Matt Wilson

Public software is down 40% in 12 months. The selloff has been indiscriminate. Companies hitting their revenue targets are getting hammered alongside the ones that deserve it. The market isn't distinguishing between well-positioned and poorly-positioned software companies.   That will change. When it does, the companies left standing will be the ones with moats that matter in a world where agents do more of the work.   The Emergence partnership spent yesterday debating a question I think every founder and investor should be asking (and, judging by my LinkedIn feed, it seems they are...):   Which software moats actually survive in an AI era?   Here's the spectrum we landed on (from least to most defensible):   1. Workflow   Pre-Claude, getting humans to do their jobs inside your software was a powerful moat. But if agents are doing the work, who cares about the human workflow? Cursor vs Claude Code is the canary in the coal mine: one owns the workflow, the other just executes—and developers are increasingly choosing execution over process.   2. Integrations   MCPs are rapidly commoditizing the glue between systems. Being the connector used to be a moat. Soon, it'll be a utility.   3. Data repository   Static repositories are table stakes. Owning customer data matters less than understanding what to do with it.   4. System of action   Now we're getting somewhere. If your software touches money, customers, or real-world outcomes (think Gusto or Shopify), ripping it out is genuinely painful.   5. Full context   The most important new moat in AI. Understanding how a full task gets done across systems, knowing what a user needs across many different sources. This is what agents need to be useful, and the companies that own it become indispensable infrastructure. But it's young and unproven. If context becomes portable (the way integrations are being commoditized now), this moat could erode too.   6. Brand   The moat that survives every platform shift. Trust compounds over time and can't be replicated by a new entrant with better tech. When everything else gets commoditized, the vendor you trust still wins.   7. Network effects   The most underappreciated moat in AI, and potentially the most enduring. But not all network effects are equal. Workflow-based ones (more humans in the tool) are vulnerable. Data and trust-based ones (every user makes the product smarter) actually accelerate with agents. LinkedIn, Doximity, and Slack all still have this. Relatively few AI native companies have prioritized it...yet.   --   The bottom line: Seat-based pricing and workflow stickiness were the backbone of the last era. Both are eroding. The next era rewards companies tied to outcomes, context, and trust.   If you're a founder, stress-test your moats against this spectrum. If your primary defense is "our users do their jobs in our software," you have work to do.   Because the world is moving towards selling outcomes, not software.

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Building a business is easy. Running one is the challenge. Every founder has to be scrappy at first. You're the CMO, CFO, and everything in between. But then one day you look up and realize, You've built a machine that only works when you do. That lesson often comes after burnout, stress, or lost momentum. But you deserve to run a business without stretching yourself thin. Here's what you need to avoid: 1. If you’re always available, you’re not leading. ↳ Being constantly accessible keeps you in reaction mode. 2. Dodging hard conversations leads to bigger problems. ↳ Silence solves nothing. 3. Holding on to the wrong people hurts everyone else. ↳ Your team notices when you keep members not performing as well. 4. You’ll always be the bottleneck until you build a system. ↳ If everything runs through you, your business is unscalable. 5. Delegation is the most important skill you learn. ↳ Avoiding it is what keeps you drowning. 6. Your energy is more important than your calendar. ↳ You can control your time and still burn out. 7. Working harder is not a plan. ↳ If more revenue = more hours, you're building a job, not a business. 8. Perfectionism stops you from being useful. ↳ People don’t need you to be flawless. They need you to be real and present. 9. Hiring more people will not fix a broken machine. ↳ A bigger team with no systems creates more chaos. 10. Growth isn’t the goal. Freedom is. ↳ A bigger business means nothing if you lose your time, health, and joy. You didn't start this journey to be exhausted. You started this to build something better for yourself. The cheat sheet breaks down each problem and how to fix it. Take a look and see where you can make a change. What advice would you give to your younger self with what you know now? ________________ 📌 Save this for later. The best advice sticks. ♻️ Repost to help another leader reach the top of their game. 🔔 Follow Christine Carrillo for more no-fluff leadership insights.

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Thinking of buying a business with 13% EBITDA margins using an SBA 7a loan? Let’s do the math: SBA wants 1.25x DSCR (minimum) PE prefers 2.0x+ DSCR—because they actually care about margin of safety At 13% margins and 90% leverage, your debt payments will choke the business You’re one slow month away from default. This isn’t a spreadsheet game. It’s real cash, real payroll, and a personal guarantee. High leverage + low margins = you work for the lender. If you’re going to borrow big, buy fat-margin businesses—or don’t borrow at all.

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"If we end up misspending a couple of hundred billion dollars, I think that is going to be very unfortunate...but I actually think the risk is higher on the other side. If you build too slowly...then you're just out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history...I think the risk for a company like Meta is probably in not being aggressive enough, rather than being somewhat too aggressive." - Zuck Meta is big and profitable. They can keep pumping money into AI, without some of the risks that startups and scaleups have.

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No board governance structure obviates the need for effective board governors. A core requirement of being an effective board member is being willing and able to productively disagree with the organizational leader. This is true for boards of public/private cos, schools, non-profits, churches, or any organization. It's not to say that a board member's contributions come only through disagreement - not at all. It's also not to say that disagreement should occur often - hopefully that's not the case. But, if a board member is unwilling to voice disagreement when it matters and the board is made up predominantly or entirely of such individuals, then the board isn't really playing any governing role at all. It's all cheerleading, no challenging. If you are the organizational leader, you can foster a productive board by doing something that is counterintuitive and often unnatural - elevating, listening to, and engaging with those on the board who disagree with you. And do that in front of the entire board. That sets the cultural tone that you value a range of opinions and believe in the value of different perspectives - even those that might challenge your own. If you are an organizational leader and your board always agrees with you and always rubber stamps what you're doing, consider the possibility that your board isn't functioning as a board at all, and the organization isn't therefore receiving the value of a well functioning board.

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Boards are supposed to help founders. Over the past 19 years, I've watched many trap them instead. As companies scale, many boards turn from insight to oversight and stop doing what founders actually need: Help making big, hard decisions. Early boards tend to be small, the board members are close to the business and highly invested in it. They argue from first principles. They help founders think. Later-stage boards often look more impressive on paper - they have more independent directors, committees and process. Somewhere along the way, collective problem solving gets replaced with oversight. The board shifts from helping the CEO make better decisions to monitoring decisions that have already been made. Strategy discussions get safer, real debate gets rarer and meetings become more about risk management than judgment. This usually coincides with the introduction of more professional board members. For better or worse, they often optimize for governance, optics, and liability management. That’s their job. But it’s not always what the company needs in moments of real uncertainty. Then, CEOs stop using them as thought partners. That’s a problem. So what should founders do? A few principles that help: • Keep the board as small as you can for as long as you can • Add directors for new insight they bring, not what boxes they check • Treat board seats like senior hires, not trophies • Design meetings for debate rather than reporting • Be explicit about when you want input vs approval Good boards should improve decision-making. If your board isn’t making you think harder, it’s probably not doing its job.

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Time and again, I am seeing PE quality companies underwritten with a VC style mandate These are businesses with some scale, some predictable demand, bit of operating leverage. These are not binary outcomes. They are built to compound steadily. However, the underwriting assumes asymmetric upside The assumption is that growth, margin expansion, and clean exits will all materialize together Entry pricing often leaves no margin for error. Which means the entire return has to be manufactured through execution These companies are not bad. They are not uninvestable. The founders are smart and execution-oriented. Multiples are often not irrational in isolation. So the issue is not price but the concentration of risk When rerating is not available at entry, all the returns paths lead to a single lever i.e., execution of growth. So, volume must grow on time, margins must expand, operations must scale cleanly, and exit multiples must hold When all of this is required together, the asymmetry disappears. At that point, the investment starts to resemble VC in structure, but has no VC style upside In the end, we are all allocators of capital. We have to be comfortable taking execution risk. But we have to avoid situations where execution becomes the only remaining underwriting lever

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A Venture Studio ignored venture and won. They built for Cashflow, not Venture. Here is how they did it: 20 years ago, an Atlanta-based venture studio operated with a unique approach. Instead of targeting VC or Private Equity, they focused solely on cash-flow businesses like professional service firms. Here are 2 powerful lessons every studio can learn from their model: ------ 1. Funding Mechanism: A Line of Credit - Companies were funded via a line of credit, not equity capital. - Portcos had to become cash flow neutral within 18 months. - Reduced funding needs = Faster scalability. This setup created discipline. Each month, portfolio founders had to justify every dollar spent. Want to hire McKinsey? Nope—do it internally. Result? Founders learned to obsess over cash flow, an essential entrepreneurial muscle. ------ 2. Picking Founders Wisely Successful founders were not running from bad employers. Instead, they were executives who always dreamed of building something but lacked the timing or resources earlier in life. These proven leaders had: - Strong networks - Deep domain expertise - Relentless drive to finally fulfill their vision They thrived almost every time. P.S. Which of these lessons resonates with you? 👇 Best, Matthew Burris

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🚀 Meet PACT, simplifying SBA-backed acquisitions with investors. Think YC’s SAFE, but built for Main Street M&A. 📘 What is PACT and why we built it PACT (Partnership Acquisition Commonsense Terms) is a free, balanced starting point for the agreements used in SBA-backed acquisitions with outside investors. For too long, SBA-backed acquisitions with outside investors have been the wild west: every deal is different, inefficient, and confusing, especially for first-time searchers raising capital. PACT gives everyone a common baseline so reviews are faster, expectations are clear, and operators can focus on acquiring the business. 🧩 SAFE for ETA Y Combinator’s SAFE gave startups a shared template that made early investing easier to execute. PACT brings that same idea to ETA. It teaches the key concepts in plain English, aligns searchers and investors on the economics, and sets a fair place to start. Our goal is for PACT to become the default baseline for investor-backed small business acquisitions using SBA loans. 🤝 Who contributed 🏛️ Legal input from top SMB M&A attorneys: Joseph Spina (Cullen and Dykman LLP), Mark Dittrich (Groundswell Advisors, LLP), and Eric Hsu (Clear Focus Law, PLLC) provided feedback on drafts. 💼 Early investor adopters: Jordan F. (Shareholder Ventures), Grant Hensel (Entrepreneurial Capital), Jason Ehrlich (Fruition Capital), Sean Smith (Search Fund Ventures), Adam Kaplan (ETA Funding Partners), Jacob Hall (Kando Capital), Tony Cappaert (Workbench Capital) and Adam Markley (PROX Search Capital) have adopted PACT on new deals. 🎓 Community support: Chelsea Wood and Walker Deibel at the Acquisition Lab and Buy Then Build have committed to start educating the community on how investor deals work using PACT. 👉 What to do next 🔍 Searchers: download the docs and ask your lawyer to start from PACT. ⚖️ SMB M&A Law firms: review the templates and send feedback so the next version is better. 💸 SMB investors: adopt PACT as your starting point and share redlines from real deals. This is a community-led standard, and we will keep versioning PACT as feedback comes in from all sides. 📝 Thanks: Special thanks to Joseph Spina for leading the legal drafting with me and helping shape a true middle ground. 🔗 Download PACT and see the key terms: ETAPACT.com (link in the comments) Let’s make investor-backed acquisitions clearer, faster, and fairer for everyone. 🚨 DISCLAIMER: PACT is not legal advice. Searchers must engage experienced SMB M&A counsel to review and tailor these documents to their deal.

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Forget the competition. Focus on this instead. Abacus founder David Moscatelli came on the pod for "Office Hours" to ask “Should I worry about competitors?” Within this answer is a powerful early-stage founder lesson. "Obsession checklist:" • Team – Are they great? Can they be better? • Product – Is your velocity good enough? • Customers – Are you obsessed with delighting them? “You’re not even on the court yet. Worry about getting in the game.” Bonus moment: David reveals $125K MRR + 9 enterprise clients… "Now you have my interest.”

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If you have 15 minutes this is what you need to listen to today. "I like to create this category called 'try.' Try to do damn near anything" Patrick Moore co founder of Pretekt joins me this week. Agreed. The only way for us to bring these costs down is everyone trying. All the elements of our system working together with transparency to address the unsustainable increases we are all feeling. Learn about innovative strategies in employee benefits, particularly for *mid-market employers*. We chat all about the importance of care navigation, direct primary care, and the impact of these solutions on healthcare costs. Pat shares insights on how to effectively implement these strategies and the challenges faced in the healthcare industry. Takeaways 👩‍⚕️ Pat Moore emphasizes the importance of nurse care navigators in employee benefits. 🏢 Mid-market employers often struggle with point solutions designed for larger companies. 🔍 The “try” approach encourages employers to take small steps toward better healthcare solutions. 🏥 Direct primary care can significantly reduce costs and improve access to care. 💰 Employers can save up to 20% on MSK spend by implementing effective solutions. ⚕️ DPC for expensive services can provide better care without high costs. 🧭 Navigating healthcare outside of insurance networks can lead to substantial savings. 💊 Employers need to focus on direct sourcing for medications and treatments. 🚀 The healthcare industry needs innovative solutions to improve cash-pay options. 🤝 Pat encourages collaboration and communication among employers to tackle rising healthcare costs. Thanks Pat for joining! This one was a lot of fun. COMMENT AND SUBSCRIBE: https://lnkd.in/gAMUQQgW

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A debate I often see on Linkedin: “Should founders take meetings/properly engage with analysts or associates at funds?” Normally this breaks down into whingeing from both sides about: -Valuable contributions can come from folks of any experience level -The fund has established processes to do the optimal job for founders -The analysts view is taken so so seriously by the fund -The founder prefers to talk to a decision maker This handily dodges the underlying truth Both partners of funds and founders are trying to optimise the use of their own time. They want to achieve as much with it as humanly possible. This is totally rational. (It’s also rational to not directly care about processes that give you time leverage costing the counterparty their time efficiency) Having analysts at a VC fund is a move where the partners spend money for a deal to take up less of their time (often none of their time at all if killed outside the wall), even though it takes up more of a founder’s time. It’s a straight distributive negotiation of time pricing. (Yes, there are humans involved…but that isn’t the point). Fundamentally it’s a question of power (or BATNA). If the founder has lots of options or powerful network, the gatekeeper step can be skipped. If not, it can’t. We should all be less emotional about this and stop dancing round the underlying issue. Later stage funds and founders seem far more adult about this. Partners talk to founders about broader issues, while associates on both sides talk to each other around finer detail. Folks seem to get less offended (perhaps because everyone is better paid) I’m OK taking calls with analysts unless I can find a way to skip those calls and move straight to the decision maker efficiently (in which case I would always do that) #shipsandshipping #seriesa #vc #maritime

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