Donat Plenter @Donat_Plenter - Twitter Profile

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6 days ago

I had to pipe in on this with this monster diatribe - which hopefully will actually help folks looking to make their billions... I agree with you about no moats... but with some caveats, since this is no small matter. When we started CEO CoPilot... and we have a ton of "fancy" technology, we knew that anyone can throw some bucks against it and replicate it. Technologically. We were not "that" dumb. NOTHING we actually built can even remotely be regarded as having a "moat." But we needed a moat!!!!! What's the moat???? This is how we crossed the moat. For better or worse, we concluded that there are 3 possible moat categories and made the $B bet. On the "3 moat options basis".... All options are like chewing glass of course. Pick your broken bottle: Moat 1. Data that nobody has. Google, FB, etc. Tough nuts to crack, obviously. Don't recommend it unless you own a country and are willing to tax every citizen 100% to pay for it. Moat 2. Establish a new system and entrench it so the cost of replacement is just too high... docusign, microsoft, etc... all of them. This is a tough one, AND it has to be coupled to ALSO replacing a legacy system or process while converting a legacy framework to AI driven - IF there's a market. These dudes will go away eventually... but tread carefully! You're the fly and they are the swatter. Moat 3. Create something entirely new, unique and with a strong "this is how the world will work in the future". Like AI infrastructure, LLMs, etc... Couldn't think of anything that didn't require a few billion against 1,000% risk. Besides, there are already enough players in that market with zero actual profit. Not even close. Plus we didn't have $25 billion lying around for a 5 year runway to bankruptcy... We went with #2. Here's why (the actual logic of the bet). It's actually a multi-moat strategy that starts with a trench of a moat, then we dig it deeper and wider... and wider, until fewer and fewer are able to/willing to cross it to storm our castle. The foundation of the strategy, so if you think I'm full of shit, at least you know what I'm shoveling. 1. Over time vertical SaaS will replace legacy. It's inevitable... but will take a few years. For example, we have lead generation, doc management, spreadsheets, video/calendar meetings, full VoIp system, CRM, email client, even NATIVE AI agents, and more.... NOT built inside an LLM, etc. Pretty easy to build now with a just a few mil. Although, there's already dilution of legacy grip with more and more in-house solutions. That's already creeping along. The walls are cracking. Your job is to find the cracks, not try to bring the wall down. But what we built is actually NOT the "product." It CANNOT be the product. Can't say.... "OK guys, we're gonna wipe out Microsoft! ... Take a chill pill man." ***It's the delivery VEHICLE***. Big diff. Trojan horse? Back to Earth... Let's look at an example focused on small businesses. For us, it's home services at the moment. Fractional CFOs, CTOs, COOs, etc. What do they do? They charge big bananas to gather data then apply a bunch of formulas, then create a 200 page report 6 months later. Stale. Holding your dick in your hand. And they walk away... or you fork out more bananas for them to hold your hand 5 to 10 hours a week. There is nothing in that process that cannot be automated, and in many cases, several pieces have already been independently automated. Collect the data in real time - invoice by invoice - apply the formulas and spit out day-by-day step by step instructions for the business owner. There's a huge operation/machine in the US focused on SMBs in home services targeting businesses in the $1M to $5M range (I won't name it here.) They charge $40K for a 2 day weekend event and you get a binder! The tab can go up to $190K where the business owner gets a 200 page report 6 months later - after they paid up. That's about it. Fully automated, any business owner can get 10X more intel and value, in real time, step by step for 90% less. This is just ONE example of hundreds of opportunities. If not thousands. Just look... will ya? We do it so the business owner can simply pick up the phone and talk to their AI Co-CEO that can report on, update and change any value, generate reports, email, text and knows EVERYTHING about business valuation, operations, technology, etc. 24/7/365. Of course, automating underlying functions is also important... like dispatch for home services, etc. Doing those kinds of things, at the same time is "peripheral and integral" if that makes sense. This is part of your "long term moat". We're looking at everything in "moat layers" over a time horizon. We're very "moat-ivated", and I would say we have a "multi-moat" strategy. ***Done right, VERY quickly, the cost of cancelling is NOT associated with "we don't need those guys anymore" but instead, with "Our revenue will drop if we get rid of those guys." I think voice is massively important. As a business owner you TALK to your GM, your staff, etc. It's the human way. I think critical... did I emphasize that enough? No need for the owner to "learn" systems and integrations, and deal with a bunch of people who have to look up the last chat in a CRM to even know your name. So the owner gets a live, real time, working 24/7/365 suite of C levels that don't ask for a paycheck. At a cost about 90% less than real, human (and very inefficient) "experts." Most of whom stopped reading/learning the after the last day of college. I know that for an absolute fact is true in banking. The market is MASSIVE because 65% of the market simply cannot afford enterprise grade services. Not the tools OR the expertise. So we have a bunch of mini-moats, which, when combined, over time will become a maxi-moat. That's the plan. It could be yours too. 1. Replacing an entire legacy industry serving a market that enterprise doesn't even touch because the mass market can't afford it. It's a far bigger market in just about every respect. The basis is simple: Automate what legacy and what the "experts" do by leveraging AI, drop the cost by 90%, offer it to a market 10X bigger than enterprise targets and make sure that they actually get MUCH better (10x) value then even enterprise has access to - or could even offer. Not magic. Access just 10% of the mass SMB home services market over 1-2 years and you easily have - not just a "valuation" in the many billions, but an actual business that's actually worth all the zeros behind it without some thumb-in-the-wind based bullshit valuation "established" while sitting in a golf cart to make sure you can get MORE money. And run it with like... a TINY staff. 2. 90% of "founders" are focused on enterprise and "optimizing" legacy/bolt on systems. Man oh man... enjoy the Ferrari until you sail off the cliff with them. 3. Large enterprise systems WILL collapse under the bolt-on weight layers. It's unsustainable complexity and inefficiency. I'm wiling to bet (don't know for sure. Not researched, and don't care to) that legacy enterprise CEOs have NO idea if AI integrations are actually helping or hurting the bottom line. They probably don't even know how to track it! What do you track EXACTLY? I have no kluski. Neither do their executives, departments heads, managers... maybe the night cleaner does. 4. Legacy charges by the seat, usage, features and functions and upsells. As compute costs and infrastructure complexity also creep up, their prices have to go up too. But every building has a top floor, and most pricing now is close to the penthouse. 5. The complexity in this model is astronomical - Imagine a simple CRM. Easy to build. But then imagine adapting that lowly CRM to 100 industries with integrations, customization and up sells. Now that humble CRM just became a monster that requires a roomful of (technical nurses) engineers just to keep the thing working - instead of 1 engineer that oversees several functions with only one eye open. 6. The best model (in my opinion) is the BYOK model. One platform. A REAL Full stack, no integrations, no usage fees, no features to sell and manage. That reduces operating expenses by over 90%. And it's a stable infrastructure. Everyone gets everything. If it breaks, easy/fast fix. Like Elon's mantra. Delete... delete... delete... #1 advice I ever came across. I even delete vegetables from my dinner plate. My wife calls me "Mr. Delete." It works. 7. Legacy absolutely cannot pivot. Gut everything and start over? Nope. The shareholders will be pissed. They're already pissed. But the CEOs have to do "something" so it's "bolt on city". While they can. But most CEOs are just employees anyway. Collecting their millions, they don't give a shit, even if they know they're the captain of the Titanic. Most know it. 8. It is 100% inevitable that as "full stack" solutions emerge, most legacy will die out. That's the way the world has always worked. Things change. Everything eventually ends up 6ft under. I will too. It's the timing we're not sure of. That's what make life similar to going to a casino. Play enough... you'll win. 9. Data is "hogged" and SOLD by the big guns, and there are concerns in that direction. When you don't need Google, or Microsoft, or any other large "data center" and 100% of the data stays under the control and OWNERSHIP of the customer/user, data becomes very valuable... why are the big data centers PAYING for YOUR data now? Times are changing, and now they are becoming data resellers... more and more. Not to mention that most data... for example (my opinion only) coming out of the big farts like Meta is basically stale and useless. Unless you're targeting 50-65 year olds talking about their hips, knees, the weather or grand kids. Don't kid yourself. Meta is not the only one. Open the lid and look what's down there in terms of actual quality data. Then flush. That's why they're buying data - because they collectively no longer control it all and there's shit floating on top. 9. So the mini-moats are bundled into subject matter expertise, technological development speed, deployment speed, etc. - until you become a "docusign" of sorts and become accepted as "the new standard - the new baseline." Especially powerful if you can serve a mass market with better than enterprise grade solutions for 90% less. And you CAN. They simply CANNOT compete. Structurally impossible. They're wearing custom made suits and you're in your underwear. You can change fast into whatever is needed. 10. The focus on using AI to "save" and to become "more efficient" is a very, very dangerous path. There's no ROI in doing that after implementation and compute costs, especially after taking into account the new layer of complexity and integrations. They're turning a 3 layer cheap lasagna into a 15 layer master piece pie that eventually nobody will want or can afford to pay for. 11. Any path that you pick, in my opinion MUST focus on revenue generation or you'll end up circling the drain. At least think about it. Or call the financial plumber to fish you out. (Could be your VC.) 12. The cost to a customer of cancelling your services must result in a measurable LOSS in REVENUE. They must always feel the PAIN of potential loss. Honey... don't go! Please... If they don't need you, they never did. Sound familiar? Before I wrap this up... if you're still we me. I still have 3 ham bones to pick about the new venture mentality... that kinda makes me want to barf. Gag at minimum. 1. Speed is king. 2. Sell before you build. 3. Only create a "minimum viable product". -------------- 1. Speed is for the VCs pocketbook. Makes sense though, for them. 2. Again. Market validation for the VC. 3. Minimum viable product - also for the VC. I completely agree with Elon Musk: Value has to exist before it can be captured, founders who start with "how do I make money" are optimizing a number with nothing behind it yet. Create enormous value first, the money will follow. It's the law of reciprocity... at least I think it is... it's some kind of law anyway. If you do enough research and just talk to enough people, read a lot, the market and the need becomes crystal clear. Most "founders" just ask a psychic or mediate or something. Or ask for validation on social media. they call that research. If you don't have a 100 pages of research, then you'd better find a VC and spend their money. Most do it seems. Of course, you'll get a tight noose around your neck and eventually you'll have to bend over and smile... to be fair, I HAVE seen (actually known of only) a number of VC deals that are actually sensible, well thought out funding arrangements that don't end up with a 2x4 in the keester of the founder. So there ARE great VCs out there. Just tread carefully. Now. If you DARE, build a MAXIMUM viable product that offers 10x more value at 10% the cost of the "next guy." Really... it's NOT hard. Just do it and stop flapping your gums to get more followers for the sake of something... whatever it is. For a long time I worked from 4am to 4pm. 7 days a week. No word of a lie. Thank God that's over... but that's what it took. ASS IN CHAIR. And it didn't kill me. Now I can actually take the time to write such a diatribe... and enjoy it. And actually hope it helps. Even if it's just one sentence of it. The start WILL BE SLOW - No matter how incredible your product/offer is. Over time, momentum will build, then accelerate. Then, all of a sudden, the market gets whiplash and scrambles to get aboard. That's when people say... "what do you mean you're not using "XYZ"...?" But this takes time, and (most) VCs don't like that... even though they KNOW that it takes time. We're in the first stage. Slow, under the radar. Like a herd of elephants that will emerge from the fog... then.... holy shit who are these guys? That's the plan anyway. We're not a herd yet... maybe a couple of elephants, but a growing family. And in the fog. Under cover. End of diatribe. Hope it helped.

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Donat Plenter

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