How Josh Mohrer built Wave AI

How to Build AI Companies: Insights from Josh Moore

Introduction to the Discussion

• The speaker introduces a discussion about building AI companies, highlighting a lack of role models in the field.

• Emphasizes that many entrepreneurs are focused on what they can build rather than sharing their experiences and insights with others.

Overview of Wave AI

• Josh Moore is introduced as the creator of Wave AI, an audio notetaking app that records meetings and personal notes.

• Current revenue for Wave AI is approximately $7 million ARR (Annual Recurring Revenue), though it has remained flat for several months.

Team Structure and Personal Involvement

• Josh mentions he handles most aspects of the business himself, including engineering and customer support.

• Reflects on his tendency to work alone, which has been amplified by advancements in AI technology.

Background and Motivation

• Discusses his previous experience at Uber as a general manager, where he had significant impact due to the company's small size at that time.

• After leaving Uber in late 2022, he found inspiration in ChatGPT's capabilities, particularly its potential to help him achieve his goal of becoming an engineer.

Idea Generation Process

• Describes how ChatGPT opened doors for him creatively; he felt empowered to pursue software development without needing extensive engineering skills.

• Shares that prior limitations in executing ideas stemmed from needing engineers' assistance but now feels more capable due to AI tools like ChatGPT.

Key Insights on Idea Selection

• Initially approached idea generation casually while unemployed; did not set out specifically to start a business.

• Identifies summarization as a key feature of computers that was previously lacking; believes this capability represents a "killer app" for future applications.

Exploring AI Applications in Summarization and Legislation

Initial Concept of Audio Transcription and Summarization

• The speaker discusses the potential of a language model (LLM) to read extensive text and condense it into concise summaries, highlighting an innovative approach to audio recording and transcription.

• The idea originated from a common scenario where people forget important discussions after lunch with friends, leading to the pursuit of technology that could capture and summarize these conversations.

Legislative Summarization Project

• A project was developed to summarize New York State legislation using their API, addressing the issue that most people do not read lengthy bills due to their complexity.

• The speaker's involvement in government at Uber sparked interest in ensuring transparency in legislative processes, preventing last-minute bill approvals without public awareness.

• This tool aimed to analyze new bills by summarizing them and predicting public support or opposition based on various factors.

Customer Service Applications

• The speaker identifies customer service as a clear application for AI technology but notes that existing solutions were still inadequate at the time.

• An early demo targeted Shopify sellers, indicating an intention to streamline customer interactions through automation despite current limitations.

Personal Projects and Innovations

• The speaker reflects on personal projects involving AI tools designed to sift through long chat threads among friends for relevant past conversations.

• These initial demos were more exploratory than business-oriented; however, they laid groundwork for what would become a standalone product later known as Wave.

Market Landscape and Competitive Analysis

• Despite existing competitors like Otter and Fireflies, the speaker chose not to focus on specific industries but rather maintain a broader application scope for Wave.

• The discussion highlights how many tools initially focused on meeting recordings while Wave captured diverse audio inputs across various settings such as Zoom calls or live meetings.

Quality Focus in Development

• Emphasis is placed on quality output; the speaker experimented with multiple AI models (e.g., Whisper 2 & 3, Assembly AI), prioritizing superior performance over cost savings during development.

• A commitment to refining summary accuracy has been crucial for success, distinguishing Wave from other applications by leveraging advanced technologies.

Understanding the Development Process of a Unique Product

The Pursuit of Perfection

• The speaker emphasizes their dedication to refining their product, highlighting years of full-time work and a desire for perfection.

• They identify a unique use case in recording in-person conversations that competitors are not addressing effectively.

Indicators of Success

• A lesson learned from Uber is shared: extreme emotional reactions from customers (positive or negative) can indicate that the product is resonating with users.

• The speaker recalls experiences at Uber where passionate customer feedback signaled value in the service provided.

User Engagement and AI Adoption

• Many users view the speaker's product as their primary interaction with AI, despite limited exposure to AI tools in their professional lives.

• The speaker notes that many people do not yet utilize AI for work-related tasks, indicating a gap in adoption across industries.

Market Positioning and Competition

• The discussion shifts to market strategy; while competitors may focus on niche vertical applications, the speaker believes there’s merit in maintaining a broader approach similar to Uber's model.

• Historical context is provided about early competition faced by Uber, illustrating how multiple ride-sharing apps posed existential threats initially.

Building the Product: A Personal Journey

• The speaker reflects on their initial coding experience, using both traditional resources like Stack Overflow and modern tools like ChatGPT for problem-solving during development.

• They describe an iterative process of creating versions of the app, identifying issues, and resolving them through hands-on experimentation.

Technical Insights into Development

• Key technical challenges included ensuring background audio recording functionality while minimizing app usage; solutions were often conceptual rather than purely code-based.

• The importance of server-client architecture was recognized early on; this allowed for efficient processing without losing data when users closed the app.

Learning Through Experience

• The speaker highlights intuitive learning throughout development—grasping concepts typically taught formally through practical application rather than structured training.

• They detail how they utilized an integrated development environment (IDE), alongside AI assistance, to troubleshoot and enhance their coding efforts effectively.

Exploring the Evolution of LLMs and Personal Experiences

The Impact of Opus 4.5 on User Experience

• The speaker reflects on their journey with LLMs, noting significant improvements over three years, particularly highlighting Opus 4.5 as a major advancement.

• They express astonishment at the capabilities of Opus 4.5, emphasizing its ability to perform tasks autonomously that were previously unimaginable.

Transitioning to Cloud Code

• The speaker shares their recent experience with cloud code, which they initially found confusing but have now embraced fully after just two weeks of use.

• They compare their previous development environment (IDE like Windsor) to cloud code, indicating a shift towards more automated assistance in coding.

Cost Efficiency and API Usage

• Discussing financial aspects, the speaker mentions spending $200 monthly for API access that provides substantial value compared to previous daily costs of $50-$100.

• They highlight how the model's improved interpretative abilities enhance user interaction through better questioning and follow-up processes.

Analytics and Decision-Making

• The speaker initiated discussions about pricing strategies influenced by analytics insights generated by AI tools, reflecting on Uber's pricing tactics as a reference point.

• They describe an experience where AI quickly generated an analytical report that would typically take a human analyst much longer to produce.

Future Applications and Organization Challenges

• Mentioning Ryan Carson’s automated reporting system based on analytics, the speaker acknowledges they haven't yet implemented such systems in their own work due to personal disorganization.

• Despite being messy in both life and digital organization, they express interest in utilizing AI for practical tasks like monitoring prices or analyzing server logs efficiently.

Tools and Strategies for Building Wave

Importance of Efficient Tools

• The speaker emphasizes the utility of tools that streamline processes, noting that without them, managing large datasets would be cumbersome.

• As a solo founder, the speaker acknowledges that certain tasks may be overlooked due to time constraints.

Software and Tools Utilized

• The primary code repository is managed through Cursor, which houses both app and web app repositories along with various other specialized web apps.

• Adapty serves as the central system for subscription management, handling purchases made in-app or via Stripe.

• Twilio is utilized for voice-over IP services within the app, allowing users to make calls while displaying their number on caller ID.

Development Philosophy

• The speaker employs Next.js as a web framework for development purposes.

• There’s a concern about AI potentially disrupting traditional SaaS tools; the speaker prefers building custom solutions over relying on existing software.

Customization Over Standard Solutions

• Intercom is used for customer support chat integration but not its AI features; instead, the speaker manages responses through a self-built website interfacing with Intercom's API.

• A preference for creating personalized solutions rather than using generic tools is highlighted; this approach allows better control over user experience.

Examples of Custom Solutions

• The speaker discusses how they prefer to build functionalities themselves when possible rather than fully utilizing third-party tools.

• An example includes sending emails where AI generates HTML content directly without needing an external editor.

Trends in Company Development Approaches

• Many companies are moving towards developing their own solutions not just to cut costs but to gain more control over user experiences.

• Integration with Zapier is mentioned as part of enhancing customer service capabilities by automating sharing features across platforms like Google Docs and Notion.

Integration of AI and Software Development

The Role of CRM and Automation Tools

• Discussion on the integration of CRM systems with automation tools like Zapier, highlighting its utility in managing recordings and data.

• Introduction of API access alongside Zapier to enhance user experience by allowing users to interact with their session data across different platforms.

Data Management and User Experience

• Emphasis on the importance of facilitating data actionability post-recording, such as generating to-do lists or action items from meetings.

• Mention of Zapier's extensive integrations that allow users to transfer their session data seamlessly to various applications.

AI in Content Creation

• Insight into using AI for automating documentation processes, where AI reads code and generates articles for knowledge bases like Intercom.

• The potential for AI to understand software features through code analysis, leading to more efficient content creation.

Future of Software Development

• Speculation about the future landscape where more individuals may create software solutions akin to existing SaaS models, questioning whether this will lead to a proliferation of unique software products.

• Personal anecdote illustrating how easily accessible software development could become similar to consumer goods production, suggesting a shift towards lower barriers in creating software.

Small Business Perspective on Software Development

• Reflection on operating a small-scale business model in the tech space rather than a large corporate structure, emphasizing personal involvement and direct engagement with customers.

• Acknowledgment that while AI enables broader participation in software creation, it still remains limited to a subset of the population capable of leveraging these technologies effectively.

Is This a Billion-Dollar Business?

Exploring the Concept of Unicorn Businesses

• The speaker discusses the idea of a "unicorn" business, which is typically defined as a company valued at over a billion dollars. However, they clarify that their venture will not seek external funding, thus it cannot be classified as a unicorn in the traditional sense.

• They express skepticism about the vanity associated with investor valuations and emphasize that their focus is not on raising money or achieving unicorn status.

Personal Goals and Growth Mindset

• The speaker draws an analogy between running and business growth, suggesting that one should aim for more than just immediate goals to foster long-term success.

• They reflect on personal achievements in running and relate them to business aspirations, indicating they desire incremental growth rather than aiming for unattainable milestones like becoming a unicorn.

Current Business Focus

• The speaker shares their goal for this year: to achieve better performance metrics in both running and business compared to previous years. They mention last year's successes but acknowledge challenges due to weather affecting their running routine.

• Unlike typical venture-backed startups focused on future outcomes, they prioritize current operational efficiency and profitability without plans for selling or seeking equity.

Customer Acquisition Strategies

• The conversation shifts towards customer acquisition methods. Initially relying on friends for feedback, the speaker now utilizes Apple search ads and Google ads effectively while struggling with Meta ads.

• They note that despite high install rates from app store searches (800 to 1000 installs daily), there are underlying issues such as competition and ad fatigue impacting overall effectiveness.

Insights into Marketing Challenges

• The speaker highlights their strong app ratings (4.9 stars with 11,000 reviews), which contribute to trustworthiness among potential users. However, they recognize gaps in measuring word-of-mouth referrals.

• Overall marketing efforts are primarily driven by organic search results alongside paid advertising strategies; however, there's an acknowledgment of areas needing improvement in engagement tactics.

Understanding Subscription Models and User Engagement

Revenue Insights from Subscription Models

• The speaker discusses the retention rates of their subscription model, noting that most daily revenue comes from renewals rather than new subscriptions.

• Revenue distribution is highlighted as being approximately one-third from weekly, monthly, and annual subscriptions in terms of user count; however, annual subscriptions generate significantly more revenue.

Annual vs. Monthly Subscriptions

• The speaker expresses skepticism about annual subscriptions, stating they personally prefer monthly options due to uncertainty about future preferences.

• Despite initial reluctance, the speaker acknowledges that users favor annual subscriptions and has shifted focus towards optimizing this aspect of their service.

Trial Period Adjustments

• Acknowledgment of a three-day trial period for annual subscriptions is deemed insufficient; the speaker plans to extend it to seven days for better user experience.

• The rationale behind extending the trial period is based on user activity patterns, with weekdays being more active compared to weekends.

Customer Support and User Feedback

• The speaker reflects on their passion for customer service as a vital source of feedback regarding bugs and user needs, despite not enjoying support tasks.

• They emphasize the importance of direct communication with users through support channels to understand real-time issues and gather insights.

Tools for User Engagement

• Discussion includes using tools like Century for tracking app usage and gathering data on user experiences without direct observation.

• The effectiveness of additional platforms like WavePod is mentioned; these tools help attract traffic by providing summaries of podcasts which engage users effectively.

Wave User Conversion Challenges

Understanding User Engagement

• The speaker discusses the difficulty in converting website visitors into active Wave users, indicating a gap between interest and actual usage.

• Reflecting on past marketing strategies, the speaker mentions successful meta ads that significantly boosted user growth but notes that such tactics are less effective now due to market saturation.

Quality vs. Marketing

• The speaker expresses a belief that quality products tend to succeed on the internet, despite receiving negative reviews from some users about app performance.

• A comparison is made with Cloey, highlighting their strong TikTok presence and marketing skills while criticizing their lack of focus on user experience.

Product Development Insights

Competitive Landscape

• The speaker critiques Cloey for mimicking their app's features and pricing strategy without offering unique value or innovation.

• There’s an acknowledgment of Cloey's ability to attract attention through stunts rather than focusing solely on product quality.

Customer-Centric Approach

• Emphasizing the importance of customer feedback, the speaker advocates for continuous improvement based on user needs and experiences.

• The discussion touches upon feelings of inadequacy regarding recent developments, suggesting a struggle with maintaining relevance amidst evolving technology demands.

Future Considerations and Profitability

Navigating Market Risks

• The speaker reflects on diversifying offerings to mitigate risks associated with potential competition from larger companies like Apple.

• Mentioning advancements in technology (e.g., Apple's recording capabilities), there’s concern over how these changes could impact user preferences.

Financial Overview

• A brief financial update reveals gross earnings around seven figures but acknowledges deductions by Apple and Google leading to lower net profits.

• Despite challenges, there's a sense of accomplishment as the speaker highlights previous successes in building wealth within this competitive space.