AI Is a Services Revolution

🌈 Abstract

The article discusses how the economy has shifted from manufacturing to services, and how AI is poised to disrupt the services industry, particularly knowledge-based desk jobs. It explores the potential impact of AI on various services sectors, the current state of AI adoption in enterprises, and strategies for building successful AI startups in services industries.

🙋 Q&A

[01] Weekly writing about technology and people

1. What are the key topics covered in the article?

• The article discusses how the economy has shifted from agriculture to manufacturing to services, and how AI is poised to disrupt the services industry, particularly knowledge-based desk jobs.
• It explores the potential impact of AI on various services sectors, the current state of AI adoption in enterprises, and strategies for building successful AI startups in services industries.

2. What are the author's key points about the impact of AI on services industries?

• AI is expected to have a significant impact on administrative office work, legal work, and architecture & engineering, with up to 40% of jobs in these industries potentially being automated.
• However, the author expects this disruption to take time, as organizations are slow to adopt new technology and AI is more likely to act as a companion rather than a replacement in the short-term.
• The author suggests that the biggest winners of the AI boom may be consultants, as enterprises are heavily investing in figuring out their AI strategies.

3. What are the key strategies the author suggests for building successful AI startups in services industries?

• Choose a large, text-heavy services industry (e.g., legal, healthcare, education, banking, insurance).
• Use LLMs to automate workflows and augment workers.
• Leverage industry-specific data to fine-tune the model over time, improving the product in tandem.
• Adopt a vertical SaaS / AI playbook, starting with a specific pain point and then expanding to adjacent products over time.

[02] The AI Revolution and Services Industries

1. How does the author describe the shift in the U.S. economy over the past 50 years?

• The U.S. economy has shifted from an agriculture economy, to a manufacturing economy, to a services economy, with industries like healthcare, education, financial services, business services, and professional services dominating 21st-century work.

2. What are the key industries that the author identifies as being most exposed to AI automation?

• According to Goldman Sachs research, the industries most exposed to AI automation are administrative office work, legal work, and architecture & engineering.

3. How does the author describe the current state of AI adoption in enterprises?

• Most enterprises are heavy on pilots/experiments with AI, but light on actual deployments. The author cites a Bain survey that shows most enterprises don't expect to deploy anything before 2026.
• Enterprises are also learning that LLM capabilities vary across use cases, with sales and software development being more impressive than legal, HR, and operations use cases.

4. What are the key elements of the author's suggested formula for a compelling AI startup in services industries?

• Choose a large, text-heavy services industry.
• Use LLMs to automate workflows and augment workers.
• Leverage industry-specific data to fine-tune the model over time, improving the product in tandem.
• Adopt a vertical SaaS / AI playbook, starting with a specific pain point and then expanding to adjacent products over time.