Recap the first episode of our "Llama Shaving" podcast, featuring AIFoundry.org co-founders, Tanya Dadasheva and Roman Shaposhnik
Rethinking the Product-Service Dichotomy
There’s a lot of discussion around whether startups should focus on delivering a product, or if there's room for something different. Traditionally, companies are expected to offer a product. But, as we explore deeper, we start to question this premise. Who says we have to create a product? What if the distinction between products and services is no longer as rigid as we once thought?
When companies are service-oriented, venture capitalists often raise concerns about scalability. After all, the more customers you acquire, the more people you need to hire. That's a capital-inefficient model. But what if we could blur the lines between products and services? In many industries, the boundaries are already fading, with companies creating something more dynamic and flexible—something beyond the product-service dichotomy.
Selling Experiences, Not Just Products
This shift brings us to an important realization: customers today aren’t just buying products—they’re buying experiences. Take Tesla as an example. While critics might argue that Tesla isn't the best car when evaluated as a traditional product, however, it excels in providing a digital experience, essentially selling an API on wheels. This is what resonates with consumers. They’re drawn to the experience, not just the product specifications.
This shift in focus from products to experiences can be seen across industries. Companies are transitioning from selling fixed, rigid products to offering customizable, composable stacks. Each customer’s needs are unique, and they want a solution tailored specifically for them. This is a key insight, particularly for data-driven companies, where creating a one-size-fits-all product isn’t possible. Instead, the experience, powered by a composable stack, is what brings value.
Aligning Sales Culture with the Composable Future
However, this approach requires a change in how sales teams operate. Traditional sales models, which thrive on pushing pre-packaged, commoditized products, won’t work in this new landscape. Salespeople often gravitate towards selling fixed products because it's simpler. You sell it, you move on. But with a composable stack, sales teams need to shift from selling a single product to selling a customizable experience. This requires understanding the customer’s specific needs and providing solutions that leverage various components in a modular way.
The good news is that the future of sales might be easier than it seems. With AI stepping in to handle commodity sales, sales teams can focus on selling the value of the experience. The goal is to align the sales culture with the engineering principles that support composability, ensuring that the promises made to the customer can be fulfilled through customizable building blocks.
The Role of Venture Capital and Foundations in Enabling the Composable Future
The shift towards composability and experience-led solutions also calls for a rethink in how venture capitalists and foundations approach investments. Venture capital has traditionally been focused on products that can scale quickly, often to the detriment of collaborative, open ecosystems. In this new world, venture capitalists must balance the need for scalable returns with the support of composable, collaborative systems.
There’s also a role for next-generation foundations. Foundations have long been limited by narrow, non-profit structures that prevent them from supporting the full spectrum of development needs. But what if these foundations took a more opinionated, curated approach to their investments, focusing on building blocks that support multiple industries? Such a shift could foster an ecosystem where vertical integrators and collaborators work together, accelerating innovation without the narrow focus on products.
In conclusion, we’re on the cusp of a significant shift in how we think about products, services, and experiences. The future will be about composability, customizable experiences, and a sales culture that embraces this flexibility. Venture capitalists and foundations have a crucial role to play in enabling this future, ensuring that it’s not just about building products, but creating lasting, impactful experiences.
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AIFoundry.org Team