Founders should focus on how AI can replace or augment human labor and services, which constitute the vast majority of enterprise budgets, rather than just layering AI onto existing software.

The primary economic incentive driving AI development is not replacing software, but automating the vastly larger human labor market. This includes high-skill jobs like accountants, lawyers, and auditors, representing a multi-trillion dollar opportunity that dwarfs the SaaS industry and dictates where investment will flow.

The economic incentive for VCs funding AI is replacing human labor, a $13 trillion market in the US alone. This dwarfs the $300 billion SaaS market, revealing the ultimate goal is automating knowledge work, not just building software.

In the current market, AI companies see explosive growth through two primary vectors: attaching to the massive AI compute spend or directly replacing human labor. Companies merely using AI to improve an existing product without hitting one of these drivers risk being discounted as they lack a clear, exponential growth narrative.

The most logical pricing model for AI is to benchmark it against the human labor costs it displaces. While a PR challenge for legacy companies, AI-native firms will likely adopt this outcome-based model because it is more tangible for finance leaders than abstract, unpredictable credit systems.

OpenAI's path to profitability isn't just selling subscriptions. The strategy is to create a "team of helpers" within ChatGPT to replace expensive human services. The bet is that users will pay significantly for an AI that can act as their personal shopper, travel agent, and financial advisor, unlocking massive new markets.

AI platforms like Anthropic and OpenAI are seeing unprecedented revenue growth because they're augmenting and competing with human labor costs. This is a far larger market than traditional IT budgets, enabling multi-billion dollar revenue months.

Contrary to the public narrative of AI as a helpful tool, the stated mission of labs like OpenAI is to build AGI that can replace all forms of human cognitive labor. The massive valuations and investments are justified by the goal of total automation, not mere augmentation.

For current AI valuations to be realized, AI must deliver unprecedented efficiency, likely causing mass job displacement. This would disrupt the consumer economy that supports these companies, creating a fundamental contradiction where the condition for success undermines the system itself.