Founder Fridays No. 144
The Not Not Test -- Business Model for the Agentic Web -- When Vertical Integration Fails
Happy Friday.
The Not Not Test
Most startups die because they confuse "perfect" value propositions with authentic demand, then spend years in a "waking dream" optimizing the wrong thing. Damballa had eager customers, massive pain ($40 million annual losses) and cutting-edge tech, yet burned $69 million over a decade because customers could still say "no" to their solution. The breakthrough insight: authentic demand exists only when someone in a specific situation "cannot not" buy your product — they have no choice but to act. This "not not" test cuts through founder self-deception and reveals whether you've found a real product-market fit or are you just chasing ghosts, who will always find ways to cope without you. Common Cog (12 minutes)
Business Model for the Agentic Web
The human web is dying as artificial intelligence agents bypass ad-supported sites, threatening the advertising-based content ecosystem that feeds AI itself. Microsoft's promising "Open Agentic Web" with MCP protocol and NLWeb markup misses the crucial piece: native payments via stablecoins for micro-transactions. The breakthrough insight is that while humans suffer decision paralysis from constant micro-payment choices, AI agents can effortlessly execute millions of frictionless stablecoin transactions, automatically rewarding content creators based on how frequently their work gets cited — transforming the economics from scarce human attention to abundant machine intelligence that actually values and pays for useful information at unprecedented scale. Stratechery (8 minutes)
When Vertical Integration Fails
Most founders worship vertical integration like a religion, believing that owning assets guarantees quality control. However, Wander proved this wrong by abandoning their real estate investment trust and going asset-light, scaling from 13 to 1,000+ locations while their net promoter score actually improved to 85. The breakthrough came when interest rates killed their ownership model, forcing them to discover that sophisticated software orchestration could maintain luxury standards across third-party properties better than direct ownership ever could. Instead of buying $3.5 million vacation homes, they now curate the world's best properties and coordinate everything through AI-powered property management software, proving that vertical integration should only extend to the point where it creates better products — not further. Sometimes the constraint that forces you to pivot reveals the superior business model hiding beneath your original assumptions. Not Boring (9 minutes)
Founder FAQ: What Do I Need to Do When an Employee is Fired?
Startups live by "hire slow, fire fast," but most founders botch the execution and create legal nightmares that could sink the company. The key isn't just speed — it's surgical precision: document everything beforehand, deliver clear explanations with witnesses present and immediately secure company property while addressing team morale proactively. You must navigate a minefield of discrimination laws, retaliation claims and contractual obligations while treating the terminated employee with dignity to avoid turning a necessary business decision into an expensive lawsuit. The hardest part isn't pulling the trigger — it's ensuring your remaining team stays motivated and productive after watching a colleague get cut, which requires transparent communication and thoughtful workload redistribution. Westaway (7 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term-by-term and give you negotiation tips so that you can speak to investors with confidence.
Convertible Note: Guide / Video
Built By Founders for Founders
I co-founded my first startup with friends in 2007. As a founder, I struggled to find an affordable law firm that was designed for early-stage startups. So, I created one myself. Westaway is a law firm built by founders, for founders. If you're ready to ditch the outdated billable hour model and try a new approach to legal services that saves you time and money, let's talk. I'd love to jump on a 15-minute call to show you how we can make legal work smooth, fast and cost-effective for your startup. Schedule a call with me now.