Just because a company is larger doesn’t always mean it’s better positioned to take advantage of AI.
The companies that make the biggest leaps with AI, ultimately gaining the most market share, probably aren’t the household names. They’re the companies that can move quickly, unencumbered by legacy infrastructure and technical debt, turning ideas into execution faster.
As FTV Managing Partner Brad Bernstein explains in this video, the biggest gains rarely come from the top of the market. They come from companies agile enough to move when the window opens.
Full Video Transcript
We don’t believe the biggest winners from AI are going to be the large enterprises. We have a thesis that the winners are going to be middle market agile companies that are able to use AI as a wedge to disrupt markets and take market share from large companies that have massive technical debt and are not agile enough to deploy AI in an aggressive way.
So many people in our ecosystem are still struggling to understand the implications of AI. They see it as a threat to software companies and they miss how much goes into a really successful software company. The data, the complex workflows, the customer support, the contract, the trust — all the critical elements that lead to a valuable partner for clients of a software company.
As we like to say at FTV, just because you can cook a couple of delicious dishes doesn’t mean you’re ready to open a restaurant. And really that’s the challenge with AI. It helps you lower the cost of co-development, which is great, but it doesn’t necessarily mean you have all the other critical ingredients to run that successful restaurant.
And so we believe that there are still many strong software companies with enduring franchises and strong moats that are going to actually accelerate their success by integrating AI into their value proposition. Where there are other thin value-add software companies that have no proprietary data, no clear moats, who are going to be challenged by AI.
