John Cutler · 6 min read · Product Strategy
TBM 430: Incubate, Compound, Refinance, Liquidate
Read the original on cutlefish.substack.com →
The article reframes software as a portfolio of assets with value and carrying costs, analyzed through moves like incubate, compound, refinance, and liquidate. It argues that AI shifts the cost, speed, and feasibility of responding to complexity rather than removing it, and that assets respond differently to AI. The result is a thought-provoking framework to visualize value versus carrying costs and guide decisions on growing, restructuring, or exiting assets.
Key Takeaways
- Treat software assets as a portfolio with value and carrying costs, guiding moves: incubate, compound, refinance, or liquidate.
- AI changes how quickly and cheaply you can respond to complexity, but does not eliminate complexity itself—different assets react differently to AI.
- Visualize value versus carrying costs on a simple 2x2 to assess posture and trajectory over time.
- Debt is a strategic choice: incubate may incur obligations before value is proven; refinance restructures economics; liquidation ends non-value assets.
- Beware the build trap: continuing to build cheap bets without increasing value can become expensive obligations, so deliberate liquidation can be a viable option.
Excerpt
Last week, things got super heavy with a post about identity, thriving, and figuring out how to navigate the workplace (when you love your work). For this week, to keep my own energy balanced, I needed to stick with something much lighter. Diagrams! Metaphors! But given AI craziness…it is probably worth reviewing. tl;dr: AI does not eliminate complexity, coupling, coordination, uncertainty, or decay. But it can change the cost, speed, and feasibility of responding to them. or: AI does not work in the same way across different portfolio puzzles. This is absolutely not a new idea. Companies have long thought…