The next trillion-dollar company will look like a services firm

Transcript

The next trillion dollar company will be a software company mass grading as a services firm. At first, that sounds backwards. For the last 20 years, pretty much every started wanting to be a software because software is scalable and services aren't. But why would the next one trillion dollar company pretend to be a service business? The answer becomes obvious once you realize something about AI. You see, most AI startups today are building tools. An AI sales tool, an AI writing tool, AI marketing tool, AI accounting tool. But companies don't actually want tools. They just want the job done. They don't want software that helps screen job candidates. They just want the job candidates already shortlisted and preferably the best ones too. Just like they don't want a legal drafting tool. They just want to contract draft. And that's the big shift that AI is enabling. Instead of selling co-pilots, that will help professionals work faster. The big AI companies of the future will start selling on a pilot. Meaning, the company buys the outcome, not the tool. Imagine an AI startup doing accounting. The traditional SaaS model would be, here's our AI accounting platform. You pay us $50 per user per month. That's it. But the new model looks completely different. They will go to a company and say, we'll close your books for you every month. To the customer, it now looks like an outsourced accounting firm. But behind the scenes, it's a whole new thing. It's mostly AI doing the work. And that creates a powerful business model. Because companies spend far more money on services than they do on software. In fact, for every $1 spend on software, around $6 spend on services. Which means the real opportunity in AI isn't selling tools. It's replacing entire service categories, accounting, and trends brokerage, legal paperwork, recruiting, marketing, IT support, strategy consulting, industries worth hundreds of billions. So the next wave of AI starters might not look like tech companies at all. They'll look like consulting firms or outsourcing providers or agencies. But if you look into it, they'll actually just be software companies running an AI. And that's why the next $1 trillion company will look a lot less like SaaS and a lot more like a professional services firm.

Transcribed automatically from the video, so small errors are possible.