TikTok video #7488796647783255327

Incumbents will fall not because they fail to adopt AI and ship AI features and products, but because they fail to adapt their pricing and their business model to a post-AI world. Building out AI tools is actually kind of the easy part. Imagine you're an incumbent technology company, you have thousands of employees, engineering departments, lots of technical people on staff. There's so many resources, there's so many tools. It's not actually that complicated to think through how you might implement AI in your software. I think what's probably a more complicated thing is figuring out holistically how to adapt your pricing and business model to an AI world. So the best example I've heard, let's just take Zendesk, which is a horizontal support SaaS product, right? You can kind of run all of your support stuff through Zendesk and basically any company can use Zendesk. They're not verticalized to a particular industry. So if you look at Zendesk's pricing right now, and this is very common with SaaS products, is they charge by seat. So every person at your company that has access to Zendesk has a seat, and you pay some fee per month for each seat based on what tier you're in, like silver, gold, platinum, or whatever the price goes up. This is a really common pricing scheme. And so if you think through Zendesk's process of adopting AI, there's all of these things they might want to build that actually incentivize their customers to decrease the amount of seats that they have in Zendesk because instead of having people go into Zendesk and do whatever they're doing, doing their jobs and completing tasks, they can have Zendesk's AI suite of features do that work. And so Zendesk and many other SaaS companies have this conundrum. They need to adapt. They need to adopt AI. They need to be shipping AI stuff to keep up with the times. But if they are too good at it, they actually end up shooting themselves in the foot. And customers that used to have 1,000 seats drop down to 100 seats, and their revenue for that customer plummets. And this could happen widespread across their entire customer base if they're not careful. So for them, the challenge is both, how do you adopt AI, bring it into your product in a sane, meaningful, reasonable way? But also, how do you think through your pricing changes and your business model changes? And that's not just updating the marketing page, right? There's a lot of economic factors there. There's a lot of financial models that need to be built. And there's a lot of relationship management that needs to be handled with your customer base. That's a really, really complex problem that is not very obvious what the solution might be. They could charge for outcomes. Every time the AI agent or whatever completes a thing, they charge for it. They could charge for usage, kind of like your token-based pricing scheme. There's a few obvious options there. But a lot of incumbent SaaS companies are dealing with this issue right now if they charge by seat. What do you think they're going to do? And how do you think they're going to cross this bridge?