Underappreciated how much the shale revolution unlocked the AI revolution.

some of my favorite founders from the manufacturing world - @jimbelosic - @PalmerLuckey - @OSHBuilt - @2112Power - @aphysicist - @MatthewChang there's like 100 more great ones. but i got to work and don't have time to @ them.

Moats! Does anyone have one anymore? Yes. Yes, they do. But only a small subset of what people call moats create real long-term value and defensibility. Not actually a moat: 1. Distribution: This does matter more than ever. Building products has gotten easier, but getting them to customers has not. Distribution, however, does not create durable defensibility. It helps create the raw ingredients for one, but it is not itself a moat. 2. Execution: Yes, speed is critical for startups. But a company that has to sprint forever is not a good business. Ultimately, it will misstep, slow down, and competition will catch up. Speed gives a company more shots on goal as it tries to build a great product and a great business, but it must eventually find something more durable. 3. Brand: The idea is that when everyone is building the same thing, the most resonant brand will win. But for startups, brand works more like customer acquisition spend: Put money in, get growth out. It’s not something that will effectively keep others from competing long-term. Brand can become a true moat over time (as with Coke or Nike or Apple), but it just takes too long to really matter for most startups. What you're looking for is compounding advantages: a self-reinforcing flywheel that gets stronger and stronger over time, ultimately making a company very hard to compete with long-term. There are only four compounding advantages that really matter. Every major tech company has at least one: 1. Switching costs: The more deeply embedded a product is in the way a customer works, the harder it is for that customer to switch. This increases retention and revenue per customer, which can be reinvested into the product. 2. Network effects: The more users a product has, the better it gets for everyone. This increases engagement and attracts more users. 3. Scale economies: The more volume a company has, the larger and more efficient its operations can be. This lowers unit costs, funding lower prices or a better product at the same price, further driving up volume. 4. Data effects: The more usage a product has, the more data it generates. This data can be used to improve the product and increase usage. If you can’t see the potential for any in the startup you’re considering joining, that’s a red flag. In today’s incredible post, @danhockenmaier shares a simple framework you can run in about an hour after getting an offer: 1. Identify a startup’s compounding advantage 2. Gauge how strong it could get 3. Measure whether it’s working Inside: dozens of real company examples, the specific metrics to track, and benchmarks for what good and great look like. Read it here: lennysnewsletter.com/p/how-t…

Every time something scarce became abundant, the world changed so fast that the people living through it mistook the beginning for the end. Food was scarce for a hundred thousand years. Agriculture made it abundant, and people who had spent every waking hour chasing their next meal suddenly had something they had never owned before. Time. That time became villages. The villages became cities. The cities became language carved into clay, and then law. Nobody standing in a wheat field understood they were building Rome. Information was scarce for millennia. The printing press made it abundant. The church lost its monopoly on knowledge, and within two centuries every throne in Europe was shaking. Nobody pulling letters from a press understood they were ending the divine right of kings. Energy was scarce until we learned to crack the earth open. Coal and oil made it abundant, and a single person could suddenly command the force of a thousand. Within one generation the entire structure of work turned inside out. Nobody shoveling coal understood they were building the middle class. The pattern never changes. A resource that was hoarded becomes available. The people who held it resist. The structures built on that scarcity fall. And whatever rises in their place is invisible from where everyone is standing. Here is the part almost everyone misses. Information stopped being scarce a long time ago. The library, the search engine, the endless feed. We have been drowning in information for decades, and it never set anyone free, because information just sits there. It answers only the question you already knew how to ask. Intelligence was the thing still locked away. A mind on the other side. Something that explains, argues back, catches your mistake, and meets you exactly where you are standing. The part that bends toward you instead of forcing you to bend toward it. That is what broke open. For the first time, a person with nothing but curiosity and a connection can reach an intelligence that teaches, challenges, and builds alongside them in real time. No tuition. No admissions office. No permission. The distance between what a person can imagine and what they can actually make is collapsing in front of us. And the people most threatened by that are not the ones without talent. They are the ones whose entire standing depends on talent staying rare. Every credential, every hierarchy, every quiet system that decided who was allowed to build and who was told to watch, is resting on a foundation dissolving underneath it. They will fight it. They always do. The church fought the press. The aristocracy fought the vote. The owners fought the union. Every single time a scarce thing became abundant, the ones who controlled it warned everyone else that the sky was falling. The sky was never falling. The ceiling was lifting. And the people underneath it, the ones who had been told their whole lives that the ceiling was the sky, finally looked up and saw nothing there to stop them. That is what is happening right now. Intelligence was never rare. Access to it was. Access just became free. Whatever gets built in the next ten years will not come from the rooms we are all watching. It will come from someone who was never supposed to have the tools, who right now has no idea that the thing they are doing has a name, or a scale, or a future. Same as the wheat field. Same as the press. Same as the coal. We never recognize Rome while we are still building it.

Bending Spoons is worth $24 billion. It trades at 8x ARR and buys B2B companies at 2.3x to 2.7x ARR. 5 learnings from its first 102 days as a public company: #1. Revenue grew 126%. Organic growth was 3%. Nearly all of the $393M of added revenue in Q2 came from six acquisitions. The CEO says he doesn't optimize for organic growth. He optimizes for EPS, which grew 167%. #2. R&D is 8% of revenue. Sales and marketing is 10%. HubSpot and Datadog each spend about 70% of revenue on those two lines. Bending Spoons spends 18.6%. About 60 people run Vimeo. The core team is under 700 people, at $4M+ of revenue each. #3. Miro sold at 2.3x ARR, five weeks after Airtable at 2.7x. $1.08B of ARR for $2.64B, signed 37 days apart. Miro was valued at $17.5B in 2022. Bending Spoons underwrites to a 25% unlevered return. At its 54% margin, that supports about 2.2x ARR. #4. 1,830 people came with AOL, Eventbrite and Vimeo. Only a few hundred were kept. Airtable arrived with 935 employees, more than Bending Spoons’ entire core team. Reorganization costs were $51M in Q2 alone. #5. AI writes 90%+ of the code. Customers pay about 10% more for the AI features. The CEO says a customer who paid 100 will now pay about 110. The AI gain shows up as capacity: the same 60 people on a business four times the size. If you're at $300M to $800M in ARR growing under 25%, this is the buyer most likely to at least call. But ... the only do a handful of deals a year. Its own stock trades at roughly 7x to 8x revenue. Your revenue is worth about 3x more inside Bending Spoons than it is in your hands.

Founders seeking venture capital: Buyer beware. Can you imagine trying to build a huge company using dilutive financing, only to get into serious litigation with your own VC? Hugely unproductive and energy sucking. Let’s be honest, most of us (you 🫵) don’t need venture capital. You need revenue and to build a team. You need to grind. That’s why I’m so bullish on HELOC founders. At the same time, this is a rich people problem. “My $1BN series B was so over subscribed I didn’t want to include my early supporters”. Like, that’s not a real problem. Same as being upset that your iPhone 18 is going to ship a week late. Seriously, there are starving kids in the world and people got hit by a hurricane today. Based on Isaiah’s letter below, Valar absolutely violated their contract with the VC below. They gave away rights in exchange for much needed capital. That’s offer and consideration. I struggle to see how the court sides with Valar based on the argument: your honor, I didn’t want to honor the bargain I made, because I wanted to give Sequoia more. There’s a lesson here. You have to be able to read your own contracts. This takes experience and discipline. I’m positive Isaiah read that clause multiple times, but never thought twice about it, until he regretted giving it to all his major shareholders, because he suddenly wanted something different. Well, that’s not exactly how contracts work. When you contract you have to be able to picture the future. The voting of a majority of shareholders to strip the right is interesting. There’s a chance that it’s lawful, but there’s a chance it’s not. It’s either a genius move or it’s breach of contract. To Isaiah’s point, the courts will decide. The biggest problem was the timing, it was clearly done to circumvent and disadvantage the lone holdout, the day before the funding, in order to invalidate the prior agreement after the intention of Valar was clear. My guess is there is case law on this is on the side of the VC and the timeline presented by the plaintiff will be brutal. Preserve all records, texts, phone calls, and emails will be examined! Again, if you don’t want to live by the inconvenient parts of the contract - don’t put it in the contract! The biggest question, instead of instigating litigation, why not just honor the contract and give the VC the 5% pro rata they were due? When did a handshake stop being a handshake? There’s also serious risk that Isaiah’s letter below is tortious interference or defamation. That can carry unwanted personal liability. If Valar loses the first case, Isaiah very well could lose the second case. Not worth the risk. And yes, I know Isaiah was livid about the whole thing and his own lawyers gassed him up to sue in Delaware. He wanted to do what he thought was right, and the VC only cared about their profit. I wish them both good luck and an equally sucky out of court settlement. I hope not to read about it again. It’s a clear case of buyer’s remorse. There were more creative ways to solve this, like letting Sequoia buy out the VC and offering up warrants as additional compensation to the VC. Prediction: Isaiah will have to pay them to go away and will later regret the whole thing. Benefit: Valar nuked (pun) their pro-rata spring back provision. Founder, you don’t need the headache of litigation, and you don’t need the headache of VC’s. -your neighborhood engineer

How I’ve Used AI to Generate a Few Hundred Thousand Dollars in New Revenue in 4–6 Weeks I have a story about how I have used AI coupled with changed human behavior to drive a significant change to business results in my business and very much increase the top line. I am a vocal critic of useless masturbatory vibe coding and applications of AI which do not actually meaningfully change business outcomes in any way (If you’re new here) But I’m also simultaneously an avid user of AI, praying that somehow the gods of superintelligence will rescue my meager profit margins and save me from the permanent underclass. Here’s something I’ve done over the past 4–6 weeks that has added a few hundred thousand dollars in top-line revenue to our business. The Problem My current cardinal sin as a business owner is that I allow proposals to stack up. I do site visits, and I’m unable to turn around a bid in a timely manner. The way you ACTUALLY solve this problem is by simplifying your service offering as a business, so you can provide pricing on the spot and do a one-call close (aka sit down at the kitchen table and hammer out a contract with a client). I’m dumb, and I’ve designed a business that is too complex to be able to provide that (at this time). As a side note, caveat: I’m working on rearchitecting everything so that we get there, but we’re not there right now. At the moment, we’re living the experience that most contractors fit into: 1. You get a call. 2. Somebody says, “Hey, can you come out and look at this and give me a price for how much it would cost to do it?” 3. You go out, look at the job, take some measurements, and write down the scope. 4. You try and figure out how much it’ll cost, and then you go back to the client with the pricing. This takes forever, is super inaccurate, is a horrific experience for everybody involved, and is the reason why it’s hard to get contractors to come out and it’s hard to get proposals out of them. It’s not because they hate money or because they’re bad at their job. It’s just that trying to reinvent the wheel every single time you put a proposal together is an impossible exercise. As the contractor or service provider, you’re terrified of providing the wrong price because, if you give the wrong price, it ends up being, at worst, a bad experience. It is, at best, a bad experience for the client, and at worst, it’ll put you out of business and into litigation or something of the sort. So you get stuck on perfection, and as we all know, perfection is the enemy of good, and the bids pile up. We get 5 to 7 leads a day, and there are times when I’m running 3 to 5 sales meetings per day. As you can imagine, if there’s any level of complexity to those jobs, it’s just an impossible exercise. You end up having clients calling you every single day, texting, asking, “Where’s my proposal?” They think you’re ghosting them when, in reality, you’re just trying to do your best to somehow deliver projects while also pricing new projects and figuring out how to keep everything together at the seams. Here’s how I’ve used AI (credit where credit is due) to go from perfection paralysis to a good-enough output, and how it’s driven multiple six figures of revenue for us here at West Coast Deck. The Tools I’m not using some sort of crazy technology stack. I’m not even using any of these MCP connectors or API connectors. I still don’t know what an MCP is. I don’t even know what an API is, so I don’t have the ability to figure any of that stuff out. Which means that if I can do this, you guys can probably figure it out too. The tools I’m using are as follows: * Quo w recording * A Plaud Pin Pro * A ChatGPT Pro subscription * A PolyCam subscription * A Company Cam subscription * A Stanley Fat Max 30 ft. tape measure Here’s What I Do The first thing is, I capture all transcripts of phone conversations and email traffic that we’ve had with the client. Next, I drive to the site. I park outside, and I turn on the plot plan. I start narrating. I say, “Here’s the address. I’m at 123 Main Street. This is Tom and Judy’s house. They have this type of deck project with this type of scope. I’m about to walk into the site and do a job walk and review the work.” Then I start the meeting. I tell the client I’m using AI tools to record, and then I essentially do a very verbal job walk and interview with them. I ask them a lot of questions about what they want to get done, and then I intentionally regurgitate back to them everything that they’ve said. I discuss my findings on the job site with them. I talk through different things. I pull measurements with my tape measure, say the measurements out loud, and talk through the universe of outcomes and options. I talk about materials. I try to be as verbal as possible, knowing that my AI recorder is capturing everything. Now, here is part of why I think this has been so effective for our business. The forcing function of me going through all of the options and being super verbal helps to create expectations with the client, help them understand what will happen, what might be possible, and what the general job scope is. It’s forcing me to be overly communicative with prospects. Before I leave the job site, I take a Polycam 3D LiDAR scan of the entire backyard, which is useful for taking measurements and referencing later if I need to look at details. I also then open Company Cam, and I do a video walkthrough where I reiterate everything that we just reviewed with the client on video. It’s like triPLICATE information: recording what scope is, what needs to happen, and what the next steps are. After the Site Visit The next step is: 1. I say goodbye to the client. 2. I go out to my truck, sit down, and talk to the Plod pin a little bit more about anything that wasn’t appropriate to discuss in front of the client or that maybe I missed and that I need to capture. 3. I end the recording. 4. I transfer the data from the Plod pin into the Plod app. 5. I copy the transcript from the recording into ChatGPT. At that point, I’m also adding any previous transcripts from Quo, any pictures that they’ve sent us, any videos that they’ve sent us historically, and any additional information. There are three more things that happen in the process: 1. I send a recap email to the client with next steps. 2. I generate a scope of work and proposal. 3. I reference our historic library and universe of proposals for pricing. My Super Scientific AI Prompts Normally, you have to buy my course to get my super scientific AI prompts, but I’ll give them away for free here. The first prompt is this: Please write a site visit recap email based on these transcripts and information, and send it to the client. Took me months and months to come up with that prompt. Should make you millions of dollars Even just that little step has made a huge difference in the customer experience. Literally 5 minutes after the site visit, they get a super detailed email from me recapping everything, talking about next steps, and what the project experience will be like for them. The next prompt is also probably worth millions of dollars. Please feel free to steal it. Please write a construction proposal based on the site visit transcript and all the information. Reference my previous proposals. And it spits out something that honestly is plenty good enough to sit down and review as a client. The next step is: you can ask it to reference pricing from previous proposals, or you can just look at your price book and manually input pricing into the detailed proposal. The Results I can’t wait for all the comments from people saying, “Oh, you should do this better.” That’s part of why I post this kind of stuff, because I want people to tell me how to do it better. We already have a V2, V3, and V4 of this planned, but this has first concept already resulted in a couple hundred thousand dollars in initial sales in just 4 to 6 weeks. Anybody could figure this out. It does not take any sort of AI wizardry. It’s just basic, rudimentary tools that are available to anybody. Provecho! (Happy hunting)

Nearly all market— bonds, gold, oil, stocks— predicting same thing. Democrats landslide.

flashscaling = decade of growth in a year there is a small handful of companies (including the labs) scaling like no company ever before, and 1) the GTM folks and 2) finance/compute folks at those companies will have uniquely in-demand experience in the next era

Some people might disagree with this, but genuinely think that investor relations and capital formation will become the most important role across all the large private equity firms The investing itself is more or less commoditized People are all paying the same multiples for these companies, everyone knows what the key diligence focus areas should be, and proprietary deals barely exist at scale Very few firms add any unique operational value, and financial engineering is widespread knowledge at this point The only competitive advantage you have as a business is how much capital you can raise from your LPs, and then deploying that capital to earn management fees Investor relations and capital formation will end up as the roles that firms actually care the most about, because that is what drives the earnings engines for the firm

Playing off what Caleb said and you said, let me propose this: 1) Migrate to a concierge service with a *few* in house self manufacturing capabilities. 2) Own the customer relationship, the entire catalogue. Sales and customer service are everything. 3) Integrate your pricing and supply chain with the scaled automated players to feed you components 4) sell kits or assemblies to your end customer. 80% sourced, 20% self manufactured with in house capabilities and artisan machinists 5) offer transparent pricing and delivery to your customers 6) revenue goes WAY up, square footage does not 7) customer continues to ask you what else you can do, invest in engineering 8) custome services 9) revenue up 10) repeat step 7