AI startups: Sell work, not software

AI startups: Sell work, not software

In the world of AI startups, there is a growing trend towards selling work rather than software. This shift in approach opens up new vertical opportunities that wouldn't have otherwise supported a traditional software company. By selling work, these startups are able to tap into industries and sectors that may not have seen the value in AI software alone.

One of the key advantages of selling work is that it changes the sales cycle. Instead of trying to convince potential customers of the productivity improvements that AI software can bring, startups can focus on the outcome of the work being done. This shifts the conversation from a purely cost-based decision to one that is centered around the value and impact that the work will have.

This change in approach also has an impact on pricing. Selling work is priced relative to the cost of a human performing the same tasks, rather than as a productivity improver. This means that startups can position their work as a cost-effective alternative to hiring additional human resources. This pricing model is often more attractive to potential customers, as it allows them to see an immediate return on investment and a clear cost savings.

Furthermore, selling work opens up new opportunities for competition. Instead of competing solely with other AI software companies, startups that sell work are essentially outsourcing the competition to international groups. This allows them to focus on what they do best - delivering high-quality work to their customers - without getting caught up in the race to develop the most advanced software.

Take Pinterest, for example. In its recent filing to go public, Pinterest described itself as a "productivity tool" rather than a social network. This highlights the company's focus on delivering value to its users in terms of their personal interests and needs, rather than simply accumulating followers or following the latest trends. Pinterest has recognized that its user base is predominantly made up of women, specifically "eight out of 10 moms" in the US. This demographic is often the primary decision-maker when it comes to buying products and services for their household.

By understanding its user base and their needs, Pinterest has been able to position itself as a valuable resource for moms. It provides them with inspiration, ideas, and recommendations for products and services that they may be interested in. This targeted approach has allowed Pinterest to become a trusted source for moms, who rely on the platform for their purchasing decisions. This unique insight into its user base has become Pinterest's not-so-secret weapon, setting it apart from other social networks and driving its success.