00:32:33 · Matthew Fitzpatrick
[00:32:33] S0: Yeah. So Axon, which is our agentic platform, platform, is configured such that when you do context encoding, you can swap in and out every new model release that happens. So I think that is... The the... There is a fallacy of kind of like, let me wait till the models have advanced more before I do anything. And and the answer is if you if you architect that correctly, you can set that up so that you can easily swap to the newer version of the model. The other thing I'd say, though, is, like, the concern you raised in that question, though, is right, which is if you if you take something that's publicly available data and you're just adding that to an LM, it's gonna get commoditized pretty quickly. And so I tend to think of the world as, like, you have all the LMs, which are, you know, this all massive, Then you... And even some of the smaller LM builders. And then you have kind of the application layers that are being built on top of them. And in some cases, those are very, very, very value add. In some case, they are, as you're saying, wrappers. But those are usually businesses that are taking predominantly third party available data and configuring it around an LM. We're different than most of those. We're what I would call a last mile business, which is most of the context we're adding is very unique to that company. So it's not data that exists anywhere else. So it might be, you know, specific patient data in a health care context or specific inventory data in a manufacturing context. But that's data that is never gonna be... That an LLM will never have in it. And so actually, a lot of what we're doing is we're configuring that and and kind of encoding that knowledge into an LLM, which is actually... Obviously, I'm biased because it's what we do, but I think that last mile is actually where a lot of the value will come in enterprise over the next decade.
00:34:12 · Guillaume Moubeche, Matthew Fitzpatrick
[00:34:12] S1: Yeah. I agree. And I think like to your point, you know, of some enterprise, I mean, even if you take like some of the software business right now, potentially, you know, like their valuation went down a lot because as you mentioned, like, it's not that the business is gonna shrink, it's just the business will grow probably like at a at a slower pace. However, for some of them, they are sitting, you know, on a gold mine of data that they haven't exploited yet, and probably like this is the chance for them, you know, to to create something unique. [00:34:47] S0: Yeah. Look. I think of the existing software players, there will definitely be several of them that evolve themselves around new AI tooling and come out much stronger than they started. So I I don't. I think in any... You know, I I use the example in Mary Meeker's predictions of some of the incumbents did well, some did not. I think it will be the same thing with software. If there will be businesses that will legitimately transform and have a bunch of really interesting data and infrastructure and relationships already in place, and they'll probably do really well. [00:35:16] S1: Do you have, like, a example off top of your mind of different kind of moats that software businesses could could build?
00:35:16 · Guillaume Moubeche, Matthew Fitzpatrick
[00:35:16] S1: Do you have, like, a example off top of your mind of different kind of moats that software businesses could could build? [00:35:25] S0: So I think the biggest... You know, I think there... One is is businesses that have kind of a regulatory moats in some ways. You could call that in any kind of regulated entity. You know, I think actually systems of record that have to go through audits. Like, those are things that are actually gonna be pretty painful to change. And so, you know, I I I, for example, don't think systems of record disappear anytime soon because, actually, they're something a lot of people are gonna wanna have for a long time. Think the other big mode I would call out are actually two others. I think data moats, as you said, are a really interesting one. So if you if you have a lot of proprietary data on interactions, pricing, any of that, you know, AI is locally powered by data. So if you have that, there's a lot of value to that. And then the third one I would call out that I think will be probably the most important in the next couple of years is kind of the marketplace network moat. So if you've built something that has interactions between numerous parties on your platform, like an ecommerce site, I don't think you're going anywhere. Because I actually think in many cases, you know, multi... Multisided marketplaces are some of those powerful businesses in the next paradigm.
00:36:29 · Guillaume Moubeche
[00:36:29] S1: Yeah. I agree. I agree. And another thing, because we we haven't touched based on this so far, but, you know, like, everyone's talking about AI taking jobs. What's like... Or like even AI as a existential risk. So from my understanding, you think this is wrong, but can you maybe, like, elaborate?
00:36:55 · Matthew Fitzpatrick
[00:36:55] S0: Look. I I I think this is obviously a topic that gets a ton of coverage in the media at the moment. And and I think one of the reasons it does get a ton of coverage is you've had a lot of announced restructures, etcetera. I would say that with most of those from what I see at least are more what I call AI AI washing than reality, meaning folks that overhire during COVID are using AI as a reason to explain why they're changing their businesses. And so I think that's one reality is that most of the numbers announced to date have not been reality. But I think if you actually look at the next ten years, the main thing I would anchorize what is... Jevons paradox, but the idea that most technologies that roll out actually create a lot more usage. And so as a result of that, a lot more jobs come from that. And so, you know, the example would be, I think, one of the best ones I've heard is, like, bank tellers. So, like, fifty six years ago, everything in a bank was done manually. You then had a bunch of software that ought to be at the vast majority of jobs in a bank branch, but you actually have more bank tellers today than you do back then because people rolled out a lot more bank branches because they're useful. And you could do the same thing with, like, for example, lawyers. Like, the law has been largely digitized the last thirty years, and there's more lawyers today than it was thirty years ago because the law became more complicated and people wanted more sophisticated legal work. And so I think that paradigm has existed in many ways. And I actually think... Here's how I think about it specifically related to AI. Most of the usage, the vast majority of the enterprise usage so far has actually been coding. And if you thought of software as, like, the primary input cost of most businesses, like starting a new company, big obsolescence, can I build a software infrastructure? I think the Jevons Paradox example here is gonna be... It's gonna be much easier to scale technology and software. And so the amount of new businesses, new offerings that scale up and around that is gonna be much, much bigger. And so I think that the nature of work will change quite materially. Like, I think you'll have way more small and urgent fast growing companies. And, you know, I I think that's what... You know, one third of GDP growth last year was AI spent. Right?
00:39:07 · Matthew Fitzpatrick
And so I think you're gonna see a similar paradigm here where we will move from a society where you have bigger companies and a lot of people doing hyper manual work, like gathering information, putting into PowerPoint slide, Two way society where there's a lot more people doing things like selling, designing products, interacting with patients, whatever those topics are, using a lot of the AI tools. And so a lot of the manual administrative work will go down. But, you know, I actually think that's a really good thing for society. Like, the example I I give often is if you take health care, for example, in The US. So, like, our average cost per patient US is, like, 12 to 13,000 per patient. In Germany and Canada, it's, like, 3,000, and about a third of our cost is administrative cost. So, actually, like, bringing it down where where it could be much more about the higher value elements of of health care, it's a really good thing for society, particularly as our aging population means we're gonna have a lot more living people that need care. And so I think all of those evolutions are going to happen. You know, the the often cited example is, like, The US went from a 40% agricultural economy to a 1% agricultural economy, then manufacturing economy, a service economy. And and I think that one of my favorite stats, and if you look at any high school class, it's something like 30% of those people end up in jobs that don't exist when they're in high school. So, like, you just have Interesting. Huge evolutions in the nature of work in every decade. And I think this will be a one where a lot more people will be in creative entrepreneurial roles as a result.