Service Businesses, Ferris on Fame, Government Contracts, and 36 Questions
Four Insights #5: Navigating the Frontier of AI, Entrepreneurship, and Human Connection
Welcome back to Four Insights, a weekly newsletter where I share unique challenges and provide relevant insights from the perspective of a startup CEO and operator. If you're a founder, employee of a tech company, or investor, you'll find practical advice and inspiration on founder/entrepreneur performance, strategy, sales, and fundraising tactics.
This is my Four Thursdays edition, a newsletter where I share insights on actionable insights and practical advice on personal finance, health, productivity, parenting, and more.
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Welcome back to Four Thursdays, a weekly newsletter where I share insights on actionable insights and practical advice on personal finance, health, productivity, parenting, and more.
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The Rise of AI-Enabled Services
Jake Saper and Jessica Cohen from Emergent Capital recently wrote about how AI-enabled services are poised to disrupt the traditional services industry and how service businesses that leverage both AI and humans to deliver holistic solutions to clients have the potential to outpace the services behemoths that have dominated for the last 50 years. This got me thinking about the age-old adage in venture-backed businesses that service businesses make terrible venture-backed startup ideas. In my startup journey, I have seen a graveyard of startups build tax, accounting, and other services-focused startups that end up going nowhere, so the question is can AI swing the pendulum the other way? Founding companies are all about timing, I wonder if founders can resurrect these ideas with Gen-AI-powered LLMs. Even more, would these new companies fare better? We see an example like Harvey, and the company cited by Emergent. Stephanie Palazzolo from the Information had her take on this new phenomenon as well and she was a bit bleaker:
It seems to me that software incumbents are adapting to the GenAI wave, and services incumbents may struggle, especially with advisory-focused projects where clients are less likely to trust a bot. The Emergence team put together a good mental model for how to think about where the opportunities might come from:
Some of these areas are already crowded when you think about Pen Testing/SOC2-type companies like Vanta, Secureframe, and Drata but there are also opportunities for software sold to law firms, banks, and even Deloitte to help them do more with less. As buyers increasingly want a single vendor to be held responsible for getting the job done well, the lines between software and services firms may blur, and most importantly Gen-AI startups need to make money and consulting services-type business models may be what is needed to get started.
Vanta’s CEO had a good short video on how this could be done for Gen-AI companies:
Sources:
The Death of Deloitte? AI-Enabled Services Are Opening A Whole New Market
Why Many AI Startups Are Consultancies Posing as Software Businesses
The Downsides of Fame
On a different note, I recently listened to an interesting podcast episode featuring Tim Ferriss discussing the pitfalls of pursuing fame and he dug into why he invested no time or money into building his YouTube channel. Now, a full stop to be in Ferris’s position is a place of privilege, and the preface is that he has tasted enough fame to say these things. I came across his takes as he was a guest on the Invest Like the Best podcast episode this week and it was generally a good listen as Patrick O’Shaughnessy quizzed Ferris on how he’s built his media empire over the past ten years. One interesting topic Ferris discussed was his insights on the pitfalls of pursuing fame.
He referenced a blog post with this quote from John Adams once wrote:
"Let the cymbals of popularity tinkle still. Let the butterflies of fame glitter with their wings. I shall envy neither their music nor their colors."
I think this is a real factor for a growing amount of creators, founders, and builders it seems as though building a major audience is the end goal — but the actual goal is all the spoils without the fame. Now of course, Ferris celebrates crossing one billion podcasts downloads in the same episode but it does make you think about how fame can impact the brain in an online world filled with all types of possibilities for threats from people you do not even know.
As Henry David Thoreau said:
"The cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run."
Sources:
11 Reasons Not to Become Famous (or "A Few Lessons Learned Since 2007")
Tim Ferriss - Curating Curiosities
GovDash: Helping Businesses Land Government Contracts with AI
GovDash, a startup founded by Sean Doherty, aims to help businesses use AI to land government contracts. This is a product idea that I have had from my days of thinking I wanted to win government contracts, the experience was almost defining. GovDash fits this theme of services that are enhanced by AI. The end game if they can win is for government contractors to never have to log into a site and make bids again. This is a medium-sized series A round, but this $10 million should be enough to prove this out over the next 18 months. This is a business I will keep my eye on for sure.
Source:
GovDash aims to help businesses use AI to land government contracts
36 Questions That Lead to Love
As a bonus insight, have you heard of the 36 questions that lead to love? I originally came across these questions and did the exercise with my wife on our baby moon a few years ago. Recently, it came back into my day-to-day as I was reading through Charles Duhig’s new book Supercommunicators. Here is an expert from the book built on the 36 questions that lead to love:
At the time, one prevailing theory within psychology said that, in order to understand others—and persuade them to listen to us—we should engage in what is known as perspective taking: We should try to see a situation from the other person’s perspective and show them we empathize.
Developed by psychologist Arthur Aron, these questions are designed to foster intimacy and connection between two people. Building strong relationships is crucial for any founder or leader and I think intimacy with your team is an underrated skill set the more I learn the more I see how deep-seated relationships drive a lot of opportunity. Try asking these questions on your next date or team-building exercise – you might be surprised by the results.
Sources:
The 36 Questions That Lead to Love
Supercommunicators: How to Unlock the Secret Language of Connection.
Trump on Trial, Big Bank Earnings, and Guest Charles Duhigg
Church Announcements
I will be at Stripe Sessions next week for the second year in a row here in SF.
I am on the fence about The Future of Insurance USA 2024 in Chicago May 15-16.
I am launching my Weekend Four edition this week focused on things outside of tech.
Deep dives are returning — I always like to look at new companies and emerging trends so I am bringing back deep dives. More to come.
My Stretch Four Podcast returns next week.
That wraps up this week's Four Insights. If you found this valuable, please consider subscribing and sharing with your network. I'll be back next week with more insights to help you navigate the startup world.
Until then,
Matt
P.S. What topics would you like me to cover in future issues? Shoot me an email at matt@stretchfour.co or comment below this email and let me know