All posts by Alex Rampell

Strategy, Tweetstorms

The platform (almost always) wins

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Originally posted as a Twitter thread on November 10, 2025

The platform (almost always) wins

The spreadsheet was invented in 1979 by VisiCalc. VisiCalc lost 50% marketshare within 4 years to Lotus, and Microsoft obliterated Lotus within 15 years.

These “creative destruction” cycles used to take decades. With AI, they can take…months?

Cloud and mobile made distribution almost instantaneous, and AI makes the creation of software faster than ever in history.

Which is why moats really do matter, and why systems of record rule supreme. The good news is that there are new systems of record just waiting to be built…for industries that just never had them before.

https://a16z.com/fruits-of-the-walled-garden/

https://a16z.com/ai-turns-capital-to-labor/

AI, Tweetstorms

Cost > Value as a Model

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Originally posted as a Twitter thread on September 30, 2025

Cost > Value

You might not realize it, but you constantly face decisions where cost is more than value — and you do not proceed.

I recently stayed at a hotel where I left my (stinky) gym clothes in the room by mistake. $50 of clothes. Look at the cost to ship them back:

There’s just no scenario where this action makes sense. The cost is more than the value and because it’s overseas shipping, there’s likely no hidden margin that would unlock this. Cost is just always going to be more than value.

Of course I have to make this about AI 🙂

What is SO exciting about many AI companies is they are flipping cost and value. Can every business have a multilingual omniscient receptionist? Sure, but that would have been too much cost for too little value.
Now it works!

Which is why the “AI will take all the jobs” narrative rings somewhat hollow based on what I’m seeing. Where AI Applications are really working is where suddenly value > cost. It’s replacing inertia — a world where cost > value for a seemingly infinite group of things.

AI, Commerce, Startups, Tweetstorms

AI Commerce

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Originally posted as a Twitter thread on August 29, 2025

How will AI commerce start?

Sometimes the best way to predict the future is to observe the present.

Millions of people who value their money more than their time already hunt or wait for deals.

Including me:) I had an alert for Spindrift, it cleared my price, and I bought.

All that is missing from this example is the “do it for me” — as in “BUY it for me when this item clears a specific price”

There’s no question that “buy this SKU for me at the lowest price” (already an observed behavior for those who value money > time) will migrate to AI

More in this piece from @venturetwins and me:

https://a16z.com/ai-x-commerce/

AI, Startups, Tweetstorms

Help Wanted? Hire my software!

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Originally posted as a Twitter thread on October 08, 2024

Help Wanted? Hire my software!

Airbnb famously grew by “[growth] hacking” Craigslist — automatically responding to listings to encourage a cross-listing to Airbnb:

https://hackernoon.com/how-airbnb-hacked-craigslist-for-viral-growth-24l35eg

As software “becomes” labor (https://a16z.com/ai-turns-capital-to-labor/), we will see similar hacks to sell software — responding to job postings with software products that do a meaningful percentage of the job’s responsibilities. “I know you’re looking for a ‘Bachelor’s Degree preferred with 5 years of experience X’, but our AI-powered software product can do everything you need, is fully trained, and only costs $20,000/year…and can start tomorrow.”

Try going through Craigslist or Monster for job listings — and notice for each job how many of the responsibilities could be done with AI *in its current form* or where AI will be very soon, particularly with more integrations…here’s a local optometrist:

One of my favorite restaurants where I live uses *zero* system for reservations. You have to call, they’re closed in the morning, and the number is always busy during peak dining times. I asked the owner — why not use an online reservation system? They’re so inexpensive now!

His answer: “We are *always* at capacity. We have never had a day where our tables are not full. This would just be an additional expense, and the employee who answers the phone is needed to greet/seat diners anyway — so the reservation taking has no extra cost.”

I asked him: “What if she retires or quits?”
“Well, then I’d hire somebody else”
“What if a software products could do everything she did, for half the cost, spoke 100 languages, never called in sick, and was never late. Would you hire that ‘product’?”
“That sounds crazy, but I guess?”

We’ve already started to see some of this. AI-powered products focused on specialized “complex workflows” are taking on tasks like the ones seen in the prior Optometrist advertisement. And some technology-laggards are adopting these tools first because (like with my restaurant example) they’ve just avoided tech because it’s felt like an extraneous expense…

AI, Economics, Finance, Startups, Tweetstorms

New Essay: The Transmutation of Capital into Labor

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Originally posted as a Twitter thread on August 22, 2024

New Essay: The Transmutation of Capital into Labor

https://a16z.com/ai-turns-capital-to-labor/

The first era of software took analog files, digitized them, and made them accessible with a specialized interface. Think PeopleSoft for HR files, Quickbooks for ledgers, Epic/Cerner for health…

This has played out for 50+ years as more industries have moved to running on software, not files. Cloud lowered the adoption barrier. Adding financial services to cloud made more markets “big enough” for specialized companies (e.g., Toast, ServiceTitan) to exist.

But the same humans that acted on the analog files now act on the digital files! And sometimes it’s impossible to align hiring and training (of those humans) with business needs.

This is what’s exciting about AI. It’s not filling software budget. It’s filling “labor” budget.

Wages in the US alone are $10T+ per year. The worldwide software market is a few hundred billion dollars.

The original “digital filing cabinet” winners have a tremendous amount of potential to add AI, but also have a daunting task of shifting from “per seat” pricing to “per outcome” pricing. Zendesk monetizes per seat. What if a business needs 95% fewer seats because of AI?

Some of the biggest startup outcomes will likely be “net new” industries where a business runs on nothing but Excel…because the software budget was small, the human budget large, and the ability to hire humans was so hard…think compliance officers at a bank.

There’s a saying in economics: “the cure for high prices, is high prices.” As the price goes up, more widgets get manufactured, which increases supply, which lowers the price.
But when it comes to humans and wages, there’s too much latency because of training, licensing, etc.

AI will largely augment employment, and fix many of the “market failures” present with highly skilled yet episodic labor. Imagine: I need your skill for 3 days a year (peak demand), but you need to go to school for 3 years to earn it.

AI, Economics, Startups, Strategy, Tweetstorms

Outcome Based Pricing

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Originally posted as a Twitter thread on June 21, 2024

Can’t wait to see the first “incumbent” (in a large software field…like support, CRM, HR, etc) switch from “per-seat” pricing to **per-outcome** pricing.

I’m writing an essay on this now, but consider Zendesk at $115/seat per month…or ~$1.4M/year for 1000 agents:

Let’s say an agent is paid all-in $75,000/year and answers 2000 tickets per year.

This makes the human cost of a ticket $37.50, and the software cost $.69.

The human cost obviously massively outstrips the software cost…and unlike software licenses, it can take months to “install” (find, hire, train) a human to occupy that seat. And in many areas there is simply a dearth of qualified humans given licensing latency

In other words, you can’t simply lift wages and produce more workers…if it’s a role that requires licensing or sufficient training (think mortgage brokers, nurses, etc)

Not to mention the fact that it’s hard (and cruel!) to “flex” humans. Southwest Airlines can’t hire tons of humans when bad weather threatens to cancel flights and then fire tons of humans when weather is clear. But software is perfect for this

So: given the rate of improvement in AI for asynchronous support — what will it take for Zendesk to switch from (in the prior example) $115 per seat per month to, say, $10 per successful ticket answered BY Zendesk? Still much cheaper, more flexible, instant provisioning

It’s obviously going to happen, but how should they price this — it’s the ultimate example of value-based pricing? How to have this interact with existing “seats”? How to have teams not feel threatened by their new AI colleagues filling “seats”?

Whole industries will change, and new ones will be created now that software can produce the outcome vs simply be the tool.

Salesforce charges per-seat pricing for salespeople…why not charge per sale?
Maybe Workday can charge for HR “resolutions”
Etc

Startups, Strategy, VC

The Pre-Mortem in Product Planning

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Original Post: https://x.com/arampell/status/1772734627410571443?s=20

Before you launch a new product, one of the most counterintuitively important things to do is to plan for how to kill or exit the product. FAST.

This isn’t as simple as it sounds…and it’s crucial for companies with multiple products or consulting work.

My company, TrialPay, was the leading company doing “offers” en lieu of payment. I realized we strategically needed to be in the more commodity payment processing space, more background here: http://www.arampell.org/2015/11/04/distribution-v-innovation/

We built this payment business to 9 figures of payment volume, but didn’t have sufficient focus to make it our top priority, and we were nowhere close to being #1 in the space. (Most value accrues to the #1 or MAYBE top 2-3 players).
But our core clients were using it!

This is why a pre-mortem is so important. We used our goodwill and “bundle economics” to cross-sell current customers on what had become a 2nd rate product. If we shut it down, they’d be PISSED and would potentially dump us for our core product!

So what to do? We were honestly stuck. Against the backdrop of massive pressure against our core business, per thread below. We needed to focus on what we were great at.
https://x.com/arampell/status/1562557849128931328?s=20

Our only answer was to find a home / new product for our customers. I called the then CEO of Braintree and basically offered our customers and product for free — he said “what’s the catch?” It’s not every day that a competitor (us) voluntarily capitulates…

But our real competition was FOCUS. It was clear we had lost the battle to be #1 in raw payment processing. Dedicating resources to be a distant #8 was more expensive than getting nothing for this asset.

The next step was to gingerly mention this to our clients without having them ditch us for our core, profitable offers product. This was hard. But we made it work.

Being an entrepreneur means being able to make the best of the hand you are dealt but also knowing when and how to switch tables. And switching tables dispassionately — when you have teams and customers “stuck” to the old table — is hard

This is one of the reasons to be VERY cautious about doing consulting work. Building a custom product for a marquee client sounds great to make ends meet, but you can’t kill it! You’ve just added a liability to your balance sheet. You have to support it…forever!

Theoretically you could kill it, but then good luck selling another product to that company. If you need to do a RIF, and you’ve gotten pre-paid for this software, how do you cut the team supporting this product that represents 0% of your future…?

So always, always think about this hidden “liability” on your business. Before you customize, contract, or test something…have a well thought through plan to KILL your new thing. Bake it into all your processes, contracts, code, culture, etc.

Tweetstorms

Every Big Company is Focused on AI

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Originally posted as a Twitter thread on September 12, 2023

1998: “The Internet is stupid, people won’t buy X over the internet”
2008: “The iPhone is stupid, my BlackBerry works fine”
2010: “Cloud is stupid, on premise is more secure”

BigCo myopia created opportunities for startups.

But today, every BigCo is focused on AI:

This is why the “known unknowns” and “unknown unknowns” make for much more interesting markets:

https://a16z.com/financial-opportunity-of-ai/

Strategy, Tweetstorms

When to Escalate vs Wait

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Originally posted as a Twitter thread on September 01, 2023

When to Escalate vs Wait – implications for M&A, deals, dumb policies, etc

When an outsider presents an organization with evidence of “complex wrongdoing” (or mistakes) from within — where I define that term as a form of wrongdoing that *requires* internal corroboration — almost inevitably internal antibodies form to fight off the foreign accusation.

My general theory is that organizations optimize for internal harmony — not shareholder value or customer satisfaction. The CEO will defer to his or her VP, who will defer to his or her Director, etc. “We made a mistake — we should re-evaluate!” rarely comes up because the CEO is unaware of the particulars and policies.

This happens all the time in schools with placements, companies where egregious errors get committed (eg M&A diligence), investment firms where termsheets get pulled, Covid policies that made no sense, etc. Escalation almost never works because of specialization. Very different from “clear to anyone” wrongdoing/mistakes — “that person shot me, here’s a video!”

There’s also a seemingly innate human instinct to not admit a mistake – “saving face” is an almost universal human desire. But within an organization this instinct almost metastasizes and ossifies positions from bottom to top.

I’ve written extensively about TrialPay’s M&A travails:

https://x.com/arampell/status/1562557861145636866?s=61

In one case, an M&A process died when an engineer who didn’t understand our tech said it was “bad” — and subsequently left the company to start a competitor! Everything about it was ridiculous. https://x.com/arampell/status/1562557861145636866

But my mistake (even though I was right!!) was angrily escalating to the top — thereby releasing the full antibody response and ossifying the company’s viewpoint. The wrongdoing and mistakes were simply too complex to present without internal corroboration, which settled down to the same engineer.

I also learned that more data doesn’t really do anything to change most people’s minds. Time is more important. For some reason, humans are capable of changing beliefs when enough time has passed — not when contradictory evidence emerges. You really need both.

More on this here, from my lessons in (ultimately, after much trial and error!) selling my company: https://x.com/arampell/status/1610761687547940864

Key learnings:
-time > data. It’s frustrating but patience often beats action.
-escalation normally ossifies positions — it’s much harder to fight a strong antibody response than a weak one
-if escalating, make it about the principle – or something that does NOT require internal corroboration of the specifics. How does matter to the top / higher person in a way that doesn’t require looking up the minutia?

AI, Fintech, Payments, Tweetstorms

How AI Will Erode Bank Profit Pools

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Originally posted as a Twitter thread on May 17, 2023

I’ve often written about how friction/inertia preserves giant gross profit pools in financial services.

The missing link to change this is what I would call a “consumer signup RPA” — which AI can do

RPA: Robotic Process Automation. Take an “API-less” process and “just do it”

Nowhere is this more true than depository accounts. A 4 week Treasury Bill from the *US Government* pays 5.49% and a 1 year Treasury Bill pays 4.73%.

How much does the biggest bank in the US pay for the same…which of course is insured by the same US Government for ONLY up to $250K?

.02% and 3%, respectively…for a higher level of risk. You’d have to be insane to choose a CD with Chase vs a T-bill.

So WHY do consumers leave excess money or buy CDs with Chase? Three reasons:
1. They don’t know what yields are (Chase takes advantage of them)
2. It’s too hard to buy T-bills directly (try signing up for http://treasurydirect.gov)
3. It’s too hard to move money back and forth

The promise of Fintech (and in particular, tools like @Plaid) is that friction/inertia will no longer be an impediment towards consumers switching from the worst services to the best services.

Round One of this was “tools to read” information — let’s import your credit card purchases, or read your checking account number in.

Mobile Wallets have the promise of being a platform for financial services (the App Stores equivalent = financial products). I wrote about this back in 2016:

https://a16z.com/2016/04/25/digital-wallets-fintech-platform/

But AI is also going to transform this, because the incredibly painful (consumer) process of, say, buying short duration T-bills directly from the US government could now be…very easy. Or the seamless movement of money to meet bill pay needs and invest excess cash.

And the missing link for all of this has its technological answer in the form of Generative AI. AI has been used extensively in fintech, but primarily for “scoring” and “approving” things — speeding up backend processes.

But Generative AI is the mirror image: help automatically answer things on behalf of a consumer, bringing a generative robot to a 1990s workflow from a bank (or government) that’s unlikely to embrace, say, RESTful APIs.

And it’s not just about seeking higher yield or lower debt cost, which are particularly salient in today’s higher interest rate environment. Friction/inertia also keep people on their metaphorical financial Flip Phones vs meaningfully better products and experiences

Gen AI also has cost-saving, transformative opportunities for the big guys, too. But if they keep ripping off their customers, they’re finally going to start paying the price as “assistants” make breaking up easy to do…