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Why a $1M Startup Wasn’t Worth Building in the Age of AI

Jean-Denis Greze was CTO of Plaid. His next startup, an AI tax product for small businesses, made nearly $1M in its first year and was on track for $2.5M to $3M. He shut it down anyway. The reason: in the age of AI, it was never going to be venture scale. Incumbents could use the same technology to automate tax prep for their existing customers faster than a startup could win market share. Tax is also sold once a year, so he had about a one-month window to pivot before the door closed. The pivot became Town, an AI assistant that works from your email and calendar. It found product-market fit fast enough that Ben Horowitz messaged a16z partner Alex Rampell to say it “changed my life,” without knowing whose company it was. In this episode, Alex and Jean-Denis cover: - Why a profitable business can still be the wrong business to build - How to know when to kill something that’s working - Why Town competes with OpenAI and Anthropic, the companies it buys its tokens from - Why the “forward deployed engineer” model gets worse as AI gets better - How a $1/month AI routine can save a restaurant thousands - What agents mean for Amazon, advertising and the future of shopping Timestamps: 00:00 Intro 00:56 Leaving Plaid for the SMB tax bet 06:57 Walking away from a working business 10:28 How Town was born 16:16 The iPhone moment for AI at work 23:22 Town as a token-allocation machine 29:10 Horizontal vs vertical 34:03 Why Town over OpenAI and Anthropic 44:32 Why AI is underhyped outside the Valley 52:33 Neutral agents and the broken ad covenant Resources: Follow Alex Rampell on X: https://x.com/arampell Follow Jean-Denis Greze: https://x.com/jgreze Learn more about Town: https://town.com Stay Updated: If you enjoyed this episode, be sure to like, subscribe, and share with your friends! Find a16z on X: https://twitter.com/a16z Find a16z on LinkedIn: https://www.linkedin.com/company/a16z Listen to the a16z Show on Spotify: https://open.spotify.com/show/5bC65RDvs3oxnLyqqvkUYX Listen to the a16z Show on Apple Podcasts: https://podcasts.apple.com/us/podcast/a16z-podcast/id842818711 Follow our host: https://x.com/eriktorenberg Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. a16z and its affiliates may maintain investments in the companies discussed. For more details please see http://a16z.com/disclosures.

Alex RampellhostJean-Denis Grezeguest
Oct 19, 20261h 1mWatch on YouTube ↗

At a glance

WHAT IT’S REALLY ABOUT

Why Town ditched SMB tax to build neutral AI work agents

  1. Jean-Denis Greze explains why he abandoned a technically successful SMB tax automation product: annual purchase cycles, weak word-of-mouth, and incumbent distribution made it unlikely to scale to venture outcomes.
  2. Town was born from customer pain and a market gap: a high-quality agent anchored in email and calendar that improves meeting prep, follow-ups, and everyday knowledge-work workflows.
  3. The company chose a product-led, consumer-grade experience first, arguing it’s easier to add enterprise controls (security, audit logs, cost governance) later than to retrofit usability into an enterprise-first product.
  4. Town’s strategy is to be horizontal yet deeply personalized, using observed power-user patterns to recommend role- and industry-specific automations while letting vertical opportunities emerge from usage.
  5. Greze argues AI adoption is under-penetrated outside Silicon Valley because most tools require tinkering and imagination; the winning platforms will “show” value with integrated workflows rather than rely on a text box interface.

IDEAS WORTH REMEMBERING

5 ideas

In AI-era markets, a working $1M business can still be the wrong company to build.

Greze built an AI-driven SMB tax product that worked technically and was approaching ~$1M ARR, but tax is purchased annually, has weak word-of-mouth, and gives incumbents time to copy while leveraging their distribution—making “venture scale” unlikely.

Email+calendar is a massive wedge because it’s cross-industry, global, and immediately useful.

Town emerged from a simple observation: email and calendar are universal workflow hubs, yet no one had built a truly great agent around meeting prep, follow-ups, and routine knowledge-work tasks; improving model agentic capability made PMF arrive quickly.

Start with the user experience; enterprise-readiness should follow, not lead.

They intentionally prioritized a consumer-grade UX and self-serve adoption (SMB/mid-market) rather than starting from enterprise compliance demands, believing it’s easier to add enterprise features later than to “consumerize” an IT-first product.

As tokens get cheaper, the surface area of economically-rational automation explodes.

Greze frames Town as a “token-allocation machine” that continuously suggests high-ROI automations as inference costs fall—enabling tasks no human EA would do (e.g., prep notes for every meeting; continuous vendor price audits).

Horizontal distribution plus role-aware recommendations can beat choosing one vertical too early.

Instead of verticalizing upfront, Town gathers patterns from power users by role/industry, builds reusable routine templates, and uses onboarding signals to recommend the right automations—moving toward highly personalized “80/20 custom software.”

WORDS WORTH SAVING

5 quotes

But post-AI, it just, it just, this was not gonna be a venture scale company.

— Jean-Denis Greze

There’s a ticking clock on the wall, which is how quickly can you get real word of mouth network effects and market penetration before the incumbents who have other advantages.

— Jean-Denis Greze

Humans are slow routers.

— Alex Rampell

I think of our product as a token-allocation machine.

— Jean-Denis Greze

You can’t teach someone. You have to just show the value prop to someone and do it for them.

— Jean-Denis Greze

Pivot decision-making in cyclical marketsEmail and calendar as the agent wedgePLG vs enterprise-first tradeoffsToken economics and Jevons paradoxHorizontal platform with role-based personalizationNeutral model routing vs lab lock-inAI adoption gap and the “tinkerer” problem

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