The transition from traditional software sales to outcomes-based models is challenging for incumbents, but startups can leverage this shift to their advantage.

Companies that sell AI solutions to enterprises can command higher budgets when they position themselves as replacements for traditional roles, like customer support or analytics teams.

The software industry is poised to grow significantly as AI enables a shift in spending from payroll to software. This means that software will become more useful and integral to business operations.

As intelligence becomes a commodity, startups need to consider how much software is necessary on top of their value proposition to remain competitive.

It's a good idea to sell software to startups when you understand their specific needs and can provide a solution that addresses those needs effectively.

American startups often focus on narrow solutions, while compound software businesses can address broader business process management needs.

When building software, it's generally scalable, but founders often struggle with service-based businesses that require high-skill human labor.

Sales tools like HR and CRM scale with the number of people in a company, while payment systems do not scale in the same way, which can lead to early-stage product churn.

The introduction of AI will not merely shift budgets from labor to software; it will create new opportunities for companies to automate tasks that were previously neglected, resulting in overall market growth.