413: We’re Gonna Need a Bigger Moat

You know that moment when you realize the ground has shifted beneath your feet? I had one of those moments recently. I was watching an AI agent build out a complex feature for Podscan in about twenty minutes – something that would have taken me days to code properly just a year ago. And it hit me: the rules of the game have fundamentally changed.


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Creators and Guests

Host

Arvid Kahl

Empowering founders with kindness. Building in Public. Sold my SaaS FeedbackPanda for life-changing $ in 2019, now sharing my journey & what I learned.

What is The Bootstrapped Founder?

Arvid Kahl talks about starting and bootstrapping businesses, how to build an audience, and how to build in public.

Arvid: 00:00

Hey. I'm Arvid, and this is the Bootstrap Founder. You know that moment when you realize that the ground has kinda shifted beneath your feet? I I think I had one of these moments recently, and I was watching my AI agents build out a rather complex feature for PodScan in just around, like, fifteen, twenty minutes, and that was something that would have taken me days to code properly just a year ago. And it hit me that the rules of the game that us software founders are in have fundamentally changed.

Arvid: 00:34

And I wanna talk about that today. So before we get to that, a word from our sponsor, paddle.com, because the way you monetize software as a service applications and mobile apps and stuff has also changed a lot over the last couple of years. Not only is there more competition now, but regulations are getting in the way in many, many places. And that's why I personally choose to charge my customers through a merchant of record. That was a choice I made.

Arvid: 00:56

I didn't want to deal with all this stuff. I just wanted to use an MOR and that was Paddle for me. They take care of all the taxes, the currencies, tracking declined transactions, updated credit cards so that I can just focus on dealing with my own competitors, not banks and financial regulators, which are way more powerful and much less interesting to work with. So if you think you would rather just build your own products, check out paddle.com as your payment provider. Over the last couple months, my way of building my own product has changed quite a bit.

Arvid: 01:30

And I've been talking about this on this podcast, like, forever. And I will keep doing it because it's just such a big impact that it had. A lot of the skill of coding solutions effectively has been pretty much surpassed by the AI agents that I use. Like, they're better than I am. And don't get me wrong.

Arvid: 01:47

I think it has a lot to do with the fact that I'm still very capable capable of specifying extremely correctly what I want and having a system built out code that is well specified and well commented that makes it easy for an agent to implement these things that I wanted to implement. When I started Podscan, I built this all by hand. So the initial constructive foundation of that is still my doing. And that being a collection of smart choices, let's just call it that, now makes it easy for an AI to find its way and build the things that I wanted to build. But the speed at which this is being built, that removes one of the biggest moats for me as an indie hacker and as a software entrepreneur.

Arvid: 02:28

Because I used to be really good at building stuff. And I think as indie founders, we all create code that works really quickly. Right? That advantage does not exist anymore because now everybody has access to Cloud or ChetGPT or whatever the latest model and the latest company is that is building software applications for you. So that speed advantage, that's gone.

Arvid: 02:48

Everybody else has access to this. It's really not that easy anymore. And on the other side of things, on the customer side, we're looking at some kind of subscription fatigue. People don't wanna buy software as a service products anymore. Right?

Arvid: 03:01

That used to be the one big thing that indie hackers had, reliable and anticipatable revenue from monthly subscriptions. Now we have to kind of claw at these as well, and it's much harder to convince people to actually use a product. So I was thinking, well, if those modes are kinda gone, right, the years of SaaS and the years of super fast indie hackers, what are the things that we still have? Or what are the things or modes that we as founders can use to protect ourselves from competition when our traditional advantages are disappearing. And I know it's kind of cynical to call something that hasn't been around for that long traditional, but, you know, for indie hackers that have been around for five, ten, fifteen years, stuff is changing in bigger ways and with larger scope than it used to in the past.

Arvid: 03:47

So I believe that we should probably expand on this a bit here, that the moats we do have are deep expertise in the field that we're in and the willingness to collaborate with our customers, where bigger companies just see these customers as a number, as a potential transaction. We do see them as a relationship. Relational engagement with customers, I think, is the ultimate opportunity builder for us software founders, solo founders, small teams, bootstrappers. We should think about relationships where others think about some row in a spreadsheet somewhere. And I think this creates something interesting.

Arvid: 04:23

We're not looking at our businesses as these kind of standalone services anymore that just generate measurable value for our measurable customers, I think it becomes much more of a collaborative approach to building services and building value for our customers. Right? Literally for the person that needs it, we build it for them. Think about it this way. When you have deep domain expertise in any field, you really understand the pain points, the workflows, the unspoken needs of the market that you're in.

Arvid: 04:49

That becomes your first competitive advantage. It gets interesting when you position yourself as the expert who codes, not just a coder who happens to be working in that domain, then all of a sudden things change for you. I think we could call this expertise as the service model. You're not just selling software. You're not just selling, you know, login and people do low touch kind of, okay, now I'm subscribing to this, and then you never talk to them.

Arvid: 05:15

You are selling your approachable understanding of the problem space. And that is backed by an ability to rapidly prototype and iterate on solutions, either through AI tools or you just being a really, really good developer. Your customers are aware that they're not just buying access to software, not just a tool that they use. They're getting access to someone who understands their world and can build exactly what they need. I've seen this in my own software as a service experience now.

Arvid: 05:44

I have such strong relationships with a group of customers that are also the highest paying ones and the most involved ones that get this. It's not necessarily that they tell me what to build, but they tell me what they want. And they are much more willing to give feedback because they know that with this feedback, they get stuff that fits into the workflow that they're already establishing. And I think we're very integration heavy and we're gonna be even more integration heavy in the future. If we're heavily collaborating with real humans, with real problems, we build integrations into existing systems because these people, they already have a business.

Arvid: 06:21

They already have certain needs. So we need to build something that fits there. Right? We maintain those integrations over time, and we have to make them work better in even more things to integrate with even more other things. And all of a sudden, our mode is not the traditional vendor lock in that it used to be because it's the other way around.

Arvid: 06:41

In our universe, our customers are kept and engaged not because they're locked in, but because our mode is that we are flexible and capable of interfacing with new and other systems. We're providing data to other systems. We're taking data from other systems. We're providing reliable, important, critical, relevant data that comes maybe from somewhere else. Or we create it for PodScan.

Arvid: 07:02

That's kind of a mix. Right? We pull in this podcast data that is literally created by other people, by creators, but we also add something. We analyze it. We extract it, and we just make it work for the people who need this data.

Arvid: 07:13

We make it attainable, and we make it manageable and accessible to them. That's why they interface with us because we have stuff that they need and we can give it to them in the shape that they need it in. That's what I've started doing. Instead of just building integrations myself, I'm trying to create what I think of like this integration marketplace around my core products. I think of it as turning a product into a platform where customers or even third party devs can build their own integrations.

Arvid: 07:40

You take a percentage, you charge some part of revenue or you have connection fees, whatever it is, suddenly your product isn't just a tool, it becomes this ecosystem of both integrations and integratability. And the biggest way of doing this, the easiest way is just have a well defined API. Right? If people can integrate with your core product, that already turns it into a platform. And it also turns it into a potential plugin for another platform if you have webhooks and that kind of stuff.

Arvid: 08:06

Not going to go too much into detail here because this might be different for every single business, but think about integratability and integratedness of your product as an important thing, not just to have as a byproduct, but as a core tenant of the whole strategy of how you build this product itself. It's an ecosystem. That's the idea. The idea is to allow it to breathe into other products and have other products push their data into it. Like, just integratables.

Arvid: 08:35

This approach transforms switching costs entirely for your customers. Instead of having this technical lock in, you create relationship depth. When your product becomes the hub that connects to everything else in their workflow or is a thing that connects to things that are important to them, leaving becomes exponentially more undesirable. It's not difficult. It's undesirable.

Arvid: 08:58

Not because they can't do it, but because they would lose all these valuable connections and relationships. And that's something that people actually still care about. And from that relational approach to customer success stems a very different future business model, a very different product design philosophy. Not one of locking people in, one of unlocking things for people. I think that's the mental shift that I'm doing.

Arvid: 09:22

It's like, how customers? How can I retain them? Right? Like, retention, retention, churn. Yeah.

Arvid: 09:27

Sure. Those are numbers that are important, but maybe they can be shifted towards even better looking numbers by just making things much, much more accessible for the people that I want to want to stay with the product. Where this happens, where you get to know how this works, like what the exact thing is that you need to do is in these collaborative conversations with your customers. It's in the feedback that you get. It's in the back and forth and the ideas that the customers bring into our products like, hey, I would like to see this, which is often something that you probably don't want to integrate immediately, but something to think about.

Arvid: 10:01

Why do they say this? What do they need it for? Or people come to you and they say, hey, a competitor offers this, a competitor has this website. This literally happened to me a couple of weeks ago. I sometimes use it, but I don't really like it.

Arvid: 10:12

I want something like that, but better. Can you do it? And those kind of things, of course are possible and you could probably come up with them without your customers giving you this feedback but if they tell you and it's something that you can do and you do do it then all of a sudden you build a really strong relationship you give somebody something that they really wanted to have and you made it for them. And those kind of things can come from these deep conversations with customers. AI doesn't have to stay on the sidelines here.

Arvid: 10:41

It can be your secret weapon for customer discovery. I've been experimenting with what I call AI powered customer discovery loops, and I talked about this last week on the podcast and over the last couple of weeks before as well. So instead of manually sifting through my tickets and my feature requests, I have AI agents to analyze for patterns across these customer interactions. These agents identify trends that I might be missing manually. They look for emerging needs, like things that are coming up more and more before they become widespread that everybody talks about it, even help me understand where customers are and which of them are most likely to churn based on their communication patterns, which is usually silence.

Arvid: 11:21

Like people who don't talk, they have things going on inside their own minds and then reality that they would like and reality as it is start to come into conflict and then they churn. So having people chat with me is actually something I like, which is so different from prior experiences with customer service where every ding of a customer service would kind of freak me out. Now it's like, hey, I get to see what this person needs. And any ding is kind of, oh, here's another fast feedback loop. And that helps me stay ahead of customer needs quite a bit.

Arvid: 11:50

So while your competitors are still kind of manually analyzing quarterly surveys or whatever, You are responding to customer needs in real time and you put attention to where a relationship is being formed. And that customer development becomes your own competitive advantage with these customers. Like, obviously, other people won't see this, but these customers will always remember how you are there. Like, you wouldn't believe the number of times that just me responding quickly to a customer paid or unpaid has turned into, a five minute, ten minute conversation. That person told me this has been the most in-depth conversation I ever had about this particular part of my business or I've never had a customer service chat this friendly, this meaningful.

Arvid: 12:33

And they remember this. And not only that, they will tell the people that they trust that you are trustworthy. Right? This is word-of-mouth, the best possible way. So the scripts that we had until now have to be rewritten.

Arvid: 12:45

I think the whole idea of the software business that was impossible to build for anybody without extensive coding experience in the past, that is gone. The software part may not even be relevant anymore. The important part if you're a software entrepreneur is not the software funny enough. It's the wetware. It's the communication between human minds.

Arvid: 13:07

It's this flow. I don't know what else to call it. There's something that is outside of all the automations that are ever easier and easier to build at this point. AI just, you know, build my automations. But the automation becomes a consequence of a conversation rather than the actual product.

Arvid: 13:25

The product in many ways is now our capacity and willingness to engage and build solutions for the people that we are actually already serving. It's not to build a solution then sell it to people, but to sell our capacity to build the thing that they want. And this is leading me toward the kind of solution concierge business model for Indie Founders. Instead of traditional subscriptions, I I think we could just offer solution packages where customers pay for outcomes rather than just access to it. And you can use AI to rapidly prototype and iterate these solutions with customers and charge per problem solved or per integration implemented rather than relying solely on monthly recurring revenue from a central SaaS product.

Arvid: 14:07

So last week I talked about how we can onboard people using AI where we don't even know what people need but AI will figure it out with them and for them or we figure out who our customers are by having AI sift through the system then write the perfect follow-up email for us knowing what the capacities of our system are and what this user should be doing with all the things that they've already tried or not tried on the platform. But there's another layer here that I've been experimenting with and that is building async collaboration tooling directly in the product. Since human communication is becoming the differentiator, why not make that communication part of the platform? Think of shared workspaces or common systems or upload, download things. Those are not new, obviously.

Arvid: 14:51

Workflow documentation. People can share how they approach a thing that keeps customers engaged with the platform daily and they see how others do it. That's not new, but it becomes something meaningful if you look at it through the lens of relational interaction. Right? You want people to interact with the platform, not in a transactional way exclusively.

Arvid: 15:10

That's great if they do it, wonderful, and they pay for it. But if you can put a relational layer on top of it, now all of a sudden it becomes something meaningful. So instead of trying to increase engagement through notifications or gamification, I think you can increase it through genuine collaboration. Your customers aren't just using your tool. They're working with you inside your tool.

Arvid: 15:32

And switching cost becomes the loss again of that collaborative relationship with you and with others, not just the technical difficulty of moving data. AI systems have to be in there. They are facilitators because they do stuff in a way that no hand coded thing could ever do. They're kind of the agentic organic compounds in the sweatware that we're building that connects things. So the more I see people struggle with the fact that AI is or is not replacing them as software engineers just yet, the more I think that these people are looking at that particular use case of AI from the wrong perspective.

Arvid: 16:08

Because it's not really about the quality of code that an AI agent writes for you. That's not what it is. It's the expectable increase in quality that agentic AI coding systems are gonna bring to the business in the next five or ten years. That's what you have to think about, right? Just like email became a thing that first was only used by universities and technical businesses or whatever, now every business is using it because it's just a commodity.

Arvid: 16:34

The idea of custom software to solve your problem or software that is highly customizable to the point that it will really adequately solve your particular problem, that's the magic that is coming. That's the commodity that we are going to be expecting in the future. When AI handles the implementation details, Your job becomes solution architecture and customer relationship management much more than typing things into a keyboard so that a machine then can read the recipe and make you the cake. Right? That's what coding is.

Arvid: 17:02

You create a code recipe and then some kind of interpreter makes it into an application. You become a translator not between your model of the solution and the machine, but between customer needs and technical feasibility. You become a curator of solutions, not the person who actually implements them. And this is where the relationship advantage really shines. I think a big company might have better and more exhaustive AI agents, but they can't have the same depth of actual relationship with each customer.

Arvid: 17:32

They can't have the same willingness to customize, to iterate, to build something that's exactly right for one specific use case for that one person because they're already serving hundreds of thousands of people. So what does this mean practically for Bootstrap founders? Well, you have to start positioning yourself as the domain expert who codes, not just someone who codes in a domain. That's an important shift. And I know it sounds very similar, but it's very different.

Arvid: 17:57

Expert first. Write about your industry. Speak at conferences. Go to conferences if you don't want to speak, but talk to people there. Become known for understanding the problem space deeply, not just for your technical skills.

Arvid: 18:09

Honestly, the people in our tech community that I look up to the most are not the ones that are the best developers or the best founders for that matter. They are the ones that have chosen to share their knowledge. They have started a podcast, they have started a blog, they have started a newsletter, they relentlessly talk about the things that they care about and that they know. And those people I trust because they share. They are experts and they're positioning themselves as such.

Arvid: 18:35

They're not just experts by the outcome of their work. They're experts by the output of the knowledge that they receive and that they built. It's not just technical output, it's people output. Second, make integration a strategy, not just a feature. Look for ways to turn your product into this hub that connects or connector to hubs to everything else that your customers use.

Arvid: 18:59

Consider building marketplace models around those integrations or be on marketplaces at the very least with your tool. Podscan is on Zapier. It has a make.com integration, all these big places. Why would I not wanna be there? Why would I not want to have a webhook ready for this if somebody else wants that data funnel somewhere else?

Arvid: 19:19

Third would be using AI for customer discovery, not just product development. It's not just an agent that creates code for you. It's an agent that can look at the people that are using your product, the people who come and try it out, the people who may or may not take a couple steps in the product, set up systems that help you understand these customers better and faster than anybody else in your space because these agents can work the moment something happens. Collaboration needs to be built into your product from the ground up. That's number four.

Arvid: 19:47

Make something that is about working with you and the team part of the value prop that you offer, not just using a software. It's not just a login and then a dashboard. It's an interaction with the founder. I know it doesn't scale. It doesn't have to.

Arvid: 20:00

Right? You will figure out ways to scale these things at some other point. As hard as it is to tell people to talk to you if you don't want to be talked to, you have to. At this point, we are beyond building software, putting it out there and hoping that people will come. That's not happening anymore.

Arvid: 20:15

Finally, you have to experiment with outcome based pricing models instead of traditional subscriptions. Doesn't have to happen for every SaaS business or every software business out there, but I think we're moving towards this kind of we need a custom thing. Can you build it for us for every software? So you have to start selling your capacity to solve problems, not just access to software. And the businesses that will thrive in this new landscape are the ones that understand that software is becoming a commodity and solutions are becoming more valuable than ever.

Arvid: 20:47

The relationship becomes the product, right? The expertise becomes the service. The willingness to collaborate becomes the moat. It's not about building defensive modes the way we used to think about them. It's more generative modes, like advantages that actually create more value for everybody involved, including your customers, that even your competitors can be, right, in some ways, like if you interact with them, if you integrate with them.

Arvid: 21:10

So when you're integration heavy and collaboration focused, you're not trying to lock anyone in. Like vendor lock in is a thing that I don't think is going to be around for much longer. People are still going to try and do it, right? They're trying to make us say, but you're trying to unlock value for your customers. And when you do that consistently with, like, expertise and genuine care for their success, not just your own, it creates a kind of loyalty that is much stronger than any technical switching cost, and people will talk about it.

Arvid: 21:37

So future belongs to founders who I think understand that in a world where code is commoditized, creating code is commoditized, relationships become premium, where solutions matter way more than software, where being able to rapidly prototype and iterate is just the default. And it beats having the most polished initial product. That stuff doesn't fly anymore. The AI handles all the implementation details and that frees you up to focus on understanding problems deeply and building relationships authentically. And in a way, that also creates more expertise.

Arvid: 22:07

Right? If the thing that you used to do was like coding all day long, didn't really have that much time to understand like the deep nuance of the industry that you were in. But since much of what you do now is prompting, you need to know exactly what to prompt. So you have to spend more time reading up and checking things out. And then you give the task of actually writing the code to something that is much faster than you could ever be, and that frees up even more time for you to dive into your industry.

Arvid: 22:34

The entrepreneurs struggling right now are the ones trying to compete on technical implementation quality or trying to build traditional SaaS businesses in the market suffering from subscription fatigue. The ones who are thriving are embracing shift towards collaboration, expertise and relationship driven business models. You will see this on Twitter. The people who are just building SaaS, they're not talking about it not as much anymore, and they're struggling much more. And the people who are just, like, experimenting, they're the loud ones because it works for them.

Arvid: 23:04

Now your coding skills are not obsolete at this point. Like, if you're a developer and you're like, ah, where's my opportunity going? We're just moving up the stack. Instead of writing functions, we are architecting solutions. And I know this sounds like business speech, but it's really you becoming this person that keeps the model going, not the actual implementation.

Arvid: 23:24

Instead of debugging code, you're just debugging problems and you're trying to figure out, well, how can I solve this problem? Build me a solution. Doesn't look right. Build me another solution. Okay.

Arvid: 23:34

This is good enough. That's kind of how it works now. So we're not optimizing algorithms. We're optimizing relationships with customers, feedback cycles. Right?

Arvid: 23:41

You built this, customer likes it, good. You built this, customer doesn't like it, build another version. And I think it's much more interesting and kind of a more sustainable way to build a business anyway. It's more agile to use a term from the software development methodology, right? The question is not whether AI replaces software entrepreneurs.

Arvid: 23:57

The question is whether software entrepreneurs will evolve fast enough to stay relevant in this new landscape. And the tools are here, opportunities are here. The only question is whether we are willing to change our approach to match this new reality. That's what I've been thinking about lately as I watch this industry transform around us. Podcasting is changing, obviously that's my industry, but even the whole software entrepreneurship field is changing quite a bit.

Arvid: 24:21

Are you seeing this in your own business? I would really like to know. Are you adapting to this shift? Have you already adapted maybe? Or are you fearful?

Arvid: 24:28

Like, do you know where to go, where not to go? I would love to hear your thoughts. This conversation, I think, is just getting started. Technology is kind of pushing us towards it. That's it for today.

Arvid: 24:39

Thank you so much for listening to the Boots of Founder. You can find me on Twitter at avid kahl, a r v I d k a h l, if you wanna know what everybody's saying about your brand on now over 4,000,000 podcasts, Podscanned out of fm tracks mentions of anything you want in near real time with a powerful API that turns podcast conversations into actionable data. And if you're hunting for your next business idea, get them delivered fresh from the podcast world at ideas.podscan.scan.fm where we have a system that extracts the best startup opportunities from hundreds of hours of expert conversations every day. Share this with anybody who needs to stay on top of the conversation. Thanks so much for listening.