Instead of selling software to traditional industries, a more defensible approach is to build vertically integrated companies. This involves acquiring or starting a business in a non-sexy industry (e.g., a law firm, hospital) and rebuilding its entire operational stack with AI at its core, something a pure software vendor cannot do.

Incumbent companies are slowed by the need to retrofit AI into existing processes and tribal knowledge. AI-native startups, however, can build their entire operational model around agent-based, prompt-driven workflows from day one, creating a structural advantage that is difficult for larger companies to copy.

Historically, channel agents focused on front-end sales and were often blind to back-end customer churn. Sophisticated partners now use data analytics and AI to identify churn risks, pinpoint cross-sell opportunities, and actively manage their existing revenue base.

The most exciting application of AI in partnerships isn't automation but its ability to analyze data and reveal non-obvious trends and correlations. This allows leaders to see patterns in partner performance and customer behavior that are invisible to the naked eye.

Enterprises struggle to get value from AI due to a lack of iterative, data-science expertise. The winning model for AI companies isn't just selling APIs, but embedding "forward deployment" teams of engineers and scientists to co-create solutions, closing the gap between prototype and production value.

AI makes the technical 'doing' of business, like coding, accessible to everyone. The durable competitive edge is no longer the ability to build a product, but the ability to reach and acquire customers. Audience and distribution channels are the new defensible assets.

Incumbents face the innovator's dilemma; they can't afford to scrap existing infrastructure for AI. Startups can build "AI-native" from a clean sheet, creating a fundamental advantage that legacy players can't replicate by just bolting on features.

The most practical channel use of AI isn't a futuristic tool, but enabling partners to analyze supplier-provided data. By feeding partners data via APIs, suppliers empower them to use their own AI tools to identify customer trends and make smarter, faster decisions.

Businesses previously considered non-venture scale due to service-based models and low margins, like Managed Service Providers (MSPs), are becoming investable. By building with an AI-first core, these companies can achieve the high margins and scalability required for venture returns, blurring the line between service and product.