Things that Used to be Impossible, but are Now Really Hard by @ttunguz

🌈 Abstract

The article discusses how AI can change the economics of business problems that were previously considered intractable, using the example of AI-based sales development reducing the minimum viable average contract value (ACV) for a sales team.

🙋 Q&A

[01] AI's Impact on Business Problems

1. What technical problems are now possible but still hard?

• The article suggests that AI can now solve problems that used to be impossible, but are still technically challenging.

2. What business problems are newly solvable with AI?

• The article provides the example of AI-based sales development, which can reduce the minimum viable ACV for a sales team, making it economically viable to sell products with lower ACVs.

3. How does AI change the unit economics of a business?

• AI can improve sales productivity, allowing a sales team to close more deals per year with the same resources.
• AI-assisted sales from freemium/product-led growth (PLG) models can also significantly improve conversion rates compared to unassisted sales.
• These improvements in efficiency and productivity can expand the addressable market segments for a business.

4. What is the hypothetical example provided in the article?

• Without AI, a sales team would need to close 48 contracts per year (1 per week) for a $10k ACV product to break even.
• With a 50% productivity improvement from AI, the same sales team can close 36 contracts per year (3 per month) and make the economics work for the $10k ACV product.
• This demonstrates a GTM motion that was previously considered impossible but is now viable, potentially becoming a competitive differentiator.

[02] Implications of AI-Powered Sales

1. How can AI-powered sales development become a competitive advantage?

• By reducing the minimum viable ACV, AI can enable businesses to target and serve lower-value customer segments that were previously uneconomical.
• Executed properly, this AI-powered sales strategy could help a business win disproportionate market share in a market segment.

2. What are the key benefits of AI-powered sales development?

• Improved sales productivity and efficiency
• Increased conversion rates for freemium/PLG models
• Ability to address lower-value customer segments that were previously uneconomical

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