Over the last 3 to 4 years, as AI has proliferated throughout the economy and business world, the demand for us to help companies build internal products for only their use has increased substantially.

In the past, companies wanted to build external products and sell them to customers, which is what drove the wave of Enterprise Software as a Service (SaaS) companies. Now every company pays 10 to 30 software vendors to provide solutions for specific problems.

Shall we augment our reality?

Most of the technology industry thinks in terms of technology. It’s so ingrained in the way of being, that it’s hard to step out of it and imagine that technology isn’t always the answer.

Let’s take augmented reality glasses as an example.

Technology was never the moat. The product you built with it, and ultimately the experience you delivered from it, was.

We don’t share 99% of the decades of work for the biggest brands on the planet. Why? Because strong core values.

But, we would be remiss if we didn’t show evidence of what we mean.

What’s the state of middle market enterprise software, AI, and capital markets as we look out to the last 5 months of 2026?

Let’s get into it.

Financial markets are tricky little muses. They draw you in with the promise of a golden ring to rule them all, then prove to you over and over again you are not, in fact, smarter than the average bear.

Many moons ago in a galaxy far, far away I advised the Boards of the Fortune 1000 on metrics, goal setting, and incentive compensation design.

Said more plainly, we determined how much money you were going to earn based on how well you improved your business.

We live in interesting times. Since 1994, our planetary population has experienced the largest scale J Curve in human history.

VCs like to swing for the fences, so they strike out a lot. PEs prefer singles and doubles since they’re less risky. But they’re both missing something important.

Systemizing high-growth by consistently hitting triples. Very few can do it.

We’ve yet to see people using this exact phrase, but it represents the core need of enterprise software companies and their investors.

They simultaneously want profitable growth (i.e., driving EBITDA), but also AI Defensibility.

The way you maintain defensibility from frontier AI is, as you might have suspected, to build frontier AI. If you just use someone else’s, and get locked in, by definition your business operates at the whims of the Emperor.

I grew up in a small town in Iowa. In fact, I spent half my life there. What a magical place to grow up playing baseball. The second half of my life was spent living and working in the biggest cities on the planet: Chicago, New York, LA, Dallas, Nashville, London, Paris, Milan, Tokyo, the list goes on.

In short, I put in the time and did the research. The truth about what I found may surprise you.

The only real way you fail is if you stop.

Keep movin’.

We see many people make the same mistake on the road to creating product.

We’ll hear things like “People will love this”. And so we see a lot of market research, and surveys, and customer advisory boards take over. Sure, this will help you get part of the way there, but not all the way.

Inside Silicon Valley, you hear terms like “AGI-pilled”, which means you drink the kool-aid, you’re on the frontier, and you understand what’s coming with Recursive Self-Improvement (e.g., automate the automation).

But outside Silicon Valley, the feeling is different. Fear, Terminator, Job Loss, Apocalypse. It’s not great. And with the next presidential and political elections right around the corner, it means campaigning for popularity is about to begin.

The U.S. AI labs on the frontier used a three-fold pricing ladder as a business model:

1. Free to get you started

2. Subscription to get you retained (once you reach the free limit)

3. Usage to get you paying (once you reach the subscription limit)

Over the last 6 months, product development within enterprise software changed. We transitioned from 0% of new code written by AI to nearly 100%. And more recently, every company’s board and management team we work with is already there.

By far the most frustrating part of using frontier agentic coding models, even with state of the art harnesses, is that they don’t check their own work. It’s basic, first day of work stuff, but for some reason these trillion-dollar AI labs don’t seem to care much about quality.

How was your weekend?

Mine was cool, had a couple SaaS vendors send me automated emails saying they were increasing prices significantly, but without any communication about product features they are adding for that extra price.

There’s about 5 bits of information per token.

But do tokens = value?

No, it’s just raw information. Raw data. Raw binary of 0s or 1s.

Finding and removing bottlenecks is an optimization strategy as old as time. But optimization is not invention.

I can checkmate you in a single move, before the chess match begins. The matchup? Your proprietary data against my algorithm that adapts in real time.