Posts

On February 23rd at 10am Pacific time, Office Hours will host Steven Goldfeder. Steven founded Offchain Labs, the company behind Arbitrum, a web3 project worth $21b as of this writing.

Arbitrum is a L2, a layer 2, that sits atop Ethereum, improving its performance & cost to write transactions.

Steven authored many of the seminal papers behind modern blockchains.

We’re entering a new pricing environment for software: AI vs non-AI. It’s only happened in the last few weeks.

Recent earnings have pushed some of the most important companies to all-time highs.

This dynamic doesn’t favor everyone.

Theory created a public market AI index to track software companies who have significant product plans or current AI businesses.

As we’ve been researching the AI landscape & how to build applications, a few design patterns are emerging for AI products.

These design patterns are simple mental models. They help us understand how builders are engineering AI applications today & which components may be important in the future.

The first design pattern is the AI query router. A user inputs a query, that query is sent to a router, which is a classifier that categorizes the input.

“For some companies, [AI is] going to be standard issue like a PC.”

It’s not just for some. Many companies are moving in this direction. Across Microsoft products, OpenAI infrastructure, Github CoPilot (for coding), & Power Platform (for Office users) the growth is spectacular.

OpenAI & Power Platform organizations have doubled or tripled in the last quarter.

Last year, I argued every company would need an AI strategy because AI would infuse most products.

But, I missed an important concept in the post.

Talent. In the last year, AI experience has become a status symbol on a resume & a path to materially higher salaries.

I’ve spoken to many executives seeking their next role. “I’m looking for a role in an AI company” is a refrain in every conversation.

The fastest growing software category in the public markets is security. Data follows.

Security companies as a group average 29% expected revenue growth in 2024, compared to 23% for Data (or DaaS which stands for data-as-a-service). Fintech & SaaS (horizontal) average ten percentage points fewer expected growth.

ServiceNow, a $150b market cap company, made this statement yesterday in their earnings call :

“In Q4, our gen AI products drove the largest net new ACV contribution for our first full quarter of any of our new product family releases ever, including our original Pro SKU.”

That’s pretty sensational for a company with 3 massive business lines & enough acronyms to fill a dictionary :

“With technology, customer and creator, we now have 3 workflow businesses over $1 billion in ACV. We have 11 individual product lines with north of $250 million in ACV. ITSM, ITOM and ITAM, each had double-digit deals over $1 million in Q4. Security and risk combined for 12 of the top 20 with 9 deals over $1 million. "

Last Friday’s post about delegation called The Class Missing from Business School, spurred a deluge of great advice from readers.

There was a recurring theme when delegating:

1. Identify the time-consuming & repetitive tasks by coloring or labelling your calendar, or calculating at the end of the week or month.
2. Record a video/Loom/Scribe* detailing the process.
3. Send it to the person & have them summarize the task. This is a key step to ensure both sides establish clarity.
4. Both sides provide feedback on what worked & areas of friction. Ideally, use metrics to judge the effectiveness of the workflow.

Paul sent this graphic about Hostinger’s Task Relevant Maturity.

When I sat down to write this post, I wrote :

Write an introductory paragraph telling a story about when I was in grade school, my 5th grade teacher, Mrs. L, insisted on the class outlining their paper.

Write a paragraph about how we all wish we would outline, & there are frameworks like Situation, Complication, Question, & Answer that achieve this goal. But it’s been easier to simply dive in as much for grade school as in corporate life.

This is the machine generated example of metawriting that I mentioned in this post.

In my grade school days, a memorable lesson from 5th grade still stands out. My teacher, Mrs. L, was particularly passionate about the importance of structuring our thoughts on paper.

She insisted that our class outline every essay before diving into the writing process. I remember how she would enthusiastically explain the benefits of an outline, emphasizing its role in organizing our ideas and ensuring a clear, logical flow.