Pivot Number 1

Background

The two directions that we’re settled on are the tech enabled system integrator in the Servicenow ecosystem or the tech enabled (AI for enterprises) consultancy like Distyl AI or Palantir.

We pretty clearly detailed the matrix above on all the categories we’re ranking these ecosystems against above.

ServiceNow

Pros

  • Currently, the TAM is large.
  • The buyers are enterprise clients and CIOs of some of the largest businesses in the world.
  • The buyers themselves are intelligent with large budgets

Cons

  • Tech companies where our investor networks and distributions are are fairly split between Servicenow and Jira.
  • Being tied to this one company as an ecosystem means that if the company declines and the ecosystem expands then resources will be constrained - given that there are strong competitors who are trying to take market share.
  • We also don’t own the system of record so the replaceability of the managed service isn’t a strong retention factor.
  • We don’t have the accessibility to deal flow to be able to crack the market easily.

Spend Breakdown

  • The services SI’s are ~$50B right now
  • The licenses spend is about $13B right now
  • The YoY growth is about 20% for Servicenow and 13% for SIs
    • Indicating that the actual services implementation spend is compressing(despite the absolute number going up) as Servicenow eats some of the services market share themselves.
  • Managed services is likely the bulk of that spend

Market Approach

  • We would have our tech enabled SI offer cheaper and more efficient services
  • We would attack both managed services AND net new implementations - where net new implementations are likely easier to get because we won’t need to churn an incumbent off of them.

General Philosophy

  • If managed services are a bulk of the spend then I predict the SI market will shrink greatly. This is because Servicenow will prioritize building a platform where managed service is easy with a very small in-house team. This is already happening. So consultancies will primarily be used for initial implementations.
    • If this is my belief then I should also believe that in the next 5-10 years services will stop growing altogether and eventually decline - if our goal is to be acquired we should build here and beat out echelon to get acquired by Servicenow. FUCK THAT.

Open Questions

  • Is Echeleon a concern?
    • The team is well suited to be building in this space as ex moveworks folks. They have a well built out product that works and can already scale - as well as having strong brand presence post k26.
    • To catch up to them we would have to simultaneously building a brand and scaling engineering - Charlie recommends rollup here
    • Likely 9 - 12 months behind in both
    • We would need to hyperscale ops, gtm, eng to catch up
    • However, the market is big enough where echelon is likely still in their sub 5M ARR phase - in a $50B dollar market, even starting second isn’t a problem.
  • What’re the viable paths forward?
  • Rollup
  • Tech enable
    • This requires
      • building both the brand and having the network to cold start.
      • hire a bunch of folks
      • being able to close the sale and deep service now expertise

Next Steps (If we want to pursue this route)

  • Talk to Lightspeed rollup person (when?)
  • Build a business plan for leadgen - open up all the mass outbound channels
  • Create a learning plan for Servicenow Sales and create decision trees for how to scientifically dissect the pains of the CIOs
  • Full send the engineering side for code gen.

Distyl

Pros

  • Even larger TAM, every enterprise in America needs AI
  • The buyers are enterprise clients and CIOs of some of the largest businesses in the world.
  • The buyers themselves are intelligent with large budgets
  • We host the infra and the platform, extremely sticky

Cons

  • We have even less of a right to be here, we don’t have any unique advantages to penetrate these enterprises (Access)
    • Meaning the way we would win is we have a generational product. Business is going to be virtually impossible at the start
  • Our pitch is that we’re a much better product team then you guys to solve your largest product problems but we don’t have the ethos.
  • We can’t run this cold without the technology really, like we can with manual Sahil
  • Repeatability is in question

Market Approach

We would hit the midmarket/small enterprise, using VC intros to get off the ground at first. Distyl partnered with OpenAI/Anthropic before but might not be a route anymore. This is the biggest ???

General Philosophy

This market is huge and is only going to get bigger. Every enterprise in the world is trying to use AI to augment their systems. The models are finally at a point where they’re tremendously useful given the right memory. Even with other players in the market it’s so expansive that I doubt we’ll even see them. The new gen consultancy is this.

Open Questions

  • Can we do some deep research on customers and problems that Distyl is solving? I imagine that they DQ a lot of customers and problems and we can learn from this. When the above question is answered we should understand why we would have the right to penetrate this market?
  • What would we need to do this?
  • Would we need to bring on an executive with a rolodex?
  • The above question is also needed to understand the variance of the product and which workflows we choose to productize being extendable to others/ what that general intelligence product even looks like.
  • I guess the amount we don’t know here is so tremendous and we aren’t even sure how to do the right disco that it’s a super daunting task

Next Steps

  • Do a super deep dive competitor analysis just to learn about how to approach the market and be able to filter down all the avenues.
  • Find a way to get enough meetings to do proper discovery on the different sectors, after we’ve niched down a little bit on the sorts of customers we need to find a way to book out our calendars.
  • Maybe hit Bucky and ask him to recon distyl + intros
  • Call up some ex Palantir goats to understand the motion better if we can get intros here too.

Conclusion

No to servicenow Maybe to Distyl - need more disco No concrete obvious yes.