Welcome back!

This week we break down the pricing data behind 50% of users abandoning tools, walk through ColorBliss's path from burnout to 40K monthly users, explore Gamma's strategy to $50M ARR with 30 people, and show how Midjourney turned scarcity into a million users.

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Founders Intel

Wrong pricing kills more conversions than bad products

Data Intel

• 50% of buyers abandon tools during evaluation because pricing doesn’t match expectations.

• Companies measuring willingness to pay achieve 23% higher revenue per user without hurting conversions.

• 78% of successful companies now use value-based pricing, up from 62% in 2023.

Why It Matters

Pricing is more than a number on your site. It signals positioning, filters buyers, and sets expectations before they sign up. Get it wrong and qualified buyers leave before they try your product. Nail it and you capture more value without changing a single feature. Most guess at pricing or copy competitors. But winners test, measure willingness to pay, and adjust based on real customer behavior.

Quick Tip

Test three price points with real users (not surveys), measure conversion and feedback at each tier, then pick the highest price where conversions stay strong. Anchor high, justify with outcomes, and let customers self-select into tiers based on the value they need.

Behind the Tool

How ColorBliss Prints Ideas on Demand

The Spark

In 2023, Ben Robertson left his tech job feeling burned out and craving a creative reset. His five-year-old kept asking for coloring pages that didn’t exist, like “Spider-Man riding a dinosaur hunting a leopard in the forest,” and it sparked an idea. Using image models available at the time, Ben started building a tool that could turn any prompt into a printable coloring page.

The Build

ColorBliss was built entirely by Ben himself using his front-end experience. It quickly became a hit with parents, teachers, and creators looking for custom designs. He gave himself a year of runway, setting “gold, silver, and bronze” outcomes to remove the fear of failure. “I wanted to see if I could run it lean on my own,” Ben says. The goal wasn’t just to make money; it was to build something useful.

The Breakthrough

After launching in October 2023, growth snowballed fast. A strong SEO foundation and an early TAAFT listing gave ColorBliss steady organic visibility. As the user base expanded, Ben’s authenticity became a defining edge: his name and face on the site, personal replies to every user, and real feedback driving product updates. That connection helped him scale to more than 40,000 monthly users and turned a simple idea into a sustainable business.

The Next Chapter

Ben is expanding ColorBliss with deeper customization tools, photo-to-page precision, and creator workflows for full coloring books. SEO remains his core growth channel, but selective paid experiments are on his roadmap.

Key Lesson

Authenticity creates loyalty, but visibility creates opportunity. Leverage discovery channels like TAAFT and SEO to get traffic first, then earn trust by showing up as a real person behind your product.

Tool of the Week

Gamma’s Growth Guide

What’s Gamma?

It’s an AI presentation maker that turns text prompts into slides, documents, or websites. Gamma hit 50M users and $50M ARR with a 30-person team. And it’s been profitable for 15+ months straight.

What Worked

• Solved the blank page problem: Gamma generates full rough drafts from vague ideas. Users edit instead of starting from scratch.

• Obsessive A/B testing: Ran hundreds of experiments on AI models. Found Claude excels at creative taste, Gemini wins on cost efficiency. Built testing into the company’s DNA.

• Credit system over freemium: Closest competitor hit 25M users with a free product, reaching $3.5M ARR. Gamma monetized early with credits, and reached $20M ARR at 40M users.

• Stayed lean and profitable: 30 people, $23M total funding, and $50M ARR. Gamma has been profitable since early 2024 and has more cash in the bank than total raised.

• Expanded beyond presentations: Started with slides, added documents, websites, and social posts. Same building blocks, different formats. Gamma became a “visual storytelling platform” instead of a PowerPoint competitor.

Founder Quote

“I want to convey to the market that small teams can do amazing things.” — Grant Lee, Gamma CEO

Key Lesson

Monetize early, stay profitable, and expand scope. Viral growth means nothing without revenue. Small teams with margin discipline beat big teams that burn cash.

Fresh Out of the Lab

Krea Realtime 14B

What Is It?

A 14-billion parameter open-source video generation model distilled for real-time autoregressive generation. It’s 10× larger than any existing open-source equivalent and produces long-form video at 11 fps on a single NVIDIA B200 GPU with text-to-video and video-to-video capabilities.

What’s New

Real-time interactivity during generation. Users can modify prompts mid-stream, restyle outputs on-the-fly, and see first frames in under a second. Novel inference techniques including KV Cache Recomputation and Attention Bias prevent error accumulation in long-form sequences.

Why It Matters

Founders building creative tools now own the entire video generation stack without API dependencies. This unlocks video editing tools, dynamic content workflows, streaming creative interfaces, and production-grade video automation that stays on-premise. Plus, real-time responsiveness transforms video from a batch process into an interactive medium.

Founder’s Edge

This Week’s Builder Toolkit

• Dev Tool: Railway gives you one-click deploys straight from GitHub with auto-scaling and zero DevOps headaches.

• Free Dataset: Benchmark your valuation, burn rate, and fundraising timeline against real startup data with AngelList's State of U.S. Early-Stage Venture report.

• No-Code App: Build internal admin panels and CRUD apps in minutes with Retool instead of wasting weeks on custom dashboards.

• Productivity Hack: Set up Text Blaze text expander shortcuts to type entire email templates, code snippets, or responses faster.

• Learning Resource: YC Startup School walks you through every stage from idea to scale with videos, worksheets, and free office hours access.

Note: If you’ve found a tool that’s sped up your build process, hit reply and share it. We’ll feature the best submissions in a future issue.

AI Founder’s Journal

How Midjourney Turned FOMO Into a Million Users

In early 2022, Midjourney was struggling. Users would type “dog” on their website, get a dog image, then leave.

No engagement. No word-of-mouth.

Instead of building better marketing, the company moved the entire product to Discord and made one change: every creation became public by default.

When someone generated “dog,” others saw it and tried “dog in a park.” Then, “dog in a park chasing a ball.” One prompt sparked chains of creativity.

Midjourney had just figured out how to turn solo experiments into social moments.

But the big breakthrough came next.

They closed the beta and switched to an invite-only system. Every paid subscriber got exactly 5 friend invites.

The results: Three months after private testing ended, the server hit 1 million users (Discord's prior server cap). At peak, thousands of new users were joining every day. All organic.

Here's what made it work:

Public creation sparked inspiration. Scarcity created urgency. The 5-invite limit turned every subscriber into a gatekeeper who carefully chose who got access. Friends invited friends who matched the creative profile. Exclusivity made the community special, and FOMO did the rest.

Key Takeaway

Make creation social, not solo. Add strategic scarcity to drive demand. Turn your users into selective gatekeepers, then let FOMO handle distribution.

— David Holz, Midjourney founder

Weekly Challenge

One Experiment. One Week. One Win.

The Goal

Ship ONE new feature from idea to production in 7 days or less.

How It Works

1. Pick ONE high-request feature from your backlog or user feedback.

2. Build and deploy it using your fastest workflow (AI coding tools, no-code integrations, or an MVP approach).

3. Share your feature, build time, and initial user response in the TAAFT community by end of week.

Why It Works

Shipping fast beats perfecting slow. The founders who move fastest learn fastest and win market position.

Spotlight

We'll showcase the fastest feature launch in an upcoming newsletter.

AI Market Watch

Deals, Discoveries, and Demand

Megadeals

• OpenEvidence – $200M round (AI for medicine)

• LangChain – $125M round (AI agent engineering)

• Sesame – $250M Series B (voice AI and smart glasses)

• Crusoe Energy Systems – $1.4B round (AI data centers)

New Research

• FLORA (fuzzy-logic entity alignment, SOTA)

• Open-o3 Video (grounded video reasoning)

• Merge and Conquer (evolutionary 2048 agent)

• UI-Ins (GUI grounding with instruction-as-reasoning)

• Line Breaks and Language Models (format sensitivity)

• A Coherence-Based Measure of AGI (AGI evaluation framing)

Search Trends

Top “best AI for…” searches:

1. Business

2. Research

3. Code

4. iPhone

5. School

Thanks for reading!

Got a project in motion? Hit reply and share what you’re working on with us.

We’ll be back next week with more founder stories, fresh tools, and data worth your time.

See you soon,
— AI Empires