Alson Chan

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on the atlas — 44

highlights — 446

Vertical SaaS is a technology category that hosts many different business models, and which strategy is correct depends on your end market. Some markets are big, like restaurants, and some are small, like auto insurance. Size and structure matter for how you build your business and what capital providers you partner with. ‍
Market Structure Drives Strategy
Few companies have successfully extended through the value chain, but those that have are superlative.
Patterns of Extension
Why hadn’t Didi’s immense scale shut down its competition for ride services in China? Why wasn’t this a winner-take-all market, as many analysts had predicted? Moreover, why do some platform businesses—such as Alibaba, Facebook, and Airbnb—flourish, while Uber, Didi, and Meituan, among others, hemorrhage cash? What enables digital platforms to fight off competition and grow profits?
Why Some Platforms Thrive and Others Don’t
Net margins on payments for the VSV are the fee revenues from the merchant, subtracting transaction costs and other fees. Some of those fees, like network and interchange fees paid to issuing banks, are pretty much non-negotiable.
Payments
often used by Independent Sales Operations (ISOs) and legacy payments providers. It can be more predatory, as rates are based on opaque qualifiers that can drive up the net cost to the merchant.
Payments
Its structure is often similar to the IC+ structure (% + $0.XX per transaction), and you as the PayFac retain the margin risk around the different card and transaction types. Therefore, the rates are often quoted differently for card-present and card-not-present transactions, or for American Express.‍
Payments
IC+ is the structure we discussed above regarding fixed transaction fees—a set percentage and fixed amount per transaction.
Payments
Logistically, the process of becoming a PayFac is not easy. There are fees attached to partnering with a bank and processor; building out onboarding and underwriting merchants is complex; and the operational burden of maintenance and compliance falls directly on you. You need to determine whether you require online-only payment processing, in-store only, or a mix, because that will impact whether you need to invest in custom hardware or card readers. You will also need to know whether or not to set up international capabilities, and if so, in which countries. Additionally, you need to decide w…
Payments
The last approach is becoming a PayFac directly and building the payments system yourself. This in-house build option requires greater expertise in payments and a significantly higher investment in cost and time. However, the opportunities it provides for monetization and customer experience are also great.
Payments
Another option is a middleware for PayFac building. These companies still provide all of the elements of a PayFac for you, but in the form of Application Programming Interface (API) building blocks that you can put together however you like. The flexibility this provides is accompanied by a SaaS fee structure and fees for volume.
Payments
The tradeoff is that there are fewer opportunities for customization or monetization down the line, since the company selling this product takes a percentage of transactions and has more rigid payment structures.
Payments
Finally, PayFacs are responsible for ongoing operational requirements. This includes everything from fraud monitoring, to maintaining a Payment Card Industry (PCI) certification, to managing chargebacks, merchant support, and other day-to-day needs.
Payments
There has to be an integration with a payment gateway, which will connect your customer merchants to networks that process payments.
Payments
PayFacs, whether in-house or from a company like Stripe, manage payments systems from creation and set-up through onboarding and ongoing maintenance. The first step is being approved as a merchant account and assigned a Merchant ID (MID). This involves registering with an acquiring bank and proving the capability to underwrite sub-merchants. Your customers become sub-merchants within your MID; this aggregation simplifies the requirements for your customers and creates a stronger experience.‍
Payments
This is an important factor that can make building payments in-house a riskier move than going with a managed service.
Payments
Supporting these merchants means offering hardware or offline mode, having high levels of support for the VSV’s software, and having core dependencies for WiFi and internet connectivity.
Payments
Instead, it is a lever by which you can transform the customer experience. If you enable a strong payments experience, onboarding can be streamlined, your checkout times can be faster, your average spend can be higher, and from a data perspective, there is a fantastic opportunity for recommendations and increased purchases.
Payments
Copilots: an editor-first approach where the coding experience is more akin to what engineers are currently used to, and code generation is more of an auto-complete flow along with a chat interface Coding agents: this is the more automated approach where based on a prompt, the coding agent would write the code, perhaps test that code, and then execute that code in some sandboxed environment Custom Foundation Models: companies that have elected to train their custom foundation models instead of using fine-tuned version from vendors like OpenAI or Anthropic
The Future of Programming: Copilots vs. Agents (Part I)
My mental model for AI-code generation startups is to break the competitors into three categories — copilots, agents, and code-generation foundation model platforms.
The Future of Programming: Copilots vs. Agents (Part I)
billions of dollars will be incinerated in the meantime as heavily capitalized startups attempt to win the market. The main difference this time is the size of the prize — the winner would be automating some fraction of engineers (which is a massive TAM)!
The Future of Programming: Copilots vs. Agents (Part I)
While AI code generation companies have collectively raised well over $1B, we’re still in the early innings of the AI coding wars, with no apparent “winner” yet. What the last generation of editors have taught us, however, is that there will only be a few contenders that will win meaningful market share, given the winner-takes-most dynamic for developer tools. And this might be the incumbent Microsoft!
The Future of Programming: Copilots vs. Agents (Part I)
Prior to the current wave of AI code generation startups, we had a “code editor” war of sorts which took place around 2015 to 2017. At the time, there were a handful of popular “newish” code editors, which included Sublime, Atom, VS Code, and a longer-tail of editors like Notepad++ and Brackets (not counting the OGs Vim and Emacs here).
The Future of Programming: Copilots vs. Agents (Part I)
The Post is a “complexifier” for me. It is, but it turns out I’m also a complexifier for The Post.
Opinion | Jeff Bezos: The hard truth: Americans don’t trust the news media - The Washington Post
Voting machines must meet two requirements. They must count the vote accurately, and people must believe they count the vote accurately. The second requirement is distinct from and just as important as the first.
Opinion | Jeff Bezos: The hard truth: Americans don’t trust the news media - The Washington Post
We’re just four years old and still figuring a lot out. But I think doing it with your friends and the people that you truly trust and love, that’s what keeps us building the strength of the team. It’s what keeps us going.”
Inside Wiz's Rapid Ascent | Sequoia Capital
“We’re looking for Wiz to be something that you cannot adopt a new technology in the cloud without.” Balkansky sees Wiz as “a company with boundless ambition. I would expect them to be like the next Palo Alto Networks. Nothing short of the next essential security platform.”
Inside Wiz's Rapid Ascent | Sequoia Capital
potential antitrust-related concerns or misaligned negotiations. Instead, he provided a simpler rationale: “Saying no to such humbling offers is tough, but with our exceptional team, I feel confident in making that choice.”
Inside Wiz's Rapid Ascent | Sequoia Capital
“Wizards, I know the last week has been intense, with the buzz about a potential acquisition,” he wrote. “While we are flattered by offers we have received, we have chosen to continue on our path to building Wiz. Let me cut to the chase: our next milestones are $1 billion in ARR and an IPO.”
Inside Wiz's Rapid Ascent | Sequoia Capital
“The way they work together is remarkable, they finish each other’s sentences,” says Leone.
Inside Wiz's Rapid Ascent | Sequoia Capital
Does Assaf have the maturity and patience to understand that running at a hundred miles an hour can expose you to things because you haven’t the time, luxury, and sometimes, the wherewithal to slow down and think?’
Inside Wiz's Rapid Ascent | Sequoia Capital
A sexy, demoable product coupled with pioneering technology and an indefatigable team put Wiz on a surefooted path to success. Just how successful, nobody was quite prepared for.
Inside Wiz's Rapid Ascent | Sequoia Capital
“In 15 minutes, it basically started providing value for customers, showing them results that would kind of light up like a Christmas tree, making very clear all the things that are wrong in their cloud infrastructure,” says Balkansky.
Inside Wiz's Rapid Ascent | Sequoia Capital
gave security specialists the ability to prioritize more pressing threats and understand how one issue might precipitate others down the road.
Inside Wiz's Rapid Ascent | Sequoia Capital
Wiz’s new “agentless” approach gave customers insight into their entire cloud environment all at once, visualizing this context using methods like cloud image analysis, log file analysis and API connections.
Inside Wiz's Rapid Ascent | Sequoia Capital
“It was a pain in the ass,” Leone laughs, “but I do urge CEOs to do that.”
Inside Wiz's Rapid Ascent | Sequoia Capital
iz’s product during Israeli working hours and making sales calls with potential customers in the U.S. at night.
Inside Wiz's Rapid Ascent | Sequoia Capital
But what has Google done in the past 10 years? Photos, the 3rd place public cloud and incremental growth at ~20% per year. S
Reflecting On My First Year At Databricks - Greg Kroleski
ton of unused office space, as so many other companies have.
Reflecting On My First Year At Databricks - Greg Kroleski
AGI – I don’t think we’re anywhere close. Will LLMs eventually be shown as a stepping stone along the path that helped fund development in infrastructure and research that eventually led to AGI. Probably. Does that mean we’re a model or two away from it. I really don’t think so. The more I learn about how AI works, the more impressed I am with the human brain. I suspect we might eventually reach a point where we realize we have a really powerful, highly efficient, fairly resilient computing device right on top of our heads. If we would just spend some more time installing the right software in…
Technology Predictions - Summer 2024 - Greg Kroleski
ncumbents in various industries still hold a significant advantage. It’s not enough to invent a more efficient tool — distribution, integration, and trust are equally important. Consider Epic in healthcare. With its deep integration into hospital workflows and entrenched relationships with health systems, Epic has a chokehold on the EHR (Electronic Health Record) market.
Re-Imagining Core Systems in Legacy Industries | by Brian Gong | Sep, 2024 | Medium
This shift is not just about efficiency — it’s about fundamentally rethinking the role core systems play in organizational strategy.
Re-Imagining Core Systems in Legacy Industries | by Brian Gong | Sep, 2024 | Medium
Although it will happen incrementally, astounding triumphs – fixing the climate, establishing a space colony, and the discovery of all of physics – will eventually become commonplace. With nearly-limitless intelligence and abundant energy – the ability to generate great ideas, and the ability to make them happen – we can do quite a lot.
The Intelligence Age
In 15 words: deep learning worked, got predictably better with scale, and we dedicated increasing resources to it.
The Intelligence Age
How did we get to the doorstep of the next leap in prosperity? In three words: deep learning worked.
The Intelligence Age
Well, currently, I'm cofounding my own company that is focused on building generative AI applications for investment firms, private investment firms. And prior to this, which I've been doing for about six months, I was an engineering manager at Glean. I was there for about four years. I joined as part of the very early team, like very early in the company's life and built a lot of things are on the search and assistant platforms, and it was later managing those teams at the time when I left. And then prior to that, I was at Scale AI for about a year. And prior to that, I graduated from Stanfor…
Former Engineering Manager at Glean | Glean | Tegus
relations between the two countries will one day renormalize, and invest in Chinese startups (though this is mostly off-limits to US investors for sensitive categories like AI, semiconductors, and quantum).
Where Returns Lie in Venture Capital - by Kevin Zhang
the founder profiles of these companies will be very different from those found in the hacker houses in SF, and these will be founders that Bay Area VCs can’t easily source.
Where Returns Lie in Venture Capital - by Kevin Zhang
It’s arguable that at this point Shenzhen has a stronger consumer hardware culture, and the recent big consumer robotics wins were Chinese companies (DJI, Roborock, etc.).
Where Returns Lie in Venture Capital - by Kevin Zhang
But, if a fund invests in both consumer AND enterprise, then that fund has even less chance of “hitting” the right once-in-a-decade consumer company. As an aside, this is one reason why LPs diversify across fund strategies and vintages (time diversification), so that if one fund truly is a bit of a “stinker”, other funds can help smooth out returns.
Where Returns Lie in Venture Capital - by Kevin Zhang
Annoyingly, this process takes years for mark ups, and potentially over a decade for real distributions to LPs.
Where Returns Lie in Venture Capital - by Kevin Zhang