Definition
Commoditization
When a once-valuable capability becomes cheap and standard, collapsing its margin.
From the episode “What it do!? The Jujitsu Secret That Scales Companies Without Force”Hear it on the podcast1 episode
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Related terms in Startups & Fundraising
Capital Efficiency (AI Era)The ratio of revenue generated to capital invested, as redefined by the AI-driven collapse in execution costs. Pre-AI, reaching $1 million ARR typically required $2-5 million in capital (engineering salaries, infrastructure, sales team). AI-native companies designed around the outcome-as-a-service model can now target $1 million ARR on less than $1 million in capital - a multiple that was structurally impossible before AI collapsed the labor cost of software execution. Infinity Constellation's portfolio benchmark: multiple companies reaching $1M ARR with teams of five or fewer in their first year. Capital efficiency in the AI era is therefore not just a financial metric but a proof point for the underlying model - if AI leverage is real, the unit economics should be visible in the revenue-to-capital ratio from the first year of operation.Capital EfficientA business that generates significant revenue per dollar of investor capital raised — the holy grail for growth-stage investors.Capital formationThe process of raising and issuing new equity to fund a company. Fairmint automates and lowers the cost of this process.Chicken-and-Egg ProblemThe marketplace bootstrapping challenge where supply won't join without demand and demand won't come without supply. Typically solved by subsidizing one side — usually supply — early on.Competitive MoatA defensible advantage such as IP, proprietary data, or network effects.Crowdfunding (equity)Raising capital from retail investors, regulated in the UK by the Financial Conduct Authority; Cornish Lithium used Crowdcube across multiple rounds.Data flywheelEach use generates data that improves the product, which drives more use and more data.Defensibility ScoreA live metric used in Wildwood's pitch scoring sheet to evaluate how protected a startup's business model is from replication. Scores have declined industry-wide as AI lowers the cost of building software.