We intentionally undercut the ENTIRE calorie tracking app market, and it’s one of the main reasons we scaled and sold the company for 9-figures in under two years.
Let me explain…
Every other week, I see an article about which AI companies are becoming profitable and which ones are headed for bankruptcy.
For example, OpenAI is billions in the red, while Anthropic might be the first big AI player to actually turn a profit.
People read that and assume the unprofitable one in every case is in deep trouble.
I promise you’re focused on the wrong metrics.
Because regardless of the niche or industry, Mindshare is the most important asset to be building early on, NOT profitability.
The company that becomes the default name in your head when you think of a certain industry wins in the long run 99% of the time.
This is the case for AI brands, running shoes, electronics, restaurants, cars, you name it.
You earn that position by being everywhere and being easy to say yes to, and profit comes later once you own the category.
We used this exact strategy on purpose with Cal AI.
We priced it as one of the cheapest calorie trackers on the market because we wanted to plant our flag in as much subconscious real estate as possible.
The playbook was simple:
Get the user first
Become the default option in their mind
Worry about squeezing out profit once we were the dominant player
Uber is a great example of the same strategy.
Even though it was founded in 2009, they didn't post a full year of profit until 2023.
And they captured most of the market because Uber slowly but surely became the word people thought of and used instead of "taxi."
If Uber had made decisions strictly off early profitability, I almost guarantee they would’ve gone under.
Jeff Bezos did the same thing while building Amazon, taking them 7 years to hit their first year of profit.
So if you're building something early in a new category, start focusing on becoming the default brand in the minds of your ideal customers, and the rest will likely fall into place.
(If you want the more technical version of this argument, Marc Andreessen has a great take on why the moat was never the product. I'll link it below.)
- Jake
P.S. you can find the Marc Andreessen article HERE, definitely worth the read
