Create Markets

🔗 Houck’s Picks

My favorite finds of the week.

Fundraising

• Jason Lee on how to cold DM investors (Link)

• Jon Lai on the onion theory of risk (Link)

Growth

• Jen Abel on the fastest and lower risk way to get into enterprise (Link)

• Steven Cravotta on the three parts that every viral video has (Link)

• Kody Nordquist on the modern marketing funnel (Link)

• Amanda Zhu on testing for real champions (Link)

ICYMI

• What ChatGPT won't tell you about hiring channels and talent acquisition costs (Link)*

• Kieran Drew on the most important skill for any entrepreneur (Link)

• Jordan Singer on what great product design shows users (Link)

• Jon Brosio on raising prices (Link)

 Opportunity: Unused IP Matchmaking Platform

You’ve probably never filed a patent or a trademark.

Honestly, it’s a tough sell for most startups because the process is arduous, slow, and expensive.

But what if you could buy or license IP from patent trolls and build or expand your business on top of it?

In a world where product is no longer a differentiator, folks are looking for other ways to set themselves apart. There’s appetite for access to IP.

A platform that ingests information about a business and its roadmap, and uses AI to return a list of patents and trademarks that could be used to expand or reinforce its competitive position could easily command an ongoing commission on every license.

Honestly, I hate patent trolls. So I don’t love the idea of rewarding them with cash.

But at least this platform offers a way to unlock some of the value that otherwise would’ve just sat there waiting to sue founders.

🧠 Framework: MoSCoW Prioritization Matrix

This week’s framework is old.

It’s from 1993.

(Sorry to anyone who was born in 1993 or earlier.)

Anyway…

The MoSCoW matrix was originally a way for product teams to prioritize features for their engineering teams.

But I actually think it’s applicable to a wide range of areas for founders.

It breaks down a group of options into categories based on how essential they are:

• Must have → Existential for your success

• Should have → It’ll make life a lot easier

• Could have → This one is more complex. It can either be used to mean “in an ideal world…” or potential outcomes that may or may not happen

• Won’t have → Either there’s no chance this gets done due to scope, or, more interestingly, these are “non-goals”, things that may be tempting to do but are explicitly not in scope

I can see this being applied to a product roadmap, yes, but also marketing campaigns, sales goals, even fundraising and more.

Here’s an example for a product launch:

📈 Trend: The CAC Crisis

In case it wasn’t obvious, most marketing channels are getting more expensive.

This is particularly evident with ads.

It’s true for everything from ecom brands to this very newsletter, acquisition costs are up and staying there.

Privacy regulations and changes to cookies have made attribution harder, targeting worse, and competition more cutthroat.

There’s significantly more demand for the same ad slots as there was 10+ years ago. Even 2-3+ years ago.

The solution is to invest in channels with compounding returns like GEO (I wrote about this last week), referrals, audience building, and product-led growth.

I’m not saying ads are dead. That would be naive, people said that about SEO two years ago and now GEO is the hottest opportunity for growth for most startups.

Whatever the next generation of ads will look like is certainly coming, and platforms like MAI.co might be a preview of what’s to come.

But, for now, there’s a CAC crisis.

💬 Quote: Create Markets

I had a great conversation with a billionaire VC yesterday.

We were talking about why, when you’re investing in startups, it’s better to look at the math of how big something can be if works rather than the likelihood of its success.

This is because the rate of failure for the truly big swings and the less-big swings is roughly the same (so optimize for upside).

They’ve invested in countless startups over decades, with many unicorn+ winners, so they’ve seen this over a long enough time horizon to be sure.

As a founder, this should be freeing.

This is the green light to aim as large as possible.

And how do you aim as large as possible?

You create a market.

Existing markets exist because someone else created them.

And you’ll fight an uphill battle to usurp them, rather than just creating your own and moving fast.

Your startup shouldn’t fit into some box, or even some investor’s thesis.

It should surprise them. It might even shock them.

They should struggle to define it without your help.

Those are the big ideas that create markets and lead to the biggest outcomes.