AI: Feature versus Architecture

Lately I’ve been thinking a lot about where AI fits into corporate strategy and structure. Marc Andreessen recently suggested

…there’s two obvious business models… one is to be a horizontal platform provider [or] infrastructure provider, analogous to the operating system or the database for the cloud. The other opportunity is in the verticals, the applications of AI.

…AI is a platform and an architecture, in the same sense that the mainframe was architecture, the mini computer was an architecture, the PC, the internet, the cloud, have been architectures. We think there are very good odds that AI is the next one of those. When there’s an architecture shift in our business…everything above the architecture gets rebuilt from scratch. Because the fundamental assumptions about what you’re building change. You’re no longer building a website, you’re no longer building a mobile app, you’re no longer building any of those things, you’re building instead an AI engine that is, in the ideal case, giving you the answer to whatever the question is. And if that’s the case, then basically all applications will change. Along with that all infrastructure will change. Basically, the entire industry will turn over again, the same way that it did with the internet, and the same way it did with mobile and cloud. And so if that’s the case, then it’s just it’s going to be like an absolute explosive period of growth for this entire industry.

What does this mean for business? It means incumbents are displaced because their products are no longer relevant. And the products become irrelevant because the service that was being performed is now being delivered in a new way, perhaps by an AI engine running across the organization. Or perhaps the service is no longer being delivered at all because it has become redundant in a world wherein AI engines deliver superior services to what was previously being delivered.

If AI is a feature sitting on top of an already existing underlying service, then AI will eventually be added to most products and services. But it will sit on top of the service and the underlying service won’t actually change much.

I see AI as much more transformational. I see AI reframing the underlying service. In this way, AI creates new services. Entirely different services and experiences than what was previously being offered.