The next generational shift in enterprise infrastructure has arrived
Cloud computing is driving growth at 3 of the 5 most valuable companies in the world. AI will impact jobs only as quickly as AI-powered business software evolves. These are just two of the ramifications of disruptions in enterprise technology permeating mainstream media. Yet the inner workings of the tightly knit enterprise software industry are rarely publicized. Most talented engineers flock to Instagram and Snapchat where they help the Kardashians hyper-optimize selfies.
Taking part in the B2B subculture of Silicon Valley feels like a second-rate option. Whereas consumer tech has the Mary Meeker report for an aggregate view of industry trends, enterprise infrastructure was missing a public perspective to explain what we believe is a seismic new wave that only comes once every 10 years — the shift from cloud to what Jerry Chen of Greylock aptly calls systems of intelligence.
We’re launching a report series that gets into the details on how systems of intelligence is reshaping the industry.
The full deck can be viewed here. With this key inflection point, our primary aim is to help founders see the forest from the trees. For Fortune 1000 executives and other players in the ecosystem, it will help cut through the noise and marketing hype to see what really matters. It’s wishful thinking, but we also hope new talent gets excited about enterprise after reading this report.
Our perspectives are shaped by anecdotal evidence based on our interactions with entrepreneurs, corporate customers and big tech leaders defining this new wave. By no means will most of my predictions be correct, but my purpose is to put a stake in the ground and start the discussion on this new shift in the industry.
Onwards to what matters. Our report highlights five key themes:
Behind each of these themes are opportunities for early-stage entrepreneurs and lessons learned from the field.
Nearly every competitive Series A or B deal in AI that has come across our desks at Work-Bench over the past year had a valuation north of $100 million attached to it. It’s easy for investors to get giddy over 10+ PhDs from Stanford and Berkeley holed up in an office in Palo Alto working on something monumental. Call me crazy, but funding these types of companies with no clearly defined path to commercialization seems unsustainable. With numerous startups touting the AI label without the expertise to back it up and big tech increasingly saying “we can build that internally,” we may be headed for disaster. The effects won’t ripple across America, but they’ll certainly be felt in the Valley.
I’m personally excited for this pattern change. Like in the internet era, where the largest and most enduring companies like Amazon and Google rose after the trough of the bubble, massively successful new companies using AI to reshape business will be created just as the AI weather gets breezy. These transformative new companies will deliver value through systems of intelligence.
Systems of intelligence are like Ford assembly lines and Toyota production systems — powerful weapons for competitive advantage. Much like Ford, Toyota and GE used such innovations to develop impenetrable process moats (i.e. through tight integration of partners, suppliers and internal processes in unique ways outsiders could never replicate), systems of intelligence forge barracks through the perfect portmanteau of data, algorithms, domain expertise and data-driven product design.
Today’s tech monopolies rule through economies of scale. Tomorrow’s will rule through systems of intelligence. The race is well underway. GE, Bosch, Samsung, Hitachi and Schneider Electric are competing for industrial systems of intelligence. Startups are building systems of intelligence for banking compliance, pharmaceutical drug development, medical diagnosis, insurance claims filing and more.
Who isn’t building systems of intelligence? Amazon, Google and Microsoft.
