Will AI services/implementation providers or productized application companies capture the greater share of AI's economic value?

Harry Stebbings · Aug 25, 2023

The interviewer has publicly argued (in a tweet) that the biggest companies built in AI will be services companies helping integrate AI into large enterprises, and puts this to the guest as a question.

Enterprises need handholding to actually adopt AI despite the implementation challenges.

Scope: framed as his own prior tweet; horizon of the next few years

13:16 20Product: Enterprises are not Adopting AI Yet, When Will AI Break Into Enterprise, What are the Blockers, What Do Enterprises Need from AI & Why Services Companies Will Win in the Next 10 Years of AI Implementation with Howie Liu, Founder & CEO @ Airtabl

Howie Liu · Aug 25, 2023

Services companies will play a very important role in enterprise AI adoption, acting as the handholders on technical implementation.

Technical implementation details like which vector database or embeddings model to use matter enormously to getting a useful solution, and enterprises need help figuring them out.

Scope: unclear how long they matter and how much of the value they capture versus application companies

13:43 20Product: Enterprises are not Adopting AI Yet, When Will AI Break Into Enterprise, What are the Blockers, What Do Enterprises Need from AI & Why Services Companies Will Win in the Next 10 Years of AI Implementation with Howie Liu, Founder & CEO @ Airtabl

Ethan Mollick · Jul 31, 2024

The steam power analogy is the right one: the value came not from the engine itself but from skilled artisans who worked out how to connect it to specific machines — so today the winning position is being the artisan who converts LLM capability into usable work inside an organization

It was the skilled artisans building the gearing from steam power to the spinning jenny or bottle-shaping tool that let manufacturers capture the money

14:38 20VC: Is More Compute the Answer to Model Performance | Why OpenAI Abandons Products, The Biggest Opportunities They Have Not Taken & Analysing Their Race for AGI | What Companies, AI Labs and Startups Get Wrong About AI with Ethan Mollick

Alex Lebrun · Jun 19, 2023

The biggest AI businesses will not be services businesses helping enterprises implement AI; instead AI will enable a new generation of players in every industry that kill the incumbents, within about five years

Existing consulting firms are already rebranding from big data to AI to LLMs and will simply absorb the implementation-services business; Element AI tried to build an ambitious AI services company and failed, ending in a modest ServiceNow acquisition

47:06 20VC: Why No Models Today Will Be Used in a Year, Why Open Will Always Beat Closed in AI, Why Proprietary Data is Less Important Than Ever And Why EU AI Regulation is a Disaster with Alex Lebrun, Founder & CEO @ Nabla

David Luan · Jun 24, 2024

AI services and implementation providers will not be the biggest winners of this cycle; the real economic winners will be companies that productize proven use cases as a conduit between base intelligence and the customer

There's a giant gulf between a base model and a specific enterprise capability; consultants and service providers fill it first, but once it's clear what's genuinely useful, that work gets productized into startups that capture the value

Scope: it may be true today that services revenue is larger

43:50 20VC: Why Foundation Model Performance is Not Diminishing But Models Are Commoditising, Why Nvidia Will Enter the Model Space and Models Will Enter the Chip Space & The Right Business Model for AI Software with David Luan, Co-Founder @ Adept