From Services to Software

For decades, startups followed a familiar playbook.

• Build software.
• Sell subscriptions.
• Scale efficiently.
• The closer you could get to pure software, the better.

Services were often viewed as a compromise. A temporary phase. Something to escape.

Investors loved software because software scaled. Services did not. Or so we thought.

Artificial intelligence is forcing us to reconsider that assumption.

Many of the most interesting AI-native companies today are not starting as software companies. They are starting as service businesses.

At first glance, this seems counterintuitive. If AI makes software easier to build, shouldn't companies become more software-centric? In many cases, the opposite is happening.

AI has dramatically reduced the cost of delivering expertise. Not just software. Expertise. This changes where founders can start.

Historically, building software required years of product development before meaningful customer value could be delivered. Today, founders can often begin by directly solving customer problems. Manually at first. With AI assistance. With humans in the loop. With workflows that combine software, automation, and expertise.

The customer doesn't care whether the value comes from software or services. The customer cares that the problem gets solved.

A different path to company creation

Instead of starting with software and hoping customers adopt it, founders can start with customer outcomes and gradually build software around what works.

The workflow becomes the product roadmap. Every customer interaction becomes research. Every exception becomes training data. Every manual process becomes a candidate for automation. The company learns before it scales.

This is one reason many AI-native companies look different from traditional SaaS businesses. They often begin closer to consulting. Closer to operations. Closer to customer success. Closer to the actual work.

Over time, something interesting happens. Patterns emerge. The same tasks repeat. The same decisions appear. The same workflows surface across customers.

Founders begin identifying which parts of the service can become software. Which decisions can be automated. Which workflows can be standardized. The business gradually evolves.

• Services become systems.
• Systems become products.
• Products become platforms.

The strongest companies do not simply automate tasks. They compound knowledge. Every customer interaction makes the system better. Every workflow improves the product. Every exception strengthens future automation.

This creates a feedback loop that traditional software companies often struggle to achieve.

What an AI-native firm really is

The result is not a services company. And it is not a software company. It is something new.

• An AI-native firm.
• A company where humans and AI work together.
• A company that continuously learns from customer workflows.
• A company that starts with outcomes and gradually builds durable software advantages.

This is one reason I believe some of the most important companies of the next decade will not look like traditional SaaS businesses. They may begin with service-like economics. They may involve significant human involvement. They may appear less scalable than investors expect.

But underneath, they are accumulating something incredibly valuable.

• Workflow expertise.
• Customer trust.
• Operational knowledge.
• Proprietary data.
• And increasingly, software built around real-world work.

The future will not belong exclusively to software companies. Nor will it belong exclusively to service businesses. It will belong to companies that understand how to combine both.

Companies that start close to the customer. Learn faster than competitors. And gradually transform expertise into scalable systems.

The line between services and software is beginning to disappear. And some of the most interesting companies will be built in the space between them.