grain with his example of the Wright brothers, who disregarded the &#8216;experts&#8217;, lacked any formal physics or aeronautics training, but owned a bicycle shop and had a strong urge for invention and experimentation, despite the risk. </p>
  45.  
  46.  
  47.  
  48. <p>In the book, Mike shares a wide range of examples and practical insights, from companies that failed and those that succeeded. As the seed backer of X/Twitter, Space X, Lyft, Nest, TaskRabbit, Chegg and others, he&#8217;s been repeatedly able to spot the pattern breakers, even whet their ideas seemed impossible or impractical.</p>
  49.  
  50.  
  51.  
  52. <p>As a seed investor myself, I picked up the book if there&#8217;s anything I can learn from Mike. As I covered in my previous post on <a href="https://www.vccafe.com/2024/10/31/the-art-of-non-consensus-investing-unlocking-venture-capitals-hidden-gems/" data-type="link" data-id="https://www.vccafe.com/2024/10/31/the-art-of-non-consensus-investing-unlocking-venture-capitals-hidden-gems/">Non-consensus investing</a>, the best returns are often captured in the opportunities that seemed unreasonable at first. This short post doesn&#8217;t replace the need to read the book, but I thought I&#8217;d share the key lessons that every founder and investor should consider.</p>
  53.  
  54.  
  55.  
  56. <h2 id="key-lessons-from-pattern-breakers-for-startup-founders" class="wp-block-heading"><strong>Key Lessons from <em>Pattern Breakers</em> for Startup Founders</strong></h2>
  57.  
  58.  
  59.  
  60. <ol class="wp-block-list">
  61. <li><strong>Embrace Non-Consensus Thinking</strong><br />The most transformative ideas often sound crazy at first. Airbnb&#8217;s concept of strangers sleeping in other people&#8217;s homes seemed absurd until it revolutionised travel. Similarly, when Lemonade Insurance introduced behavioural economics and AI to transform insurance, they weren&#8217;t just improving the existing system – they were fundamentally reimagining it.</li>
  62.  
  63.  
  64.  
  65. <li><strong>Master Strategic Timing</strong><br />Timing isn&#8217;t just about being early or late – it&#8217;s about recognising when enabling conditions align. Uber&#8217;s success wasn&#8217;t just about the idea of ride-sharing; it was about launching when smartphone adoption hit critical mass. Minute Media similarly capitalised on the perfect convergence of social media maturity and the democratisation of content creation.</li>
  66.  
  67.  
  68.  
  69. <li><strong>Ask Catalytic Questions</strong><br />Pattern breakers don&#8217;t start with solutions; they start with transformative questions. SpaceX didn&#8217;t begin by improving rockets; they asked, &#8220;Why can&#8217;t rockets be reusable?&#8221; Healthy.io transformed medical testing by asking, &#8220;What if every smartphone could be a medical device?&#8221; These questions don&#8217;t just solve problems – they reframe entire industries.</li>
  70.  
  71.  
  72.  
  73. <li><strong>Begin with Unscalable Efforts</strong><br />Counterintuitively, many breakthrough companies start with decidedly unscalable approaches. Dropbox&#8217;s founders personally pitched on college campuses. Wix initially helped users <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> websites one at a time. These &#8220;inefficient&#8221; starts provided invaluable insights that shaped their eventual scalable solutions.</li>
  74. </ol>
  75.  
  76.  
  77.  
  78. <h2 id="the-pattern-breakers-mindset" class="wp-block-heading">The Pattern Breaker&#8217;s Mindset</h2>
  79.  
  80.  
  81. <div class="wp-block-image">
  82. <figure class="aligncenter size-full"><img data-recalc-dims="1" fetchpriority="high" decoding="async" width="970" height="600" data-attachment-id="11528" data-permalink="https://www.vccafe.com/2024/11/18/breaking-the-mold-pattern-breakers-book-review/8f0375c1-59ac-420b-8ff2-4162cfd68439-__cr00970600_pt0_sx970_v1___/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?fit=970%2C600&amp;ssl=1" data-orig-size="970,600" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR0,0,970,600_PT0_SX970_V1___" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?fit=300%2C186&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?fit=970%2C600&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?resize=970%2C600&#038;ssl=1" alt="" class="wp-image-11528" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?w=970&amp;ssl=1 970w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?resize=300%2C186&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?resize=768%2C475&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?resize=380%2C235&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/8f0375c1-59ac-420b-8ff2-4162cfd68439.__CR00970600_PT0_SX970_V1___.png?resize=800%2C495&amp;ssl=1 800w" sizes="(max-width: 970px) 100vw, 970px" /></figure></div>
  83.  
  84.  
  85. <p>Maples argues that successful pattern breakers share several distinctive characteristics, each contributing to their ability to create transformative change:</p>
  86.  
  87.  
  88.  
  89. <h3 id="1-combining-audacity-with-rigorous-execution" class="wp-block-heading">1. Combining Audacity with Rigorous Execution</h3>
  90.  
  91.  
  92.  
  93. <p>Pattern breakers don&#8217;t just dream big – they execute with precision. They balance moonshot thinking with methodical implementation:</p>
  94.  
  95.  
  96.  
  97. <ul class="wp-block-list">
  98. <li><span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">Vision</span>: They envision seemingly impossible outcomes</li>
  99.  
  100.  
  101.  
  102. <li>Methodology: They break down grand visions into actionable steps</li>
  103.  
  104.  
  105.  
  106. <li>Discipline: They maintain high standards in day-to-day execution</li>
  107.  
  108.  
  109.  
  110. <li>Iteration: They rapidly test and refine their approaches Example: Elon Musk&#8217;s approach at SpaceX combined the audacious goal of making humanity multi-planetary with rigorous engineering processes and iterative testing.</li>
  111. </ul>
  112.  
  113.  
  114.  
  115. <h3 id="2-thinking-globally-from-day-one" class="wp-block-heading">2. Thinking Globally from Day One</h3>
  116.  
  117.  
  118.  
  119. <p>True pattern breakers don&#8217;t limit themselves to local or incremental improvements:</p>
  120.  
  121.  
  122.  
  123. <ul class="wp-block-list">
  124. <li>Market Scope: They design for global markets from the beginning</li>
  125.  
  126.  
  127.  
  128. <li>Universal Problems: They target fundamental human needs and desires</li>
  129.  
  130.  
  131.  
  132. <li>Scalable Solutions: They <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> infrastructure that can serve millions</li>
  133.  
  134.  
  135.  
  136. <li>Cultural Adaptability: They create solutions that transcend cultural boundaries Example: Stripe didn&#8217;t just aim to improve payments for Silicon Valley startups; they envisioned and built a global financial infrastructure that works across continents.</li>
  137. </ul>
  138.  
  139.  
  140.  
  141. <h3 id="3-blending-insights-across-disciplines" class="wp-block-heading">3. Blending Insights Across Disciplines</h3>
  142.  
  143.  
  144.  
  145. <p>Innovation often happens at the intersection of different fields:</p>
  146.  
  147.  
  148.  
  149. <ul class="wp-block-list">
  150. <li>Cross-pollination: They import successful patterns from one industry to another</li>
  151.  
  152.  
  153.  
  154. <li>Diverse Expertise: They <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> teams with varied backgrounds</li>
  155.  
  156.  
  157.  
  158. <li>Synthesis: They combine seemingly unrelated concepts</li>
  159.  
  160.  
  161.  
  162. <li>Novel Applications: They apply existing technologies in unexpected ways Example: Netflix combined <span class="mywpglossary-term-def" data-title="data-science" data-url="https://www.vccafe.com/startup-and-vc-glossary/#data-science">data science</span> with entertainment, using algorithmic recommendations to transform how we consume content.</li>
  163. </ul>
  164.  
  165.  
  166.  
  167. <h3 id="4-being-contrarian-with-conviction" class="wp-block-heading">4. Being Contrarian with Conviction</h3>
  168.  
  169.  
  170.  
  171. <p>Pattern breakers don&#8217;t just oppose conventional wisdom – they develop well-reasoned alternative viewpoints:</p>
  172.  
  173.  
  174.  
  175. <ul class="wp-block-list">
  176. <li>Independent Thinking: They form their own conclusions rather than following the crowd</li>
  177.  
  178.  
  179.  
  180. <li>Data-Backed Decisions: They support contrarian views with thorough research</li>
  181.  
  182.  
  183.  
  184. <li>Long-term <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">Vision</span>: They maintain conviction despite short-term skepticism</li>
  185.  
  186.  
  187.  
  188. <li>Calculated Risks: They take bold steps based on deep understanding Example: Brian Chesky and Joe Gebbia of Airbnb persisted with their &#8220;crazy&#8221; idea of strangers staying in homes, backed by their conviction in the sharing economy&#8217;s potential.</li>
  189. </ul>
  190.  
  191.  
  192.  
  193. <h3 id="5-reimagining-systems-not-just-solving-problems" class="wp-block-heading">5. Reimagining Systems, Not Just Solving Problems</h3>
  194.  
  195.  
  196.  
  197. <p>Pattern breakers think in terms of systems and platforms rather than point solutions:</p>
  198.  
  199.  
  200.  
  201. <ul class="wp-block-list">
  202. <li>Root Cause Analysis: They dig deeper to understand underlying systems</li>
  203.  
  204.  
  205.  
  206. <li><span class="mywpglossary-term-def" data-title="platform" data-url="https://www.vccafe.com/startup-and-vc-glossary/#platform">Platform</span> Thinking: They <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> foundations that enable broader change</li>
  207.  
  208.  
  209.  
  210. <li>Network Effects: They design for compounding benefits</li>
  211.  
  212.  
  213.  
  214. <li>Ecosystem Creation: They develop environments where others can innovate Example: Amazon didn&#8217;t just create an online bookstore; they built a global infrastructure for digital commerce that transformed retail, cloud computing, and beyond.</li>
  215. </ul>
  216.  
  217.  
  218.  
  219. <h2 id="implications-for-founders-and-investors" class="wp-block-heading">Implications for Founders and Investors</h2>
  220.  
  221.  
  222.  
  223. <p><strong>For Founders:</strong></p>
  224.  
  225.  
  226.  
  227. <ul class="wp-block-list">
  228. <li>Don&#8217;t just look for market opportunities; create new markets</li>
  229.  
  230.  
  231.  
  232. <li>Start with transformative questions rather than immediate solutions</li>
  233.  
  234.  
  235.  
  236. <li>Be willing to do things that don&#8217;t scale to gain deep customer insights</li>
  237.  
  238.  
  239.  
  240. <li>Think beyond your immediate industry for inspiration</li>
  241. </ul>
  242.  
  243.  
  244.  
  245. <p><strong>For Investors:</strong></p>
  246.  
  247.  
  248.  
  249. <ul class="wp-block-list">
  250. <li>Look for founders who aren&#8217;t just following playbooks</li>
  251.  
  252.  
  253.  
  254. <li>Value teams that can articulate why now is the perfect time</li>
  255.  
  256.  
  257.  
  258. <li>Recognise that the most promising opportunities might initially sound crazy</li>
  259.  
  260.  
  261.  
  262. <li>Consider how cross-disciplinary approaches might create new categories</li>
  263. </ul>
  264.  
  265.  
  266.  
  267. <h2 id="what-i-took-away-from-the-book" class="wp-block-heading">What I took away from the book</h2>
  268.  
  269.  
  270.  
  271. <p>I enjoyed reading &#8220;Pattern Breakers&#8221;. As an investor, it was a good reminder that 90% of seed investments will fail, but to reach outsized returns, it&#8217;s imperative to take risk. As a founder, it&#8217;s like a word of encouragement to keep going and disregard the critics. In a world where everyone&#8217;s following playbooks, the real opportunities lie in writing new ones. Whether you&#8217;re a founder or investor, the message is clear: true innovation comes not from following patterns, but from having the courage and <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span> to break them.</p>]]></content:encoded>
  272. <wfw:commentRss>https://www.vccafe.com/2024/11/18/breaking-the-mold-pattern-breakers-book-review/feed/</wfw:commentRss>
  273. <slash:comments>0</slash:comments>
  274. <post-id xmlns="com-wordpress:feed-additions:1">10871</post-id> </item>
  275. <item>
  276. <title>Weekly Firgun Newsletter – November 15 2024</title>
  277. <link>https://www.vccafe.com/2024/11/15/weekly-firgun-newsletter-november-15-2024/</link>
  278. <comments>https://www.vccafe.com/2024/11/15/weekly-firgun-newsletter-november-15-2024/#respond</comments>
  279. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  280. <pubDate>Fri, 15 Nov 2024 14:12:59 +0000</pubDate>
  281. <category><![CDATA[Firgun]]></category>
  282. <category><![CDATA[alison ai]]></category>
  283. <category><![CDATA[bluespine]]></category>
  284. <category><![CDATA[cybersixgill]]></category>
  285. <category><![CDATA[Israel]]></category>
  286. <category><![CDATA[panjaya]]></category>
  287. <category><![CDATA[planven]]></category>
  288. <category><![CDATA[plarium]]></category>
  289. <category><![CDATA[pointfive]]></category>
  290. <category><![CDATA[rapidAPI]]></category>
  291. <category><![CDATA[rezonate]]></category>
  292. <category><![CDATA[scaleops]]></category>
  293. <category><![CDATA[Tessl]]></category>
  294. <category><![CDATA[upwind security]]></category>
  295. <guid isPermaLink="false">https://www.vccafe.com/?p=11522</guid>
  296.  
  297. <description><![CDATA[The original version of this newsletter was published on Linkedin. Sign up to get the next edition in&#8230;]]></description>
  298. <content:encoded><![CDATA[<p>The original version of this newsletter was <a href="https://www.linkedin.com/pulse/weekly-firgun-newsletter-eze-vidra-sjr3e" data-type="link" data-id="https://www.linkedin.com/pulse/weekly-firgun-newsletter-eze-vidra-sjr3e">published on Linkedin.</a> Sign up to get the next edition in your inbox. </p>
  299.  
  300.  
  301.  
  302. <p id="ember2434">It&#8217;s <strong>#Firgun</strong> time.</p>
  303.  
  304.  
  305.  
  306. <p id="ember2435">The word &#8220;Firgun&#8221; (Hebrew: ??????/ pronounced &#8216;feer-goon&#8217;)&nbsp;is an informal modern Hebrew term and concept in Israeli culture (originally Yiddish), which describes genuine, unselfish delight or pride in the accomplishment of the other person. It&#8217;s the opposite of &#8220;schadenfreude&#8221;. Firgun is all about genuinely feeling and expressing happiness, pride, or admiration for someone else&#8217;s accomplishments, good fortune, or well-being. More about Firgun and why it matters on <a href="https://www.linkedin.com/company/vc-cafe/">VC Cafe</a>: <a href="https://lnkd.in/dg2a86p">https://lnkd.in/dg2a86p</a></p>
  307.  
  308.  
  309.  
  310. <p id="ember2436">It&#8217;s been 405 days since October 7th 2023. The wounds still run deep, not just for Israelis but to Jews worldwide, as they see the alarming rise in Antisemitism. The pogrom we saw in Amsterdam, close to the 86 year anniversary of Kristallnacht, brought back painful memories of Jewish people under attack. There&#8217;s no one that feels this pain more than the hostages and their families. For healing to begin, we must #BRINGTHEMHOME</p>
  311.  
  312.  
  313.  
  314. <p id="ember2437">A friend, successful entrepreneur who took a company public, asked me for help on a presentation he was giving about the economic resilience of Israel. I pointed him to a couple of recent reports that showed that Israeli startups raised 35% more in the first nine months of 2024, than the equivalent period in 2023 (pre-war). Given the circumstances, it&#8217;s nothing short of incredible, I&#8217;d say.</p>
  315.  
  316.  
  317.  
  318. <p id="ember2438">In the wider tech world, there&#8217;s a lot going on. Let&#8217;s start with Saudi Arabia who is planning a massive $100 billion AI project and the EU slapping <a href="https://www.linkedin.com/company/meta/">Meta</a> an $840M over abusive practices in FB marketplace. All the AI giants are reportedly facing challenges in building more advanced AI. Bitcoin topped a record of all time at $87,000, Chinese gaming giant <a href="https://www.linkedin.com/company/tencentglobal/">Tencent</a> reported 47% surge in profits from gaming and AI, and <a href="https://www.linkedin.com/company/perplexity-ai/">Perplexity</a> is nearing $500M funding round at $9 billion <span class="mywpglossary-term-def" data-title="valuation" data-url="https://www.vccafe.com/startup-and-vc-glossary/#valuation">valuation</span> as it started introducing ads. All of this AI usage is creating a power problem: nearly half of AI data centres may lack enough power by 2027, according a report by <a href="https://www.linkedin.com/company/gartner/">Gartner</a>. I don&#8217;t mostly mention smaller rounds of US startups, but take a look at <a href="https://www.linkedin.com/company/odysseyml/">Odyssey</a> which raised $18M <span class="mywpglossary-term-def" data-title="series-a" data-url="https://www.vccafe.com/startup-and-vc-glossary/#series-a">series A</span> this week. They are offering extremely realistic generative world-building models, trained on the real-world (captured with a futuristic looking camera).</p>
  319.  
  320.  
  321.  
  322. <h2 class="wp-block-heading" id="ember2439"><span id="quote-of-the-week">QUOTE OF THE WEEK</span></h2>
  323.  
  324.  
  325.  
  326. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  327. <p>It&#8217;s good to be a SEEKER, but sooner or later You have to be a FINDER. And then it is well to give what You have found, a gift into the world for whoever will accept it.” </p>
  328. <cite>?Richard D. Bach (1970) from JONATHAN LIVINGSTON SEAGULL</cite></blockquote>
  329.  
  330.  
  331.  
  332. <h2 class="wp-block-heading" id="ember2441"><span id="new-venture-rounds">NEW VENTURE ROUNDS</span></h2>
  333.  
  334.  
  335.  
  336. <ul class="wp-block-list">
  337. <li>Congratulations <a href="https://www.linkedin.com/in/guypo/">Guy Podjarny</a> and team <a href="https://www.linkedin.com/company/tesslio/">Tessl</a> on your impressive $125M in funding unveiled ($25M seed and $100M <span class="mywpglossary-term-def" data-title="series-a" data-url="https://www.vccafe.com/startup-and-vc-glossary/#series-a">series A</span>) for your AI coding <span class="mywpglossary-term-def" data-title="platform" data-url="https://www.vccafe.com/startup-and-vc-glossary/#platform">platform</span>!</li>
  338.  
  339.  
  340.  
  341. <li>Awesome <span class="mywpglossary-term-def" data-title="milestone" data-url="https://www.vccafe.com/startup-and-vc-glossary/#milestone">milestone</span> <a href="https://www.linkedin.com/in/amirams/">Amiram Shachar</a> and team <a href="https://www.linkedin.com/company/upwindsecurity/">Upwind Security</a> on securing (no pun intended) a $100M to protect cloud infrastructure in real time!</li>
  342.  
  343.  
  344.  
  345. <li>Well done <a href="https://www.linkedin.com/in/yodar-shafrir/">Yodar Shafrir</a> and team <a href="https://www.linkedin.com/company/scaleops-sh/">ScaleOps &#8211; Cloud-Native Optimization</a> on securing a $58M <span class="mywpglossary-term-def" data-title="series-b" data-url="https://www.vccafe.com/startup-and-vc-glossary/#series-b">series B</span> to scale your hands-off approach to cloud optimisation!</li>
  346.  
  347.  
  348.  
  349. <li>Kudos <a href="https://www.linkedin.com/in/alon-arvatz/">Alon Arvatz</a> and team <a href="https://www.linkedin.com/company/pointfive-us/">PointFive</a> on your $20M <span class="mywpglossary-term-def" data-title="series-a" data-url="https://www.vccafe.com/startup-and-vc-glossary/#series-a">series A</span> to track cloud usage across multiple clouds to optimise costs!</li>
  350.  
  351.  
  352.  
  353. <li>Way to go <a href="https://www.linkedin.com/in/asaf-yanai/">?Asaf Yanai</a> and team <a href="https://www.linkedin.com/company/alison-ai/">Alison.ai</a> on securing a $13.3M seed round (an $8.2 seed extension) to scale your AI-based video ad optimisation!</li>
  354.  
  355.  
  356.  
  357. <li>Great stuff <a href="https://www.linkedin.com/in/guy-piekarz-771ba24/">Guy Piekarz</a> and team <a href="https://www.linkedin.com/company/panjaya-ai/">Panjaya.ai</a> on coming out of stealth with $9.5M in <span class="mywpglossary-term-def" data-title="seed-funding" data-url="https://www.vccafe.com/startup-and-vc-glossary/#seed-funding">seed funding</span> to launch your AI-based dubbing <span class="mywpglossary-term-def" data-title="platform" data-url="https://www.vccafe.com/startup-and-vc-glossary/#platform">platform</span>!</li>
  358.  
  359.  
  360.  
  361. <li>Mazal tov <a href="https://www.linkedin.com/in/davidtalinovsky/">David Talinovsky</a> and team <a href="https://www.linkedin.com/company/bluespineio/">Bluespine</a> on coming out of stealth with a $7.2M seed round to help self-insured employers manage medical overbilling!</li>
  362. </ul>
  363.  
  364.  
  365.  
  366. <h2 class="wp-block-heading" id="ember2450"><span id="exits">EXITS</span></h2>
  367.  
  368.  
  369.  
  370. <ul class="wp-block-list">
  371. <li>Well done <a href="https://www.linkedin.com/in/schraga-mor-b50130/">Schraga Mor</a> and team <a href="https://www.linkedin.com/company/plarium/">Plarium</a> on your $620M-$820M <span class="mywpglossary-term-def" data-title="acquisition" data-url="https://www.vccafe.com/startup-and-vc-glossary/#acquisition">acquisition</span> of by <a href="https://www.linkedin.com/company/modern-times-group-mtg/">Modern Times Group MTG AB</a>! Israeli gaming talent FTW!</li>
  372.  
  373.  
  374.  
  375. <li>Congrats <a href="https://www.linkedin.com/in/sharonwagner/">Sharon Wagner</a> and team <a href="https://www.linkedin.com/company/sixgill/">Cybersixgill</a> on your <span class="mywpglossary-term-def" data-title="acquisition" data-url="https://www.vccafe.com/startup-and-vc-glossary/#acquisition">acquisition</span> by <a href="https://www.linkedin.com/company/bitsight/">Bitsight</a> for a reported $115M to strengthen cyber risk management!</li>
  376.  
  377.  
  378.  
  379. <li>Mabruk <a href="https://www.linkedin.com/in/roy-akerman/">Roy Akerman</a> and team <a href="https://www.linkedin.com/company/rezonatesec/">Rezonate</a> on the $30M exit to <a href="https://www.linkedin.com/company/silverfort/">Silverfort</a>!</li>
  380.  
  381.  
  382.  
  383. <li>One door closes and another one opens, <a href="https://www.linkedin.com/in/iddogino/">Iddo Gino</a> and team <a href="https://www.linkedin.com/company/rapidapi/">Rapid</a> API. Congrats on the sale to <a href="https://www.linkedin.com/company/nokia/">Nokia</a> for an undisclosed sum to boost API-driven 5G <span class="mywpglossary-term-def" data-title="monetization" data-url="https://www.vccafe.com/startup-and-vc-glossary/#monetization">monetization</span>!</li>
  384. </ul>
  385.  
  386.  
  387.  
  388. <h2 class="wp-block-heading" id="ember2456"><span id="appointments">APPOINTMENTS</span></h2>
  389.  
  390.  
  391.  
  392. <ul class="wp-block-list">
  393. <li>Congratulations <a href="https://www.linkedin.com/in/eran-westman-06a4a71b/">Eran Westman</a> on your appointment as Managing Partner at <a href="https://www.linkedin.com/company/planven-entrepreneur-ventures/">Planven</a> to lead growth investments in Israel! Would love to find a deal together with <a href="https://www.linkedin.com/company/remagine-ventures/">Remagine Ventures</a></li>
  394. </ul>
  395.  
  396.  
  397.  
  398. <h2 class="wp-block-heading" id="ember2459"><span id="new-funds">NEW FUNDS</span></h2>
  399.  
  400.  
  401.  
  402. <ul class="wp-block-list">
  403. <li>Well done <a href="https://www.linkedin.com/in/dror-glass-7bb30b144/">Dror Glass</a> and team <a href="https://www.linkedin.com/company/israel-secondary-fund/">ISF Israel Secondary Fund</a> on closing your third fund at $350 million ($100 million above the initial target)!</li>
  404. </ul>
  405.  
  406.  
  407.  
  408. <h2 class="wp-block-heading" id="ember2462"><span id="links-for-your-browser">LINKS FOR YOUR BROWSER</span></h2>
  409.  
  410.  
  411.  
  412. <h3 class="wp-block-heading" id="ember2463"><span id="israel">ISRAEL</span></h3>
  413.  
  414.  
  415.  
  416. <ol class="wp-block-list">
  417. <li><a href="https://www.calcalistech.com/ctechnews/article/s1liitlmje?">Israel’s AI startups dominate tech investment landscape</a>. AI companies secured nearly half of the total tech funding in Israel, a striking figure given that AI startups comprise just 30% of the broader tech ecosystem.</li>
  418.  
  419.  
  420.  
  421. <li><a href="https://www.calcalistech.com/ctechnews/article/vmkh9o1tq">Startups choose to stay in stealth, more than ever before</a> by <a href="https://www.linkedin.com/in/sophie-shulman-3304181/">Sophie Shulman</a> for <a href="https://www.linkedin.com/company/calcalist/">Calcalist ???????</a> (I agree with this and 5 of the investments we made over the summer chose to stay in stealth mode for now)</li>
  422.  
  423.  
  424.  
  425. <li><a href="https://www.timesofisrael.com/google-amazon-set-to-compete-in-tender-for-israels-ai-supercomputing-platform/"><strong>Google, Amazon set to compete in tender for Israel’s AI supercomputing platform</strong></a><strong>:</strong></li>
  426. </ol>
  427.  
  428.  
  429.  
  430. <h3 class="wp-block-heading" id="ember2466"><span id="global">GLOBAL</span></h3>
  431.  
  432.  
  433.  
  434. <ol class="wp-block-list">
  435. <li><a href="https://www.reuters.com/technology/artificial-intelligence/openai-rivals-seek-new-path-smarter-ai-current-methods-hit-limitations-2024-11-11/">OpenAI and others seek new path to smarter AI as current methods hit limitations</a></li>
  436.  
  437.  
  438.  
  439. <li><a href="https://www.linkedin.com/posts/peterjameswalker_state-of-private-markets-q3-activity-7260751757704601600-dNRe?utm_source=share&amp;utm_medium=member_ios">State of private markets Q3 2024</a> by <a href="https://www.linkedin.com/company/carta--/">Carta</a></li>
  440.  
  441.  
  442.  
  443. <li><a href="https://www.theverge.com/2024/11/13/24295879/openai-agent-operator-autonomous-ai">“I think 2025 is going to be the year that agentic systems finally hit the mainstream.”</a></li>
  444. </ol>
  445.  
  446.  
  447.  
  448. <h3 class="wp-block-heading" id="ember2468"><span id="new-on-vc-cafe">NEW on VC CAFE</span></h3>
  449.  
  450.  
  451.  
  452. <ol class="wp-block-list">
  453. <li><a href="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/">The AI Services revolution: Why VCs are betting big on Agentic AI</a></li>
  454.  
  455.  
  456.  
  457. <li><a href="https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/">Kindling Early B2C Growth: Getting to 1,000 Users</a></li>
  458.  
  459.  
  460.  
  461. <li><a href="https://www.vccafe.com/2024/01/18/israeli-startup-landscape-collection-2024/">ICMYI: My 2024 Israeli startup Landscape Collection</a></li>
  462. </ol>
  463.  
  464.  
  465.  
  466. <h2 class="wp-block-heading" id="ember2471"><span id="media-of-the-week">MEDIA OF THE WEEK</span></h2>
  467.  
  468.  
  469.  
  470. <p id="ember2472">Another sad <span class="mywpglossary-term-def" data-title="milestone" data-url="https://www.vccafe.com/startup-and-vc-glossary/#milestone">milestone</span> reached. #BRINTHEMHOME NOW!</p>
  471.  
  472.  
  473.  
  474. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQFabhr03-GpuA/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731678365176?e=1736985600&amp;v=beta&amp;t=pnA7XhKGnqly6aF_8FR2CsTGCXxzIt9BYN8BosyQYwY" alt=""/></figure>
  475.  
  476.  
  477.  
  478. <p id="ember2475">Shocking alert from the Israel Ministry of Diaspora Affairs identifies 3 European countries/regions in which Jews are at &#8220;very high risk&#8221; for physical violence (<a href="https://x.com/stopantisemites/status/1856132992646713749?s=46&amp;t=qx_2YP2_W_UEvY4QKvtXYQ">source</a>)</p>
  479.  
  480.  
  481.  
  482. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQGNQbd41MqQEg/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731677891492?e=1736985600&amp;v=beta&amp;t=gYJAGUgfNhmbjUB67c3r2ClOjbA-lpDCYK6qtiQOL3E" alt=""/></figure>
  483.  
  484.  
  485.  
  486. <p id="ember2478">The seed consumer VC market map by <a href="https://www.linkedin.com/company/headlinevc/">Headline</a> &#8211; <a href="https://www.linkedin.com/company/remagine-ventures/">Remagine Ventures</a> is sadly missing, but nevertheless worth a share! (<a href="https://headline.com/blog-latest/article-latest/the-seed-consumer-vc-market-map">source</a>)</p>
  487.  
  488.  
  489.  
  490. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQEgSmTk5b-K0g/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731678678354?e=1736985600&amp;v=beta&amp;t=8cZIqlLxj9vmlUsn_J7RY8uW9xFndkHjw8pG2GrNCmY" alt=""/></figure>
  491.  
  492.  
  493.  
  494. <p id="ember2481">In case you were wondering who wrote the most patents on generative AI&#8230; take a look at the chart below (from a report by <a href="https://www.linkedin.com/company/wipro/">Wipro</a>)</p>
  495.  
  496.  
  497.  
  498. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQEe12vB_M9JYg/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731678903570?e=1736985600&amp;v=beta&amp;t=H2UbSXdVlhttEP0IZebcSS1MctCQZUqHQDM-f2MsYG8" alt=""/></figure>
  499.  
  500.  
  501.  
  502. <p id="ember2485"><a href="https://www.linkedin.com/school/y-combinator/">Y Combinator</a> says we&#8217;re in the &#8220;Golden age of building&#8221; in their latest &#8216;request for startups&#8217; post. <a href="https://www.linkedin.com/in/benmlang/">Ben Lang</a> did a great job summarising it in one sheet. (<a href="https://www.ycombinator.com/rfs-build">source</a>)</p>
  503.  
  504.  
  505.  
  506. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHHGE7xNyyiLw/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731678016089?e=1736985600&amp;v=beta&amp;t=znVUG5G8lGAPbT6HswFp_MIOZPWClQUmwqdIxPYgdrU" alt=""/></figure>
  507.  
  508.  
  509.  
  510. <p id="ember2489">Interesting market map of Gen AI use cases in education by <a href="https://www.linkedin.com/company/edtech-insiders/">Edtech Insiders</a> (<a href="https://edtechinsiders.substack.com/p/the-edtech-insiders-generative-ai">source</a>)</p>
  511.  
  512.  
  513.  
  514. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQFqQbWdI6SmJQ/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731678779515?e=1736985600&amp;v=beta&amp;t=_2p7iqXz5At5ltRAMCGAPNIpOHB-mkpn-TXxgVpOy8I" alt=""/></figure>
  515.  
  516.  
  517.  
  518. <p id="ember2492">RIP to RPA &#8211; how AI Agents are changing <span class="mywpglossary-term-def" data-title="automation" data-url="https://www.vccafe.com/startup-and-vc-glossary/#automation">automation</span> by <a href="https://www.linkedin.com/company/a16z/">Andreessen Horowitz</a> (<a href="https://a16z.com/rip-to-rpa-the-rise-of-intelligent-automation/">source</a>)</p>
  519.  
  520.  
  521.  
  522. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQG2gHFCszFEPA/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731678843404?e=1736985600&amp;v=beta&amp;t=Rnnvc2cTix5_1tYOLhYSG9YAvAsBaWTy8v85bvY-c64" alt=""/></figure>
  523.  
  524.  
  525.  
  526. <p id="ember2495">The median time between primary rounds has lengthened considerably over the past 2 years. For a while the standard 18-24 months advice held pretty true (see the blue area in the below chart) but lately that’s out of date.</p>
  527.  
  528.  
  529.  
  530. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQH42zxpnriieQ/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731679428996?e=1736985600&amp;v=beta&amp;t=-bcnYuwGbEARA-w8LN55ry586oubPjFbDVIoTArRlPE" alt=""/></figure>
  531.  
  532.  
  533.  
  534. <p id="ember2499">Interesting chat between Sam Altman and Gerry Tan on how to <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> the future and just how close we are to AGI&#8230;</p>
  535.  
  536.  
  537.  
  538. <figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
  539. <div class="cs-embed cs-embed-responsive"><iframe title="How To Build The Future: Sam Altman" width="1200" height="675" src="https://www.youtube.com/embed/xXCBz_8hM9w?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></div>
  540. </div></figure>
  541.  
  542.  
  543.  
  544. <p id="ember2500">Finally, I&#8217;ll be at <a href="https://www.linkedin.com/company/slush/">Slush</a> in Helsinki next week for the first time. I&#8217;m looking forward to meeting old friends and making new connections.</p>
  545.  
  546.  
  547.  
  548. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHOV0YUQF5IGQ/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731679141756?e=1736985600&amp;v=beta&amp;t=pBLd8x0ZgaVtXngzhpebsPrSYINVDhOdeu5w_bHGvRg" alt=""/></figure>
  549.  
  550.  
  551.  
  552. <p id="ember2503">That&#8217;s all for this week. Thank you for reading. There&#8217;s a lot to celebrate in our &#8220;small&#8221; community! Keep on creating.</p>]]></content:encoded>
  553. <wfw:commentRss>https://www.vccafe.com/2024/11/15/weekly-firgun-newsletter-november-15-2024/feed/</wfw:commentRss>
  554. <slash:comments>0</slash:comments>
  555. <post-id xmlns="com-wordpress:feed-additions:1">11522</post-id> </item>
  556. <item>
  557. <title>Kindling Early B2C Growth: Getting to 1,000 Users</title>
  558. <link>https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/</link>
  559. <comments>https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/#respond</comments>
  560. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  561. <pubDate>Mon, 11 Nov 2024 09:02:04 +0000</pubDate>
  562. <category><![CDATA[B2C]]></category>
  563. <category><![CDATA[First 1000 users]]></category>
  564. <category><![CDATA[b2c]]></category>
  565. <category><![CDATA[cold start]]></category>
  566. <category><![CDATA[community building]]></category>
  567. <category><![CDATA[content creation]]></category>
  568. <category><![CDATA[Growth Hacking]]></category>
  569. <category><![CDATA[GTM]]></category>
  570. <category><![CDATA[lenny ratchitsky]]></category>
  571. <category><![CDATA[marketing]]></category>
  572. <category><![CDATA[PMF]]></category>
  573. <category><![CDATA[viral loops]]></category>
  574. <guid isPermaLink="false">https://www.vccafe.com/?p=11503</guid>
  575.  
  576. <description><![CDATA[&#8220;When building for your first thousand users, you&#8217;re not looking for statistical significance – you&#8217;re looking for insights.&#8230;]]></description>
  577. <content:encoded><![CDATA[<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  578. <p><em>&#8220;When building for your first thousand users, you&#8217;re not looking for statistical significance – you&#8217;re looking for insights. One deep conversation with a user who loves your product is worth more than a hundred lukewarm surveys.&#8221;</em></p>
  579. <cite>Rahul Vohra, founder of Superhuman</cite></blockquote>
  580.  
  581.  
  582.  
  583. <p>Getting your first 1,000 users is an important early <span class="mywpglossary-term-def" data-title="milestone" data-url="https://www.vccafe.com/startup-and-vc-glossary/#milestone">milestone</span> for any B2C startup. It&#8217;s a sign that there&#8217;s interest in your product and that you&#8217;re on the right track. But how do you get there? What are the most effective strategies for early B2C growth?</p>
  584.  
  585.  
  586.  
  587. <p>In my previous post, I covered <a href="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/" data-type="link" data-id="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/"><strong>how to get to product market fit (PMF)</strong></a>, and how to avoid fake PMF. This post is about how to get to your first 1,000 users, and how to get to know your users better, in particular for B2C startups. </p>
  588.  
  589.  
  590.  
  591. <p> Let’s dive into what actually works, based on insights from industry leaders like Rachitsky, First Round Capital, A16Z and my own experience as a product manager.  </p>
  592.  
  593.  
  594.  
  595. <h2 id="7-strategies-to-acquire-b2c-users-in-the-earliest-stage" class="wp-block-heading">7 strategies to acquire B2C users in the earliest stage</h2>
  596.  
  597.  
  598.  
  599. <p>Research from Lenny Rachitsky’s extensive survey of 600+ startups reveals a surprising truth: the path to your first 1,000 users rarely follows the conventional playbook. Success often comes down to a few core strategies executed with depth, along with an intense focus on understanding early users.</p>
  600.  
  601.  
  602.  
  603. <figure class="wp-block-image size-large"><img data-recalc-dims="1" decoding="async" width="1024" height="825" data-attachment-id="11504" data-permalink="https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/how-to-get-your-first-1000-b2c-users-lennys-blog/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?fit=1456%2C1173&amp;ssl=1" data-orig-size="1456,1173" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="how to get your first 1000 b2c users lenny&#8217;s blog" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?fit=300%2C242&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?fit=1024%2C825&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=1024%2C825&#038;ssl=1" alt="" class="wp-image-11504" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=1024%2C825&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=300%2C242&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=768%2C619&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=380%2C306&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=800%2C645&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?resize=1160%2C935&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-to-get-your-first-1000-b2c-users-lennys-blog.webp?w=1456&amp;ssl=1 1456w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">How to kickstart and scale a consumer business (<a href="https://www.lennysnewsletter.com/p/consumer-business-find-first-users" data-type="link" data-id="https://www.lennysnewsletter.com/p/consumer-business-find-first-users">source</a>)</figcaption></figure>
  604.  
  605.  
  606.  
  607. <ol class="wp-block-list">
  608. <li><strong><span class="mywpglossary-term-def" data-title="leverage" data-url="https://www.vccafe.com/startup-and-vc-glossary/#leverage">Leverage</span> Your Network and Reach Out to Targeted Strangers:</strong>
  609. <ul class="wp-block-list">
  610. <li><strong>Start with your closest connections:</strong> This is the easiest and fastest way to get started. <span class="mywpglossary-term-def" data-title="leverage" data-url="https://www.vccafe.com/startup-and-vc-glossary/#leverage">Leverage</span> your personal and professional networks, email your contacts, post on social media, and ask for feedback. However, keep in mind that your friends may not be your target audience, so don&#8217;t get discouraged if they&#8217;re not interested.</li>
  611.  
  612.  
  613.  
  614. <li><strong>Reach out to targeted strangers:</strong> This is a more time-consuming approach, but it can be effective for marketplace startups. Identify your ideal customers and reach out to them directly through email, DMs, or even phone calls.</li>
  615. </ul>
  616. </li>
  617.  
  618.  
  619.  
  620. <li><strong>Go where your target audience hangs out:</strong> This is the most popular and effective strategy. Find out where your target audience spends their time online and offline, and get in front of them. This could involve attending industry events, joining online forums, or posting on relevant social media platforms.
  621. <ul class="wp-block-list">
  622. <li><strong>Find online communities:</strong> Identify niche online forums, subreddits, or social media groups where your target audience spends time (LinkedIn and FB Groups, Product Hunt, Discord, Slack groups etc).. Engage with these communities by answering questions, sharing valuable content, and subtly promoting your product.</li>
  623.  
  624.  
  625.  
  626. <li><strong>Explore offline opportunities:</strong> Not enough people do this, but consider college campuses, industry events, or meetups that align with the affinity of the group. The idea is to get physical placement: This strategy involves placing your product in physical locations where your target audience will see it. This could involve distributing flyers, putting up stickers, or even setting up a booth at a local event. </li>
  627. </ul>
  628. </li>
  629.  
  630.  
  631.  
  632. <li><strong>Generate Excitement and Word-of-Mouth:</strong>
  633. <ul class="wp-block-list">
  634. <li><strong>Create a waitlist:</strong> This creates a sense of <span class="mywpglossary-term-def" data-title="exclusivity" data-url="https://www.vccafe.com/startup-and-vc-glossary/#exclusivity">exclusivity</span> and anticipation around your product. When people see others waiting to try your product, they are more likely to be interested.</li>
  635.  
  636.  
  637.  
  638. <li><strong>Run contests and giveaways:</strong> Offer incentives for people to sign up and share your product with their network. This can be a cost-effective way to boost initial awareness and engagement.</li>
  639. </ul>
  640. </li>
  641.  
  642.  
  643.  
  644. <li><strong>Enlist influencers:</strong> Influencers can help you reach a wider audience and generate buzz for your product. Identify influencers who align with your brand and target audience, and partner with them to promote your product. You can offer them free products, discounts, or even pay them for their services.
  645. <ul class="wp-block-list">
  646. <li><strong>Identify relevant influencers:</strong> Find individuals with a following within your target audience and try to get them talking about your product. This could involve offering free access, collaborating on content, or even paying for sponsored posts.</li>
  647.  
  648.  
  649.  
  650. <li><strong>Get on podcasts!</strong> While not hugely scalable for most podcasts, hosts featuring startups are always looking for their next guest. Can you get people excited about your startup?</li>
  651.  
  652.  
  653.  
  654. <li><strong>Get press:</strong> Getting featured in publications can help you gain credibility and reach a wider audience. Craft a compelling story about your product and pitch it to journalists who cover your industry.</li>
  655. </ul>
  656. </li>
  657.  
  658.  
  659.  
  660. <li><strong>Create viral content:</strong> Viral content can help you reach a massive audience in a short amount of time. However, it&#8217;s difficult to predict what will go viral, and this strategy is often more luck than skill. If you have a knack for creating engaging content, it&#8217;s worth a shot.
  661. <ul class="wp-block-list">
  662. <li><strong>Start a blog:</strong> Write articles and create content that is relevant to your target audience. This can attract organic traffic, establish you as an authority, and give you material to share on social media. It&#8217;s so much easier to create content these days with generative AI. Make sure you&#8217;re planning ahead.</li>
  663.  
  664.  
  665.  
  666. <li><strong>Experiment with different formats:</strong> Consider micro-blogging on social media, creating videos, or even hosting a podcast. The key is to provide value and engage your audience in a way that feels authentic.</li>
  667. </ul>
  668. </li>
  669.  
  670.  
  671.  
  672. <li><strong><span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">Build</span> a Community Before Launch:</strong>
  673. <ul class="wp-block-list">
  674. <li><strong>Start an email list:</strong> Collect email addresses through your website or landing page. This allows you to <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> anticipation and communicate directly with potential users.</li>
  675.  
  676.  
  677.  
  678. <li><strong>Engage with early signups:</strong> Offer exclusive content or early access to <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> excitement and gather valuable feedback.</li>
  679. </ul>
  680. </li>
  681.  
  682.  
  683.  
  684. <li><strong>Offer a Simple, Valuable Product:</strong>
  685. <ul class="wp-block-list">
  686. <li><strong>Focus on solving a specific pain point:</strong> Don&#8217;t try to do too much at first. Create a product that effectively addresses a specific need for your target audience.</li>
  687.  
  688.  
  689.  
  690. <li><strong>Make it easy to use and understand:</strong> The easier it is for people to get value from your product, the more likely they are to stick around and tell others</li>
  691.  
  692.  
  693.  
  694. <li>Too many startups, especially in AI, focus on the technology vs. on the benefits for the users. I wrote about this in &#8220;<a href="https://www.vccafe.com/2023/01/05/are-you-telling-a-story-or-pitching-features/" data-type="link" data-id="https://www.vccafe.com/2023/01/05/are-you-telling-a-story-or-pitching-features/">Are you telling a story or pitching features?</a>&#8220;</li>
  695. </ul>
  696. </li>
  697. </ol>
  698.  
  699.  
  700.  
  701. <h2 id="top-channels-for-consumer-apps" class="wp-block-heading">Top Channels for Consumer Apps</h2>
  702.  
  703.  
  704.  
  705. <p>The most successful early-stage B2C companies typically rely on a mix of organic and direct channels. While the exact percentages vary by product type, several sources recommend aiming for <strong>a mix of 40/30/20/10</strong>:</p>
  706.  
  707.  
  708.  
  709. <ul class="wp-block-list">
  710. <li><strong>40%</strong> &#8211; <strong>Word of mouth and direct referrals</strong> Particularly powerful for products with built-in network effects or clear value propositions. Superhuman&#8217;s famous waitlist strategy, for instance, grew entirely through word of mouth by optimizing for their &#8220;very disappointed&#8221; metric.</li>
  711.  
  712.  
  713.  
  714. <li><strong>30%</strong> &#8211; <strong>Organic community building </strong>&#8211; Products that solve specific community pain points often find their first users through focused community engagement. Reddit&#8217;s founders famously created numerous fake accounts to seed initial content and create the impression of activity, eventually building enough momentum for real community engagement. Building your own strong community should be your end goal, but in the early days, you can tap on existing communities like Reddit, Hacker News, Newsletters, Podcasts, etc. </li>
  715.  
  716.  
  717.  
  718. <li><strong>20%</strong> &#8211; Direct outreach and partnerships &#8211; things like <strong>Content and SEO</strong> &#8211; Many successful B2C companies found their early users through content that addressed specific pain points. Canva, for example, initially grew by creating targeted design tutorials that brought in their core audience of non-designer professionals. </li>
  719.  
  720.  
  721.  
  722. <li><strong>10%</strong> &#8211; Everything else (including paid <span class="mywpglossary-term-def" data-title="acquisition" data-url="https://www.vccafe.com/startup-and-vc-glossary/#acquisition">acquisition</span> on Google/ Youtube Meta, X, etc)</li>
  723. </ul>
  724.  
  725.  
  726.  
  727. <p>For example, GTM strategist Maja Voje also created interesting visual for zero budget go to market plan to get your first 1000 users by tapping into Linkedin to launch AI products: </p>
  728.  
  729.  
  730.  
  731. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="962" height="1024" data-attachment-id="11508" data-permalink="https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/zero-budget-go-to-market-plan/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?fit=1200%2C1278&amp;ssl=1" data-orig-size="1200,1278" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}" data-image-title="zero budget go to market plan" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?fit=282%2C300&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?fit=962%2C1024&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=962%2C1024&#038;ssl=1" alt="maja voje gtm 0 to 1000 users" class="wp-image-11508" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=962%2C1024&amp;ssl=1 962w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=282%2C300&amp;ssl=1 282w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=768%2C818&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=380%2C405&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=800%2C852&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?resize=1160%2C1235&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/zero-budget-go-to-market-plan.jpg?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 962px) 100vw, 962px" /><figcaption class="wp-element-caption"><a href="https://substack.com/@majavoje/note/c-66863713" data-type="link" data-id="https://substack.com/@majavoje/note/c-66863713">source</a></figcaption></figure>
  732.  
  733.  
  734.  
  735. <p>Let&#8217;s dive in to each one of these with concrete examples. </p>
  736.  
  737.  
  738.  
  739. <h2 id="crafting-a-high-impact-word-of-mouth-engine" class="wp-block-heading">Crafting a High-Impact Word-of-Mouth Engine</h2>
  740.  
  741.  
  742.  
  743. <p>Successful word of mouth isn’t accidental—it’s engineered. The top predictors of strong word-of-mouth growth, according to Rachitsky’s research, are:</p>
  744.  
  745.  
  746.  
  747. <ol class="wp-block-list">
  748. <li><strong>Time to “Wow” Moment</strong>: The faster a user experiences value, the more likely they are to recommend it.</li>
  749.  
  750.  
  751.  
  752. <li><strong>Frequency of Value Delivery</strong>: Daily engagement beats weekly; weekly beats monthly.</li>
  753.  
  754.  
  755.  
  756. <li><strong>Social Proof Within the Product</strong>: Make it easy for users to see others benefiting from your product.</li>
  757. </ol>
  758.  
  759.  
  760.  
  761. <p>For example, Superhuman’s email client grew largely through word of mouth by optimizing for a single metric: the percentage of users who would feel “very disappointed” if they lost access. By focusing on this, they cultivated a loyal user base willing to pay a premium.</p>
  762.  
  763.  
  764.  
  765. <p>It&#8217;s been a while since I read it, but in the book <strong><a href="https://www.instrumentalbackgroundmusic.com/blog/arouse-your-audience-with-music/" data-type="link" data-id="https://www.instrumentalbackgroundmusic.com/blog/arouse-your-audience-with-music/">Contagious, by Jonah Berger</a>,</strong> the author describes how things catch on. The summary below should give you some ideas as to what feeling you want to invoke in people to have them share your product. Sharing a product involves risk for the person sharing (social currency) and they are more likely to share content that has perceived practical value for their audience. </p>
  766.  
  767.  
  768.  
  769. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="691" data-attachment-id="11506" data-permalink="https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/contagious-summary/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?fit=1800%2C1214&amp;ssl=1" data-orig-size="1800,1214" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="Contagious-Summary" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?fit=300%2C202&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?fit=1024%2C691&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=1024%2C691&#038;ssl=1" alt="" class="wp-image-11506" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=1024%2C691&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=300%2C202&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=768%2C518&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=1536%2C1036&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=380%2C256&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=800%2C540&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?resize=1160%2C782&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Contagious-Summary.jpg?w=1800&amp;ssl=1 1800w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure>
  770.  
  771.  
  772.  
  773. <h2 id="building-community-as-a-growth-engine" class="wp-block-heading">Building Community as a Growth Engine</h2>
  774.  
  775.  
  776.  
  777. <p>An <a href="https://review.firstround.com/a-founders-step-by-step-guide-to-getting-your-first-1000-community-members/" data-type="link" data-id="https://review.firstround.com/a-founders-step-by-step-guide-to-getting-your-first-1000-community-members/">analysis by First Round Capital</a> found that successful B2C startups spend 20% of their time building community in their first year, with this figure increasing to 50% among companies that reached 1M+ users. This is because community building compounds, creating a <span class="mywpglossary-term-def" data-title="network-effect" data-url="https://www.vccafe.com/startup-and-vc-glossary/#network-effect">network effect</span> that attracts and retains users.<br /><br />To <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> a community around your product it&#8217;s essential to start with a strong foundation. Before launching your community, ensure you have the basic infrastructure in place. This includes:</p>
  778.  
  779.  
  780.  
  781. <ul class="wp-block-list">
  782. <li>A website that acts as a central hub for information and interaction</li>
  783.  
  784.  
  785.  
  786. <li>A professional domain name that lends credibility to your efforts</li>
  787.  
  788.  
  789.  
  790. <li>Social media accounts across relevant platforms to broaden your reach and engagement</li>
  791. </ul>
  792.  
  793.  
  794.  
  795. <p>Back in the day, there was Digg, Delicious, and other places where you could &#8216;list&#8217; your startup. Today, building a community can start with creating valuable content, supporting discussions in relevant forums like Product Hunt, Reddit or Hacker News, or even launching a dedicated online group or Discord channel. This type of foundation grows organically as members share and invite others. While building an email list is not exactly building community, capturing the email of people who expressed interest in engaging with the product is essential to activate them later on.</p>
  796.  
  797.  
  798.  
  799. <figure class="wp-block-image size-large is-resized"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="1024" data-attachment-id="11509" data-permalink="https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/eq0kkgbudyoze1hexx2lvvi_ic-xqrvg1ud4g5uuwupuvjxwzi3unkjrxxfu-9yqhwzzdenqsb9afhay71fd3avkvwo07w61sxqjbtk4gie2muhn3k4urrxu8upu7c1nf1fidbxlnrgchc_ujxuuuka/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?fit=1600%2C1600&amp;ssl=1" data-orig-size="1600,1600" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?fit=300%2C300&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?fit=1024%2C1024&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=1024%2C1024&#038;ssl=1" alt="" class="wp-image-11509" style="width:700px;height:auto" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=1024%2C1024&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=300%2C300&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=150%2C150&amp;ssl=1 150w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=768%2C768&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=1536%2C1536&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=80%2C80&amp;ssl=1 80w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=110%2C110&amp;ssl=1 110w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=380%2C380&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=800%2C800&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?resize=1160%2C1160&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Eq0kKGbUDyoze1hExx2LVVi_Ic-xQrvg1Ud4G5uUwuPUVjXWzI3uNkjRXxFU-9yQHwZZdeNqsb9AfhAY71Fd3aVkvwo07w61sxqjBtK4gIe2muhn3k4Urrxu8upu7C1Nf1fiDbxlNrgchC_UJxuuukA.webp?w=1600&amp;ssl=1 1600w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Community led growth (<a href="https://nogood.io/2022/10/21/community-led-growth/" data-type="link" data-id="https://nogood.io/2022/10/21/community-led-growth/">source</a>)</figcaption></figure>
  800.  
  801.  
  802.  
  803. <h2 id="the-concentric-circle-theory-of-growth" class="wp-block-heading">The Concentric Circle Theory of Growth</h2>
  804.  
  805.  
  806.  
  807. <p>In Y Combinator’s Startup School, Gustaf Alströmer describes early-stage growth as expanding in concentric circles:</p>
  808.  
  809.  
  810.  
  811. <ol class="wp-block-list">
  812. <li><strong>Inner Circle (0-100 users)</strong>: Direct relationships, high-touch onboarding, and personal referrals.</li>
  813.  
  814.  
  815.  
  816. <li><strong>Second Circle (100-1,000)</strong>: Friends of friends and professional networks.</li>
  817.  
  818.  
  819.  
  820. <li><strong>Outer Circle (1,000+)</strong>: Viral growth and scalable <span class="mywpglossary-term-def" data-title="acquisition" data-url="https://www.vccafe.com/startup-and-vc-glossary/#acquisition">acquisition</span> channels.</li>
  821. </ol>
  822.  
  823.  
  824.  
  825. <p>Each circle requires distinct tactics. The inner circle relies on manual engagement, the second on social referrals and partnerships, and the outer on scalable methods like content marketing or SEO.</p>
  826.  
  827.  
  828.  
  829. <p>I recommend watching the video ?</p>
  830.  
  831.  
  832.  
  833. <figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
  834. <div class="cs-embed cs-embed-responsive"><iframe loading="lazy" title="How to Get Your First Customers | Startup School" width="1200" height="675" src="https://www.youtube.com/embed/hyYCn_kAngI?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></div>
  835. </div></figure>
  836.  
  837.  
  838.  
  839. <h2 id="never-stop-iterating-and-experimenting" class="wp-block-heading">Never stop iterating and experimenting</h2>
  840.  
  841.  
  842.  
  843. <p>The journey to your first 1,000 users isn’t about shortcuts or growth hacks—it’s about understanding these foundational principles and applying them with consistency. Regularly gathering user feedback and analyzing engagement data is key as no strategy remains effective for a sustained period. What worked in the first few weeks might wear off and it&#8217;s crucial to continue to experiment with new product loops and marketing experiments to reach new users. </p>
  844.  
  845.  
  846.  
  847. <p>Gaming founders know this well. As a founder of a <span class="mywpglossary-term-def" data-title="unicorn" data-url="https://www.vccafe.com/startup-and-vc-glossary/#unicorn">unicorn</span> gaming startup once told me, they spend a ton of money a month on advertising to acquire users. Whenever they discover a channel that performs better than others, they divert most of their budget to that channel, until it starts going down in efficiency. Rinse and repeat.</p>
  848.  
  849.  
  850.  
  851. <p>As you grow beyond your first 1,000 users the priorities change accordingly and you&#8217;ll start working on engagement and retention, north star metrics and scaling up some of these early experiments into go to market motion. I hope to dive into these in a future post.</p>]]></content:encoded>
  852. <wfw:commentRss>https://www.vccafe.com/2024/11/11/kindling-early-b2c-growth-getting-to-1000-users/feed/</wfw:commentRss>
  853. <slash:comments>0</slash:comments>
  854. <post-id xmlns="com-wordpress:feed-additions:1">11503</post-id> </item>
  855. <item>
  856. <title>The AI Services Revolution: Why VCs Are Betting Big on Agentic AI</title>
  857. <link>https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/</link>
  858. <comments>https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/#respond</comments>
  859. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  860. <pubDate>Sat, 09 Nov 2024 16:03:19 +0000</pubDate>
  861. <category><![CDATA[Agentic AI]]></category>
  862. <category><![CDATA[AI Agents]]></category>
  863. <category><![CDATA[Generative AI]]></category>
  864. <category><![CDATA[AI agents]]></category>
  865. <category><![CDATA[AI first applications]]></category>
  866. <category><![CDATA[AI powered Design]]></category>
  867. <category><![CDATA[battery ventures]]></category>
  868. <category><![CDATA[Echo3D]]></category>
  869. <category><![CDATA[Felicis Ventures]]></category>
  870. <category><![CDATA[Foundation Capital]]></category>
  871. <category><![CDATA[generative AI]]></category>
  872. <category><![CDATA[hour one]]></category>
  873. <category><![CDATA[Human AI collaboration]]></category>
  874. <category><![CDATA[Insight Partners]]></category>
  875. <category><![CDATA[Sapphire Ventures]]></category>
  876. <category><![CDATA[Services Industry]]></category>
  877. <category><![CDATA[Systems of Agents]]></category>
  878. <guid isPermaLink="false">https://www.vccafe.com/?p=11490</guid>
  879.  
  880. <description><![CDATA[Remember when AI was just about chatbots and image generation? Those days are behind us. We&#8217;re entering the&#8230;]]></description>
  881. <content:encoded><![CDATA[<p>Remember when AI was just about chatbots and image generation? Those days are behind us. We&#8217;re entering the era of <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> – where AI systems don&#8217;t just respond, they take initiative. And for the services industry, this is a game-changer. </p>
  882.  
  883.  
  884.  
  885. <p>I&#8217;ve written about <a href="https://www.vccafe.com/2024/05/10/everybody-is-talking-about-ai-agents-and-automation/" data-type="link" data-id="https://www.vccafe.com/2024/05/10/everybody-is-talking-about-ai-agents-and-automation/">Agentic AI on VC Cafe in May 2024</a> and specifically about <a href="https://www.vccafe.com/2024/09/26/ai-agents-the-evolution-of-rpa/" data-type="link" data-id="https://www.vccafe.com/2024/09/26/ai-agents-the-evolution-of-rpa/">AI agents as the evolution of RPA (robotic process automation) in September 2024</a>.  The rapid developments in the AI agent space have meant that there&#8217;s better infrastructure enabling founders to <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> AI-native startups by incorporating existing foundational models and open-source technologies, and the rapid pace of investment into this space has also offered entrepreneurs more nuance as to where are the big opportunities for startups in the <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> sector. </p>
  886.  
  887.  
  888.  
  889. <p>In this post, I collated some of the latest research published on <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">Agentic AI</span>, with the aim to share knowledge, primarily with founders, about what can be built in this space. But first, a refresher on what is <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">Agentic AI</span>, how it&#8217;s different and why VCs are all of a sudden so excited about it. </p>
  890.  
  891.  
  892.  
  893. <h2 id="whats-different-about-agentic-ai" class="wp-block-heading">What&#8217;s Different About Agentic AI?</h2>
  894.  
  895.  
  896.  
  897. <p><span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">Agentic AI</span> refers to AI systems that can autonomously manage and execute complex workflows, involving multiple steps and intelligent decision-making. Unlike traditional AI applications, <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> systems can assess situations, make decisions, and take actions to achieve goals without constant human intervention.</p>
  898.  
  899.  
  900.  
  901. <p>Think of traditional AI as a powerful but passive tool, like a calculator. Now imagine a proactive assistant that not only crunches numbers but manages your entire financial planning process. That&#8217;s <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> – systems that can independently execute complex workflows and make decisions.</p>
  902.  
  903.  
  904.  
  905. <p>Real-world example: Sierra&#8217;s AI agents can now handle entire customer service conversations, making decisions about refunds, escalations, and follow-ups without constant human oversight. This isn&#8217;t just <span class="mywpglossary-term-def" data-title="automation" data-url="https://www.vccafe.com/startup-and-vc-glossary/#automation">automation</span>; it&#8217;s autonomous problem-solving.</p>
  906.  
  907.  
  908.  
  909. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="604" data-attachment-id="11493" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/key_attributes_of_agentic_ai_vs_generative_ai-f/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?fit=1200%2C708&amp;ssl=1" data-orig-size="1200,708" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="key_attributes_of_agentic_ai_vs_generative_ai-f" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?fit=300%2C177&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?fit=1024%2C604&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=1024%2C604&#038;ssl=1" alt="" class="wp-image-11493" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=1024%2C604&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=300%2C177&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=768%2C453&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=380%2C224&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=800%2C472&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?resize=1160%2C684&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/key_attributes_of_agentic_ai_vs_generative_ai-f.png?w=1200&amp;ssl=1 1200w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure>
  910.  
  911.  
  912.  
  913. <h2 id="vcs-see-agentic-ai-as-4-trillion-opportunity" class="wp-block-heading">VCs see Agentic AI as $4 Trillion Opportunity</h2>
  914.  
  915.  
  916.  
  917. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  918. <p>&#8220;A <a href="https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/the-economic-potential-of-generative-ai-the-next-productivity-frontier">multi-trillion-dollar opportunity</a> to reimagine software, services, and work&#8221;</p>
  919. <cite>Insight Partners</cite></blockquote>
  920.  
  921.  
  922.  
  923. <figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="2112" height="2112" data-attachment-id="11496" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/addressable-market-software-ai/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?fit=2112%2C2112&amp;ssl=1" data-orig-size="2112,2112" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="addressable-market-software-ai" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?fit=300%2C300&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?fit=1024%2C1024&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?fit=1024%2C1024&amp;ssl=1" alt="" class="wp-image-11496" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?w=2112&amp;ssl=1 2112w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=300%2C300&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=1024%2C1024&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=150%2C150&amp;ssl=1 150w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=768%2C768&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=1536%2C1536&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=2048%2C2048&amp;ssl=1 2048w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=80%2C80&amp;ssl=1 80w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=110%2C110&amp;ssl=1 110w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=380%2C380&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=800%2C800&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/addressable-market-software-ai.jpg?resize=1160%2C1160&amp;ssl=1 1160w" sizes="auto, (max-width: 1200px) 100vw, 1200px" /></figure>
  924.  
  925.  
  926.  
  927. <p>A new report by Battery Ventures is calling it the <a href="https://www.battery.com/blog/opencloud-2024/" data-type="link" data-id="https://www.battery.com/blog/opencloud-2024/">Coming AI Market “Supercycle”</a>. The idea is that AI has the capacity to disrupt software, services, and labor markets across virtually every industry. If you take into account the $2 trillion dollar spend on services, $1.5 trillion dollar spend on labor, $300 billion spend on SaaS and $380 billion spend annually on infrastructure, AI is potentially increasing the TAM of software to $4 Trillion. </p>
  928.  
  929.  
  930.  
  931. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="582" data-attachment-id="11492" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/whatsapp-image-2024-11-08-at-10-22-30/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?fit=1600%2C909&amp;ssl=1" data-orig-size="1600,909" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="WhatsApp Image 2024-11-08 at 10.22.30" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?fit=300%2C170&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?fit=1024%2C582&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=1024%2C582&#038;ssl=1" alt="" class="wp-image-11492" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=1024%2C582&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=300%2C170&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=768%2C436&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=1536%2C873&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=380%2C216&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=800%2C455&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?resize=1160%2C659&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-08-at-10.22.30.jpeg?w=1600&amp;ssl=1 1600w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">AI&#8217;s $4 trillion opportunity (<a href="https://www.battery.com/blog/opencloud-2024/" data-type="link" data-id="https://www.battery.com/blog/opencloud-2024/">Battery Ventures</a>)</figcaption></figure>
  932.  
  933.  
  934.  
  935. <p>The <a href="https://www.marketsandmarkets.com/Market-Reports/ai-agents-market-15761548.html" data-type="link" data-id="https://www.marketsandmarkets.com/Market-Reports/ai-agents-market-15761548.html">AI Agents market</a> is projected to grow from $5.1 billion in 2024 to $47.1 billion by 2030, representing a CAGR of 44.8%. As a result, VCs aren&#8217;t just excited – they&#8217;re recalibrating their entire <span class="mywpglossary-term-def" data-title="investment-thesis" data-url="https://www.vccafe.com/startup-and-vc-glossary/#investment-thesis">investment thesis</span> around <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span>.  The pie for software businesses has just grown dramatically, and <span class="mywpglossary-term-def" data-title="smart-money" data-url="https://www.vccafe.com/startup-and-vc-glossary/#smart-money">smart money</span> is betting that <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> will create more unicorns than mobile or cloud computing did. </p>
  936.  
  937.  
  938.  
  939. <p>But there&#8217;s a catch – the rise of <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> will likely lead to increased startup formation and venture capital activity, creating a more complex and competitive market. The returns will likely be more concentrated. The stakes are higher, and the technical barriers to entry are substantial.</p>
  940.  
  941.  
  942.  
  943. <h2 id="heres-where-the-money-is-flowing-in-agentic-ai" class="wp-block-heading">Here&#8217;s where the money is flowing in Agentic AI</h2>
  944.  
  945.  
  946.  
  947. <p>October 2024 broke a record in global venture capital deployed, $32 billion in a single month, with AI attracting $12.2B, or 38% of the total funding. Here is where the money is flowing for AI Agent startups:</p>
  948.  
  949.  
  950.  
  951. <ul class="wp-block-list">
  952. <li><strong>AI-First Applications/ Vertical AI:</strong> Instead of bolting AI onto existing software, startups are building intelligence-first solutions. Take <a href="https://www.harvey.ai/" data-type="link" data-id="https://www.harvey.ai/"><strong>Harvey AI</strong></a> in legal tech – it&#8217;s not just searching documents; it&#8217;s drafting contracts, suggesting negotiations strategies, and managing entire case workflows.</li>
  953. </ul>
  954.  
  955.  
  956.  
  957. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="578" data-attachment-id="11500" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/ai-native-startup-landscape-by-sapphire-ventures/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?fit=1170%2C660&amp;ssl=1" data-orig-size="1170,660" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="AI native startup landscape by Sapphire Ventures" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?fit=300%2C169&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?fit=1024%2C578&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=1024%2C578&#038;ssl=1" alt="" class="wp-image-11500" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=1024%2C578&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=300%2C169&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=768%2C433&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=380%2C214&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=800%2C451&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?resize=1160%2C654&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-native-startup-landscape-by-Sapphire-Ventures.jpeg?w=1170&amp;ssl=1 1170w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">AI-native companies that have raised at least $5M, by Sapphire Ventures</figcaption></figure>
  958.  
  959.  
  960.  
  961. <ul class="wp-block-list">
  962. <li><strong>Human-AI Collaboration Platforms</strong>: The most promising startups aren&#8217;t trying to replace humans – they&#8217;re transforming how we work. <a href="https://github.com/features/copilot" data-type="link" data-id="https://github.com/features/copilot"><strong>GitHub&#8217;s Copilot</strong></a> doesn&#8217;t just write code; it pairs with developers to tackle complex engineering challenges, learning and adapting to each team&#8217;s coding style.</li>
  963.  
  964.  
  965.  
  966. <li><strong>Systems of Agents</strong>: Platforms that allow multiple AI agents to collaborate, specialize in tasks, and continuously learn from each other, mirroring human teams. For example, <a href="https://www.crewai.com/" data-type="link" data-id="https://www.crewai.com/"><strong>Crew AI</strong></a> provides a framework for managing and deploying multi-agent AI systems, enabling agents to coordinate, interact, and automate tasks efficiently.</li>
  967. </ul>
  968.  
  969.  
  970.  
  971. <figure class="wp-block-image"><img data-recalc-dims="1" loading="lazy" decoding="async" width="959" height="1367" data-attachment-id="11497" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/whatsapp-image-2024-11-01-at-09-09-13/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?fit=959%2C1367&amp;ssl=1" data-orig-size="959,1367" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="AI Agents Foundation Capital" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?fit=210%2C300&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?fit=718%2C1024&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=959%2C1367&#038;ssl=1" alt="Foundation capital system of Agents" class="wp-image-11497" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?w=959&amp;ssl=1 959w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=210%2C300&amp;ssl=1 210w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=718%2C1024&amp;ssl=1 718w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=768%2C1095&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=380%2C542&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/WhatsApp-Image-2024-11-01-at-09.09.13.jpeg?resize=800%2C1140&amp;ssl=1 800w" sizes="auto, (max-width: 959px) 100vw, 959px" /><figcaption class="wp-element-caption">Foundation Capital&#8217;s System of Agents 50 (<a href="https://foundationcapital.com/system-of-agents/" data-type="link" data-id="https://foundationcapital.com/system-of-agents/">source</a>)</figcaption></figure>
  972.  
  973.  
  974.  
  975. <ul class="wp-block-list">
  976. <li><strong>AI Agents for Professional Services</strong>: AI agents that automate high-value tasks traditionally done by professionals in fields like sales, customer service, <span class="mywpglossary-term-def" data-title="cybersecurity" data-url="https://www.vccafe.com/startup-and-vc-glossary/#cybersecurity">cybersecurity</span>, accounting, and healthcare. A good example is <a href="https://techcrunch.com/2024/09/16/ai-digital-employee-startup-11xai-raises-24m-led-by-benchmark/" data-type="link" data-id="https://techcrunch.com/2024/09/16/ai-digital-employee-startup-11xai-raises-24m-led-by-benchmark/">Benchmark-backed 11x</a>, which is building AI digital workers, or in Insurance is <a href="https://www.sixfold.ai/" data-type="link" data-id="https://www.sixfold.ai/"><strong>Sixfold</strong></a>, which creates an AI copilot for insurance underwriters, ingesting data from various sources to make optimal recommendations.</li>
  977. </ul>
  978.  
  979.  
  980.  
  981. <figure class="wp-block-image size-full"><a href="https://www.marketsandmarkets.com/Market-Reports/ai-agents-market-15761548.html"><img data-recalc-dims="1" loading="lazy" decoding="async" width="895" height="493" data-attachment-id="11501" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/ai-agents-market-ecosystem/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?fit=895%2C493&amp;ssl=1" data-orig-size="895,493" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}" data-image-title="ai-agents-market-ecosystem" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?fit=300%2C165&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?fit=895%2C493&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?resize=895%2C493&#038;ssl=1" alt="" class="wp-image-11501" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?w=895&amp;ssl=1 895w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?resize=300%2C165&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?resize=768%2C423&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?resize=380%2C209&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/ai-agents-market-ecosystem.jpg?resize=800%2C441&amp;ssl=1 800w" sizes="auto, (max-width: 895px) 100vw, 895px" /></a><figcaption class="wp-element-caption">AI Agents by agent role (source)</figcaption></figure>
  982.  
  983.  
  984.  
  985. <ul class="wp-block-list">
  986. <li><strong>AI-Powered Design Tools</strong>: Solutions leveraging AI to streamline and enhance design processes in various disciplines, such as:
  987. <ul class="wp-block-list">
  988. <li><strong>Video:</strong> AI-powered video generation, editing, and avatar creation tools like <a href="https://www.hourone.ai"><strong>Hour One</strong></a> (disclosure: a Remagine Ventures <span class="mywpglossary-term-def" data-title="portfolio" data-url="https://www.vccafe.com/startup-and-vc-glossary/#portfolio">portfolio</span> company)</li>
  989.  
  990.  
  991.  
  992. <li><strong>3D Design:</strong> Platforms that simplify 3D asset creation, offer collaborative workflows, and enable no-code prototyping. This also includes companies like <a href="https://www.echo3d.com"><strong>Echo3D</strong></a>, a DAM for 3D assets that enables viewing of heavy 3D models in the browser (disclosure: a Remagine Ventures <span class="mywpglossary-term-def" data-title="portfolio" data-url="https://www.vccafe.com/startup-and-vc-glossary/#portfolio">portfolio</span> company)</li>
  993.  
  994.  
  995.  
  996. <li><strong>Web Design:</strong> AI-powered website builders with advanced customization <span class="mywpglossary-term-def" data-title="options" data-url="https://www.vccafe.com/startup-and-vc-glossary/#options">options</span> and business-in-the-box functionality. Companies such as Israeli startup <strong><a href="https://www.weavy.ai">Weavy.ai</a></strong>, which caters to professional designers. </li>
  997. </ul>
  998. </li>
  999. </ul>
  1000.  
  1001.  
  1002.  
  1003. <p>Sapphire Ventures created a dedicated landscape for AI powered design tools. There&#8217;s a whole range of startups in this space, including<a href="https://www.midjourney.com/" data-type="link" data-id="https://www.midjourney.com/"> </a><span class="mywpglossary-term-def" data-title="open-source" data-url="https://www.vccafe.com/startup-and-vc-glossary/#open-source">open source</span> <a href="https://www.comfy.org/" data-type="link" data-id="https://www.comfy.org/"><strong>ComfyUI</strong></a>, which offers developers a powerful design companion. </p>
  1004.  
  1005.  
  1006.  
  1007. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="609" data-attachment-id="11498" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/ai-design-software-landscape/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?fit=1120%2C666&amp;ssl=1" data-orig-size="1120,666" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="AI Design software landscape" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?fit=300%2C178&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?fit=1024%2C609&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=1024%2C609&#038;ssl=1" alt="" class="wp-image-11498" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=1024%2C609&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=300%2C178&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=768%2C457&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=380%2C226&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?resize=800%2C476&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/AI-Design-software-landscape.jpeg?w=1120&amp;ssl=1 1120w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Sapphire Ventures dedicated a whole landscape to the AI design stack (<a href="https://sapphireventures.com/blog/design-software-the-hidden-force-shaping-the-world-whats-next/" data-type="link" data-id="https://sapphireventures.com/blog/design-software-the-hidden-force-shaping-the-world-whats-next/">source</a>)</figcaption></figure>
  1008.  
  1009.  
  1010.  
  1011. <ul class="wp-block-list">
  1012. <li><strong>Unstructured Data Infrastructure</strong>: Technologies for extracting, processing, managing, and storing unstructured data, which is essential for training and fine-tuning <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> models</li>
  1013. </ul>
  1014.  
  1015.  
  1016.  
  1017. <figure class="wp-block-image size-full"><img data-recalc-dims="1" loading="lazy" decoding="async" width="786" height="505" data-attachment-id="11499" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/felicis-ventures-ustructured-data/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?fit=786%2C505&amp;ssl=1" data-orig-size="786,505" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="Felicis Ventures ustructured data" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?fit=300%2C193&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?fit=786%2C505&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?resize=786%2C505&#038;ssl=1" alt="" class="wp-image-11499" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?w=786&amp;ssl=1 786w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?resize=300%2C193&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?resize=768%2C493&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Felicis-Ventures-ustructured-data.jpeg?resize=380%2C244&amp;ssl=1 380w" sizes="auto, (max-width: 786px) 100vw, 786px" /><figcaption class="wp-element-caption">The unstructured data landscape by Felicis Ventures consists of startups that help companies with data extraction and ingestion, data processing, and data management (<a href="http://data extraction and ingestion, data processing, and data management">source</a>)</figcaption></figure>
  1018.  
  1019.  
  1020.  
  1021. <h2 id="what-this-means-for-founders" class="wp-block-heading">What This Means for Founders</h2>
  1022.  
  1023.  
  1024.  
  1025. <p>For startup founders, this means a new opportunity to reinvest SaaS by building intelligence-first applications, adopting new design patterns that <span class="mywpglossary-term-def" data-title="leverage" data-url="https://www.vccafe.com/startup-and-vc-glossary/#leverage">leverage</span> <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span>&#8217;s capabilities.</p>
  1026.  
  1027.  
  1028.  
  1029. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="614" data-attachment-id="11495" data-permalink="https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/insight-partner-next-stack/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?fit=2048%2C1228&amp;ssl=1" data-orig-size="2048,1228" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="Insight partner Next Stack" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?fit=300%2C180&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?fit=1024%2C614&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=1024%2C614&#038;ssl=1" alt="" class="wp-image-11495" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=1024%2C614&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=300%2C180&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=768%2C461&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=1536%2C921&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=380%2C228&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=800%2C480&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?resize=1160%2C696&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Insight-partner-Next-Stack.jpeg?w=2048&amp;ssl=1 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">Insight Partner&#8217;s &#8216;Next Stack&#8217; landscape: a Reimagination of everything: How intelligence-first design and the Next Stack will unlock human+AI collaborative reasoning (<a href="https://www.insightpartners.com/ideas/intelligence-first-design-unlocks-humanai-collaborative-reasoning/" data-type="link" data-id="https://www.insightpartners.com/ideas/intelligence-first-design-unlocks-humanai-collaborative-reasoning/">source</a>)</figcaption></figure>
  1030.  
  1031.  
  1032.  
  1033. <p>The playbook for building successful AI companies is being rewritten. The winners will be those who:</p>
  1034.  
  1035.  
  1036.  
  1037. <ol class="wp-block-list">
  1038. <li><strong>Own valuable data sources</strong> (like Bloomberg does for financial data)</li>
  1039.  
  1040.  
  1041.  
  1042. <li><strong>Solve real labor shortages </strong>(particularly in healthcare and professional services)</li>
  1043.  
  1044.  
  1045.  
  1046. <li><strong>Create entirely new service categories</strong> with AI at the core (think AI-powered preventive legal counsel)</li>
  1047. </ol>
  1048.  
  1049.  
  1050.  
  1051. <h2 id="looking-ahead" class="wp-block-heading">Looking Ahead</h2>
  1052.  
  1053.  
  1054.  
  1055. <p>We&#8217;re still in the early innings of the <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">agentic AI</span> revolution. The next 18-24 months will be critical as early adopters prove out use cases and business models. For founders and investors willing to bet big on this shift, the opportunity is unprecedented.</p>
  1056.  
  1057.  
  1058.  
  1059. <p>But remember: with great power comes great responsibility. The companies that win won&#8217;t just have the best technology – they&#8217;ll be the ones that address ethical concerns head-on and <span class="mywpglossary-term-def" data-title="build" data-url="https://www.vccafe.com/startup-and-vc-glossary/#build">build</span> trust with both users and regulators.</p>
  1060.  
  1061.  
  1062.  
  1063. <p>At <strong>Remagine Ventures</strong> we&#8217;re active deploying in this space. Two of our latest investments in 2024 (still in stealth) are the <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">Agentic AI</span> space: a product manager co-pilot (starting with gaming and consumer apps) as well as an agent-to-agent service for the transactional web. We&#8217;re excited to share more about these companies soon. Are you building in the <span class="mywpglossary-term-def" data-title="agentic-ai" data-url="https://www.vccafe.com/startup-and-vc-glossary/#agentic-ai">Agentic AI</span> space? I&#8217;d love to hear about your experience in the comments below, or reach out to me directly for feedback and support.</p>]]></content:encoded>
  1064. <wfw:commentRss>https://www.vccafe.com/2024/11/09/the-ai-services-revolution-why-vcs-are-betting-big-on-agentic-ai/feed/</wfw:commentRss>
  1065. <slash:comments>0</slash:comments>
  1066. <post-id xmlns="com-wordpress:feed-additions:1">11490</post-id> </item>
  1067. <item>
  1068. <title>Weekly #FIRGUN Newsletter – November 8 2024</title>
  1069. <link>https://www.vccafe.com/2024/11/08/weekly-firgun-newsletter-november-8-2024/</link>
  1070. <comments>https://www.vccafe.com/2024/11/08/weekly-firgun-newsletter-november-8-2024/#respond</comments>
  1071. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  1072. <pubDate>Fri, 08 Nov 2024 12:59:43 +0000</pubDate>
  1073. <category><![CDATA[Firgun]]></category>
  1074. <category><![CDATA[Adaptive Shield]]></category>
  1075. <category><![CDATA[AI]]></category>
  1076. <category><![CDATA[Antisemitism]]></category>
  1077. <category><![CDATA[Augmedics]]></category>
  1078. <category><![CDATA[Chat.com]]></category>
  1079. <category><![CDATA[Donald Trump]]></category>
  1080. <category><![CDATA[generative AI]]></category>
  1081. <category><![CDATA[Glilot]]></category>
  1082. <category><![CDATA[Kardome]]></category>
  1083. <category><![CDATA[Lidwave]]></category>
  1084. <category><![CDATA[Siit]]></category>
  1085. <category><![CDATA[Starget Pharma]]></category>
  1086. <category><![CDATA[Third Point]]></category>
  1087. <category><![CDATA[USA]]></category>
  1088. <guid isPermaLink="false">https://www.vccafe.com/?p=11486</guid>
  1089.  
  1090. <description><![CDATA[The original version of this newsletter was published on Linkedin. The word &#8220;Firgun&#8221; (pronounced &#8216;feer-goon&#8217;) is an informal modern&#8230;]]></description>
  1091. <content:encoded><![CDATA[<p>The original version of this newsletter was <a href="https://www.linkedin.com/pulse/weekly-firgun-newsletter-eze-vidra-wfz4e/?trackingId=DSKV6UpwSm%2BLJUzWpaMBdg%3D%3D" data-type="link" data-id="https://www.linkedin.com/pulse/weekly-firgun-newsletter-eze-vidra-wfz4e/?trackingId=DSKV6UpwSm%2BLJUzWpaMBdg%3D%3D">published on Linkedin</a>. </p>
  1092.  
  1093.  
  1094.  
  1095. <p id="ember162">The word &#8220;Firgun&#8221; (pronounced &#8216;feer-goon&#8217;) is an informal modern Hebrew term and concept in Israeli culture (originally Yiddish), which describes genuine, unselfish delight or pride in the accomplishment of the other person. It&#8217;s the opposite of &#8220;schadenfreude&#8221;. Firgun is all about genuinely feeling and expressing happiness, pride, or admiration for someone else&#8217;s accomplishments, good fortune, or well-being. More about Firgun and why it matters on <a href="https://www.linkedin.com/company/vc-cafe/">VC Cafe</a>: <a href="https://lnkd.in/dg2a86p">https://lnkd.in/dg2a86p</a></p>
  1096.  
  1097.  
  1098.  
  1099. <p id="ember163">Donald J Trump has been elected as the 47th President of the United States of America, with the Republican party getting a majority also for the Senate and the House. I hope his presidency brings stability to Israel, the <a href="https://x.com/Osint613/status/1854280837098881472">quick return of the hostages</a> and a new era of prosperity for America and its allies. We must #BRINGTHEMHOME now. More about the election in the links section.</p>
  1100.  
  1101.  
  1102.  
  1103. <p id="ember164"><a href="https://x.com/StopAntisemites/status/1854711625355288587">A shocking organised Pogrom against Jews</a> took place in Amsterdam last night. Dozens of Maccabee Tel Aviv football fans were attacked by Pro Pa*******an mobs after the match ended. They were targeted on the streets, and the assailants filmed themselves running over Jews with cars, kicking Israelis on the ground unconscious and throwing a person to the river. The police took hours to settle the situation and Israel is sending two rescue flights to get them out. It&#8217;s scary how Antisemitism has spread in Europe. #STOPANTISEMITISM</p>
  1104.  
  1105.  
  1106.  
  1107. <p id="ember165">Israeli startups raised $987 million in October alone, across 26 deals, with 3 companies completing rounds of over $100M .</p>
  1108.  
  1109.  
  1110.  
  1111. <p id="ember166">In the wider tech world, the <strong>Fed</strong> cuts rates by 25 bps to 4.50% &#8211; 4.75%, as Powell vows not to leave. Global VC hit a new high with $32 billion invested in October 2024, Bitcoin crossed the $75K mark since Trump became president, an all time hight. AI robotics startup <a href="https://www.linkedin.com/company/physical-intelligence/">Physical Intelligence</a> raised $400M from the likes of Jeff Bezos and OpenAI, <a href="https://www.linkedin.com/company/mistralai/">Mistral AI</a> launched an API for content moderation. <a href="https://www.linkedin.com/company/amazon/">Amazon</a> discussing new multibillion-dollar investment in <a href="https://www.linkedin.com/company/anthropicresearch/">Anthropic</a> as long as the LLM uses its inference chips. Chinese <a href="https://www.linkedin.com/company/baidu-inc/">Baidu, Inc.</a> plans to unveil AI smart glasses with cameras, voice support next week. <a href="https://www.linkedin.com/company/netflix/">Netflix</a> appointed <a href="https://www.linkedin.com/in/mike-verdu-2a6113/">Mike Verdu</a> as VP of GenAI for Games. <a href="https://www.linkedin.com/company/openai/">OpenAI</a> paid a reported $20M, the highest amount ever paid for a domain name, to acquire chat.com.</p>
  1112.  
  1113.  
  1114.  
  1115. <h2 class="wp-block-heading" id="ember168"><span id="quote-of-the-week">QUOTE OF THE WEEK</span></h2>
  1116.  
  1117.  
  1118.  
  1119. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1120. <p>&#8220;The ballot is stronger than the bullet.&#8221; </p>
  1121. <cite>Abraham Lincoln</cite></blockquote>
  1122.  
  1123.  
  1124.  
  1125. <h2 class="wp-block-heading" id="ember170"><span id="new-funding-rounds">NEW FUNDING ROUNDS</span></h2>
  1126.  
  1127.  
  1128.  
  1129. <ol class="wp-block-list">
  1130. <li>Congratulations <a href="https://www.linkedin.com/in/kevinhykes/">Kevin Hykes</a> and team <a href="https://www.linkedin.com/company/augmedics/">Augmedics</a> on your $30M series E to give surgeons &#8220;x-ray <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span>&#8221; using cutting-edge augmented reality technology!</li>
  1131.  
  1132.  
  1133.  
  1134. <li>Well done <a href="https://www.linkedin.com/in/dani-cherkassky/">Dani Cherkassky</a> and team <a href="https://www.linkedin.com/company/kardome/">Kardome</a> on securing a $10M <span class="mywpglossary-term-def" data-title="series-a" data-url="https://www.vccafe.com/startup-and-vc-glossary/#series-a">series A</span> for spatial hearing AI technology!</li>
  1135.  
  1136.  
  1137.  
  1138. <li>Mazel tov <a href="https://www.linkedin.com/in/yehuda-vidal/">Yehuda Vidal</a> and team <a href="https://www.linkedin.com/company/lidwaveil/">Lidwave</a> on securing a $10M seed round for 4D LiDAR-on-chip technology!</li>
  1139.  
  1140.  
  1141.  
  1142. <li>Kol hakavod <a href="https://www.linkedin.com/in/sigal-kalmanson-cusnir-978714/">Sigal Kalmanson Cusnir</a> and team <a href="https://www.linkedin.com/company/starget-pharma/">Starget Pharma</a> on raising $5.1m to develop precision peptide radioligand therapies!</li>
  1143.  
  1144.  
  1145.  
  1146. <li>Way to go <a href="https://www.linkedin.com/in/chalom-malka/">Chalom Malka</a> and team <a href="https://www.linkedin.com/company/siit-app/">Siit</a> on securing a $5M seed round to redefine internal service desk and ticketing!</li>
  1147. </ol>
  1148.  
  1149.  
  1150.  
  1151. <h2 class="wp-block-heading" id="ember177"><span id="exits">EXITS</span></h2>
  1152.  
  1153.  
  1154.  
  1155. <p id="ember178">Massive congrats <a href="https://www.linkedin.com/in/maorbin/">Maor Bin</a> and team <a href="https://www.linkedin.com/company/adaptiveshield/">Adaptive Shield</a> on the exit to <a href="https://www.linkedin.com/company/crowdstrike/">CrowdStrike</a> for a reported $300M (the company raised $34M in total).</p>
  1156.  
  1157.  
  1158.  
  1159. <h2 class="wp-block-heading" id="ember180"><span id="appointments">APPOINTMENTS</span></h2>
  1160.  
  1161.  
  1162.  
  1163. <ul class="wp-block-list">
  1164. <li>Kudos <a href="https://www.linkedin.com/in/nofar-amikam-75a48533/">Nofar Amikam</a> on being appointed managing partner at the <a href="https://www.linkedin.com/company/glilot-capital-partners/">Glilot Capital Partners</a> seed/pre-seed fund!</li>
  1165.  
  1166.  
  1167.  
  1168. <li>Well done <a href="https://www.linkedin.com/in/adiel-gopas-436586148/">Adiel Gopas</a> on joining <a href="https://www.linkedin.com/company/third-point-llc/">Third Point LLC</a> to expand the Israel office!</li>
  1169. </ul>
  1170.  
  1171.  
  1172.  
  1173. <h2 class="wp-block-heading" id="ember184"><span id="links-for-your-browser">LINKS FOR YOUR BROWSER</span></h2>
  1174.  
  1175.  
  1176.  
  1177. <h3 class="wp-block-heading" id="ember185"><span id="israel">Israel</span></h3>
  1178.  
  1179.  
  1180.  
  1181. <ol class="wp-block-list">
  1182. <li><a href="https://www.israels-ai-blueprint-report.com/">Israel&#8217;s AI expansion Blueprint report</a> by <a href="https://www.linkedin.com/company/f2-capital/">F2 Venture Capital</a>, <a href="https://www.linkedin.com/company/deloitte/">Deloitte</a> and <a href="https://www.linkedin.com/showcase/google-cloud/">Google Cloud</a></li>
  1183.  
  1184.  
  1185.  
  1186. <li><a href="https://www.calcalistech.com/ctechnews/article/bytsk2vw1x?">Israeli startups raised nearly $1 billion in October 2024.</a> The real numbers are likely to be much higher as <a href="https://www.calcalistech.com/ctechnews/article/vmkh9o1tq">Israeli startups choose to stay in stealth mode more than ever before</a>.</li>
  1187.  
  1188.  
  1189.  
  1190. <li><a href="https://en.globes.co.il/en/article-there-has-been-no-better-time-to-invest-in-israel-1001493215?">There has been no better time to invest in Israel</a>, according to <a href="https://www.linkedin.com/in/juan-delgado-moreira-a879674/">Juan Delgado-Moreira</a>, co-CEO of $870 billion asset management firm <a href="https://www.linkedin.com/company/hamilton-lane/">Hamilton Lane</a> &#8211; I agree!</li>
  1191. </ol>
  1192.  
  1193.  
  1194.  
  1195. <h2 class="wp-block-heading" id="ember188"><span id="from-the-blog">From the blog</span></h2>
  1196.  
  1197.  
  1198.  
  1199. <ol class="wp-block-list">
  1200. <li><a href="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/">Finding Product Market Fit is more than just ticking boxes</a> &#8211; and how to tell the difference between real and fake PMF</li>
  1201.  
  1202.  
  1203.  
  1204. <li><a href="https://www.vccafe.com/2024/11/04/the-emerging-israeli-ai-landscape-in-2024/">The emerging Israel AI expansion in 2024</a> &#8211; my coverage of the latest Israeli AI report</li>
  1205.  
  1206.  
  1207.  
  1208. <li><a href="https://www.vccafe.com/2024/10/31/the-art-of-non-consensus-investing-unlocking-venture-capitals-hidden-gems/">Non-consensus investing</a> &#8211; how to unlock venture capital&#8217;s hidden gems</li>
  1209. </ol>
  1210.  
  1211.  
  1212.  
  1213. <h3 class="wp-block-heading" id="ember190"><span id="global">Global</span></h3>
  1214.  
  1215.  
  1216.  
  1217. <ol class="wp-block-list">
  1218. <li><a href="https://www.thefp.com/p/how-kamala-harris-lost-to-trump">We blew it, Joe</a> &#8211; the <a href="https://www.linkedin.com/company/thefreepress/">The Free Press</a> on why Trump won</li>
  1219.  
  1220.  
  1221.  
  1222. <li><a href="https://www.ft.com/content/3686960c-8704-457c-a1cf-695e5e2665d8">What will Donald Trump’s second term in office look like?</a> by Gideon Rachman at the <a href="https://www.linkedin.com/company/financial-times/">Financial Times</a></li>
  1223.  
  1224.  
  1225.  
  1226. <li><a href="https://www.battery.com/blog/opencloud-2024/">Inside the Coming AI Market “Supercycle”</a> &#8211; interesting report by <a href="https://www.linkedin.com/company/battery-ventures/">Battery Ventures</a> The Battery Ventures 2024 State of OpenCloud Report</li>
  1227. </ol>
  1228.  
  1229.  
  1230.  
  1231. <h2 class="wp-block-heading" id="ember192"><span id="media-of-the-week">MEDIA OF THE WEEK</span></h2>
  1232.  
  1233.  
  1234.  
  1235. <p id="ember193">Global VC funding hits 2024 high in Oct., at $32B. +11.5% YoY<strong> </strong>in global VC funding from $28.7B a year ago.</p>
  1236.  
  1237.  
  1238.  
  1239. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQGpMMKWRsi9ow/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731069321751?e=1736380800&amp;v=beta&amp;t=LlaerlIkhjAKob7d-AY_Pw9b47VbY56-1qwN4KiLrMY" alt=""/></figure>
  1240.  
  1241.  
  1242.  
  1243. <p id="ember195">AI led all sectors, attracting $12.2B, or 38% of the month’s total funding. <strong>+94% YoY in AI funding</strong> in Oct. from $6.3B a year ago.</p>
  1244.  
  1245.  
  1246.  
  1247. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQE0UY5dfdw3Rg/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731069396913?e=1736380800&amp;v=beta&amp;t=qPrmZrUQBoCE5NPcaMrJtyMrDCyPmLn0hpJVFeNH5bI" alt=""/></figure>
  1248.  
  1249.  
  1250.  
  1251. <p id="ember198">Half of all new Israeli startups in 2023 are companies leveraging AI. These new Israeli AI landscapes were added to my <a href="https://www.vccafe.com/2024/01/18/israeli-startup-landscape-collection-2024/">2024 Israeli startup landscape collection</a> on <a href="https://www.linkedin.com/company/vc-cafe/">VC Cafe</a></p>
  1252.  
  1253.  
  1254.  
  1255. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHjQ10HQG0iNQ/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731067783075?e=1736380800&amp;v=beta&amp;t=ux-dJZI1lNfudAw0YM90CUjHyKgD3HEWRNM9vgbeUdI" alt=""/></figure>
  1256.  
  1257.  
  1258.  
  1259. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQFq5BidMzmrjg/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731067793587?e=1736380800&amp;v=beta&amp;t=OXoB7WFjf3wiQC4fCThNjK1kKMHPOFVOsXwPY5ukbWY" alt=""/></figure>
  1260.  
  1261.  
  1262.  
  1263. <p id="ember201">October 2024 was a strong month for private funding with Israeli startups raising over $940M, driven by significant contributions from the <span class="mywpglossary-term-def" data-title="cybersecurity" data-url="https://www.vccafe.com/startup-and-vc-glossary/#cybersecurity">cybersecurity</span> sector. These achievements indicate strong investor interest and are a signal of business continuity in Israeli innovation.</p>
  1264.  
  1265.  
  1266.  
  1267. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHHoeGE9ofuMw/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731067306591?e=1736380800&amp;v=beta&amp;t=pq7Yd7R3NdIoG-pTx2oBVrrnabjPPxzkw3Nm7uXYOGA" alt=""/></figure>
  1268.  
  1269.  
  1270.  
  1271. <p id="ember203">AI proponents are betting that $1.5T of services spend can be turned by AI into high <span class="mywpglossary-term-def" data-title="gross-margin" data-url="https://www.vccafe.com/startup-and-vc-glossary/#gross-margin">gross margin</span> software &#8230; along with another $1.5T of human labor into software &#8230; that would 3x the TAM for software to $4T overall.</p>
  1272.  
  1273.  
  1274.  
  1275. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHx6_DdiMwh7g/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731067534466?e=1736380800&amp;v=beta&amp;t=FwseovacmsBBwujpB59SM7TqZGchjlwfWNfloyjrUIs" alt=""/></figure>
  1276.  
  1277.  
  1278.  
  1279. <p id="ember206">‘Demystifying the Crypto x AI Stack (<a href="https://medium.com/quantum-economics/8-highlights-from-coinbase-ventures-research-report-demystifying-the-crypto-x-ai-stack-3572d32bb427">source</a>)</p>
  1280.  
  1281.  
  1282.  
  1283. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQGkwqTmFXaMxA/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731067897294?e=1736380800&amp;v=beta&amp;t=FxVEHx7lCwgAVK8fE4p_y04txtOWKDFdHVI5Wl9wLNs" alt=""/></figure>
  1284.  
  1285.  
  1286.  
  1287. <p id="ember208">The AI native applications market map by <a href="https://www.linkedin.com/company/sapphirevc/">Sapphire Ventures</a> (<a href="https://www.linkedin.com/posts/sapphirevc_ainative-generativeai-enterprisetech-activity-7258171018316242945-gTMg?utm_source=share&amp;utm_medium=member_desktop">source</a>)</p>
  1288.  
  1289.  
  1290.  
  1291. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQEoasX_t31QHA/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731068836400?e=1736380800&amp;v=beta&amp;t=j6QdHshm5dAv8KKJpaTEGgJGiIAKmSBmplYr6M4bDxk" alt=""/></figure>
  1292.  
  1293.  
  1294.  
  1295. <p id="ember210">AI x Parenting Thesis by <a href="https://www.linkedin.com/company/a16z/">Andreessen Horowitz</a> (<a href="https://x.com/venturetwins/status/1854561496656962049?mx=2">source</a>)</p>
  1296.  
  1297.  
  1298.  
  1299. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQEyavnbDCDSUQ/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731068262181?e=1736380800&amp;v=beta&amp;t=1CStGJtUi5XVcRRefKlDSmrDEqgRtINPW42H8jhbjvg" alt=""/></figure>
  1300.  
  1301.  
  1302.  
  1303. <p id="ember212">We ain&#8217;t going back to 2021</p>
  1304.  
  1305.  
  1306.  
  1307. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQF-ZT1mtJkr1w/article-inline_image-shrink_1000_1488/article-inline_image-shrink_1000_1488/0/1731068988285?e=1736380800&amp;v=beta&amp;t=s8y_ozf9dpwA5Gu6zEcFI02l9A8yYWhLbEePA9IywL8" alt=""/></figure>
  1308.  
  1309.  
  1310.  
  1311. <p id="ember215">Finally, some comic relief</p>
  1312.  
  1313.  
  1314.  
  1315. <figure class="wp-block-image"><img decoding="async" src="https://media.licdn.com/dms/image/v2/D4E12AQHXpZ3n4ZIn-w/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1731068701646?e=1736380800&amp;v=beta&amp;t=AYFQ1eUQMJDdf2YKL0P_NIPhDwPagLBNMFMZwqC42iw" alt=""/></figure>
  1316.  
  1317.  
  1318.  
  1319. <p id="ember217">Thank you all for reading the #Firgun newsletter. I always appreciate the feedback. If you know someone that might benefit from this &#8211; please share #Firgun with them!</p>
  1320.  
  1321.  
  1322.  
  1323. <p id="ember218">There&#8217;s a lot to celebrate in our &#8220;small&#8221; community. Keep on creating!</p>]]></content:encoded>
  1324. <wfw:commentRss>https://www.vccafe.com/2024/11/08/weekly-firgun-newsletter-november-8-2024/feed/</wfw:commentRss>
  1325. <slash:comments>0</slash:comments>
  1326. <post-id xmlns="com-wordpress:feed-additions:1">11486</post-id> </item>
  1327. <item>
  1328. <title>Finding Product Market Fit is More Than Just Checking Boxes</title>
  1329. <link>https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/</link>
  1330. <comments>https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/#respond</comments>
  1331. <dc:creator><![CDATA[Eze Vidra]]></dc:creator>
  1332. <pubDate>Tue, 05 Nov 2024 11:21:09 +0000</pubDate>
  1333. <category><![CDATA[Product Market Fit]]></category>
  1334. <category><![CDATA[PMF]]></category>
  1335. <category><![CDATA[product management]]></category>
  1336. <category><![CDATA[Product market fit]]></category>
  1337. <category><![CDATA[venture capital]]></category>
  1338. <guid isPermaLink="false">https://www.vccafe.com/?p=11460</guid>
  1339.  
  1340. <description><![CDATA[“If you’re pre-product/market fit, the best advice that I have from that period is: action produces information. Just&#8230;]]></description>
  1341. <content:encoded><![CDATA[<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1342. <p>“If you’re pre-product/market fit, the best advice that I have from that period is: action produces information. Just keep doing stuff.”</p>
  1343. <cite>Brian Armstrong, founder of Coinbase</cite></blockquote>
  1344.  
  1345.  
  1346.  
  1347. <p>Product/Market Fit (PMF) is the holy grail for startups. It’s the point where you’ve built something people want so much that they can&#8217;t imagine living without it. But finding PMF is more than just checking off items on a list. It’s about understanding your customers deeply, iterating relentlessly, and being willing to <span class="mywpglossary-term-def" data-title="pivot" data-url="https://www.vccafe.com/startup-and-vc-glossary/#pivot">pivot</span> when necessary.</p>
  1348.  
  1349.  
  1350.  
  1351. <p>I&#8217;ve seen this happen many times in startups: you&#8217;ve done everything by the book. Identified a significant pain point, formulated a hypothesis, conducted thorough research, mapped out user needs, created wireframes, designed and built your product, and rigorously tested it. Yet something still feels off. You need to raise your next round of funding but there still isn&#8217;t that magnetic pull and word of mouth you were hoping for. Welcome to the challenging world of startups, where following the playbook is just the beginning.</p>
  1352.  
  1353.  
  1354.  
  1355. <p>I&#8217;ve been thinking for a while about how to write this post. There&#8217;s so much great content about finding PMF from the likes of <a href="https://www.lennysnewsletter.com/p/finding-product-market-fit" data-type="link" data-id="https://www.lennysnewsletter.com/p/finding-product-market-fit">Lenny Ratchitsky</a>, <a href="https://www.ycombinator.com/library/5z-the-real-product-market-fit" data-type="link" data-id="https://www.ycombinator.com/library/5z-the-real-product-market-fit">Ycombinator</a>, <a href="https://www.bvp.com/atlas/tackling-product-market-fit-tactics-and-frameworks-for-founders" data-type="link" data-id="https://www.bvp.com/atlas/tackling-product-market-fit-tactics-and-frameworks-for-founders">Bessemer</a>, <a href="https://pmf.firstround.com/" data-type="link" data-id="https://pmf.firstround.com/">First Round</a>, <a href="https://a16z.com/12-things-about-product-market-fit/" data-type="link" data-id="https://a16z.com/12-things-about-product-market-fit/">A16Z</a> and others. So naturally, I&#8217;ve used Google&#8217;s amazing <a href="https://notebooklm.google.com/notebook/b4b3efe1-8924-4e44-9905-3ed2ca21625b?authuser=1" data-type="link" data-id="https://notebooklm.google.com/notebook/b4b3efe1-8924-4e44-9905-3ed2ca21625b?authuser=1">NotebookLM</a> to better engage with the material that&#8217;s out there and get my questions answered. </p>
  1356.  
  1357.  
  1358.  
  1359. <p>Let&#8217;s start from the end: there&#8217;s no single best framework or answer on how to find product market fit. It&#8217;s also good to remember that the path to PMF is rarely linear.  Some companies are able to find it straight out of the gate and to other (very successful) companies, it took 4+ years to get to PMF as you can see in the chart below from Lenny&#8217;s blog. It&#8217;s a journey of discovery, iteration, and sometimes complete reinvention. Don&#8217;t be afraid to <span class="mywpglossary-term-def" data-title="pivot" data-url="https://www.vccafe.com/startup-and-vc-glossary/#pivot">pivot</span>. The key is to stay focused on genuine user value while remaining flexible enough to adapt when the market tells you something unexpected. Let&#8217;s dive in.</p>
  1360.  
  1361.  
  1362.  
  1363. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="863" height="1024" data-attachment-id="11461" data-permalink="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/how-long-it-took-for-companies-to-find-product-market-fit/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?fit=2159%2C2560&amp;ssl=1" data-orig-size="2159,2560" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="how long it took for companies to find product market fit" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?fit=253%2C300&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?fit=863%2C1024&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit.webp?resize=863%2C1024&#038;ssl=1" alt="" class="wp-image-11461" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=863%2C1024&amp;ssl=1 863w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=253%2C300&amp;ssl=1 253w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=768%2C911&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=1295%2C1536&amp;ssl=1 1295w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=1727%2C2048&amp;ssl=1 1727w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=380%2C451&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=800%2C949&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?resize=1160%2C1376&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/how-long-it-took-for-companies-to-find-product-market-fit-scaled.webp?w=2159&amp;ssl=1 2159w" sizes="auto, (max-width: 863px) 100vw, 863px" /></figure>
  1364.  
  1365.  
  1366.  
  1367. <h2 id="real-pmf-vs-self-deception" class="wp-block-heading">Real PMF vs. Self Deception</h2>
  1368.  
  1369.  
  1370.  
  1371. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1372. <p>&#8220;Finding <span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">product-market fit</span> is like dating. When it&#8217;s wrong, you&#8217;re the one constantly texting them. When it&#8217;s right, they&#8217;re flooding your inbox and you&#8217;re trying to manage all the attention.&#8221;</p>
  1373. <cite><br /><em>— Naval Ravikant, AngelList</em></cite></blockquote>
  1374.  
  1375.  
  1376.  
  1377. <p>There are four quadrants of product/market fit <a href="https://www.bvp.com/atlas/box-s-aaron-levie-on-his-journey-from-college-dropout-to-public-ceo#Prioritize-survival-of-the-business-above-all-else-during-turbulent-economic-times" data-type="link" data-id="https://www.bvp.com/atlas/box-s-aaron-levie-on-his-journey-from-college-dropout-to-public-ceo#Prioritize-survival-of-the-business-above-all-else-during-turbulent-economic-times">according to Bessemer</a>. Achieving and maintaining true PMF (the top right square) requires balance and judgment. Startups in this quadrant have a <strong>strong product <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span></strong> that resonates with customers and demonstrates a deep understanding of their <strong>needs and priorities</strong>. </p>
  1378.  
  1379.  
  1380. <div class="wp-block-image">
  1381. <figure class="aligncenter size-large is-resized"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="576" data-attachment-id="11462" data-permalink="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/the-four-quadrants-of-product-market-fit-adam-fisher-atlas/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?fit=1600%2C900&amp;ssl=1" data-orig-size="1600,900" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}" data-image-title="the-four-quadrants-of-product-market-fit-adam-fisher-atlas" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?fit=300%2C169&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?fit=1024%2C576&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=1024%2C576&#038;ssl=1" alt="" class="wp-image-11462" style="width:700px;height:auto" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=1024%2C576&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=300%2C169&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=768%2C432&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=1536%2C864&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=380%2C214&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=800%2C450&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?resize=1160%2C653&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/the-four-quadrants-of-product-market-fit-adam-fisher-atlas.png?w=1600&amp;ssl=1 1600w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption class="wp-element-caption">The Four Quadrants of PMF (<a href="https://www.bvp.com/atlas/box-s-aaron-levie-on-his-journey-from-college-dropout-to-public-ceo#Prioritize-survival-of-the-business-above-all-else-during-turbulent-economic-times" data-type="link" data-id="https://www.bvp.com/atlas/box-s-aaron-levie-on-his-journey-from-college-dropout-to-public-ceo#Prioritize-survival-of-the-business-above-all-else-during-turbulent-economic-times">Bessemer</a>)</figcaption></figure></div>
  1382.  
  1383.  
  1384. <p><strong>Fake PMF</strong>, as mentioned by Mike Siebel, can occur with <strong>sexy stories startups</strong>. They may have a <strong>compelling <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span></strong>, but they haven&#8217;t yet validated it with <strong>meaningful customer engagement</strong>. These startups may be successful in attracting early adopters and generating buzz, but their success may be anecdotal and fleeting if they haven&#8217;t truly understood the needs of a larger market. The risk, is that they may fall into the trap of believing that their early adopters represent the broader market, leading to a misaligned product roadmap. </p>
  1385.  
  1386.  
  1387.  
  1388. <p><strong>Self deception</strong> startups are equally risky. Startups in this quadrant lack both a compelling <span class="mywpglossary-term-def" data-title="vision" data-url="https://www.vccafe.com/startup-and-vc-glossary/#vision">vision</span> and meaningful customer engagement, but convince themselves that they have PMF because they are focusing on the latest and greatest technology, but they avoid engaging customers in a meaningful way.</p>
  1389.  
  1390.  
  1391.  
  1392. <p>It&#8217;s also harder to tell the difference between fake and real PMF when it comes to <strong>revenue centric startups</strong>.They may exhibit characteristics like:</p>
  1393.  
  1394.  
  1395.  
  1396. <ul class="wp-block-list">
  1397. <li>Wide-ranging customer use cases</li>
  1398.  
  1399.  
  1400.  
  1401. <li>Inconsistent sales cycles</li>
  1402.  
  1403.  
  1404.  
  1405. <li>Product customization</li>
  1406.  
  1407.  
  1408.  
  1409. <li>A high level of post-sale service</li>
  1410.  
  1411.  
  1412.  
  1413. <li>Pricing pressure</li>
  1414. </ul>
  1415.  
  1416.  
  1417.  
  1418. <p>It&#8217;s important to understand when you can be confident you got PMF, because trying to scale before that can be a costly mistake. For example, listen to Ycombinator&#8217;s warning to founders about hiring people and increasing burn before they&#8217;ve found PMF ?</p>
  1419.  
  1420.  
  1421.  
  1422. <figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
  1423. <div class="cs-embed cs-embed-responsive"><iframe loading="lazy" title="The Real Product Market Fit by Michael Seibel" width="1200" height="675" src="https://www.youtube.com/embed/FBOLk9s9Ci4?start=17&#038;feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe></div>
  1424. </div></figure>
  1425.  
  1426.  
  1427.  
  1428. <h2 id="what-does-real-product-market-fit-look-like" class="wp-block-heading">What does real product market fit look like?</h2>
  1429.  
  1430.  
  1431.  
  1432. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1433. <p>&#8220;<span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">Product-market fit</span> isn&#8217;t just about building the right product; it&#8217;s about building the right product for the right people at the right time. Miss any of these, and you&#8217;re just building an expensive hobby.&#8221;<br /></p>
  1434. <cite><em>— Ben Horowitz, Andreessen Horowitz</em></cite></blockquote>
  1435.  
  1436.  
  1437.  
  1438. <p><span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">Product-market fit</span> (PMF) is often described as a <span class="mywpglossary-term-def" data-title="milestone" data-url="https://www.vccafe.com/startup-and-vc-glossary/#milestone">milestone</span>, but in reality, it&#8217;s more like discovering a hidden frequency that suddenly puts you in perfect tune with your market. It&#8217;s when your product stops feeling like a solution in search of a problem and becomes the solution your market can&#8217;t imagine living without. Let&#8217;s start from the textbook definition:</p>
  1439.  
  1440.  
  1441.  
  1442. <p>Product Market Fit (PMF) is the stage where a product successfully meets a specific market’s needs, resulting in strong demand, customer satisfaction, and sustainable growth. Achieving <span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">product-market fit</span> is a critical <span class="mywpglossary-term-def" data-title="milestone" data-url="https://www.vccafe.com/startup-and-vc-glossary/#milestone">milestone</span> for startups, signalling that the product has <span class="mywpglossary-term-def" data-title="traction" data-url="https://www.vccafe.com/startup-and-vc-glossary/#traction">traction</span> and resonates well with its target audience.</p>
  1443.  
  1444.  
  1445.  
  1446. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1447. <figure class="wp-block-image size-large"><img data-recalc-dims="1" loading="lazy" decoding="async" width="1024" height="576" data-attachment-id="11472" data-permalink="https://www.vccafe.com/2024/11/05/finding-product-market-fit-is-more-than-just-checking-boxes/product-market-fit-vc-cafe/" data-orig-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?fit=1920%2C1080&amp;ssl=1" data-orig-size="1920,1080" data-comments-opened="1" data-image-meta="{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;1&quot;}" data-image-title="Product Market Fit &#8211; VC Cafe" data-image-description="" data-image-caption="" data-medium-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?fit=300%2C169&amp;ssl=1" data-large-file="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?fit=1024%2C576&amp;ssl=1" src="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=1024%2C576&#038;ssl=1" alt="PMF Visualisation" class="wp-image-11472" srcset="https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=1024%2C576&amp;ssl=1 1024w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=300%2C169&amp;ssl=1 300w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=768%2C432&amp;ssl=1 768w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=1536%2C864&amp;ssl=1 1536w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=380%2C214&amp;ssl=1 380w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=800%2C450&amp;ssl=1 800w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?resize=1160%2C653&amp;ssl=1 1160w, https://i0.wp.com/www.vccafe.com/wp-content/uploads/2024/11/Product-Market-Fit-VC-Cafe.jpg?w=1920&amp;ssl=1 1920w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /></figure>
  1448. </blockquote>
  1449.  
  1450.  
  1451.  
  1452. <p>The textbooks will tell you to look for these indicators to tell if you&#8217;ve achieved PMF:</p>
  1453.  
  1454.  
  1455.  
  1456. <ol class="wp-block-list">
  1457. <li><strong>Magnetic Customer Retention</strong>
  1458. <ul class="wp-block-list">
  1459. <li><strong>High retention: </strong>Users aren&#8217;t just staying; they&#8217;re becoming increasingly dependent on your product</li>
  1460.  
  1461.  
  1462.  
  1463. <li><strong>Your <span class="mywpglossary-term-def" data-title="churn-rate" data-url="https://www.vccafe.com/startup-and-vc-glossary/#churn-rate">churn rate</span> drops</strong> significantly, and when customers do leave, they provide detailed feedback instead of simply disappearing</li>
  1464. </ul>
  1465. </li>
  1466.  
  1467.  
  1468.  
  1469. <li><strong><span class="mywpglossary-term-def" data-title="organic-growth" data-url="https://www.vccafe.com/startup-and-vc-glossary/#organic-growth">Organic Growth</span> on Steroids</strong>
  1470. <ul class="wp-block-list">
  1471. <li><strong>Strong word-of-mouth:</strong> your users become your most passionate salespeople</li>
  1472.  
  1473.  
  1474.  
  1475. <li>You start hearing phrases like &#8220;I&#8217;ve told everyone on my team about this&#8221; or &#8220;Why didn&#8217;t this exist before?&#8221;</li>
  1476. </ul>
  1477. </li>
  1478.  
  1479.  
  1480.  
  1481. <li><strong>Feedback That Feels Different</strong>
  1482. <ul class="wp-block-list">
  1483. <li><strong>Positive Customer Feedback:</strong> Instead of &#8220;nice to have,&#8221; users describe your product as &#8220;must-have&#8221;</li>
  1484.  
  1485.  
  1486.  
  1487. <li>Feature requests shift from &#8220;basic functionality&#8221; to &#8220;power user&#8221; territory</li>
  1488.  
  1489.  
  1490.  
  1491. <li>Your NPS isn&#8217;t just high; it comes with detailed explanations of value</li>
  1492. </ul>
  1493. </li>
  1494.  
  1495.  
  1496.  
  1497. <li><strong>Revenue That Makes Sense</strong>
  1498. <ul class="wp-block-list">
  1499. <li><strong>Rapid Sales Growth:</strong> Sales cycles shorten naturally</li>
  1500.  
  1501.  
  1502.  
  1503. <li>Your growth curve starts to look less like a hard-fought battle and more like a natural progression</li>
  1504. </ul>
  1505. </li>
  1506.  
  1507.  
  1508.  
  1509. <li><strong>Efficient Customer <span class="mywpglossary-term-def" data-title="acquisition" data-url="https://www.vccafe.com/startup-and-vc-glossary/#acquisition">Acquisition</span></strong>
  1510. <ul class="wp-block-list">
  1511. <li>Marketing starts feeling like pouring fuel on an existing fire rather than trying to spark one</li>
  1512.  
  1513.  
  1514.  
  1515. <li><strong>Your CAC drops</strong> as word spreads and your brand gains recognition</li>
  1516. </ul>
  1517. </li>
  1518.  
  1519.  
  1520.  
  1521. <li><strong>Price Becomes Secondary</strong>
  1522. <ul class="wp-block-list">
  1523. <li><strong>Willingness to Pay:</strong> Customers stop haggling over price and start asking about <span class="mywpglossary-term-def" data-title="enterprise" data-url="https://www.vccafe.com/startup-and-vc-glossary/#enterprise">enterprise</span> features</li>
  1524.  
  1525.  
  1526.  
  1527. <li>The conversation shifts from &#8220;how much does it cost?&#8221; to &#8220;how quickly can we deploy?&#8221;</li>
  1528. </ul>
  1529. </li>
  1530. </ol>
  1531.  
  1532.  
  1533.  
  1534. <p>First Round Capital created a <a href="https://pmf.firstround.com/levels" data-type="link" data-id="https://pmf.firstround.com/levels">body of content around PMF</a>, and I found their visualisations of the various degrees of product market fit particularly helpful.</p>
  1535.  
  1536.  
  1537.  
  1538. <div class="wp-block-jetpack-slideshow aligncenter" data-effect="slide"><div class="wp-block-jetpack-slideshow_container swiper-container"><ul class="wp-block-jetpack-slideshow_swiper-wrapper swiper-wrapper"><li class="wp-block-jetpack-slideshow_slide swiper-slide"><figure><img loading="lazy" decoding="async" width="2816" height="1536" alt="" class="wp-block-jetpack-slideshow_image wp-image-11473" data-id="11473" src="https://www.vccafe.com/wp-content/uploads/2024/11/nascent-pmf-1.avif"/></figure></li><li class="wp-block-jetpack-slideshow_slide swiper-slide"><figure><img loading="lazy" decoding="async" width="2816" height="1536" alt="" class="wp-block-jetpack-slideshow_image wp-image-11474" data-id="11474" src="https://www.vccafe.com/wp-content/uploads/2024/11/developing-pmf-1.avif"/></figure></li><li class="wp-block-jetpack-slideshow_slide swiper-slide"><figure><img loading="lazy" decoding="async" width="3840" height="2095" alt="" class="wp-block-jetpack-slideshow_image wp-image-11475" data-id="11475" src="https://www.vccafe.com/wp-content/uploads/2024/11/strong-pmf-updated-1.avif"/></figure></li><li class="wp-block-jetpack-slideshow_slide swiper-slide"><figure><img loading="lazy" decoding="async" width="2816" height="1536" alt="" class="wp-block-jetpack-slideshow_image wp-image-11476" data-id="11476" src="https://www.vccafe.com/wp-content/uploads/2024/11/extreme-1.avif"/></figure></li><li class="wp-block-jetpack-slideshow_slide swiper-slide"><figure><img loading="lazy" decoding="async" width="2816" height="1536" alt="" class="wp-block-jetpack-slideshow_image wp-image-11477" data-id="11477" src="https://www.vccafe.com/wp-content/uploads/2024/11/4-levels-of-pmf-2.avif"/></figure></li></ul><a class="wp-block-jetpack-slideshow_button-prev swiper-button-prev swiper-button-white" role="button"></a><a class="wp-block-jetpack-slideshow_button-next swiper-button-next swiper-button-white" role="button"></a><a aria-label="Pause Slideshow" class="wp-block-jetpack-slideshow_button-pause" role="button"></a><div class="wp-block-jetpack-slideshow_pagination swiper-pagination swiper-pagination-white"></div></div></div>
  1539.  
  1540.  
  1541.  
  1542. <h2 id="beyond-the-checklist-the-real-signs" class="wp-block-heading">Beyond the Checklist: The Real Signs</h2>
  1543.  
  1544.  
  1545.  
  1546. <blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
  1547. <p>&#8220;When you achieve <span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">product-market fit</span>, your biggest problem becomes managing growth, not finding it. It&#8217;s like trying to drink from a fire hose instead of searching for water in a desert.&#8221;<br /></p>
  1548. <cite><em>— Sean Ellis, Growth Hackers</em></cite></blockquote>
  1549.  
  1550.  
  1551.  
  1552. <p>At the heart of PMF, is a deep understanding of the users for your product. <span class="mywpglossary-term-def" data-title="product-market-fit" data-url="https://www.vccafe.com/startup-and-vc-glossary/#product-market-fit">Product-market fit</span> isn&#8217;t just about checking boxes or hitting metrics. It&#8217;s about creating something that becomes an integral part of your users&#8217; lives or businesses. When you achieve it, you&#8217;ll know not just from the data, but from the way your entire company&#8217;s narrative changes from &#8220;pushing&#8221; to &#8220;keeping up.&#8221;</p>
  1553.  
  1554.  
  1555.  
  1556. <p>While checklists can be useful for tracking progress, they can&#8217;t capture the nuances of PMF. The path to real PMF involves constant iteration, experimentation, and the courage to <span class="mywpglossary-term-def" data-title="pivot" data-url="https://www.vccafe.com/startup-and-vc-glossary/#pivot">pivot</span> when necessary. But here&#8217;s what they don&#8217;t tell you about PMF:</p>
  1557.  
  1558.  
  1559.  
  1560. <ul class="wp-block-list">
  1561. <li><strong>Effortless Customer Conversations</strong><br />When nearing PMF, conversations shift from convincing to responding to demand.</li>
  1562.  
  1563.  
  1564.  
  1565. <li><strong>Deeper Problem Understanding</strong><br />As you approach PMF, your grasp of customer pain points sharpens, and your product evolves naturally into the solution.</li>
  1566.  
  1567.  
  1568.  
  1569. <li><strong>Constructive Criticism</strong><br />Feedback moves from broad skepticism to specific feature requests, signaling an alignment with core needs.</li>
  1570. </ul>
  1571.  
  1572.  
  1573.  
  1574. <p>Maja Voje, author of the Go To Market (GTM) Strategist book, offered some actionable advice on what tactics to apply in the startup&#8217;s<a href="https://www.linkedin.com/pulse/4-stages-go-to-market-strategy-rub%C3%A9n-dom%C3%ADnguez-ibar-ktfpf/?" data-type="link" data-id="https://www.linkedin.com/pulse/4-stages-go-to-market-strategy-rub%C3%A9n-dom%C3%ADnguez-ibar-ktfpf/?"> GTM motion in her latest post</a>.</p>
  1575.  
  1576.  
  1577.  
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  1582. <p>Your product doesn&#8217;t need to be perfect for everyone—it needs to be essential for YOUR users. It&#8217;s particularly exciting at the earliest level, or what First Round calls &#8216;Nascent&#8217;, feeling the pull from the market and having the users rave about your product is one of the best feelings in the startup journey. </p>]]></content:encoded>
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