The Death of Deloitte: AI-Enabled Services Are Opening a Whole New Market
Companies combining AI & humans are not only loosening the grip of services behemoths, they're overtaking them with solutions never before seen 🤖 💪
A decade ago, software categories typically had 2 or 3 contenders gunning to win. As software’s gotten easier to build (and flooded by ample venture dollars), competition has skyrocketed in almost every market. The deluge of me-too products has made it hard for buyers and founders to tell the difference. Sure, there's major opportunity remaining in software. But it might come in a different package.
Services businesses are a promising next frontier. With massive market sizes — the Big 4 alone brought in $200B in revenue last year — and a relative dearth of dynamic tech talent, the ground is fertile. Common wisdom has held that “services businesses aren’t venture backable.” Compared to software businesses, services performed by humans tend to be low margin, hard to scale exponentially, lumpy in revenue, etc. etc. There are many cautionary tales. But change is afoot… hastened by AI, cracking open new, huge opportunities for founders brave enough to go against the tired wisdom.
Companies that leverage both AI and humans to deliver holistic solutions to clients are poised to outgun and outpace the services giants that’ve dominated for the last 50 years. Legacy providers are ripe for disruption: their business models rely on human labor and hourly billing which can be turned on its head by AI-enabled vendors. Further, their “product” (humans) is very difficult to integrate AI into. While software incumbents are having a relatively easy time adapting to the GenAI wave, services incumbents will struggle. Founders, this is a boomtown moment to seize.
One of the things we’re most excited to share here: A framework for spotting the best opportunities on this new frontier. To evaluate this, we realized there were two major forces at play - 1) AI being used to either enable humans to do things or do things for humans from end to end, and 2) whether the service in question is highly repeatable or not. We used these two spectrums to identify some low hanging fruit for founders:
