Alan Li

[Alan Li @alanliberkeley]

We make mirror signs :) And a lot of other cool things for events / pop ups / physical spaces.

[Michelle Marcelline @michwirantono]

100 aura points for this welcome mirror at the @resend x @ycombinator devtools meetup

[Alan Li @alanliberkeley]

@michwirantono @resend @ycombinator we made this mirror sign! Glad you all like it :)

[Alan Li @alanliberkeley]

@rrhoover Interviewed the founder of memento who owns the photobooth booth in west village. They make a lot!

https://t.co/gZQDry9fy5

[Alan Li @alanliberkeley]

@jimbelosic Congrats Jim! Have bought a few parts from you and have enjoyed the process

[Alan Li @alanliberkeley]

Start in Claude cowork, finish in codex

[Alan Li @alanliberkeley]

@elonmusk What gauge stainless steel are you using?

[Alan Li @alanliberkeley]

@tobi @Shopify YES

[Alan Li @alanliberkeley]

@johncoogan @TurnerNovak @sama Incredible! Congrats John

[Claude @claudeai]

You can now enable Claude to use your computer to complete tasks.

It opens your apps, navigates your browser, fills in spreadsheets—anything you'd do sitting at your desk.

Research preview in Claude Cowork and Claude Code, macOS only.

[Alan Li @alanliberkeley]

Really impressed with how Chloe and Pink handled this

[Pop Crave @PopCrave]

Olympic snowboarder Chloe Kim confuses P!nk with Kelly Clarkson:

“Growing up, when I was like 12... I loved listening to your music... Like 'What doesn't kill you makes you...'

[Alan Li @alanliberkeley]

@MattiSchroder Thank you!!

[Alan Li @alanliberkeley]

@MattiSchroder Amazing! Re: 2 it’s for people purchasing their labels directly on Shopify.

[Alan Li @alanliberkeley]

@ycombinator @aidan__pratt Congrats!!

[Tanay Kothari @tankots]

We offered 5 people a Porsche 911 GT3 RS if they could get @WisprFlow to make a mistake

It's the fastest and most accurate AI voice dictation app that's 3x more accurate than ChatGPT, Claude, or Siri.

Today, we’re finally launching on Android. Download now: https://t.co/TJhnUhDSLv

As a part of the launch, we’re giving away 6 months of Wispr Flow Pro for free.

Like, retweet and comment ‘Wispr Flow’ to get it. Enjoy.

— Written with Wispr Flow

[Alan Li @alanliberkeley]

@tankots @WisprFlow Wispr Flow

[Claude @claudeai]

Our latest Claude Code hackathon is officially a wrap.

500 builders spent a week exploring what they could do with Opus 4.6 and Claude Code.

Meet the winners:

[Matt Shumer @mattshumer_]

https://t.co/ivXRKXJvQg

[Ethan Brooks @alt_w_v_g]

Everyone suddenly wants to “buy a small business” and it is a terrible idea

Usually HVAC, plumbing, roofing, etc.

Usually 80% debt and with a personal guarantee

Here’s why the numbers don’t work once you move from Excel to cash:

Hypothetical Setup:
- Revenue = $2M
- Industry average gross margin = ~45% ($900K) gross profit
- Operating expenses (SG&A, admin, insurance, etc.) = $600K
- EBITDA = $300K (15%)

Purchase Price:
- Price = $1.5M (5x EBITDA)
- 80% financed = $1.2M debt, $300K cash equity

Debt Service:
- $1.2M loan at 10% interest, 7-year amortization = ~$246K annual payment
- EBITDA $300K – $246K = $54K pre-tax, pre-CapEx, pre-working capital
- If you pay yourself a ~$200K salary, cash flow = ($146K)

Debt Service Coverage Ratio:
- $300K ÷ $246K = ~1.22x before CapEx and taxes,
but after reinvestment and your salary, coverage < ~0.3x

CapEx & Maintenance:
- 3 service trucks at ~$50K each, 7-year life = ~$21K/year
- Equipment, software, tools, uniforms, insurance, facilities = ~$30 – 40K/year
- Annual maintenance CapEx = $60K

Working Capital:
- AR average 45 days, AP 30 days = ~15-day gap
- 15/365 * $2.0M = ~$82K of operating float required

Free Cash Flow Walk:

EBITDA $300K
– CapEx $60K
– ΔNWC $80K
– Debt service $246K
= ($86K pre-tax), pre-owner draw

Even before paying yourself, you’re cash-negative

Sensitivity Analysis:
- 2% margin compression on $2M revenue = ~($40K) hit
- 5% material inflation on COGS (~$1.1M) = ~($55K) hit
- 10% revenue dip at 45% gross margin = ~($90K) hit to gross profit

Combined = ~($185K) reduction to EBITDA, now ~$115K

Free cash flow = $115K – $60K – $80K – $246K = ~($271K)

Return on equity:
- You invested $300K cash
- At best you break even in year 1
- At worst, you lose ~($271K) and still owe $1.2M personally
- That’s near-zero to negative ROE in practice, with full recourse risk

Cash Reality:
- Suppliers want payment every Friday
- Customers pay 30 – 60 days out (if you are lucky)
- Bank drafts monthly
- Payroll never stops

Your “ownership” income isn’t leveraged equity, it’s subordinated cash flow

The Myth: “Buy a boring business and get rich”

The Math:
- You bought a $2M revenue job with gross margin volatility, thin EBITDA, high leverage, and personal recourse
- You didn’t escape the W-2
- You created one with negative working capital and a personal guarantee

[Preston Rutherford @PrestonRuther10]

Chubbies has done over $100M so far this year, increasing EBITDA margin > 50% YoY. Your classic overnight success that took 14 years. One of the many things they do so well to continually drive balanced, profitable growth where margins can * increase * over time is follow the 95/5 rule as well as any brand I’ve seen. 

However, for the first 5 years, I basically did the exact opposite of what the rule says. My loss is your gain, so here are:

1) Three things I learned about the 95/5 rule
2) Three ways you can update your thinking on the topic
3) Three things you can do about this right now

let's do it.

** Three things I learned about the 95/5 rule **

1. Only 5% of the people who see your content on a daily basis (AKA your potential buyers) are in-market to buy right now. That means 95% of the buyers you reach are out-of-market and won’t buy for months or even years. 

2. And, nope, no matter how awesome your direct response offer is, you cannot persuade the buyer to go in-market because they already have what you’re selling and won’t need a newer version any time soon. We don’t move buyers in-market – buyers move themselves in-market based on their needs.

3. All the direct-response conversion-focused dollars we spend are only relevant to the 5% of folks. This was especially humbling when realizing that ~95% of our spend allocation went to direct response (see reference above re: doing the exact opposite). 

** Three ways you can update your thinking on the topic ** 

1. Our goal is to increase the probability that the brand comes to mind when the buyer goes in-market, NOT to persuade the buyer to go in market. You can’t push buyers down a funnel, but you can, to quote Professor Jenni Romaniuk, “catch buyers as they fall”.

2. ""People largely use their memories when buying, rather than searching. Simply put, the brand that gets remembered is the brand that gets bought."" - John Dawes of the Ehrenberg-Bass Institute

3. Since marketing works by influencing future buyers, think about developing creative that gets noticed and gets remembered -- gives you permission to be bold, put on a show and have a little fun.

** Three things you can do about it right now ** 

1. Since we've all been so focused on optimizing the hell out of how we convert the 5%, we need to reacquaint ourselves with the 95%. Walk a day in the shoes of the 95% to develop the empathy needed to effectively speak to that person. 

2. Put together a plan to gradually shift your marketing investments to match the reality of the 95/5 rule. It could take all of 2024. No need to rush.

3. Take a day with your team. Remove all meetings. From a blank slate, think about what it means to do things that get remembered, that get noticed. What does it mean for your brand to be bold, to put on a show, and to have a little bit of fun? 

enjoy