The Startup Ideas Podcast
The best businesses are built at the intersection of emerging technology, community, and real human needs.
Starting with a leveraged agency approach will produce better outcomes than going straight to VC-backed AI startup for most entrepreneurs
The Reasoning
Leveraged agencies provide immediate cash flow, force you to understand customer problems deeply, allow you to retain equity, and give you leverage when/if you do raise capital later
What Needs to Be True
- AI tools continue improving reliability for routine tasks
- Market demand for boring automation services remains strong
- VCs continue funding unproven AI startups with high burn rates
- Most entrepreneurs can successfully acquire initial agency clients
Counterargument
Some markets require immediate scale and massive investment to be viable, VC backing provides valuable network effects and expertise, and agency work might not translate to scalable AI products
What Would Change This View
If AI development costs increase dramatically, if VC-backed AI startups start showing much higher success rates, or if agency-to-AI transitions prove harder than expected
Implications for Builders
Consider agency path even if you have technical AI skills
Focus on understanding customer problems before building solutions
Don't rush to raise capital until you have proven demand
Maintain optionality between bootstrapped growth and VC funding
Example Application
“Instead of raising $2M to build an AI invoice processing platform, start a $5K/month invoice processing service, learn every edge case manually, then build AI to scale it while keeping all your equity.”