Paul Ford: Hi, I’m Paul Ford.

Rich Ziade: And I’m Rich Ziade.

Paul: And this is The Aboard Podcast, the podcast about how AI is changing the world of software. Richard, how are you?

Rich: I’m doing well. How are you?

Paul: I’m good. Let’s play the theme song, and let’s get into it.

Rich: Get to work!

Paul: I want to talk about—get ready, it’s gonna be pretty exciting—pricing.

[intro music]

Paul: First of all, I want to actually just help everyone who has people from the Middle East in their life.

Rich: Okay.

Paul: Because a lot of people are confused about the etiquette.

Rich: Mmm.

Paul: Of what to say to the person from the Middle East, with family in the Middle East, in your life during yet another global crisis.

Rich: Yes.

Paul: And I’m going to just give everyone this advice. You go—here, we’ll do it. You ready?

Rich: Yes.

Paul: How’s your family?

Rich: You want to make a bacon, egg, and cheese, as you walk into my bodega? [laughter]

Paul: That’s about right. Like, that’s about it. Like, everybody, you know, because Americans are like, “I’d like to explore your trauma.”

Rich: Yeah.

Paul: No. It’s, “How’s your family?” “Everybody’s okay.” “Okay!”

Rich: Yeah.

Paul: That’s it. Nobody wants anything—

Rich: Anything else other than this Arizona iced tea?

Paul: Nobody wants anything else.

Rich: Yeah, there’s a, I can’t speak for all—like, there’s many countries in the Middle East, but the Lebanese don’t wear pity well.

Paul: No.

Rich: They don’t want you saying, “Are you okay?” They don’t like it.

Paul: People like a, “How’s your family?” And then that’s it.

Rich: How’s your family? Yeah. And then what they’ll do is they’ll divert the conversation. [laughter]

Paul: Yeah.  They don’t want, “How are you?”

Rich: Yes. I don’t know when this airs. The world may…

Paul: Oh, I’m sure it’s all—

Rich: …have moved on by that point.

Paul: It’s all going to be fixed up by the time.

Rich: It is early March right now, and the world’s a little on fire.

Paul: Yeah.

Rich: So, say hi to everyone.

Paul: Yeah. That’s it. But that’s it. Then on to the next thing.

Rich: Yes.

Paul: So that’s what we’re doing right now.

Rich: Yes.

Paul: Your family’s good. And I’m going to tell you a story. And it’s a true story, about projects coming into our organization.

Rich: Yes.

Paul: Because we have, we have a platform that we build on, but the way the AI works is you actually need to kind of help and advise organizations, too.

Rich: Yes.

Paul: Okay. So that’s what we do. You come to us and we’re like, “Hey, I can build that for you,” sometimes in, like, a minute.

Rich: Yeah. Anyone who’s selling you shrink-wrapped boxes—

Paul: Of AI.

Rich: Of AI? Be wary.

Paul: Yeah.

Rich: [laughing] Is what I would say.

Paul: So someone came in. I would say this is, like, four or five months ago.

Rich: Uh huh.

Paul: And somebody I knew, and I won’t give—it’s a client project, so I’m not gonna, like, or customer project, depending on how the weather is on a given day.

Rich: Yeah.

Paul: I like to use the term “clustomer” for the client in the age of AI. [laughing] Mailchimp apparently has some ad campaign where they’re, like, cluster of customers, and they kind of amass everyone in—

Rich: That’s really clever.

Paul: Yeah. I’m saying it’s a combination of client and customer, and if we’re going to come up with really terrible words, I want to claim it back.

Rich: Take it. I mean, if you’re going to claim anything, you might as well grab that.

Paul: I’m working on neologisms that explain the moment.

Rich: Mmm hmm.

Paul: So that’s one of them. The other one I’ve got, by the way, is Illustrator, but it’s spelled T-R-A-I-T-O-R.

Rich: Oh…

Paul: Yeah. It’s someone who uses AI instead of actually doing it by hand.

Rich: Oh… Okay. You’re running with this, I can see.

Paul: I got to have some talks to give, you know. [laughter] Anyway, regardless. So they come in and they go, “Hey, I got this data and I really want to make it accessible and usable.”

Rich: Okay.

Paul: And it was, like, in PDF and spreadsheets and all over the place.

Rich: Littered everywhere in different formats.

Paul: Yeah. And I was like, “All right, well, let me get you a proposal for that.”

Rich: Okay.

Paul: But I was like, “Give me the data.”

Rich: They didn’t commit.

Paul: No.

Rich: As a customer.

Paul: No, no, no.

Rich: You just said, “Give me the data.”

Paul: Yeah, it was—

Rich: Maybe there was an NDA. I don’t know anything about the background.

Paul: No, that’s why I’m not giving any detail.

Rich: Okay, so then, then, okay, they gave you, they gave you the data?

Paul: Gave me the data.

Rich: What, was it a zip file?

Paul: Big, like, thousand-page PDF. Lots of, lots of stuff in it.

Rich: Okay.

Paul: Okay? Lots of ecological data, things like that.

Rich: Okay.

Paul: And then a whole bunch of spreadsheets around locations.

Rich: Okay.

Paul: Five years ago it would have been like, “All right, let’s go take a look at this and then we’ll describe how we’re going to convert it and what a process might look like.”

Rich: Maybe write a proposal.

Paul: And the goal here is to make a product that people use.

Rich: Yeah.

Paul: That people can use to explore the data, that maybe you could you do some newsletters on top of it.

Rich: Sure.

Paul: Like, they want to make it active. That would have been—and, you know, as I’m writing that proposal five years ago, the numbers are going up. $10,000, 20,000, 30,000, 40,000. Like, it’s expensive because you need a team of engineers and you—

Rich: It takes time. And people.

Paul: Data, just scaffolding and setting up the database.

Rich: Sure.

Paul: So I went home and I vibe coded a little bit. And actually in two hours, I had a pretty good data explorer going. The PDF was all turned into images.

Rich: Yup.

Paul: I’d extracted, I’d used Claude—I spent about $15 of CPU time and several hours of my time.

Rich: Yeah.

Paul: So I put it on a website. I was like, “You know, I was going to send you—”

Rich: It became a website.

Paul: I was like, “I was going to send you a proposal. But here’s the data. If you want to explore it, we can use this to guide the next conversation.”

Rich: Yeah.

Paul: Two weeks go by. Silence.

Rich: Yeah, yeah, yeah, yeah.

Paul: And this is, I was expecting this because these are not, like, if I send you a proposal, you’re going to go, “Oh, received it. We’re going to talk about it and I’ll get back in touch.”

Rich: Yeah.

Paul: But I sent you a data product that you didn’t ask for.

Rich: Yeah, yeah.

Paul: So the person comes back. Two weeks have gone by. They’re like, “This is really interesting. Okay. I’m kind of getting my head around it.”

Rich: Yeah.

Paul: Rope some other folks and we have another conversation. We talk about the kind of app they want to build, how you could really use this data. Same thing. I go, I’m about to, like, turn it into a proposal. I’m like, “Well, wait, let’s see how far we can go.” Get the whole app as a mobile app.

Rich: You kept going.

Paul: Well, I was like, why not?

Rich: Why did you keep going?

Paul: You’ve written proposals.

Rich: Yeah.

Paul: How would you describe that process?

Rich: It’s terrible.

Paul: It’s boring as shit. Right?

Rich: Yeah. You’re playing around. Well, this is the other thing. You enjoy building stuff.

Paul: This is also a person I like. I want to, like, have a relationship here.

Rich: Okay.

Paul: Right? I want to—

Rich: Not an intimate one.

Paul: No, no, no. That’s not—

Rich: Personal relationship. Professional relationship.

Paul: A professional relationship. Yeah.

Rich: Because I’ve seen different ways to get there.

Paul: Yeah. Well, now it’s really complicated, but yes.

Rich: Okay, so you kept going and what, you made another version of it?

Paul: I made—well, now I built the whole app with the onboarding, and it did a really good job.

Rich: Okay.

Paul: Like, really good. Throw this over. Two weeks go by, we have another call, and they’re like, “I guess we want to move forward. We don’t even know—”

Rich: What that means.

Paul: Exactly. And then they’re like, “And what would it cost?”

Rich: Yeah.

Paul: And I had to just go like, “I don’t have the first freaking clue, man.”

Rich: Yeah.

Paul: Like, I’m trying to be transparent. I’m trying to drive this value towards people.

Rich: Yeah.

Paul: I know that I bring a lot of value because very few people can currently unlock, like, a product-level delivery right now.

Rich: Yeah.

Paul: So I know there’s that. But I also don’t buy this thing where it’s, like, “Well, they should just pay you for your value, which could be $10,000 a minute!”

Rich: Yeah.

Paul: Like, that’s not how the world works, right?

Rich: Yeah.

Paul: So I’m throwing this back to you to do real-time strategy, because how do you price these things now? Where is the value? How is this going to look? Because this would have been $400,000 four years ago.

Rich: Okay, before I go into real-time strategy mode.

Paul: Yeah. What was your favorite real-time strategy game?

Rich: Command and Conquer.

Paul: Okay.

Rich: And then Command and Conquer: Red Alert.

Paul: Thank you.

Rich: And we don’t need to go there. That’s a separate podcast.

Paul: The audience would far prefer if we went there.

Rich: I know. They’re wonderful games. There are great current real-time strategy games today. Total Annihilation and then Plan and Annihilation, which came out a few years ago, but has like a rabid—

Paul: Wait, so for people who are not as cool as you are, what is real-time strategy?

Rich: It is a video game where you don’t need eye-hand coordination, but it’s not turn-based. So time is passing. And so you do need to think on your feet as time goes by. And it’s really fun. And they’re, they’re just—

Paul: Compare this to, like, SimCity. Like, SimCity, time is passing, things happen.

Rich: SimCity is similar, except SimCity is world building and so you’re not battling an enemy.

Paul: So when you say real-time strategy, there’s, like, a war going on.

Rich: There’s a war going on. By the way, I mean, shout out to South Korea, where Starcraft is, like, the equivalent of chess in South Korea. They’re like cafés, where, to this day—

Paul: No, big stadiums—

Rich: Stadiums get filled up with Starcraft, which is a legendary real-time strategy game. But I digress. I want to make two points based on your little story here.

Paul: My widdle stowie.

Rich: No, it’s not little, it’s interesting. \

Paul: Thanks.

Rich: The first is acknowledging just how, like, exploding the mind this all is. This is the equivalent of me calling a restaurant saying, “Hey, we saw your website, we might want to book a reservation, but we’re not sure yet. Are you guys open Saturday?” And they’re like, “Yeah, we’re open Saturday.” “Okay, great. We’ll call you back.” And then an hour later, the restaurant’s van shows up, rolls out a leg of lamb on a spit, and says, “Well, listen, I don’t know if you’re booking this Saturday, but if you want to try the lamb, it’s here.”

Paul: It’s exactly like that. And it’s not, I don’t think, necessarily a good feeling on the other side.

Rich: It’s too much.

Paul: Yeah.

Rich: Right? And you would think that, wow, they should just lean into this. What the brain does is it goes to, I cannot bet my business or my organization on crazy stuff like this.

Paul: Yeah.

Rich:  That’s where their head goes. They don’t go to, “Wow, let’s do this.” Right? Which leads me to my second point, before I get into real-time strategy mode. My second point is you, and we, are building a culture and building tools to actually ship production. Great stuff. Everyone else is hearing about how AI is moving too fast and how you can’t trust the software. And the truth is, we actually are doing that deep thinking around shipping something legitimate and is a very, by the way, I sell, I’ve sold a lot in my life. If you’re having to explain why everything’s going to be okay, the sale is not going well.

Paul: Yeah, that’s a good point.

Rich: It’s not going well. That means you’re trying to calm them down. You’re trying to get them relaxed.

Paul: To be clear, this is someone who I knew. So I’m ready to take a little more of a fly—

Rich: We don’t do this with everyone.

Paul: Yeah.

Rich: That’s a huge point.

Paul: I wouldn’t. You’re right. It’s too confusing.

Rich: It’s too confusing.

Paul: You know what it is? It’s, as you were talking, I’m just, like, we’ve all known a lot of dudes. Everyone who listens to this podcast has known a lot of dudes. You know what dudes talk about? They talk about, like, “Boy, she’s really hot, but she’s pretty crazy.” [laughter] That’s the status of AI software right now. Everybody’s like, “Wow, that’s really hot.”

Rich: Yeah. Should I roll the dice here?

Paul: But why—she just, like, cut her face with a little knife when we were out at the restaurant? [laughter]

Rich: I appreciate this analogy because it typically comes from me, and you’re usually calming me down.

Paul: Well, the thing is, when a dude tells she’s hot and crazy, you know you’re about to lose him for six months and he’s going to come back either a lot thinner or a lot fatter.

Rich: Yeah.

Paul: And he’s going to, like, you’re going to get a call six months from now and he’s going to go like, “Hey, man, I don’t know, you want to go, like, you want to go like just go out to a movie or something?”

Rich: Yeah.

Paul: And you’re going to be like, “Yeah.” Because that’s what AI is going to do to everybody.

Rich: It’s doing it.

Paul: Yeah.

Rich: I mean, we’re here and we’re focusing on software.

Paul: You’re seeing middle aged guys—it’s the middle aged guy with the crazy younger girlfriend.

Rich: Yeah.

Paul: And then suddenly they’re like getting into shape and then they dye their hair like a weird color.

Rich: Well, it’s just too black.

Paul: Yeah. And then the sweater—

Rich: It’s a little too black.

Paul: The sweater gets tight.

Rich: Yeah.

Paul: That’s what AI is doing to our industry.

Rich: Yeah. It’s doing it to many industries, by the way.

Paul: Yes.

Rich: And what it’s causing is for people to sort of take a step back and say, “Whoa, I still want the radiologist to look at the results. I still want the lawyer to review the documents.” This is a lot of change.

Paul: You know who has—doctors have the healthiest relationship here. Not a surprise. They’re doctors. But no, we had a health event, right?

Rich: Yes, we did.

Paul: And what you see with the doctors is they’re like, because their industry and their training and their whole philosophy is that there are certain bright lines that you never can cross?

Rich: Yeah.

Paul: They’re like, “Yeah, this thing helps me summarize notes. I review the notes. Of course I review the notes.”

Rich: Yeah.

Paul: And they’re like, “Of course medical students are going to abuse this technology. So I’m going to have to stay on them and hit them with a stick every time I see it.”

Rich: Yeah.

Paul: They have already factored in all of the abuses because they actually think that way. They’re like, “Oh, a new technology. We have to put it on rigid parameters to hew to the philosophy of medicine that allows our culture to move forward at all costs.”

Rich: There’s another reason. By running to these tools, you’re not giving people an opportunity to build intuition, to build skills. A good doctor kind of can, in about eight minutes, can look at the whole picture and give you a read. And that’s experience.

Paul: You get spoiled in New York because my GP has probably seen 50,000…

Rich: It’s a high-volume play.

Paul: So I walk in and he’s like, “Yep,” it’s just like within about a minute.

Rich: Yeah.

Paul: So I want to get back to the actual pricing, right? But there’s a real thing going on, which is that a lot of the things that we charged for with code were almost, like, syntactic, like, set up the system, install the database, put the right stuff on. That was thousands and thousands of dollars to do that well. That’s pretty easy now.

Rich: Yes.

Paul: Okay? Architecture remains really hard.

Rich: Yes.

Paul: An LLM can advise you about how a system should work.

Rich: Yes.

Paul: It can even build that. But that may, it’s often not going to be right or purpose-built for your actual needs. It’s just like where, it’s where software becomes human. And so you still need that intentionality in the mix. And this is not me going, like, [high-pitched pollyannaish voice] there’s something wonderful about people that can never be replaced.

Rich: Yeah.

Paul: That’s not what I’m saying. I’m just saying, like, that is the actual product that most people want.

Rich: Yeah.

Paul: So is it a good idea to share artifacts like this with people? You assume people want to see as much value as they can right away. And I love showing off and feeling like I’m a very smart boy.

Rich: Mmm hmm.

Paul: But is that a mistake? Should I just be, like, “No, come on in, we’re going to whiteboard. Let’s have a conversation.”

Rich: No, it’s not a mistake. I’ll tell you why it’s not a mistake. It feels like a mistake today, and it won’t feel like a mistake in two years. We went from, you know, there was a day where commercial flight was all about, like, they would wheel out a ham and it was first class and it was expensive to fly.

Paul: Spiral cut. Sometimes the whole pig. [laughter] They’d walk it down, you could pet it.

Rich: It wasn’t casual.

Paul: Yeah.

Rich: There was a day when it wasn’t casual to fly from New York to Chicago. And then a lot of time passed and then it became like taking a bus, like it’s nothing anymore.

Paul: Right. You go to LaGuardia.

Rich: Imagine one day it’s first class and very expensive, and the next day, anybody can fly. The shift is too fast, and that’s why this person is so scrambled. Right? There’s going to come a day where, “Hey, why don’t you show me something?” Is going to be the norm.

Paul: You know, the other thing, too—

Rich: It’s just too soon.

Paul: I’m going to bet you everyone who flew big propeller planes, “This is the apex technology.”

Rich: Oh, of course.

Paul: “You’re never going to get faster and better. And I am so good at keeping these propellers going.”

Rich: Absolutely.

Paul: And then jets show up and they’re like, “Nobody wants that. It’s loud. It’s fast.”

Rich: Yeah. Yeah. All of it. And then they got cheaper and commoditized commercial flight became a thing, and anybody could fly. Which is wonderful. I just don’t think people are, like, their brains haven’t adjusted yet. Like, showing fully baked software in three days is still exploding people’s minds.

Paul: Well, it’s also because it has to be disposable. You haven’t actually put the needs of the business into the software.

Rich: That’s confusing, too.

Paul: Yeah. So it’s like, I think, seeing the artifact, where it’s literally like, “Hey, we already made the Thanksgiving turkey. Like, really, in, like, five minutes. And now we’re gonna figure out what we’re gonna have for Thanksgiving.”

Rich: Yes.

Paul: That is the conversation. Imagine saying that to your grandmother.

Rich: Yes.

Paul: Right. And she’s like, “The hell are you talking about? Go to the store and get me cranberry sauce.”

Rich: Yeah.

Paul: So here we are.

Rich: Tactical advice, Paul?

Paul: Architecture matters. We’re going to end up communicating and showing people really big, complicated artifacts in ways that maybe we didn’t before.

Rich: Yep.

Paul: I could bill you by the hour. I could speak and I could be like, “My hour is really, really expensive because I have 20 years of experience. I’m going to bring it to bear on your problem, and you need to pay me a million dollars an hour.”

Rich: Yeah.

Paul: Okay. So I could say that.

Rich: You could.

Paul: I could also say, “It’s going to be $1,000 a month for the rest of your life, but I’ll take care of it for you.”

Rich: Yes.

Paul: And I’m seeing, you know, I read an article today about a, not a journalist, a lawyer who’s using Claude to run their practice. And they’ve started to offer a subscription service.

Rich: They’re nearby to help with whatever.

Paul: Yeah. “I’ll do all the contracts for you because I have this process that accelerates and isn’t expensive for me.” So that’s them driving the value, but saying, like, “I will take ownership and responsibility as your lawyer for these artifacts, but I’m not going to try to hide that I’m accelerating the process with Claude.”

Rich: I’m going to imagine this lawyer is relatively young.

Paul: Well, we don’t, I mean, it’s, we looked at his profile. It’s a guy named Zach Shapiro on LinkedIn.

Rich: He’s not, he is not someone that has been groomed by getting billable-hour bonuses at one of the white-shoe law firms.

Paul: He runs his own law firm.

Rich: Exactly. Here’s the universal advice. The economics that worked in the past are going to get challenged. And if you think you’re going to be able to hold on to them by creating fancier packaging and more ceremony and stalling, because the way you measure value is through the time you spend or the number of people you deploy, you’re in for an awakening. That ship has sailed. And so you need to let go of the previous set of assumptions that drove the economics. And that’s hard for even us, because that’s what we used to do.

Paul: We’re having this conversation, we’re trying to do it in public.

Rich: Correct.

Paul: Here’s what’s tricky. You’re going to say that and everybody’s going to be like, “Yeah, but nobody’s ready right now. So I am going to stall just a little bit because that’s in the best interest of me and my org.”

Rich: Oh, it’s happening.

Paul: Here’s the problem with that, and this is the actual advice.

Rich: Yeah.

Paul: When you do that, you are not focusing on building infrastructure and resilience for what’s coming next.

Rich: Yes.

Paul: You’re focused on stalling. And you have a fantasy, you’re going to set up, like, an innovation group.

Rich: Yes.

Paul: Where you’re with the AI team that’s going to build the whole new business.

Rich: Yeah.

Paul: Those people will be hit by sticks and then they will go work for a startup that cherishes them.

Rich: Yeah.

Paul: As opposed to delivering the future to you on your terms.

Rich: Yes.

Paul: You either eat this or don’t. You can stall, but then you might get punished later.

Rich: Yes.

Paul: Or you can lean in and not stall and you might lose a lot of near-term revenue.

Rich: Yes.

Paul: Every attempt in the middle I have seen in 30 years has failed completely.

Rich: That’s the thing. Right? But it is a major rewiring of how you think about what you sell.

Paul: No, you can’t change culture in one room over to the side. That’s always the fantasy.

Rich: Correct.

Paul: Yeah. Do you think there are law firms that have, like, labs right now? That’s gotta be the worst thing ever.

Rich: No, I think what they’re doing is they’re repurposing their IT groups.

Paul: Oh!

Rich: That’s definitely what they’re doing.

Paul: Going from legal IT to AI innovator?

Rich: You know who I feel for? There are star—I don’t know them, but there are startups that are worth a lot of, not startups, there are companies that are worth a lot of money that just sell Microsoft Word macros.

Paul: Yeah.

Rich: For the law.

Paul: Yeah.

Rich: They’re very complex. They do all sorts of things. They go out to the web, they do special redlining features.

Paul: I mean, WordPress templates are half the Brazilian economy.

Rich: It’s a big, big deal. Right? And so back to pricing. Let’s reset it for a second. Okay? Used to sell what was a highly valued rare commodity: Skilled people’s time.

Paul: Yeah. Our agency was essentially, like, an API to get access to a lot of, you know, actual complicated humans.

Rich: Correct.

Paul: The promise was we would deal with all the complicated human parts and you would get your thing.

Rich: Yes. And I want to come back to humans in a second, but—

Paul: They’re great.

Rich: They’re great. Well, also, people want them.

Paul: Yeah.

Rich: People want humans. Our process with you, if we pitch to you, we talk about, here’s how, what it’s like to work with us in the first couple of weeks, it’s like this, and the next couple of weeks are like that, and then the next month is like that. So people hearing that we are going to put care and also going to build trust with them? You can have great tools. The thing that you threw over the wall—

Paul: You could get TurboTax, but you still have an accountant.

Rich: Yes, exactly. And look, the thing is, you threw a thing over the wall to make a point. But that thing was really this sort of shocking artifact that is not the result of you having a lot of time and conversations with that person.

Paul: No, it’s not deep.

Rich: It’s not just that it’s not deep. Part of relationship building, even in the business context, is that you are signaling to them that you’re starting to internalize their needs and their pain. Like, you’re starting to transfer over and, like, I am joining you in this journey. Right? And when you throw, like, what looks like a fully baked thing over the wall, it’s not that different than someone hearing you out for five minutes is, like, “I got it. I’ll be back in two weeks. See ya.” And they don’t talk to you. No one wants that. Even if they get it right, no one wants that.

Paul: I think that’s really key. That’s key because what they need is the relationship so that they can work out the strategy.

Rich: I gotta call you also.

Paul: Yeah.

Rich: You know, we got most of it right, but there’s a few things we didn’t get right. And then we’re saying to them, “I hear you.” Right?

Paul: I mean, this is, you know, again, like, this is not me defending myself. Like, this is just somebody I’ve known for a while and I’m kind of prototyping this with them—

Rich: Totally. I get that.

Paul: But my initial instinct is like, yeah, you probably shouldn’t do that.

Rich: This applies to the law. This applies to other industries where, look, don’t misread. What took 10 hours will now take 2. But the relationship doesn’t go away.

Paul: It also goes both ways, where if a person calls me up and is like, “Hey, it used to take 10 hours, now it takes two. I’m gonna give you $100. You do it for me?”

Rich: Yeah.

Paul: I’m gonna hang up the phone.

Rich: Yeah. So this is, this is the crux of it, because this is really about us and how we’re going to make money, Paul, you and I.

Paul: It’s good to finally have this conversation after four years of building this business.

Rich: [laughing] Yes. So we can’t sell time, billable time. The idea of billing your time is no more. We have to come to terms with that.

Paul: Well, most people, like, we identify ourselves kind of as a product company with a little bit of agency. So that was off the table to start, but now it’s kind of back. Like, talk about that. It’s a little tricky.

Rich: I will give you my time. I will give you my time in the spirit of this relationship.

Paul: That’s what I was afraid of.

Rich: [laughing] But you’re, you’re not, I’m not going to run the meter. Our goal is to put something in your hands that you value deeply, and we’re going to work with you to get to that thing. Now, when you get to that thing, and the reason I use the word value is what we’re shifting from is time-based or people-based pricing to value-based pricing. Value-based pricing is in the luxury world, right, has very little, essentially, they move away from the raw materials and the labor it takes to make a watch. And they’re like, well, what will the marketplace bear?

Paul: I mean, the archetypal term is the veblen good. Right. Which is the Veblen good, which, you know, the status signal.

Rich: Exactly. The perceived value in the market is, the value is value-based. Like, so you price it against that. Even though it cost me $600 in parts and maybe $1,000 in labor, I’m at $1,600. And then I have marketing and all that.

Paul: Don’t forget R&D.

Rich: R&D and all that. But I’m going to charge $10,000 for this watch.

Paul: Yep.

Rich: And I can do that—not everybody can do that, to be very clear. It takes a long time to build a brand such that you can do it. But that’s a luxury brand. And this is what’s tricky about our world. A luxury brand, you’re buying it for status and you want it on your wrist so you can go to the dinner party. Right? Our value-based pricing is actually value, meaning I am literally going to save you millions of dollars. If I’m gonna save you millions of dollars, even though it took me two weeks, don’t you think you should factor in that I’m gonna save you millions of dollars. What’s it worth to you? And the truth is, when we try to have that conversation, we still hit a wall because everybody’s very confused.

Paul: It’s a confusing time. I mean, you know what I go back to. We used to talk about this. We had this concept of the $15 Volvo.

Rich: Yes.

Paul: And that is, that’s what this is. Nobody wants a Volvo for $15 because something’s wrong with it and it’s supposed to protect your children.

Rich: Correct.

Paul: The Volvo is in the middle of the luxury—there’s the mass produced, you know—

Rich: Camry. Nothing against Toyota Camry.

Paul: Not even the Camry. Like, like stuff that comes in a bag from China.

Rich: Yeah.

Paul: That you bought, you bought these headphones and they show up and they’re in that, like, that soft bag and they’re from a part of China you’ve never heard of before.

Rich: Yeah.

Paul: That’s the true, like, boy, just industrial process comes off, goes to you. Goodbye.

Rich: Yeah.

Paul: On the other side, there is a tiny gnome has made a watch for you using magic spells.

Rich: Stick with headphones. There’s German brands of headphones. The unboxing experience, you would think the Lord was coming out of this box, and it’s thousands of dollars.

Paul: And I think in the middle there’s the thing where it’s like, yeah, I know—Apple is often in here, right?

Rich: Yeah.

Paul: Where it’s like, I know I’m paying a couple hundred extra.

Rich: Yeah.

Paul: But I really don’t want to deal with the other stuff.

Rich: I trust this brand. I trust what they do.

Paul: When I buy Apple, because I buy a lot of Apple.

Rich: Yes.

Paul: I got, I got relatively good assurances of privacy.

Rich: Yes.

Paul: I have stability. I know there’s continuity.

Rich: Yes.

Paul: And in general, like, it’s just not going to blow up my life in the way that Android and Windows is happy doing.

Rich: Yes.

Paul: And so that’s a premium for me at this stage of my life. I used to be an Android guy. At this stage of my life, I’m just like, whatever.

Rich: Yes.

Paul: I feel like that’s the place that I most like exploring, which is sort of, like, hey, it’s going to be a little bit of a premium, but you’re not going to have to think about it. We’re going to take that part away from you.

Rich: And we’re not going away.

Paul: Yeah. So over here on the left, you got everybody who’s like, “I can hack that myself in Claude code in an hour and a half.”

Rich: Yes.

Paul: Okay? Over here on the right, you have, “Only I can solve this for you ever.”

Rich: Yes.

Paul: And in the middle, which is I think the most interesting place on Earth is like, “You still need some custom stuff, but you can save a lot of money and time and it can run for 10 years for you because you don’t want to think about software for the rest of your life. I’m going to do that for you.”

Rich: Correct.

Paul: And that is the space—like, so now how do you price that? You know, it used to be T&M everywhere.

Rich: Yeah. I think the blend—well, I think two things. The good news for the buyer is that that incredibly expensive upfront implementation cost has plummeted. We can’t justify it if something takes me five weeks to get in your hands, right, I can’t charge you as if it’s 30 weeks. I just can’t do it anymore.

Paul: No, that part of the process where it’s like the product manager will write the PRD and then we’ll build the prototype.

Rich: Correct.

Paul: Really you’re buying the relationship in a much more direct way than—you used to buy a lot of artifacts along the way towards the relationship.

Rich: Correct.

Paul: Now you’re more buying the relationship with software on the other side.

Rich: I think that is like such an interesting outcome of all the robots are taking over.

Paul: Well, that’s lawyers. That’s lawyers. That’s actually accountants. That’s like—

Rich: The relationship matters a lot.

Paul: Yeah.

Rich: And so, okay, so then how do I make money? Right? I can’t charge you like I used to charge you, because the thing took me five weeks. So here’s first off, I have to come to terms with the fact that my margins may still be good even though it took five weeks. So the thing that you held precious as worth a half a million dollars might just be worth $100 grand. And you just need to accept that because it didn’t cost you that much to make it.

Paul: You’re going to do more of it.

Rich: You’re going to do more of it.

Paul: And then you’ll make it up in volume, literally.

Rich: Exactly, exactly. So come to terms with it. Right? And it’s okay. And this is my point about if you were doing 20 years of billings at a law firm, you’re not going to be as forward looking because, boy, the gravy train was good.

Paul: You know it’s funny, though, is like, the software industry has always said that this is the future. But we liked it when we would commoditize things into products, and then you could sell a lot of the product and that person would get really rich.

Rich: Yeah.

Paul: So it was just like, hey, and that’s kind of how we started Aboard. We’re like, oh, we were doing an agency. Let’s do all our agency stuff as a product.

Rich: Yeah.

Paul: And we’ll sell it and we’re going to be really awesome.

Rich: Yeah.

Paul: Right? And then AI shows up and is like, nah, it’s kind of in the middle now.

Rich: It’s in the middle. I think that’s the message here, which is, okay, so I don’t get to charge as much. So, wait, can I make enough money? Is there enough volume of opportunity? I don’t know. But there is another path that’s opened up on the other side of this is that when you’re working at this velocity and delivering that quickly, the customer, whether you’re a lawyer or whether you’re a buyer of software, doesn’t want you to leave. And so there is a new dynamic that’s taking hold. Our friend at the law firm has a subscription model.

Paul: Yeah.

Rich: That is, there are old men in the big firms looking at that and snickering.

Paul: They think that’s the dumbest thing they’ve ever heard.

Rich: It’s the dumbest thing. That is the future.

Paul: Yeah. “Good luck to you, buddy, with your subscription model.”

Rich: Do you know why that’s the future? Because he can probably assign 100 subscriptions to two people.

Paul: I think that’s right.

Rich: Right? Because the tools are incredible. Right?

Paul: Well, and what’s going to happen is the deep expert. So I’m thinking of people in our firm. The product manager, who is now a solution engineer.

Rich: Yeah.

Paul: Everybody’s a solution engineer. But the product manager is now able to ship what used to be, required partnership with engineering.

Rich: Yes.

Paul: They can build a pretty robust business application using our platform. They put in the words, they get the stuff, they tweak the database a little bit using the interface.

Rich: Yes.

Paul: And now you can give them your data and off we go.

Rich: Yes.

Paul: So we’re having a lot of those conversations. The engineer can also build that in, like, 10 minutes.

Rich: Yeah.

Paul: But the engineer can go off and do really ugly database stuff that used to take an enormous amount of time.

Rich: Yeah.

Paul: They can do 10 times more of it.

Rich: Sure.

Paul: They can be, like, “Oh, you know what? I wanted a vector database here, but it was always a chore to set up, it was going to be too expensive.”

Rich: Yup.

Paul: Now I snap my fingers and I got it.

Rich: Yeah.

Paul: So the engineer can be going really really deep.

Rich: Yeah.

Paul: The product manager can be shipping. Those worlds can line up. But, and that, I think is the new middle.

Rich: And what is the buyer paying for? I’m not going to be orthodox about exactly what they’re paying for. We have clients today that frankly want to know that—

Paul: Clustomers.

Rich: [laughing] Clustomers. That we have a dedicated team committed to them and that they just want that. And that’s okay. You can be, have a successful business.

Paul: I want that, I don’t want to call my lawyer and then I get an answering machine with somebody else’s voice from a different firm.

Rich: Exactly. And we have others that don’t want to pay that upfront and they don’t have to but they are going to pay something akin to a licensing plus people model over time. So look, the good news here is that—

Paul: Anything over, like, $3, 400 bucks a month.

Rich: Yeah.

Paul: People would like to talk to somebody.

Rich: Always.

Paul: You just, you just kind of need to because otherwise you’re getting fleeced.

Rich: That’s right. That’s right. Now it’s not easy. Look, we’re not young upstarts. Like, we had an old way of billing and so we are having to reboot it. And that’s just life. Reboot it. Like, the law firms are gonna move slow. The big consulting firms, we didn’t talk about big consulting who just live, they live and breathe for billable hours, are gonna, are gonna be slow. Why? Because it’s not in their best interest to move fast. And the truth is the world doesn’t move that quickly. We’re moving quickly because we’re a startup and we get to talk about this stuff and we don’t have to answer to anyone. But go talk to an organization that’s over 500 people? All this is gonna move real slow.

Paul: There’s two signals. One is are they giving everyone really good high-value access to expensive LLMs, like you know the premier package.

Rich: That’s a good point.

Paul: Like, Accenture gave 30,000 people Claude Code.

Rich: Yeah.

Paul: I’m, like, alright, that’s good. Step 1. Good news for Accenture. If they’re saying we’ve got an AI innovation group that’s doing amazing stuff and it’s, they’re going to ship a couple little products but then they’re hoping it stays away from the rest of the org?

Rich: Yeah.

Paul: I would mark that stock down a little bit. That’s not going to, that’s not going to go so good.

Rich: 100% you have to be willing to allow these changes to insinuate themselves into your culture, into your social dynamics and power dynamics. People are going to crush a lot of dreams with this stuff. There are old men and old women who are SVPs of this and that. They’re going to be, like, “Get out of here with that.”

Paul: Thank you, everybody, for listening. It’s been The Aboard Podcast.

Rich: Now, if you are an SVP and you want to innovate?

Paul: [laughing] Get in touch, because—

Rich: And you don’t want to shatter your culture.

Paul: Yeah, that’s right.

Rich: You should reach out to us because we have amazing people and amazing tools that ship production-grade software.

Paul: Honestly, why you should call us is you want to gently shatter your culture.

Rich: Yeah, exactly.

Paul: That’s what we’re for.

Rich: Yeah.

Paul: All right, so get in touch. Hello@aboard.com, check out aboard.com, a lovely website made for everyone. Give us five stars. Give us those thumbs up. We cherish it. We welcome it.

Rich: Yes.

Paul: We love feedback, good and bad. We want to know about all of it and honestly ask questions. We love that, too. It’s great.

Rich: And just last, last point, Paul. All you old men and women are aging very gracefully. Just want to say that as we pitch our own product.

Paul: It’s been nothing but snow. And I’m just not on the bike right now, so I’m not—

Rich: I think we’re turning, we’re turning a corner.

Paul: I’m not aging gracefully The last couple of months.

Rich: It’s been a rough couple months.

Paul: I’m looking forward to that. All right, let’s get out there.

Rich: Have a great week.

Paul: Bye.

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