The AI Workforce is Here: The Rise of a New Labor Market

🌈 Abstract

The article discusses the rise of AI workers and the fusion of the software and labor markets, creating new opportunities for founders and startups. It outlines two dominant approaches to building companies in this space: selling into existing job descriptions and automating entire workflows. The article also discusses the potential for AI to disrupt SaaS incumbents, the characteristics of spaces where AI can thrive, and the advantages startups may have over incumbents in this transition.

🙋 Q&A

[01] The Rise of AI Workers and the Fusion of Software and Labor Markets

1. What are the two dominant approaches to building companies in this space?

• The first approach is to sell into an existing job description, such as creating "AI software engineers," "digital SDRs," or AI-powered healthcare agents.
• The second approach is to automate an entire workflow that would typically encompass many different jobs, such as re-imagining existing BPOs or creating new types of "firms" that couldn't exist without AI.

2. How is this trend creating opportunities to disrupt SaaS incumbents?

• Certain SaaS tools may become superfluous as AI service providers build the tools they need internally.
• There may be business model conflicts, as the pay-per-seat model increases revenues provided headcount keeps increasing, while AI workforces will initially decrease headcount.

3. What are the key factors the article looks for in spaces where AI can thrive?

• Areas where AI excels compared to human labor, such as legal document inquiry, account payable positions, social media content moderation, data entry, or basic customer service.
• Areas where AI can add additional value beyond that of a human worker, such as providing 24/7 availability, instant personalization, and better outcomes.

4. How do startups have advantages over incumbents in this transition?

• Specialized AI workers will likely outperform AI incumbents at first, as they are performing very specific knowledge work where perfection matters.
• Incumbent service providers may initially resist adopting AI if it reduces their billable hours model, allowing startups to steal market share.
• The willingness to work with startups is higher than in the past, as every company is considering adopting AI.

[02] The Importance of "Soul" in AI-Powered Services

1. What is the importance of "soul" in the next wave of AI automation?

• For software to truly replace services, it needs to have relatability, room for the disorder inherent in human use, mistakes, and patient understanding.
• Removal of friction is not sufficient; the software needs to look and feel like interacting with a person, with a "soul" expressed through a magical and intuitive user interface or a thoughtful personalized "personality."
• As the tasks to be automated become more complex, this "soul" becomes more important for AI to be truly useful in sectors like education, therapy, or healthcare.

2. How may software with a "soul" endure beyond software that seeks to automate repetitive tasks?

• In the long term, software with a soul may endure far beyond software that seeks to automate repetitive tasks, as it represents the final step of the true fusion of software and labor.