What AI is actually doing to your margins and what to do about it, With Marcel Petitpas

And so this was a talk that I did a couple of weeks ago now at an event that was put on by Cloudways, which is a great event.

A whole bunch of our friends were speaking there and it was really cool to be a part of it.

And a lot of the talks were centered around AI.

And so what I wanted to talk about was my point of view on where we're headed in And I don't want to say that this was a bit of a contrarian take, but maybe a bit of a different perspective than people have had on this historically.

So I'll try to summarize the talk very briefly, although I struggled to fit these ideas into 15 minutes.

So for context, right, why should...

You care about my perspective on this? Well, we have run at Paraquito a technology enabled service business for a number of years.

So we have some experience directly in this space and in the concept of like services led technology play.

And then on top of that, I have been a part of SaaS Academy for the better part of six years.

And this isn't very widely known, but I've also been involved in AI Venture Studio for the last seven months, where we've been working on incubating a whole bunch of AI first companies.

And so I've sort of seen the changes in the SaaS industry and the changes in the agency industry.

I've seen both industries converging around, I think, the direction that we've all been headed for a very long time.

But AI is sort of accelerating and pushing everybody to the entire point of commerce.

And so the perspective that I want to share on this is when you ask the question of who's going to win in the age of AI, is it services or is it SaaS? The way I look at this is those two markets are effectively going to converge and become very difficult to differentiate.

What is a service? What is a software company? Those lines are already sort of getting blurry because a lot of SaaS companies have a lot of services.

We just happen to historically call them things like support and customer success and onboarding and customization and so on.

um and just let softbank or other venture capital firms pay for it and sort of subsidize all of that human capital that has been necessary in b2b sas for a long time and then of course on the agency side increasingly agencies are recognizing like we really need to embrace technology and ai is sort of the latest wave of that in order to stay relevant to add more value to our customers to be competitive And there's been a lot of margin pressure over the last few years.

So I surfaced two big ideas that I think are important.

And the first is what I call the four Ps.

And so the four Ps is really a simple framework to think about, like, how do you build great product? And for the purpose of this conversation, I want to broaden the definition of product to the definition that we use internally at ParaKeto.

which is like the product is the entire experience that a customer has with us.

So it includes the meetings that we have with them, the emails that we send to them, the technology and tools that we build, the templates, like all of that is our product, right? And when you think about what a product is, it is literally just a set of processes and technologies and templates and intellectual property.

It's just a set of tools that are meant to leverage a process And the process is a set of steps that is meant to deliver an outcome.

That's really all it is.

And productization is just formalizing that process in a way that hopefully makes it more valuable to the customer.