Defensible Growth
What are your strong core values?
Definitions
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.
The conversation today is American (closed-source) vs Chinese (open-source) models. But, it’s the wrong analysis framework. The correct framework is:
Strong core values
Weak core values
That’s not an American thing, or Chinese thing, or Australian or African or European or Canadian or … thing. It’s a human being thing.
The people who create AI encode themselves into the models. They encode their belief systems, biases, values, experience, decisions, empathy (or lack thereof), and use cases. This is what the industry calls “alignment”.
Do you build war-fighting machines or build food production systems? Do you kill people or help people achieve their dreams. The thing you get out of the black box is directly related to the people building the black boxes.
Be careful the thin veneers of people who wear Hawaiian shirts to make you think they’re docile but simultaneously build autonomous human being killing machines. That’s not alignment. That’s weak core values.
Leaders who confuse you and change their tune, have weak core values. Leaders who invest heavily into machinery but then lay off tens or hundreds of thousands of people have weak core values.
Thus, you must first get clear on your core values before you can ensure there’s “alignment” with the people creating the AI’s core values. If they have weak core values, and you have weak core values, then good luck. It ain’t gonna go well for the rest of us.
You have a very serious responsibility for where you invest your attention, your time, your capital, your skills, and your energy:
Give it to those with weak core values and that circle of life is going to come back around and whip your butt eventually.
Give it to those with strong core values and that circle of life is going to come back around and benefit you considerably.
End Game
So where is this all headed? We have a hypothesis.
The narrative and rhetoric for the last decade has been “data is the new oil” and “data is the foundation of defensibility”. That’s true on some level, but represents only 10% of the value of productizing that data into a commercial use case. Into a Product.
Which means, taken together with the findings above, you will need to develop your own proprietary models that you use internally that benefit your business, your people, your partners, and your customers.
Customers want their own models owned and operated internally but they may not have the skills, capabilities, or experience to do it well, on the right timeline, in a budget that enables ROI. Which means they will need to rely on vendors and partners to build those models for them, for specific use cases.
And how will those customers choose the right vendor? It will be the ones they trust to be good stewards of their intellectual property. One word for that is Trust, but what that actually means is our service/product provider has Strong Core Values.
Are you getting it yet?
Only those enterprise and consumer product companies that have strong core values, and put themselves into the models, aligned with empathy and positive good for humanity (and animals, and this spaceship called Earth), while also being useful, will be allowed to get access to a company’s or person’s proprietary data, workflows, tasks, and models.
This, by definition, has lock in stronger than ERPs of old, and has built-in defensibility, while also driving growth (e.g., word of mouth). “You should use XYZ because they have the right values system.”
Strong Core Values can’t be designed on a whiteboard in some committee meeting, at an offsite, or as a marketing campaign (see “Authenticity” in every creative brief over the last decade). Those are weak core values. Strong Core Values represent something you’ve stood your ground on that probably wasn’t popular at the time, and foundationally damaged you, but represented a core human right.
For example, nobody wakes up in the morning saying they want to be a whistleblower. But in most cases, they saw or experienced something that didn’t sit right, and did something about it.
Strong Core Values is how you achieve Defensible Growth in the Age of AI. You don’t like it because it’s not as easy as buying an ad on Google or Instagram. But that’s the point.
So what do you need to execute that vision? Well, you need a good team who understands how to humanize a brand, has strong core values, and decades of experience building emerging tech products in the small and at scale.
There are only a few providers on the planet who meet those requirements.
And you’re reading a note from one of them right now.
—Sean
