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Knuckle Up with Nakul · 3 min · Aug 25, 2026
Engineering shifts from writing code to building the software factory
Guillermo Rauch says engineers should improve the system that produces software, not just individual outputs. Vercel's data shows delivery acceleration correlating with revenue acceleration.
Guillermo Rauch is founder and CEO of Vercel.
Founded Vercel, which created Next.js and the v0 AI tool for building websites.

Nakul Mandan, Host · Host, Knuckle Up with Nakul
General partner at Audacious Ventures; his show goes deep with founder CEOs on how they build.
About this segment
Guillermo Rauch says engineers should improve the system that produces software, not just individual outputs. Vercel's data shows delivery acceleration correlating with revenue acceleration.
From “Inside Vercel's AI-era playbook: "Recursive Founder Mode" | Guillermo Rauch (CEO)”, Aug 25, 2026. Watch the full episode
Thanks. We'll look at and fix what's off.
“we're leaning into this shift of I work on the output to I work on the machine that produces the output.”
Guillermo Rauchat 29:58 · Knuckle Up with Nakul29:58Takeaways
- The next engineering skill is learning how to direct models well.
- Work on the system that produces software, not just its output.
- Vercel sees faster delivery correlating with faster revenue growth.
In this episode
Full episode- 2:02Vercel scales founder ownership through product leaders5:26
- 10:08Vercel tests candidates by asking them to build4:25
- 35:40Vercel gives employees one agent as a front door6:39
29:06Engineering shifts from writing code to building the software factory3:19
- 51:32Vercel replaces analytics ticket queues with an internal agent3:15Up next
- 48:29Security review costs can vary sevenfold across models3:14
- 23:34Vercel encodes design taste into reusable components and agents3:21
- 59:17Agent-facing products need APIs and CLIs, not just polished UIs3:38
Transcript
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
- 29:12
My best engineers have been the ones that adopted this tool as the fastest. They've developed an understanding of them that's deeper than the average. So there's a parallel here. If I ask a model, build me a site, I get purple. and most people that are in the know can tell right away like this it's like the m dash and the judge tpt speak right the same happens with engineering like if you just say like fix it make no mistakes you can only go so far and so there's a meta game and a meta skill of how good are you deploying this the ultimate meta skill that i think is the next evolution of software companies is that you're building the factory that produces software and so i think what's, I can objectively look at our data and I've seen the acceleration of delivery correlated with the acceleration of revenue. And why is that happening? It's because we're leaning into this
- 30:06
shift of I work on the output to I work on the machine that produces the output. It's a recursive founder word taken to agents. It's the technologification of it. 100 percent in fact funny enough this is hilarious one of my uh poster childs of uh founder mode is literally turning the ai sdk repository for the world to see into a software factory meaning you're going to be able to report an issue and 99 of the work is going to be solved automatically or so a lot of people said with ai sdk how are you going to keep up with the model changes it's Well, first of all, if AI is super intelligent, I can have AI reflect on what is the new capability and then add it automatically to AI SDK.
- 30:56
That was kind of a dream a year ago. Now it's reality. Any customer report or any advancement in the underlying models can automatically get typified and then released. But are you finding then accordingly, you know, I actually have discussed this with many people at AI companies that are you finding that product people are becoming more capable now because it's about what to build or engineers who can be.
- 31:22
Yeah. Where is this going? Yeah. Lee Robinson wrote a great post. I think he called it like the rise of the product engineer. And I think that's the spot on. You know, I see it a lot in Silicon Valley. Perhaps it's not yet as widespread, but it's a duality of knowing, you know, product management skills and thinking about your P&L and thinking about your customers and thinking about their case studies and thinking about expansion and thinking about retention and also thinking about the engineering of it.
- 31:52
And, you know, when I say stuff like this, it does sound a bit like science fiction or alchemy. Like, oh, wait, so you have an autonomous software factory produced by someone that is this unicorn product designer engineer, but we're kind of getting there, right? And I think, again, that goes back to like why the future is going to be very founder-centric, flatter organizations, fast information flows, higher ownership, and transparency.