On Product Compounding

2025.05.25

CI

[Free Marketing, Product Compounding, Speedy Funding Rounds, The Long Game, Competition is For Losers]

Thesis: Competition really is for losers—the more you stay in your lane, the more you compound, and the bigger the moat you have.

[Free Marketing]

Over the last two weeks, two incumbents in BirdDog’s space launched feature sets that are, at a surface level, quite similar to BirdDog’s core product. 

Really, though, we’re not actually so concerned. There are a lot of really good things that have come out of it:

• Validation - Both players are truly admirable & respectable businesses–they wouldn’t be investing in something they didn’t think was valuable.

• Marketing & Sales - Jack’s aggressive posts on the matter have booked a lot of meetings that we’re already turning into revenue.

• Education - Now these other companies will be spending money helping to educate the market on part of what we’re selling.

The real point of this post, though, is not about what our competitors are doing–it’s about something you start to unlock when you keep focusing on the same problem for a long time–Product Compounding. It’s the thing that makes your “competitors” irrelevant.

This weekend, we very easily drafted a “magic” feature that a lot of our users will love. Once it’s in production, we estimate that we will start capturing 10-20% of funding rounds before startups announce them!*

The thing is, getting this feature near completion took a day, and it was a day on which I was pretty delirious (I am ~48 hours into a fast right now & yesterday, when I was coding yesterday, I was plagued by the dreaded keto flu).

The thing is, if we were to have pushed this feature 3 months after we started, it likely would’ve taken us closer to a week & a lot of trial and error. Besides that, I might not even think it was possible to do it.

Now, it’s become a trivial thing for us to add that will drive a lot of value for a lot of users. This is what happens when you focus on Product Compounding, which, incidentally, is also where we believe you can build a moat. 

And, it’s far more than any notion of competition.

*We already found a $40M Series B from a week ago that’s not in the news or even on Crunchbase yet

[Product Compounding]

A powerful term I heard perhaps a month ago from some gentlemen at A16Z that, given my obsession with the nonlinear, I’ve become quite fond of, is: Product Compounding.

It’s a phrase that contains within it the notion that there is a way to make the value of your product increase like an exponential graph rather than like a line.

While Product Compounding is real, the trick is actually getting to the point where your product can compound.

One of the understandable illusions plaguing people considering starting a company is this notion that the idea is all that matters. This is the person who won’t start until he has the perfect thesis.

The truth is, an idea for a product on its own isn’t worth very much. And, there will never be a perfect business plan or product idea or thesis, especially at the very beginning. The insights need to be hardened by iterations and trials and errors–they need to be hardened by execution.

There’s a trap at the other end of the spectrum, though. If you don’t believe an idea is worth anything, and you just flip flop between building things, because “there’s no moat ever,” then it’s going to be harder to reach the point where you start hitting product compounding. Then, you’ll be stuck jumping from sub linear slog to sub linear slog.

But, if you can stick it out for long enough, you’ll really start to see something cool—compounding.

When you start anything, every bit of effort that you put into something, like your product, returns almost nothing. It feels impossible to move the needle! You might work for weeks or months or talk to hundreds of possible customers and still be at 0 revenue. 

Somewhere in there, though, as you keep working on the same thing, you realize that every bit of effort you put in has a higher payout than it did before. And at some point, it’s much higher. 

Overtime, you start to get more reward for each additional ounce of effort you put in. I think this is not only because you have more infrastructure built up that you’re just packing more value onto, but also because you have a better idea of what is actually valuable.

[Speedy Funding Rounds]

Our new found native ability to grab some funding rounds before most other commercial tools is less evidence of any engineering prowess on my end and more a symptom of product compounding.

The impetus for the feature came from a guy I was talking to who asked why we weren’t looking at Form D’s directly to get ahead of funding round press releases. This is maybe the most important part—I was quickly able to realize that this was obviously valuable for our users & some prospects.

Then, I was very quickly able to come up with the sketch of a pipeline that would work to robustly pull the needed data in & analyze it. I was able to do it quickly because literally 50% of my technical job is building such pipelines.

Second off, I was able to reuse code. Of course we already have half a dozen functions that can be used to do something new that’s very similar to the things we already do.

Third off, we were able to cross reference existing data we already have. This one’s more nuanced, but we’re more or less using what we already know about companies to validate that the funding round is actually theirs.

All of this is without paying for any api calls or even relying on something as compute heavy as a GPU–the costs are constrained to a sprinkle of storage, a splash of ram, and a sliver of CPU. And, since we’re just inserting this into an existing pipeline, a lot of those costs are already amortized to 0 & we’ll be able to do it efficiently every night across tens of thousands of companies.

In short, we’re just doing more of what we already do! Which is how you compound. If we were to do this 6 months ago, it would have taken us a lot longer. We’d need trial and error, to figure out what design patterns actually work, building out boiler plate code and scaffolding, etc, etc.

In all honesty, 6 months ago, I might’ve not thought it was possible to get anywhere in this direction without making calls to GPT!

So, in short, we’re getting much more reward for much less effort by pursuing Product Compounding.

[The Long Game]

The coolest thing is, BirdDog is still utterly fledgling. By continuing to go further and further in the same direction, it will become increasingly trivial to do more and more otherwise challenging things.

Perhaps I am full of hubris & naivety & the unforgiving forces of the market will violently crush our business while it is still in it’s nascent stage, but I don’t think so.

I still don’t really know what a lot of people think of when they say moat, but I do think that if there is a real moat, you’d get there by chasing exponentials, whether in the form of network effect or product compounding or accumulating data, etc.

On that note, if you’re wondering what we’re trying to compound towards, we think that with another couple of years & proper integration into our client’s CRMs, what we’re doing for sellers will look a lot like quant trading.

[Competition is for Losers]

It’d be super lame if me & Jack spent this weekend strategizing about how we’ll “beat the competition” just because some other, significantly better resourced teams decided to launch some features that are surface level similar to BirdDog.

Instead, Jack used it to get attention & book revenue, and I continued to make sure that, technically, we’re getting better at doing what we already do. We spent the weekend continuing to product compound.

At the end of the day, we’re not competing with the others, and they would be making a big mistake if they actually thought they were competing with us. And, that would be a mistake regardless of BirdDog’s performance. It would be a mistake because they’d be abandoning their game to play someone else’s.

I respect both businesses & their leaders & really do think they understand that’s a poor idea—otherwise, they probably would’ve accepted our duals!

So, all of this is to say, Peter Thiel is right: competition really is for losers, unless you’re competing with yourself.  

Live Deeply,