Technology is permeating every industry and blurring the lines between them, making traditional sector-based research obsolete. Wood advocates for structuring investment research departments around foundational technologies like AI, robotics, and blockchain to accurately analyze future growth drivers.
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As platforms like AlphaSense automate the grunt work of research, the advantage is no longer in finding information. The new "alpha" for investors comes from asking better, more creative questions, identifying cross-industry trends, and being more adept at prompting the AI to uncover non-obvious connections.
Like containerization, AI is a transformative technology where value may accrue to customers and users, not the creators of the core infrastructure. The biggest fortunes from containerization were made by companies like Nike and Apple that leveraged global supply chains, not by investors in the container companies themselves.
Within just six months, AI-related investment has transformed from a niche topic to a primary focus in top-down cyclical discussions at major global finance conferences like the IMF/World Bank meetings. This rapid shift highlights its perceived impact on global growth and employment.
Despite the hype, YC's focus isn't just on pure AI startups. The accelerator is backing a diverse portfolio of companies in healthcare, finance, and deep tech, using AI as a disruptive tool to rewrite the rules of these traditional, 'dusty' industries, much like the internet did.
During a fundamental technology shift like the current AI wave, traditional market size analysis is pointless because new markets and behaviors are being created. Investors should de-emphasize TAM and instead bet on founders who have a clear, convicted vision for how the world will change.
If AI is truly transformational, its greatest long-term value will accrue to non-tech companies that adopt it to improve productivity. Historical tech cycles show that after an initial boom, the producers of a new technology are eventually outperformed by its adopters across the wider economy.
The true economic revolution from AI won't come from legacy companies using it as an "add-on." Instead, it will emerge over the next 20 years from new startups whose entire organizational structure and business model are built from the ground up around AI.
Technology's share of the economy will grow as it underpins every industry. Conversely, the services sector, which sells human intelligence for repetitive tasks, is fundamentally threatened by AI that can automate processes and commoditize expertise.
Consumer innovation arrives in predictable waves after major technological shifts. The browser created Amazon and eBay; mobile created Uber and Instagram. The current AI platform shift is creating the same conditions for a new, massive wave of consumer technology companies.
The future of financial analysis isn't job replacement but radical augmentation. An analyst's role will shift to managing dozens of AI agents that perform research and modeling around the clock, dramatically increasing the scope and speed of idea generation and validation.
