It’s easier when you already have customers
There’s tremendous excitement about the possibilities for AI in business. One of the most common questions I hear is “what’s the next great business that will get created because of AI?”
The direct answer to that question is “I don’t know.” It’s early days and we’ll see.
But in the near term, another answer is that it dramatically improves certain businesses that already have customers. Take Microsoft as an example. On Tuesday they announced several new features for Microsoft Office, inspired by AI and at a higher price per month.
It’s a lot easier to roll out new features to an existing customer base than it is to start a new business from scratch. It’s hard to find new customers. It’s much easier to make your existing product better and sell it to your existing customers. We think the larger tech companies continue to be underrated on this basis.
So while it’s exciting to think about the new companies that will be formed from a boom in AI development, the incumbents already have a significant advantage in monetizing AI.
That may not be exciting, but it’s very likely to be profitable.