AI itself is not a durable moat, leading to a risk of commoditization for companies relying solely on model superiority.
The low barrier to entry for AI software will create a hyper-competitive landscape, making it difficult for startups to reach the scale needed for a moat.
Incumbent software companies with per-seat pricing models are at risk of revenue decline as AI automates the tasks of their users.
Startups building on major AI platforms face significant platform risk, including the possibility of being competed with or heavily 'taxed' by the platform owner.
Opportunities Identified
The total addressable market for software is expanding from IT spend to the much larger category of labor spend.
AI enables the creation of highly valuable 'features' that can replace expensive labor, leading to rapid revenue growth for new companies.
Incumbents in software and BPO can leverage AI to become vastly more profitable if they adapt successfully.
Previously uninteresting or niche markets are now viable and attractive for software companies due to AI's advanced capabilities.