Former Plaid CTO Jean Denis Greze tells a16z why he shut down a profitable AI tax startup and pivoted to the AI assistant Town
Jean-Denis Greze was CTO of Plaid. His next startup, an AI tax product for small businesses, brought in nearly $1M in revenue its first year, and he projected $2.5 to $3M the next. 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's Alex Rampell to say it "changed my life." In this conversation, Alex and Jean-Denis cover: - How to know when to kill a business that's working on paper - 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 0:57 How Ben Horowitz discovered Town 2:20 Why Town started with AI tax prep 3:55 Why tax couldn't be venture scale 6:30 Shutting down a working business 10:24 The customer ask that became Town 13:35 Why Town built for users before IT 16:18 AI's iPhone moment at work 21:28 Jevons paradox for executive assistants 23:13 Town as a "token allocation machine" 28:00 How Town tailors itself to each job 34:03 Competing with your token suppliers 42:24 Staying off the AI labs' radar 44:42 Why AI isn't spreading evenly yet 52:32 How agents break the ad model 55:35 The friction humans actually enjoy 57:05 Why supply aggregators lose to agents YouTube: t.co/UzKrI8Mvbe @jgreze @TownAI @arampell
Context
His argument that incumbents can use the same AI faster than startups can win customers is a warning for founders building AI features on top of existing markets.
This is a promotional podcast post from a16z, which led Town's $55 million Series A in June, according to Fortune. The revenue figures for his earlier startup are as told by Greze and a16z.
Deep dive
On October 19, a16z posted that Jean Denis Greze, the former CTO of Plaid, built an AI tax product for small businesses that brought in nearly $1 million in revenue its first year, with $2.5 to $3 million projected for the next, and shut it down anyway.
The post said the reason was that in the age of AI it was never going to be venture scale, because 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.
The pivot became Town, an AI assistant that works from your email and calendar, which the post said found product market fit fast enough that Ben Horowitz messaged a16z partner Alex Rampell to say it changed his life. The episode with Rampell covers when to kill a business that works on paper, 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, and what agents mean for Amazon, advertising and shopping.
Because a16z is an investor in Town, the conversation is not independent.
What to expect next
Watch whether Town can keep growing as OpenAI, Anthropic and Google build their own assistants that work from email and calendar, since Greze himself says it competes with its token suppliers. His view that incumbents win when AI features are easy to copy will be tested as more vertical AI startups raise money. Also watch whether Town announces new funding or usage numbers.