Services: The New Software

• Next trillion-dollar company sells outcomes, not software licenses.
  • “For every dollar spent on software, six are spent on services.”
  • AI autopilots (Crosby, WithCoverage) beat copilots (Harvey, Rogo) on value capture.
• AI crossed the threshold: intelligence work is automated, judgment work remains human.
  • Software engineering leads adoption — it’s almost purely intelligence, not judgment.
• Wedge strategy: start with outsourced, intelligence-heavy tasks; expand inward.
  • Outsourced work has existing budgets and tolerance for external delivery.
• Labor TAM dwarfs SaaS: $1T+ across insurance, accounting, legal, IT, consulting.
  • Insurance brokerage $140-200B; IT managed services $100B+; consulting $300-400B.
  • 75% of CPAs nearing retirement — accounting is structurally understaffed.
• Medical coding and claims adjusting: rules-based, aging workforce, ripe for autopilots.
• Supply chain: 2-5% contract leakage = recoverable value, not a tool sale.
• Judgment-heavy work (management consulting) is last to fall — start at the edges.

Julien Bek (Sequoia Capital) · 2026-03-06 · Read on sequoiacap.com