Software products don't exist anymore

The difference between a product and service especially in the software industry will conflate very soon (It already is). There won’t be service anymore, or said differently, there will only be product which is the service is given. But it also can be said that the product is the service itself, chicken-or-egg-ing this argument.

Vertical Integration in Tech Startups

This is especially important with vertical integrated technology startups : startups that work with small number of clients but go deeper into each than a general solution a large number of people (that is horizontal integration).

What I do not agree with the though is the fact the “AI Native Services Companies” are its own sub-type of AI startups. What I am arguing in this essay though is that every AI native software company is turn a services company than a product company. There won’t be no services companies no more.

Why this is possible

And again this is enabled with how good coding agents have gotten over the past few months. Building a feature for your SaaS tool used be a whole product-management project before, and now it is one cloud sub-agent running on its own computer and making a PR. So it just enables you to build out more customized features for every specific small request each one of your clients has. Especially in vertically integrated startups, where there is so much dense business logic and custom workflows that you need to tailor the product each client.

But it is at that point you are not building a product are you. You are technically build a suite of tools specific to that client, and that in turn is just a service.

The Meaning of Service

The reason it conflates is because service has been deemed to be “human” given, while AI just gave you text outputs. Now it can do much more. And essentially the AI models that run on your software that run these custom workflows for your client, they are the service-men.

I went to this YC event on AI Native Services Companies in June this year, and where there was a lot of insight on how to build this certain kind of companies. And this was their whole point on how you just accelerate existing service companies and cut down time 90% with AI. And rather sell the outcome than the product solution itself.

However, that product will be the outcome itself. Models will continue to automate workflows so dense, that your clients just use that product to get the service they want. And this is the reason for that conflation. Because it gets so mixed up that, in the end are you building a product that acts like a service? Or are you just building service packaged into a product?