An AI-native service provider goes directly to the end customer, bypassing intermediaries. They offer a superior result (e.g., faster, cheaper cybersecurity) at a lower price, making the switch an easy decision by solving the entire problem.
Pre-AI, the main challenge was creating a compelling, non-incremental value prop. Post-AI, creating 10x value is table stakes. The primary risk has shifted to intense, multifaceted competition from incumbents, foundation models, and new entrants.
In the late B2B SaaS era (2018-2022), major opportunities were gone. Startups were forced to build 'nice-to-have' solutions for narrow verticals, like a CRM for recruiters, offering only marginal improvements over existing horizontal tools.
In the SaaS era, a 2-year head start created a defensible product moat. In the AI era, new entrants can leverage the latest foundation models to instantly create a product on par with, or better than, an incumbent's, erasing any first-mover advantage.
Founders are stuck in a SaaS mindset, selling tools to existing service providers. The bigger opportunity is to build new, AI-first service companies (e.g., accounting, legal) that use AI to deliver a superior end-to-end solution directly to customers.
With traditional moats gone, the only way to stay ahead is to move faster. Defensibility now comes from the speed at which a team can ship new value and deeply understand its customers, ensuring the product is always one step ahead of a crowded field.