Outcome-based Pricing and Selling the Work

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Mike Maples knows how AI startups can beat incumbents with billions of dollars. 

Mike—who wrote early checks to Twitter, Twitch, Okta, and Lyft, and now invests through Floodgate, the fund he cofounded—told me it's not about the smartest model, or raising the most money. 

Startups can win in AI with better strategy.

AI is changing the economics of startups—both how they’re started and how they’re funded. A new breed of companies is emerging, and I invited Mike on the show to talk about how they can best strategize. Last year, Mike co-authored a book called Pattern Breakers, which is essentially a guidebook to why there’s no guidebook to building companies. I really liked it, and my colleague Evan Armstrong reviewed it for Every, so I was glad to have him on. We talk about how shifts in technology create space for smaller players to compete—even with AI giants like OpenAI—and how to capitalize on them.

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Timestamps:

1. Introduction: 00:02:20
2. Innovate the business model, not just the product: 00:06:02
3. How startups can compete against the likes of OpenAI: 00:15:49
4. Mike’s take on DeepSeek: 00:19:34
5. Why the future has always belonged to the tinkerers: 00:21:44
6. How small teams today can make big money: 00:24:03
7. Find niches that incumbents can’t or don’t want to enter: 00:28:55
8. The qualities of the truly AI-native: 00:47:08
9. How AI changes the funding model for software companies: 00:53:46
10. Knowledge work is moving toward systems-level thinking: 00:58:23

Links to resources mentioned in the episode:

• Mike Maple: @m2jr
• The fund Mike confounded, Floodgate: @floodgatefund
• Evan’s piece reviewing Pattern Breakers: "A New Book of the Startup Bible" 
• Dan’s piece on the allocation economy: "The Knowledge Economy Is Over. Welcome to the Allocation Economy."