Why Is It So Hard To Sell, How To Index Venture Capital and Founder Mathematics

The secret is to show up, do the work, and go home.

Good morning

Hope you are doing amazing.

In today's edition, among other things:

• Why Is It So Hard To Sell Right Now?

• Founder Mathematics

• How To Index Venture Capital

• AI Can (Mostly) Outperform Human CEOs

• Low Impact, High Visibility

• How to Measure Product-Market Fit

Onwards!

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Why Is It So Hard To Sell Right Now?

Selling software is becoming increasingly challenging as net-new dollars for startups have diminished, and companies are selective due to macroeconomic factors, cutting down on budgets and slowing down decision-making processes for new contracts.

There are a couple of challenges selling software today:

Source: a16z

• The shrinking software market is partly driven by macroeconomic uncertainty, post-COVID SaaS consolidation, and the early stages of gen AI adoption. With budgets tightened, CIOs are hesitant to invest in long-term projects.

• SaaS Saturation: The buying frenzy during COVID led to an overabundance of software, resulting in companies now focusing on getting the most value from existing solutions while reducing low-ROI investments.

• Selective Spending: While there is strong interest in gen AI, it accounts for only a small portion of total software spending. Companies are evaluating whether new software purchases, including gen AI, provide a clear return on investment.

Contrary to popular belief, 85% of winnable IT spend lies outside industries immediately affected by gen AI. Startups can target opportunities in sectors that are only in the medium or long-term stages of considering gen AI’s impact, such as e-commerce and manufacturing.

Companies fall into three buckets regarding gen AI adoption—immediate, medium-term, and long-term - each with different needs and expectations:

• Immediate-term companies prioritize innovative products and rapid deployment, often accepting higher risks.

• Medium-term companies balance ROI with incorporating AI into internal tools, being more selective about investments.

• Long-term companies (e.g., manufacturing firms) focus primarily on clear ROI for operational improvements, not innovation.

So, if selling is difficult right now - how to win new business?