Constellation Software built an $80B company by acquiring niche vertical SaaS businesses. An even bigger opportunity exists in applying this model to the services market, which is orders of magnitude larger. The vision is to build a platform that aggregates and transforms various vertical services with AI.
AI companies can accelerate enterprise adoption by focusing on workflows already outsourced to BPOs. This provides pre-codified standard operating procedures (SOPs), existing QA processes, and simpler change management, as replacing a vendor is easier than displacing an internal team.
To overcome high AI pilot failure rates, companies like Pace use "forward deployed engineers" (FDEs). These founder-type individuals work onsite, deeply understand customer problems, and do whatever it takes—from prompt tuning to data cleaning—to ensure successful production deployment.
While initial sales conversations for BPO replacement focus on 50-75% cost savings, customers discover greater value in AI's unique abilities. These include superhuman speed to close business faster, instant scalability for seasonal demand, and unprecedented observability into previously "black box" processes.
Simply adding AI "nodes" to a deterministic workflow builder is a limited view of AI's potential. This approach fails to capture the human judgment and edge cases that define complex processes. A better architecture empowers AI agents to run standard operating procedures from end to end.
The goal for AI isn't just to match human accuracy, but to exceed it. In tasks like insurance claims QA, a human reviewing a 300-page document against 100+ rules is prone to error. An AI can apply every rule consistently, every time, leading to higher quality and reliability.
While often seen as a risk, solo founding can be a strength once a company has a clear direction and just needs to execute. It forces critical decisions and ownership to be distributed among a broader leadership team, rather than confined to co-founder conversations, building a stronger overall culture.
For AI companies replacing BPOs, success isn't just capturing revenue but fundamentally changing the business model. Pace's CEO considers building a multi-billion dollar BPO with traditional 10% margins a "failure case," aiming instead for 80% software-like gross margins powered by AI agents.
When building for a specific domain like insurance, the best hiring strategy isn't to find unicorn candidates with both AI and deep industry expertise. Instead, hire top-tier AI talent and top-tier domain experts and have them collaborate closely, sitting them "next to each other" alongside customers.