These visions captivate our imagination and paint a picture of a future that is radically different from the present. However, amidst all the buzz and excitement, it's important not to overlook the practical applications of technology in our current reality.

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Sep 11, 20233 min read

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These visions captivate our imagination and paint a picture of a future that is radically different from the present. However, amidst all the buzz and excitement, it's important not to overlook the practical applications of technology in our current reality.

One area where technology has already made significant strides is in the field of artificial intelligence (AI). AI startups have been focused on selling software that improves end-user productivity. Traditionally, this software has been priced on a per seat basis, with the cost benchmarked against the productivity gains it provides.

However, there is a new approach that AI startups can adopt - selling work instead of software. This opens up new opportunities and verticals that were previously out of bounds for software companies. By selling the work itself, startups can tap into markets that wouldn't have supported a software-based business model.

Take the example of EvenUp, a startup that leverages AI to streamline the process of putting together demand packages in the legal industry. Instead of selling software to improve the productivity of lawyers and paralegals, EvenUp sells the work product itself - the demand package. This shift in mindset allowed EvenUp to target a different customer base and offer a solution that is priced relative to the cost of a human performing the work.

Selling work also changes the dynamics of the sales cycle. Instead of competing against other software companies, the competition becomes outsourced groups internationally. An AI-driven product with consistent quality and service level agreements (SLAs) has a significant advantage over an outsourced offering. Not only is it more cost-effective, but it also delivers a superior product.

Of course, there is a concern that AI will replace humans in the long run. However, in the case of EvenUp, the introduction of AI actually benefits both the customer and the people within the firm. By automating the process of putting together demand packages, lawyers and paralegals can focus their time and expertise on more valuable tasks, such as client services or acquiring new customers. This leads to better outcomes for everyone involved.

But selling work is not enough. To truly succeed and differentiate themselves, AI startups must also find ways to escape competition. This could involve focusing on niche markets or developing unique features that set their products apart from the competition. It's important to remember that in a rapidly evolving technological landscape, differentiation is key.

In conclusion, the traditional model of selling software for productivity gains is being challenged by the concept of selling work itself. AI startups have the opportunity to tap into new verticals and markets by shifting their focus from software to the work product. By doing so, they can offer solutions that are priced relative to the cost of human labor and compete on a different playing field. However, to truly succeed, AI startups must also find ways to differentiate themselves and escape competition. This could involve focusing on niche markets or developing unique features. The future of AI startups lies not only in selling software but in selling the work itself.

Actionable advice:

1. Consider the potential of selling the work instead of just the software. Explore new verticals and markets that wouldn't have supported a software-based business model.

2. Shift the pricing strategy to be relative to the cost of human labor. This opens up new opportunities and makes the solution more cost-effective for customers.

3. Find ways to differentiate your AI product and escape competition. Focus on niche markets or develop unique features that set your product apart.

In the fast-paced world of technology, it's important to stay ahead of the curve and explore new possibilities. The transformative visions for the future are exciting, but it's equally important to find practical applications for technology in the present. AI startups have the opportunity to sell work instead of software, opening up new markets and delivering superior solutions. By embracing this shift and finding ways to differentiate themselves, AI startups can carve out a successful path in the ever-evolving tech landscape.

Resource:

  1. "AI startups: Sell work, not software", https://www.sarahtavel.com/p/ai-startups-sell-work-not-software (Glasp)
  2. "Presentations — Benedict Evans", https://www.ben-evans.com/presentations (Glasp)

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