Brian Balfour: belief

Transcript context

…I'm really excited to have you back. We're just going to dive right in. Essentially, you've uncovered a really important trend or insight about how products are going to grow differently in the future, how growth is changing, and this is something that I think a lot of people need to hear, so I asked you to come on to share what you're seeing. I also think this is just very timely. I think you said you're going to say in the next six months things might significantly change, so I'm really excited to do this. We're going to spend this whole conversation on this insight. To set us up, what is just the big idea? What's the high-level idea here? Just like you, I've spent my whole career just really passionate about startups, figuring out how to build products that win, that emerge in new markets, and one of the things that I have learned over time or one of the things you hear a lot from a lot of folks is, to win, you have to really build a great product. A lot of advice boils down to that. And one of the things that I feel like I've banged my head against the wall in a lot of ways in my career is actually telling people that building a great product is one of those things that's necessary, but not sufficient, and actually the separation is between those that build really great distribution. So this general partner, his name's Alex Rampell, he's at Andreessen Horowitz, actually wrote this blog post 10 years ago back in I think 2015. In the essence of the blog post, he basically says one thing, which is that startups is a game of trying to get distribution before the incumbent can copy. It's this kind of concept of escape philosophy. On that note, which I think os a very good summary of what you're trying to do in a startup and distribution, is that we're right now living in this environment where that game of startups getting distribution faster than the incumbent has gotten way harder in a lot of ways, and in some small cases has gotten a little bit easier. But if we think about this, the way that it's gotten harder and some of the things that probably a lot of founders or folks working on the growth side that probably feel is that, one is that incumbents can copy faster these days. That window that you have to get that escape velocity has actually shrunk. It's decreased. The second thing is that a lot of the organic distribution that we've had, especially over the past few years, has really shrunk as well. Everybody's talking about the decline of SEO and clicks declining, but you also see it in some other cases. A lot of these social platforms don't really let you send as much traffic to sites. LinkedIn just changed their algorithm, which has really dropped organic distribution. Obviously the Twitter-to-X, transition that happened, right? TikTok's almost always been like that. And then the third way that it's gotten harder is that AI's really good at writing software and code generation, and so everybody's feeling this infinite increase of competition, especially at the startup level. YC is pumping out six of the same thing every single cohort. That's what it literally feels like. So it's gotten way harder. This game, this escape velocity game has gotten a lot harder. It's gotten easier in some very exceptional cases like the Cursor or something where AI has been like the spark. I know you wrote the blog post about the race car engine, and I think you said there's the spark plug in the engine. AI really created that, a new type of spark, a new type of interest of early adopters to fuel some new players in a short period of time. ne, and I think you said there's the spark plug in the engine. AI really created that, a new type of spark, a new type of interest of early adopters to fuel some new players in a short period of time. So it's amazing to see something like Cursor overtake market share of something like GitHub Copilot in nine months or less. That's how fast it happens. It's kind of crazy. But the main thing that people need to understand is, okay, well, if that's the game I'm playing, how to get to escape velocity before the incumbent? What are all the ways to do that and to really figure that out? There's multiple ways that this can happen, but one of the major ways, one of the major, major ways that we always see is that this can happen when new distribution platforms emerge, because when new distribution platforms emerge, startups are usually the fastest to take advantage of them. It's slower for the incumbents to move. It gives startups this opportunity essentially to play this game. Casey Winters wrote this blog post about two years ago, maybe 18 months ago, about the AI technology shift. His key point was the AI technology shift has been a technology shift that has not come with a distribution shift yet. If you look historically, we've had a bunch of technology shifts from the internet to the cloud to mobile to social, all of these different types of things. Some of them come with new distribution platforms, new ways to distribute products, and some of them don't, but the most powerful ones, the most impactful ones are the ones that do come with these new distribution platforms. His second key point was that these two things don't actually happen at once. Usually you get the technology shift, then you get the distribution shift a little bit later. Now we're a couple years from that post. We are a couple years into AI technology shift, and one of the things that I am seeing is all of the conditions, all of the ingredients for a new distribution platform to emerge are essentially happening. So I think we're at an inflection point where we're going to see this emerge really fast. The key thing for everybody to know is that as new distribution platforms emerge, they follow the same four-step cycle and it's a game that you're playing, that everybody's playing. Just like any game, you need to know the rules of the game. You need to know the steps of the game in order to have any sort of opportunity to win. That's the thing that I've lived through once again, both painfully and also in good ways, and is something that I'm keeping my eye on and something that I've been talking about. Before we go into that four-step cycle, I figured I'll pause there to see if you have any follow-up questions on that.…

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