Productivity One Year from Now
If AI continues on its current trajectory or accelerates, what will change in your business?
We’ve been asking leaders of companies & departments this question & the answers aren’t clear.
In a few years, consensus agrees that rote work of BDRs & paralegals & software engineering will be somewhat to mostly automated. But determining the timing of that impact is much more difficult : it depends on the accuracy of the AI.
Calculating headcount changes is more difficult. Sudden headcount reductions or team restructuring are unlikely. Instead, teams will hire fewer people over time but generate more revenue per employee.
Most public companies operate at between $100-400k in ARR per employee.
What will that number be in 2 years? 500k? 600k? 1m?
Today, publicly traded software companies operate on average unprofitably with -9.3% net income margin, but 16.2% Cash Flow Margin.
As multiples in the public markets have compressed in the last 2 years, but AI publics trade at a 100% premium, it may be because the market is pricing in these efficiencies, implying revenue from AI companies will be twice as valuable because they will generate twice as much in earnings.
This assumes that investors value software companies on future ability to generate earnings.
Founder and CEO at MySidecar.ai.| Experienced hands-on marketing and start-up leader | Oracle, SAP, LinkedIn, and a variety of early-stage companies
3 周Very interesting. On the power of AI to automate marketing and sales, I feel there is an often overlooked perspective - the perspective of the prospect and customer. Although AI may be able to automate and thereby replace headcount in marketing and sales, my experience is that audiences often become immune to a predictable approach and companies will need to search for new creative and personal approaches.
CMO, Hypergrowth Advisor, Took Atlassian Public
3 周Lots of hype around the 3-person billion dollar revenue company. This will be an interesting ride!
AI Strategy Advisory | CEO of HUBRIS.at | AI, Data & Investments ????????????
3 周Tom, I appreciate your insightful analysis on AI’s impact on business productivity. Your point about revenue per employee becoming a key metric is particularly compelling. However, achieving this isn’t just about deploying AI everywhere; it must bring real utility and economic viability to businesses. Many CEOs I work with recognize AI’s potential but grapple with practical questions like where to start and what budget to allocate. Rather than initiating drastic transformations, targeting low-hanging fruits allows companies to feel the immediate benefits of AI adoption and the leverage it provides. Augmenting human capabilities with AI is an essential trend—not about reducing headcount but enhancing efficiency and hedging risks associated with employee turnover. Businesses need a clear roadmap for AI integration, considering both strategic goals and budgetary requirements. Ultimately, I believe AI will have a deflationary effect on companies, serving as the ultimate cost-saving measure. As Andrew Carnegie said, “Prices and revenues are cyclical, but cost savings are permanent.”
Associate Director, Channel Sales | Business Development | Telematics | Fleet Management Solutions
3 周Love the insight in this post!
CEO at PRAY.COM
3 周Tomasz Tunguz ????