AI Charts of the Week
A few charts that caught my eye this week in lieu of the usual longer form post.
They touch on different corners of the market — enterprise AI adoption, software's share of productivity gains, and vertical software sales performance.
1. The most common AI use cases and barriers to adoption. Today, AI is mostly being used for data analysis and automating the functions you’d expect. LLMs are great with language and code and as a result are being adopted by customer service, marketing, and engineering.
For customer service, it feels like AI is replacing labor while in marketing and engineering it’s augmenting humans and keeping headcounts flat.
2. Software captured a lot of private sector growth gains from the eras of personal computing to the cloud rollout. 25% of all gains were captured by software companies during previous innovation cycles.
Some estimates report that AI could unlock up to $7T in productivity growth over the coming decades - that would mean another ~$1.75T grabbed by software, though which business models capture it remains to be seen.
3. Vertical software isn’t slowing down. If software captures a similar share of AI-driven productivity gains, the question becomes which categories of software are best positioned — and vertical software has a strong early case.
I wrote last week that vertical software will have bigger moats in the age of AI due to data lock-in and the understanding of proprietary workflows. So far, that’s holding true.
Quota attainment in vertical software outperformed peers last year, especially in the back half of the year once Liberation Day volatility settled. It’s way too early to determine whether this is a trend, but good signs early.
Idea I’m Chasing
The best motivator in life is having a few people you really don’t want to disappoint.
Ideas I’m Collecting
“Instead of altering our beliefs to fit new information, we do the opposite, altering our interpretation of that information to fit our beliefs.” - Annie Duke, Thinking in Bets
“It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.” - Charles Darwin
