Silicon Valley’s new obsession: Founder Mode

Hey team,

Welcome back to another edition of Tech Creator!

At WWDC 2024, Apple unveiled Apple Intelligence, an AI integration for apps like Mail, Messages, and Siri. Powered by large language models, it enables features like text summarization and image generation, aiming for a seamless experience. A U.S. beta launches this October, with global rollout set for 2025.

Silicon Valley’s new obsession: Founder Mode

Micromanaging is making a comeback in Silicon Valley, and it’s being rebranded as "Founder Mode." Coined by Y Combinator’s Paul Graham, this idea argues that startup founders have a unique edge over professional managers. According to Graham, founders like Elon Musk and Steve Jobs could make bold moves that professional managers simply wouldn’t, thanks to their deep personal connection to their companies.

What’s the deal with "Founder Mode"?

Instead of handing over control to experienced managers as a company grows, "Founder Mode" says that founders should stay in charge. The idea is that only the founder truly understands the company’s DNA and can make game-changing decisions, like Musk betting Tesla’s future on the Model 3 or Steve Jobs revolutionizing Apple with the iPhone.

Airbnb’s Brian Chesky supports this mindset, saying founders have a “parental” connection to their businesses, giving them the passion and permission to act boldly. Other tech leaders, like Shopify’s Tobias Lütke, agree.

Not for everyone

But it’s not all roses. For every successful founder, there are flameouts like WeWork’s Adam Neumann. Critics say that as companies scale, they need operational experts, not founders who can’t delegate. Even Steve Jobs needed Tim Cook to handle the day-to-day.

While "Founder Mode" has its fans, it’s clear that not every founder can pull it off. Still, it’s the latest trend in tech leadership—and it’s got people talking.

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☕️ Latest…

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• X hires new Global Head of Marketing. X, formerly known as Twitter, has hired Angela Zepeda, a former CMO of automaker Hyundai.

• Apple shows off AI-powered iPhones, Watch. At an event, Apple played up the abilities of Apple Intelligence.

Insight: which startups get acquired?

Series A startups top the acquisition charts, consistently seeing the most M&A activity since 2021.

Key insights:

• Pre-priced rounds also see frequent acquisitions, often acquihires.

• M&A activity grew from H1 2023 to H1 2024 across most stages.

• Late-stage acquisitions get attention but make up a small share of deals.

• More startups are open to M&A talks now, though not all will find buyers.

Who’s buying?

Mostly private equity firms, other startups, and big tech.

New AI business model: pay only when it works

Last month, Zendesk made a bold move: they introduced a new pricing model where customers only pay when their AI chatbot successfully resolves an issue—no more paying for attempts that fall short. This shift, known as outcome-based pricing, is catching on in the customer support industry.

The shift in AI pricing

Instead of the traditional model where companies pay for software usage, Zendesk, along with competitors like Intercom and Forethought, now charges based on the chatbot's success in solving customer problems without human intervention. The idea is simple: if the bot doesn’t do the job, you don’t pay.

This model aims to attract businesses tightening their IT budgets by promising real cost savings. But there’s a risk—if the AI doesn’t perform well, revenue could be unpredictable.

Why the change?

AI has advanced rapidly, and now businesses can access powerful AI tools, like GPT-4, for relatively low costs. Zendesk and others hope this new pricing model will prevent companies from building their own in-house solutions, which could hurt software vendors’ sales.

Early success stories

Companies like RB2B have already adopted this pricing model. Their AI bot from Intercom resolved 60% of their customer support tickets in August, saving them hours of work. Instead of paying $10 for a human resolution, they only paid 99 cents per resolved issue.

Not everyone's on board

Some software companies, like Moveworks and Decagon, remain skeptical. They argue it’s difficult to price the true value of resolving issues, and fear outcome-based pricing could lead to unpredictable customer behavior or revenue shortfalls.

For now, outcome-based pricing is gaining traction, but it’s still too early to see if this new approach will take over the software industry.

☕️ Extra reads…

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• 44 of the most promising AI startups of 2024, according to top VCs (Business Insider)

• Hiring your first sales person: James Allgrove (Software Synthesis)