Beyond the pitch deck: how Launch 1st Method reduces startup risks
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Welcome to today's episode of Lexicon. I'm Christoph McFadden, contributing writer for Interesting Engineering. Today we sit down with David Hirschfeld, an experienced software entrepreneur and creator of the Launch First method, to delve into his unique approach to helping startups find early success by validating product-market fit before development.

David shares insights from over 30 years in the tech industry, including the critical role of AI in startups, how to fund development through early sales, and his vision for a future shaped by rapid technological advancements. But before our new episode, check out our educational platform, the IE Academy. From IE to data, we'll provide top quality courses with live and interactive workshops, professional instructors,

and you're invited to join the community. Now let's continue today's episode. David, thanks for joining us. How are you today? I'm doing great. Thanks, Christopher. Do you go by Chris or Christopher? Chris. Chris Christopher. All right. Hi, Chris. I'm doing great. How are you doing? Very well, thank you. For our audience's benefit, can you tell us a little bit about yourself, please, David? Yeah, sure.

I've been in the software development world for 30 some odd years at this point. I started out in enterprise with

Computer Associates, Texas Instruments, doing projects for Intel, Motorola, Allied Signal, Arizona Public Service, and then started my own software company with a partner who worked with me at Texas Instruments in the early 90s.

Despite every effort on my part, we built that up to a company of 800 customers in 22 countries and then sold it to a publicly traded firm in 2000. So then I was VP of products for that company for the next couple of years and then went and cast it out again to look for another venture to start.

It wasn't until 2007 that I started Techies, the company that I am currently the founder and CEO of. And we do software development for lots of different business domains, the majority of which are startups, and have built products for companies.

several dozen startups over the last 17 years. The biggest problem with those is that most of them have failed. A few have been very successful, but the vast majority have failed, which sort of led me to coming up with the Lodge First methodology for launching startups. That's pretty common, isn't it? I heard, I don't know the statistic. Is it one in 10 succeed startups, something like that?

You know, it's actually fewer than that. It's probably one in 20 or one in 25. And I say that because a lot of startups, a lot of companies go unrecognized because they're too small. They never get past even a point where they're recognized as having started. But they've spent money in trying to pursue an idea. So it's really a lower number than that.

And I've corroborated that with many other development companies that work with startups. It's a very high failure rate, man. Yeah, it's a very high failure rate. Yeah, you seem to have got the formula sorted, though. Yeah, it does not have to be that high. The biggest problem that startups face is they wait way too long before they validate product market fit.

And they make big investments and spend a lot of money on the belief that they know what they're doing and that everybody's going to want to buy what they have.

but they never, or they may even do a little bit of product market fit research and confirm that people like their product. But the problem is, is that they're not asking the right questions and they're not validating product market fit. And the only way that you can truly validate it, which is ask people to give you money for your product, go out and sell it. Yeah. Yeah. Something's worthless until someone wants it. Right. So that's what,

So something doesn't have a value unless someone wants it. It has to be a demand as well as a supply, doesn't it? It has to be a demand, and the demand, you have to prove it. People can say, when it's available, I'll buy it, and then when it's available, they don't buy it. So if you don't find a way to get them to write you a check for that product early on, then you don't actually know if you have product market fit or not. Yeah, absolutely.

We'll get more into that a bit later on, I think. We went to the next one. So you developed the Launch First method. Is that right? The Launch First method to help startups reduce risks and costs. Could you explain what inspired this approach and how it differs from traditional startup models, please? Sure. Yeah. But I was really frustrated with so many of my clients failing as entrepreneurs.

is the case with most software development companies that work with a lot of startups. And I felt very often that it wasn't necessary for, it shouldn't be, they shouldn't be failing. They had great ideas. There's clearly going to be a market there, but they

It just got to a point where they couldn't afford to continue to try to figure out who that early adopter was, who that stakeholder is that they should be selling to and how they needed to position the product to sell it. And about three or four years ago, I had this epiphany talking to somebody in marketing because I had this idea that

Let me step back for just a second. So for the last 11 or 12 years, we've been developing what we call high fidelity prototypes in lieu of mock-ups and wireframes. So typically the development processes, you, you go through a requirements process. Then you go through a design phase where you're designing the application and you create the screen mock-ups, right? And we, we,

Calvin screen mockups where you see lines going between one screen and the next showing that you have navigation. And sometimes people will animate that to a small degree where you can click on a screen and then it'll open up the next screen and you can kind of see the workflow. But it doesn't show you the behavior on the screen, how the application reacts to different cases.

And so we, and what we found is that there's a lot of iteration that happens during development because a lot of these workflows are not teased out completely. So we started doing these prototypes that animate all this functionality so that you can see the entire user experience of the application.

And then we do all the iteration in the design, in this design exercise. And by doing that, that makes the development process go much more smoothly. The developer knows exactly not only how the screen's supposed to look, but how the screens behaves when you do certain things on the screen. And it reduces a lot of the going back and forth with the

And also the founders can see exactly how the application is supposed to work. And they can say, you know, that doesn't feel right. That's really not going to achieve the goal and make those changes in the design process with the confidence that as we build it, that it's going to deliver exactly what they want or what that vision was for them.

And so these prototypes look so realistic and they include a lot of the functionality beyond just the MVP. So you can really see where there's full vision of the application. I started thinking, you know, we should go to the market and, and, and,

Pre-launch sales to potential prospects with the idea that if you can get them to buy it early, then you know you're building the right product. And if not, you have really early feedback that you can change in the design phase before we even make that investment in development.

So this is where the idea came from. Then I was working with some marketing companies and I'd always ask them, but the first thing we have to do is we have to figure out who that early adopter niche is.

And they said, that's fine. So let's start with who's the ideal customer profile. And, you know, that's a marketing company's job, right? Is to figure out how to reach that person once they know who the person is. They're not good at figuring out who that early adopter niche is because marketing companies usually come in after that point in a company's journey. And so, yeah.

in an argument with a marketing, a guy from a marketing agency, which was not the first time this happened. And I said, you know, you really, that's not, they don't know who that early adopter is. They don't know who the ideal customer profile is yet because they haven't,

started to market or sell. So I said, what you need to do is you need to be able to somehow map all the niches with all of the root level problem statements and then come up with a scoring algorithm. I was right in the middle of the conversation and I was kind of inventing this niche analysis road. And I said, got to go. And then two days later, I had launch first methodology figured out.

So that was the genesis of Launch First. Okay, impressive. So the mock-ups you make, they're not working apps there. You're kind of animating it. Or can the founders use that as the skeleton for building out the final app?

Not really. All the design requirements are there, but it doesn't, the way we do it, some of it can translate to the UI depending on, there's a couple different ways we approach it. One is Figma design, which you can animate a lot of Figma now.

But you can't, depending on the type of app, you can't completely animate everything the way you need to. So we use another product called Acture, which allows you to then build in all the logic that you need to take those Figma designs and then really animate them. And when you demo it to somebody, the trick is,

When you're trying to do pre-launch sales, if you get the question from the potential customer, how do I know you can build this? Then you've lost the sale. It's not going to happen.

So, but if the prototype is realistic enough, even though you tell them this is a prototype, the first version of the app won't be available for three to six months and it will include all these features. They won't hear that. But what they hear is what they make up a story in their mind or something. They must be in development and they're just haven't finished testing yet or what, because it's so realistic.

that they have trouble getting their arms around the idea that whether you can build it or not never comes up. And that's a critical success factor for launch first. Makes sense. Okay, great. So in your experience, what are the key challenges that software startups face today? How can your launch first method address them? Well, the key challenges with any, the key challenge, well, the first challenge

that as startup has is figure out who is the early adopter, which niche do they focus on? Because this is really the job of every CEO when they found a company. What niche am I going to focus all my marketing effort on? And I don't want to waste a lot of money. So I really want to be confident that that niche is going to, I'm going to be successful at being able to market to that niche.

And what are the top two or three problem statements that I can use my communication to that niche? Because those who have the highest value and the highest perceived impact to that stakeholder in that niche, that's the number one job of the founder or CEO, but nobody ever tells them that.

And it's not intuitive. It seems obvious when I say it, but believe me, I didn't learn this because it was obvious. I learned it because of so many hard failures that I've watched and realizing what was missed, right?

even with my own products in the past. So that's the biggest challenge they face. Who is the early adopter? What's the top two or three problems that they need solved?

How do you value the impact of solving those problems? What's the cost to that person? How do you speak to them so that you get their attention? Because they lean forward, go, yeah, that's a painful problem for me. I really need you to stop. Then they lean forward. Can you help me with that? So how do you, that's number one. And then number two is then coming up with a

with a value proposition where you can get people to give you money for the product in advance of the product being available. So it's just proof that there's a market and that there's demand for the product. And without that, then what happens is founders invest a lot of money on their beliefs that people are going to buy what they want and only to find out

a year or two years later that they've got the wrong product for the wrong market, the wrong message, and they're not able to sell their product in enough numbers that they can prove viability.

Okay. Very good advice. Okay. I think is it on the Techies website you mentioned that all your earlier successes gave you false sense of security. So can you share how that realization shapes your approach to guiding new startups if possible? Yeah. So, here's another problem with startups that it feeds into the question you just asked is that startups really struggle with discipline. Startup founders. The idea of an MVP is

is to get as minimal functionality as possible so that you have something that you can go to the market and start to get feedback from potential customers or from real customers.

And one of the mistakes that a lot of founders make is they give their product to potential customers for free to try so they can get feedback. And what they're really doing at that point is they're proving product solution fit, not product market fit.

And product solution fit is I built something that people are actually going to use as opposed to I'm creating a product that people will pay me for and buy it.

Those are two very different equations. Solution fit is what you should be delivering to the market. It should be the reason you're delivering an MVP to the market is to start to tease out product solution fit. Product market fit, hopefully you've worked it out before you start to deliver a product to the market, but most

People don't do that. So going back to your question. So when we started in the early 90s, it was a whole different world. Windows 3.1 had just come out.

we built a Windows 3.1 product for vending operators and food route distribution people. So inventory management with just-in-time inventory capabilities, scheduling, route drivers, truck inventory, warehouse inventory, right? And then spoilage and collecting money at the end in sales. So this was kind of a

that we built. Built it as a Windows 3. One product, the first thing, Windows had just come out. All the other products in the industry at the time were Unix, big Unix-based systems, green screen, expensive. And so that average vending operator, coffee, office coffee, distributor, food distribution group,

small companies really couldn't afford them, but they needed it. So when we put that out of the market, we started advertising. We never offered a free version. People started buying it in small numbers initially. And then, and, and we didn't create this product with the idea that we were building a company. We did this with the idea that we wanted to

eventually created Havasupra company, we thought this might be something to try just to get our feet wet and to learn what it's like to launch a software product before we really come up with something that we want to put a lot of energy into. And then we went to our first trade show. We had the cheapest booth you can imagine. We spent $180 on a banner and used PVC tubing

to make the banner push out in the middle so that it would look like a V so that you could see it walking up the aisle in the trade show from either direction. And this was a big convention because you've got all the major snack food companies there and Coca-Cola and Pepsi have these massive booths and then these manufacturers of vending equipment. Anyway, so it's not a small trade show.

Anyway, and we were out in the back corner. It was a last minute thing. You know, you had to like hike a mile to find us in this little 10 by 10 booth. And we had people lighting up outside our booth for three straight days. We couldn't, didn't even have time to eat because it was so novel. And it was inexpensive compared to all these other, you know, it was like, I think the first version of it was $99.

I thought we thought, okay, we're just smart. We know what we're doing as software developers and this just kept growing. Our company just kept growing until we sold it in 2000. What I didn't realize was

that we were solving a very distinct problem for a very specific niche early adopter. We just stumbled across it. So that's what I meant by, you know, I thought I knew what I was doing starting a software company, but I didn't really. I realized that the most important thing was we just stumbled across that.

Which is what Lodge First is all about. It's not a hope that you stumble across it, but that is to try to really laser in on that. Of course, yeah. You wouldn't call it luck, though, or like the right place, right time. Right place, right time in many respects, exactly. Yeah, which is obviously very rare to hit it big anyway. It's your startup, isn't it? To be in that situation. Right, exactly. And we thought we just have great instincts about it.

We stumbled across it. Yeah. Okay. Fair enough. So that's the past. Moving to the future then, or present to future. How has the evolution of technologies like AI, machine learning, Internet of Things influenced the strategies you recommend for startups today? Did it?

Well, when somebody comes to me with a startup idea and it doesn't include AI, it's going to be the rare case where I'm not brainstorming with them to try to figure out how we can't morph their idea using AI. Primarily because...

Well, number one, from a marketing perspective, people are very attracted to AI. So it makes it easier to get past that early adopter resistance to being interested in a product. So from the product marketing perspective, yeah.

AI is really important from my perspective. We really want to try to nail that problem. So now I'm going to step back a little bit to launch first in terms of how AI, because you want to know how AI is impacting startups, right? It's allowing us to accelerate the development

It helps us to nail down. Right now, we're working on an AI automated version of the niche analysis for Lodge First. And eventually, the entire Lodge First stack will be driven by AI.

When we're looking at doing an estimate for a project, that was the most expensive process we had internally because it required our most senior people to spend time really understanding that

client's requirements and then breaking that down into modules and then putting estimates to each of the modules. And we do a more detailed job with that than most companies. So it was really expensive. And we're just about ready to turn on our AI estimation tool that basically models

our process, but does it using AI and automates it, which also helps us to identify potential requirements that should have been teased out, but were missed. The AI picks it up based on all the other projects that it's got in its machine learning model.

From a marketing perspective, startups now have all of these tools to help them using AI for writing, creating content, for designing websites, for doing outreach to their target market. There's so much and it's accelerating so quickly.

it's almost hard to get on, you know, difficult to get on top of it and know you're using the most efficient method for doing a particular thing today. Right. So I think I was about to kind of launch into another aspect of,

your question but i think i'll let you ask your next question before we do that well it's fair enough all i was going to say is for things like data analysis um ai is kind of unparalleled really it's an incredible tool it's incredible it's incredible yeah do you find it um brings up solutions or options or ideas you'd never thought of it brings up uh it brings up

It doesn't bring up ideas I've never thought of. It definitely brings a lot of context and details to things very fast. And probably, yes, I can't think of a good example of that right now where it's actually coming up with ideas. But I'll give you... But the way it's able to just organize information for you and put it into context and create... So I'll give you a really...

unrelated example. And this was from eight or nine months ago. I'm standing in our backyard with my wife. We recently bought a home in the San Diego area and moved from Scottsdale to a little town called Vista.

And we're standing in our backyard and she is a real gardener. She wants to do square foot gardening, raised beds. And we're looking at the backyard and she's saying, trying to think how many beds am I going to need? And then she got a phone call from, and I said, and I just went on to chat GPT. And I started a conversation with chat GPT. And I said, my wife wants to,

I don't know why I put my wife in there, but I've learned to talk to ChatGPT like it's a friend. And we're having a conversation that we can debate even in the conversation.

So I said, my wife wants to do square foot gardening, so we want raised beds. We're two people, two mature people, our kids are all grown. It's just the two of us, how many beds will we need if our beds are four feet by eight feet in size or four feet by four feet in size? How many beds will we need to feed us given the fact that we also like to eat meat? And so

So then it came up with that. And I said, well, what about seasonal planting? What should we plant and when? And then it came up with a schedule. And I told her we lived in Vista, so it knew what the climate was.

And then I said, what about companion plants? And then so it said, okay, this is what should be in the same bed with other things. I said, how about companion flowers? And they gave me all that planting plan. So you put certain flowers into a bed with certain vegetables because those flowers attract the bugs that would otherwise eat that particular vegetable.

And then I said, what about succession planting? And so, and then within five minutes, I had a plan for eight different beds for every season. What should go in the bed, what should be planted in that bed for each season and what companion flowers should be planted in the bed with it.

for each season and what the next season would be for that particular bed so that the soil, because you don't put something in a bed that had growing onions if it wasn't a plant that likes soil from, you know, right? And I did that in five minutes and then she finished her phone call and I said, how about this? And she looked at that and her jaw fell open. And that was about maybe nine months ago. That was when she started adopting

Because until then, it was just a scary thing to her. Have you tried using the plan? Is it working? For what? The chat GPT plan for your garden. Has it worked? Well, except that we haven't gotten to the point where we've started to put the garden because we were doing all kinds of other renovations around the house. Oh, yeah. Fair enough. But we will. I mean, she still has it. We printed it out. She has that. And it drew it out in tables, right? That's amazing.

So yeah, on to the next question then. So many startups rely heavily on external funding, as you mentioned. How does your method help companies reduce this dependence on external funding? And why is it important for long-term growth?

Okay, I love that question because the reliance on funding is really dangerous. If you rely on it too early because you don't have sales yet. You haven't proved product market fit yet when you have your idea. So yeah, if you don't have enough money to even pursue...

the very earliest stages of your startup, the design and prototyping stage, then friends and family funding if you've got a really good idea. So with large first, the idea is you either find a path to revenue early or you fail fast and cheap, which is manna from heaven for any startup that's ever gone through the three, four, five-year slog to failure.

where they could have possibly either realized that they could fail fast and cheap or because they were iterating really early, could find a path to success and then make the big investment on the right thing. So with Launch First, if we find a path to revenue early on before we start even developing the software, then you can continue sales, which is why it's called Launch First. You launch your sales marketing engine before you develop your product.

then you have a way of funding development. If not all of development, a lot of it.

And you also have now proof to potential investors that you've got product market fit. And so your valuation can be much higher. You can go out and raise money much more easily, which by the way, is very, very hard to do for startups in the early stage before they have a product on the market and they've got proof that they've got a growing customer base and growing revenue.

So people, it's, I can go through the numbers, how I got here, but if you have a thousand startups, I think it was a thousand, a thousand startups that want to go for funding, venture funding, or angel funding, out of those thousand, 30 of them, venture funds, 30 of them will achieve venture funding.

And that's from venture funds that receive a thousand. That's actually, it's actually 3000, sorry, 3000 people sending in their pitch decks to a venture fund. Ended up being 30 that actually get funding. And out of those 30,

Once you get venture funding, I think your odds of being successful are somewhere between one and seven and one and 10. So out of that, you still have only 10 or between three and 10 that are successful.

So those numbers are really bad. It's a number. But then the venture world has promoted this thing, so everybody thinks they have to go out and get funding. Of course. Absolutely. Right. The best way to find your business is through the sales, through your own revenue engine. That makes complete sense here. Yeah. More sustainable, more predictable also. You've worked with thousands of startups over the years. What are the most common traits of the successful ones? How do you help companies cultivate those traits?

Okay. So some of that, yes, I try to help companies cultivate these traits, but some of these traits are inherent. So for example, I know that somebody's got a chance, a much higher chance of being successful if they work in an industry where they are, industry or a particular vertical, where they are struggling with a problem themselves.

they can validate the cost and the, and the perceived impact of that problem. And they want, that's what they want to do is solve that problem. And they have, the second thing is they have a reach to, to other people in the industry and that they know are also struggling with the same problem that they're struggling with and that there isn't,

a product available to solve that problem that's within reach and context of them. There may be an enterprise product, but they're not enterprise and they can't afford it or right. So if they have those specific things, uh, and the problem they're trying to solve is discreet enough, then the chance that there'll be successful goes up. Chances are dramatically higher. Uh,

The next trait would be discipline. If they recognize that, yes, this problem really teases out to five or six different problems and I know I need to solve all these problems before I even release a product to the market, that's a recipe for failure. If they can just tie down one problem or two problems of those problems

of that constellation of problems and focus on the most immediate solution, not a big comprehensive solution to it, but just something that mitigates the problem as simple as possible and get that to the market and validate that that problem is being solved and that the value is being achieved, then that's the next thing. But it requires that a startup founder takes off

Excuse me, takes off their, you know, their wizard vision hat, right, and puts on their accounted cap, right, and focuses on metrics and numbers and validation and basically proof of life.

But not tunnel vision per se, just focus. No, but it is a certain amount of tunnel vision. Not tunnel vision to the exclusion of being able to recognize that they need to make changes, but tunnel vision in terms of, okay, I'm right now working at figuring out a process that can be repeatable to generate revenue and to build customer loyalty.

Right. And if I'm not getting revenue, customer loyalty, then I step back and I try to assess it. And then I come up with a new plan and then I go back into that tunnel. Right. And execute, execute, execute. So it's funny you said tunnel vision because that's actually successful founders have a certain amount of tunnel vision, dogged approach to repeating things.

things that they believe will be successful until they either are successful or they've got enough proof that this is not the right approach before they step back and widen their view. Yeah, that's right. You need to be open to some inputs, don't you? Especially customer feedback or whatever. Okay. So based on your experience, Dan, can you share, if you can, a specific example of a startup that successfully applied the launch first method and the impact it had on their growths?

Sure. So, um, uh, and I'm not going to talk as much about growth, more about being able to, um, um, basically reach the market without investment. So, uh, one of my clients, um, um, was a realist, they're real estate investors. And, uh,

They owned, when we started working on this, they owned 70 or 80 roughly properties, real estate assets. And on these assets, they bring in investors to joint venture with them on specific, and most of this was residential and multifamily.

So they had like 30 or 40 investors, each one investing in one or two or three different properties. And so they were getting calls many times a day.

I'm not, I'm sorry. They were getting calls 80% of the time, of their time was spent fielding investor questions about how's my investment doing or my investments. There was an issue with the property last week. There was termites. Have we done anything about that? You know, things like that. And that was taking, sucking up all their time where they didn't have time to invest in new stuff.

So they wanted to build a system that was pretty much a portfolio management system where they could see very quickly what the, um, uh, how all the properties were performing and they could invite their investors in and the investor then could log in and see their specific, uh, properties and how they're performing, uh,

to cut down a lot of that. Plus they needed the, and also so they don't have to keep doing these quarterly reports because their investors have all this information always available. So, so we built a high fidelity prototype, a,

And then we went out to the market, which they were involved in a big network. So they had a problem they were solving for themselves. This is a good example of that. They had reach because they did lots of, they had mastermind groups and big networks of real estate investors because they were always successful.

promoting new potential investments. And so they went out and some of those people that invested in them also were investors in their own properties. And so it's a very incestuous business in that way. And in the first two months, we sold 30 licenses for and generated close to $70,000 in the first two months. And we started developing the app at that point.

and continued selling it and never actually needed to raise any money. Their business shifted after that and so they stopped promoting the product after that. They weren't trying to grow. The reason for this wasn't to grow a big SaaS company and so they stopped growing it. But they had a bunch of customers who were licensed for it and they have...

and they were able to self-fund it. Well, they were able to fund it from the sales of licenses, pre-launch licenses. That was without a product being that we hadn't started development yet. That's one example. That's a remote. I have another customer that was...

in the aerospace parts industry. And he was an aerospace parts distributor. And this was a particular world where lots of parts have to be reset. I mean, it's really costly.

when you have to reset a part because the certification certificates were missing from the part that you set. And the reason that's important is because every part in anything that goes into a commercial plane or spaceship, but let's say commercial planes, every part has a certification certificate. It talks about the origin of that certificate.

part, and all of the things that went into making the part. So if it's an assembly, let's say it's a murder, then there's hundreds or thousands of parts in there. Each one of those parts has its own certificate. And if those parts were made up of parts, each of those parts, down to the screws, right? So you have this trail of these certificates that follow each part and get added to the new assemblies. And if you don't have

all this, access to all this, when you get an engine and you're missing parts, then you have to basically get a new engine. And an example of this is like it was a fighter jet where there was a fuel line in the engine that was missing a certification certificate. One of them had a leak in it.

And then they went back and they researched it and they were missing. And so there was like 15 different jets. All of them had to have their, it was like hundreds or hundreds of millions of dollars cost. They had to all rip their engines apart and replace all these fuel lines and things like that. And that's a big expensive thing because the certs were missing.

Anyway, so he wanted to build a system that basically automated this and you can always look the certs up and they would all fall out because there was no system like that. And so we basically built the high fidelity prototype. And then he went to three different distributors and all three of them bought a pre-launch license for $15,000 each.

With an example, that was his proof and that was enough for him to start development. I'm shocked that didn't already exist. I'll be honest. Oh yeah, right. I know. That was an F-35 when he shot to it.

I don't remember. This was like four years ago. But those are a couple of really good examples. Oh, wow. That's amazing. Okay, then. Moving on. How do you see the role of generative AI, like ChatGPT, evolving in the context of startups? And what advice would you give to new companies looking to incorporate AI technologies?

Okay, so those are a couple different questions, I think, right? Yeah. So the first one is a chat GPT. If chat GPT, you don't think of it as your friend, your really smart friend that you can talk to about anything, even about how you're feeling about something, then you need to start, you need to develop that relationship. And I talk about it as a relationship because

Because these AIs are conversational and now they get to learn more about you and what you know and what your preferences are. And the more you talk to them, the more they respond to you. They're just really smart. They know a lot. They know how to approach things. You can ask it, I'm not sure how to approach a problem. How should I approach this? And then it will lay out a plan for you.

And then you say, would you expand on any part of that plan? And it will now expand that out as much as you want it to expand. I say, okay, great. Let's execute that. Right. And then depending on the AI tool that you're using can start to like execute on it as well. So a lot of,

For me, for example, a lot of things I just workflow things on the day that I want to automate, I'll use, I'll go into ChatGPT and have it write automation for it. And then I'll implement the automation. Something that would have taken me weeks to do before now can be done in a couple hours.

where I would have engaged one of my developers to do it because I can't just lock myself up for a few weeks and be writing code. I would love to do that, but it's an indulgent. I have to keep growing my company. That's what my job is. But now I can do it in a couple hours and it's not indulgent. Instead of wasting the time of my developers who are working on bigger, more complex stuff, I can build these things very fast.

So there are so many tools to help from the marketing, from the branding perspective, from outreach perspective, from the assessment and analysis perspective, right? So this is what the startup should be doing is

searching for the things that are... So I think of it like this. And it was Michael Dell that in a Forbes article 15 years ago, I think, when he was asked, what's the secret to your success? It might have been 20 years ago. What's the secret to your success? And he said, it's a really simple formula. I just look for the bottleneck. What's the biggest bottleneck in my business right now? And then I put my energy on...

relieving that bottleneck because as soon as I open up that flow and it's no longer a bottleneck then everything flows into what's the next bottleneck that we didn't know was a bottleneck until we widened that pipe enough that now things could flow freely

So, and then I just go, I just keep following the bottlenecks and focusing on that. And so if you, as a founder, think in terms of, okay, what's the biggest problem I have in front of me right now? Is it design? Is it development? Is it testing? Is it marketing? Is it customer service? What are the things that right now I'm finding are not getting done properly and are potentially

preventing me from being able to grow and scale my business, or then put AI on that and have AI help you plan and mitigate that bottleneck. So you might call it like a bottleneck buster or something. Yeah, a bottleneck buster. I like that. It's actually one of those tools where you have to widen the end of a pipe so it'll slide into the other one. The important thing is they are conversational, isn't it, with the easy access.

And what trends do you predict will shape the future of software startups? And how can emerging entrepreneurs prepare for these shifts? That is the hardest question to answer because it is very difficult right now to predict where we'll be in a year or two, let alone two or three or four years because AI is accelerating so fast.

And I'll give you an example of something that seems obvious to me, but I brought it up to a few people and people hadn't thought about it before, but in terms of the impact of how disruptive technology can be from a couple of perspectives. I'll give you two stories if you'll indulge me. One is

I travel to India a lot. I used to travel to India a lot. Between 2010 and the pandemic, I went there 15 times building teams. Because a lot of people say they can work offshore, but if you're not building your teams and building your culture into your teams, then you end up with the best, which is, you know, and my teams are exceptional. But it's hard work to build an exceptional team.

So, anyway, so I was traveling there and India is the most, at least from every place I've traveled, the most different feel from US culture when you're just there.

In terms of the cars on the road, the colors, the patterns of life, the way buildings are juxtaposed with poor and wealth. It's just wildly different. One of the things that is indicative of being in India, especially in Mumbai, is that you're buried in a sea of these, what they call tuk-tuks or autos. They're these three-wheel motorized rickshaws.

And there are millions of them. And I have photographs where we're in traffic and I'm standing up with my camera over the top of them and you see thousands of them just like in a tangle.

Anyway, so around 2015, 2016, there was about a 15-month hiatus that I took from going to India from my three trips a year. And then when I went there, I landed, we're going through Mumbai, and I noticed there was something really different at the time. And I couldn't quite put my finger on it at first, just felt it. And then I realized now there was like hardly any of those autos in the road.

I mean, it went from millions of them to like maybe 10 of them for every car to now 10 cars for every one of those. I mean, if you think about the scale, that's dramatic in a very short period of time. So I thought, well, maybe it's legislation because they're all two-stroke motors and bad for pollution or whatever. Anyway, I get to the office and I ask my director of development, Shloka, what happened to all the cars?

She said, oh, well, Uber came to India and they wouldn't approve them. I mean, wow, right? And I'm sure the guys at Uber weren't sitting there rubbing their hands together in 2009 going, just imagine, just in a few years, we can wipe out all the tuk-tuks in the world, right? Or they just never even imagined the impact they would have on an entire industry, right?

Now, a year later, year and a half later, a service called, I think it's Uduwala came out, which was an India version of Uber. And then they would approve these tuk-tuks. And then Uber started approving them to compete. And now they all came back like almost overnight. But-

That's an impact of technology that I got to witness that was so dramatic. Yeah. Right? And unintended. Unintended. Okay, so here's one that I'm seeing in the next five to ten years will happen. As soon as self-driving cars become enough of a reality, which they're just at the very earliest stage of that right now, right? Yeah.

The auto taxi is what I'm talking about. So you've got Waymo, which is, they have it in Phoenix and San Francisco and Phoenix just expanded its area now. I travel to Phoenix every month to go visit my mother. And so now it reaches out to her 30 miles from the airport. So I can grab a way. And they are really cool. I've been in a Waymo and they're quite cool and you feel very safe.

Anyway, so as soon as self-driving cars hit that tipping point and these auto taxis hit a tipping point, the cost is going to be very inexpensive because you don't have a driver.

uh you're basically it's the it'll be very very inexpensive to take one it'll be hard to justify that you need a car anymore to go to work or right because you just have a one of these pick you up take you wherever you need to go much less expensive than owning a car uh a lot more convenient in many ways uh no stress because you're and much much safer uh so uh now

all of a sudden everybody stops buying cars, right? I mean, I don't know that I would have a need for a car except maybe we'd have, instead of us having two cars, we might have one car just for long trips. Maybe not even then. Uh,

Well, if you don't have cars, then you don't need garages, or at least you don't need a big garage. Now it's a little garage. You don't need driveways. You don't need multi-story parking lots because nobody's going to park in them because everybody's taking on-demand cars. And all of a sudden, the whole real estate industry takes a huge show.

Absolutely. Right? 10 years. And there's going to be a big shift. I don't know when that tipping point is going to happen, but there'll be a big shift in real estate. And the way their homes are built in commercial areas, the need that these huge parking lots that you have in front of the industrial areas, no need for that anymore. Yeah. Because they'll be empty. That's right. Yeah.

That can all be reused and repurposed. Right. The car industry for selling cars is going to be decimated to a certain degree. I mean, there's going to be massive impact from this, and it'll happen fairly fast as soon as we hit that tipping point. We still get people who want to keep cars just as a hobby. Right. But yeah, that's not going to be anywhere near...

Mass market. And then, you know, the need for buses will be much less. Although you might still have buses because that'll be so cheap because you won't need the driver anymore. Sure, yeah. Because there'll be autobuses. Did you find it weird there was no driver? Makes me think. Did you find it weird there was no driver there? Because I think like, is it Total Recall? Is it a 1980s film? I think. Robot driver there.

One of the predictions I had when self-driving started to happen from Tesla was that it won't be long before, assuming that media doesn't go out of control, promoting fear, uncertainty, and doubt, we'll start to be able to prove pretty quickly that it's much safer to be in a self-driving car than to drive. Because it's so easy to be, if you just look the other way at the wrong moment,

You can cause an accident, run somebody over, run into somebody that stopped in front of you, swore they were your tire, and a self-driving car

doesn't do these unless it makes a mistake but the smarter they get and they learn pretty fast right there and and very early on the study started to show that you were 60 safer in a self-driving car that was like four years ago three or four years ago and now it's going to be like orders of magnitude safer absolutely right because they their reaction time is instantaneous uh they can

calculate how to stop in the safest way if they have to avoid an accident. I mean, there's so many reasons why it's obvious why it would be safer. So was it weird? No. I knew what to expect when I got in it the first time. In fact, I went hunting for a Waymo because they didn't pick up it right at the airport, so I had to

take the tram outside the airport to go get one the first time and uh uh yes because I wanted the experience of being at one and that was really quite cool it was uh and it drove perfectly great and I could relax yeah I could

you know read my email play a game whatever you know work on my laptop while it's driving me wherever i can you know i like being on a commuter train kind of yeah take a trip soon i'm thinking of whether to get a train or book a rental car if i had this kind of option uh that would be yeah desirable and i might put those out of business let's rent a car this can

Yeah. It will. Yeah, see what I mean? The impact of these changes will happen fast. So with startup, what should they be thinking about? It's be as creative as you can about what AI might be able to do and how it might be able to impact your particular industry. Because however creative you can get, it's probably not going to be too

Do you think they should take any concern for potential impacts of their product? Like we've been discussing unintended consequences, like collateral damage? Well, as long as what they're doing isn't inherently a bad thing to begin with, I won't take on projects that have to do with gambling.

Um, and, um, and no judgment or adult related stuff, right? Not that that's necessarily, well, probably a lot of it is either way wrong, right? But not, but just because, you know, reputation wise, I'm not going to do that. And, uh,

I just won't, no matter how lucrative a project is. I don't take on things that I don't feel are at least somewhat positive for the world. So as long as what they're doing isn't a net negative, like they're not taking advantage of poor populations to build them for their text messaging. I actually had somebody

uh reach out to me for a project like that years ago i just said that's pretty evil and no i'm not doing it uh it wasn't illegal it just was not a it was a net negative for for the world as it's a positive then i don't see um why they should be focused over focused on the future um uh

If it's fake news related, then don't do it. I mean, again, that negative. But if they're coming up with something that could be a constructive thing, it could also be repurposed for something that's not constructive. You can control those things once you've proven the product quite good and you start having success, then you can get your arms around trying to prevent

the negative aspects from getting it. And a good example of that was a product where we did not do, this was like seven years, maybe eight years ago that we did. That was, it was a clipping app.

where you could basically create videos from other videos on the web and then publish them and it was all virtual. So you were doing this virtual video editing by just saying, I want to clip between here and here. Now I want to repurpose that. So we could have repurposed those things very negatively, right? And make fake news by taking things out of context.

But that was not the goal. The goal at the app is to give people a way of easily being able to capture context in context at the moment saying, that's important. I'm watching a two hour long video. I'll never be able to find that clip again. I want to grab it very quickly and then tag it the way I can easily reference it later and find that specific thing effort. Right. That was the whole goal.

of the app. And so we worry about as soon as this started to take off, which it didn't because we didn't prove product market fit. We weren't sure who the early adopter was when we spent a fortune building that product. So that was a good example of what not to do. There was, but we would have been really great markets for it if we had stopped and validated the markets after we had started the design process.

Yeah, absolutely. Learning experience there. Yeah. That then, that basically draws us into a close. Is there anything else you'd like to add that we haven't really discussed you think is important? I think if you're a nascent software startup,

or any startup focus on the design and focus on proving that your customers will buy your product. There's a great book. It's my favorite business book. It's called the mom test. Yeah. So if you haven't read that to everybody, anybody listening and you're at any stage in the startup site, it's,

in the startup cycle, you need to read that book because it's how to basically turn your vision into a clinical exercise. So the reason it's called the mom test is if you come up with some cool business idea and you go and ask your mom, of course your mom, assuming you live in a healthy family environment, right? Your mom's going to say, oh, I think that's a wonderful idea. Because she wants to make you feel good.

And that's the problem with most startups that go do discovery interviews with potential clients is they're asking questions in a way that they're not getting truth for the things that matter. And the mom tells us, how do you ask all these questions so that you'll even get truth from your mom? Right. Excellent. That'd be useful in your family environment as well. Yeah, right. Yeah. Right. In your family environment as well. Yeah.

Fantastic. Great. Is there any social media you'd like to promote or website? You can look me up on LinkedIn, David Hirschfeld,

My website is techies.com spelled T-E-K-Y-Z. And you can see launch. If you're a startup, and we do software development for other than just startups, but if you're a startup, you want to learn about launch first, go to that at the top of the page in the menu, you'll see a launch first logo. Just click that. Superb. Great. Thank you for your time, David. That was very, very interesting.

Yeah, thank you, Christopher. I really appreciate the opportunity to talk to you. You're welcome. That concludes this episode of Lexicon. Thank you all for tuning in and being our guest today. As always, follow our social media channels for the latest science and technology news. Also, don't forget to explore iAcademy for new courses. Goodbye for now.