I am frequently asked about my view on the impact of AI in the business world, particularly the line between software and services.
It isn't a quick answer or the full answer, but the article below is a snapshot of an important segment on how AI specifically affects the finance function.
The short version
For 40 years, software and services were two different businesses. Different margins, different multiples, different buying motions, different valuation frameworks. Every strategic question in enterprise tech is routed through that binary.
That binary has collapsed. The firms being built right now are neither software with a services wrapper nor services with software attached — and most of the market hasn't yet priced the category in.
The full essay walks through
- Why the services TAM, historically locked behind a Big Four pyramid, is suddenly addressable
- Why buyers no longer want SaaS subscriptions or billable hours, and what they want instead
- The distinction between AI-first strategy and AI-native architecture, and why category-defining firms need both
- How AI-native services firms are converging on SaaS economics
- Where the markets are hiding in plain sight (tax, audit, accounting, and FP&A)
- Why the constraint is founder-team formation, not market size
Why it matters
I draw on what I've seen across four vantage points — Pioneer Square Labs, AI Fund, LumaTax and Exactera, where I'm now building the next generation of AI-powered services.
The window for founders and investors to be early is 12 months or less. After that, the categories lock in.
Read the full essay here → — with citations underneath the economics claims and the productivity research.
Happy to engage with pushback — particularly from founders building in the same gap and investors thinking about how to price it.
Drop us a line at hello@1904labs.ai — especially if you're in the middle of building this.