Are services the new software? This venture capitalist thinks the future is in selling AI-delivered outcomes, not AI-powered products

Hello and welcome to Eye on AI. In this edition…Are services the new software?…Anthropic’s Mythos has financial regulators and bankers freaking out…more executive turnover at OpenAI…these measures may mean China may soon surpass the U.S. in developing the best AI models…are AI inference costs getting too steep? Julien Bek never expected to go viral. Bek, who is an early stage investor in the London office of the venerable Silicon Valley venture capital firm Sequoia, says he merely wanted to highlight one of the firm’s recent investing theses and use the piece to highlight some of the startups Sequoia had recently backed. So he penned a blog with the title “Services: The New Software” and posted it to his social feeds. Within days, it had surpassed 1 million views on X . It is now closing in on 3 million. It has done more than 450k impressions on LinkedIn . “I certainly didn’t expect to have this kind of reach,” Bek told me on a call earlier this week. The provocative headline no doubt helped. But Bek’s thesis also struck a nerve. In short, he thinks that the world’s next $1 trillion company won’t sell hardware or software as a product. Instead, it will sell an outcome, and use AI-powered software to help deliver it, alongside human expertise. Instead of selling customer service software, for instance, it will simply deliver customer service for a client, the way business outsource processing companies do today. But these new entrants will be AI-native from the start. Instead of selling legal tech, these firms will sell legal services, etc. Good examples of companies already pursuing this model that I’ve written about before include both Robin AI and Legora in the legal space and Dwelly in the real estate market. There’s also Dystyl AI in the consulting space, Rogo in financial services, and WithCoverage in the insurance brokerage market. Bek thinks there are many, many more to come. And he is sure the market potential is huge, noting that for every dollar enterpris…