Why Services Are The Next $1T Business Opportunity

The next $1 trillion business opportunity is not SaaS. In fact, it's services. When you look at the top firms out there, top investment firms like Andreessen Horowitz, Sequoia, or you look at the accelerator Y Combinator, everyone is looking towards services and not just services, but services as a software. Why? Because in software you're just taking $1 of the budget. When you think about services, it's another $6, right? So it's a much bigger TAM, total addressable market. And that's why a lot of these investment firms are interested. I'm going to show you the manifesto that we have around this in terms of how to think about this. I'm going to talk about the economics as well. I'm going to talk about how you can not just capture the $1, but you're going to capture the $1 and the $6. You get the $7 there and ultimately you're going to do a lot better. And I'm going to tell you this right now, there are services firms out there, AI service firms that are commanding a 30x multiple on their valuation. So imagine this. Let's say for round numbers, your company is doing $2 million in profit times 30, that's $60 million. Whether you want to exit or you want to build something for the long term, this is the video for you because literally I'm going to talk through again the manifesto, how we think about the org chart, how things are going to have to shift and what you need to do to win in this new era. So let's get into it. This post over here that I put up a couple weeks ago, or maybe even a week ago or so, you can see this is why Andreessen Horowitz, Sequoia Y Combinator going nuts over services software. And here's how to do it specifically, right? That's why you should stay till the end of this video. Initially, we had talked about how the $1 service to $6 services concept, software to services concept, and with AI powers now you're able to do a lot more. And the key thing that you don't want to do if you're looking to make this transition, I think you have to have both software, you have to have both services, right? A lot of people right now, they're talking about this concept of having a forward-deployed engineer, right? Or forward-deployed employees, you can look at it that way too. But you want to have forward-deployed engineers and you want to have a strong customer success people that can implement these solutions, these scalable AI solutions, and also have strong strategy baked in with it. As an example, my company Single Grain, which is a marketing agency, we want to make sure that when we're implementing Single Brain, which is our agentic solution, our unified intelligence, that we're kind of pulling from what we're good at— institutional knowledge around marketing— and then layering that in with AI as well. And then you're able to gain superpowers that way. So what I'll also say is that you're not looking to necessarily make labor cheaper. And a lot of people are talking about that right now. In fact, I talked to a lot of people, there are a lot of founders, they're like, oh, I'm looking to cut headcount by 20%, 30%, 40%, 50%. You don't want to look at it that way. More so, you want to grow your headcount when it comes to AI-pilled people that have these superpowers, right? So the wrong game is just cutting to cut and save on efficiencies because you're going to need amazing people. I don't think that's going to change for a while. And you don't want to have a blender for AI slop just because you don't want to stack your best people with more work. In fact, more people are working harder than ever right now. In fact, I'm working harder than I ever have. I'm also having more fun than I've ever had. But you also want to keep in mind that you need to make sure that you manage the burnout situation with your team. So the bottom line is agencies need to stop focusing on selling selling labor. More so, they need to focus on selling these outcomes. They need to focus on selling these managed growth loops. And I'll explain what that is in a second because you'll see these interesting charts in terms of how you should think about your org structure and how these growth loops will look. And I'll explain how that works as well. So keep that in mind. Stop focus on selling labor. You should focus on selling managed growth loops. If you come down over here, so you don't want to just look at selling units of hours, and then it became deliverables, then you sell expertise. That's consulting. The next unit of value now is the loop. So loop is an end-to-end business process that repeatedly turns inputs into outcomes and gets smarter from feedback. So I'm gonna give you an example here. So this example is a paid creative loop. Let's say you are running ad creatives for people, and a lot of people come to us right now when they're looking for single brain. They would be like, we need to jack up our creatives, we want to do way more creative. So that's good. Well, paid creative loop over here— first we need to understand the customer pain, we need proof that their product actually works, we need to have a good offer, and we need to have good channel data. And then from there we can figure out the creative angles. We can also look at what competitors are doing, we can look at what has worked in the past historically. We should figure out what messaging looks like too, and then we can create 100 variants here. Then we can launch the ads, and then you get performance and sales feedback. You get the data and then we scale up the winners, we create more variants there, we kill the losers. And then what happens is we save the learnings. So this loop recursively compounds. So you can see over here it improves and then the loop compounds and it repeats over and over. And that's when you have something that is— it just gets stronger and stronger over time. Now the problem is when you're selling labor, it's inconsistent because one person might be really good, like an A player, then you might have a B player, then you might have a C player. So even though you might have all your processes documented, it doesn't quite matter because there's a difference in skill level. But when you're having the agents handle structured work and it's predictable and learns over time, and you have a human constantly tweaking it, it's going to be better. In that case, your customers are getting that predictability. Of course, they're going to pay for that. They just don't want to worry about it at the end of the day. But they start worrying when the agency, the services company is not proactive, they're not strategic, they're not good at selling themselves in terms of telling a story about the results. And so all these things end up being a drag on the customers, that the agency ends up not being happy because the customer is hounding them all the time. The customer isn't happy because they're not getting results. Ultimately, this is why a lot of people hate agencies, they hate service companies because they can't bring consistent results. This is no different than any service company owner, right? This is This is a problem that we've all faced in the past, but we can solve this using these loops now. And again, stay till the end because I'm going to show you the org chart in terms of how this looks. By the way, an agent and a loop is very different, right? Because an agent is something that can solve a particular problem and then you insert it into a loop. That workflow is something that improves over time. So the loop is where the value lives. So you have managed loops over here, which will own the outcome. You have specialist agents. So you might have one that focuses on doing keyword research or one that focuses on handling internal linking or from SEO purposes, or you might have one that is focused on just doing research in general, right? Or coming up with different angles when it comes to creative. And then you have human judgment. So this is taste, trust, strategy, calls. When you combine these 3 things over here, you ultimately have a reliable system because you have humble, hungry, smart people that are continually strategizing and figuring out ways to improve these specialist agents and improve these loops. So most people have it wrong here. They're thinking about eliminating headcount. That's not what you want to do. What happens here is the human doesn't disappear, but the human actually moves up the stack. And so you don't want to hire humans to do robot work. And I'll say that again. You don't want to hire humans to do robot work because when you do that, the humans end up unhappy because they're doing work that they're like, why am I even doing this in the first place? It's very boring. It's very structured work, and it doesn't feel like they're adding a lot of value at the end of the day, for the most part. So the humans, ultimately, they should own taste, strategy, or talk about narrative, and they should focus on what to scale, what to eliminate, hard decisions, trade-offs, things like that. So that's why, again, you want to hire very humble, hungry, smart people that can scale with the company. It's interesting to me because a lot of smart people, they're not AI-pilled. So can you consider them smart? I don't know about that. I would say that you want smart people. The smart people that are super AI-pilled, those are the very smart people that are very forward on this, and they will offer you the best judgment here to then train these specialist loops and these And so this is how you want to think about it. And there's a lot more to go in here. You can have like a conversion loop, a demand capture loop, a creative testing loop, an SEO loop. You can have like an analytics loop as well, a sales enablement loop. So there's a lot of loops for you to think about. And that's for you to sit on a moment to think about your business, to think about, hey, what should actually be made into loops? And maybe start with the highest priority items first in terms of impact, confidence, ease. What's the most impactful thing that I think we can do where it seems pretty relatively simple to execute? Start there first because you want to go for high leverage and then you kind of work yourself down the stack. And then once you start to get this going, you can hand it off to your team. By the way, if you want a single brain, a unified brain, brain that's living inside of your Slack or your Microsoft Teams where your team can query information, but they can also scale their ads. They can also put together their cold email infrastructure. And ultimately you can have your team working with this. This is SingleBrain with a B. SingleBrain over here, you can see on my screen, literally it's creating multiple variations inside of Slack. So when your team already knows how to work inside of Slack or Microsoft Teams and they know how to talk to people, well, you don't really need to worry about AI transformation because it's already happening. This change management piece, it's already happened. There's nothing to resist there if they're used to working like this. So you can check out singlebrain.com with a B if you want to learn more information. I'll see on the other side. So next part here is I want to bring you to this $1 trillion services as software guide. So we're talking about trillion-dollar company, not billion dollars, we're talking about $1,000 billion. So when you look at this, this manifesto, this is actually about 2,500 words or so. I already talked about building a growth operating system, right? But what I want to bring your attention to here— yes, we can talk about the raw materials of great marketing when it comes to services, but there's lots of different types of service companies out there. But you need to understand from first principles what are the raw materials required for good marketing: customer pain, proof, offers, objections, all these things over here. But we've talked about the loop already. But when I scroll down, I want to bring your attention over here to this org chart. The old org chart is this. You have functions. So you have client account, and this is like, you can call it like Mattel. So you might have an account manager, you might have a strategist, you might have an SEO specialist, a paid media specialist, a designer, depending on whatever it is that you sold to this customer. This is how it works. And I will tell you one thing, one aside right now. When we talk to a lot of these large agency holding company people who want to leave their companies, we ask them, why are you looking to leave? Oh, our company's not AI-forward enough. We're not moving fast enough. And when I ask them about AI, they say, oh, I love AI. I was like, okay, so can you give me some examples of how you're using AI? And they give bad examples. So all that to say is the people that sit in these organizations, they don't believe in these organizations, but they don't even want to save themselves. So what you need to think about here, those of you watching this right now, is one, if you're not AI-pilled, you got to get AI-pilled. The second piece is this org chart. Your org chart has to change. Let's say you're working for a company right now, you're working for a service company. You need to even share this video with them saying, hey, the org chart here needs to change. It doesn't work anymore. So the future org chart is going to be designed around those loops that I talked about, those agents that I talked about. So the future org chart should be built around outcomes. So you have a client revenue system now. It's not just a client account, it's a system. So you have an outcome owner, like, like a general manager of it. You have a strategic lead, You have growth loop owners, and then you have acquisition loop, conversion loop, retention loop, expansion loop. So a loop might contain multiple agents inside of it. So you can think of it as a workflow, and it might have multiple agents who are doing paid media, multiple agents who are doing creative, multiple agents who are doing sales. Because sales, like, oh, if you're going to do outbound, cold outbound, you got to figure out prospect, you got to clean the list as well. You have to make sure the emails aren't bouncing back. You have to make sure that you have the right naming conventions. You have to make sure that your domains are still active right now or in good standing. And then you have to also think about your sequences, testing 5 different sequences. You have to think about optimizing those sequences too. You have to think about changing up different offers. So there's a lot of stuff that goes into that. Loop. And that's where you have this agent fleet layer where you have these specialist agents. So the way I look at this is that you might have the marketing specialist, at least for us, because we're talking about marketing right now, my business at least. You want to have these people managing these loops because these are very strong, humble, hungry, smart, strategic people. They know what it means to do the actual work. Then with this agent fleet layer over here, you want to have people who are the designers, developers, and the product people, and they're constantly tweaking this fleet over here. So imagine that you have a fleet of jets. You're going to have to maintain them. You might have to repaint them. You might have to upgrade them from time to time. A lot of maintenance needs to happen, right? And that kind of happens within this infrastructure and systems team because you got to make sure permissions Commissioning, governance, and security, all those things. We want our loops to be stable, secure, and reliable. Again, stable, secure, and reliable. And then you have an executive sponsor down here. So this talent model changes, and you can think about what goes where, but it's important for you to at least start to put together some type of manifesto here and go from there, right? Even the offer has to change too. It used to be that you can sell these menu of services, a list of stuff, but now a better offer stack looks like this: revenue channel management. So you own a channel or portfolio of channels against agreed leading and lagging indicators. So we're now— we're talking more about outcomes, right? Which a lot of people don't want to be held accountable to, which is your opportunity. Marketing infrastructure build-out, right? We're talking about infrastructure now. We're talking about security. We're talking about provisioning. It actually levels up your conversation when you're talking to these people, because when we have these conversations about single brain versus single grain, single grain, we're treated more as a vendor, but single brain, we're treated more as equals, as partners in their company. And then you AI native marketing transformation, executive growth operations. There's a lot to tackle here. So when we run these, we run these as 45 to 60 day pilots. And then myself and my CTO, we get on these calls and we try to figure out, hey, what are the broken workflows right now? Like, what is the biggest pain point and what can we go out there and solve for you? And one thing I will say about this too, anybody that's showing interest in this, they haven't really disappeared. Appeared versus on the services side, because they're talking to so many different people and that offering is more widely available. That one's like more of a— we're competing pretty aggressively with other agencies. That's another benefit of doing this because you're doing things a different way and you're standing out from other people. So anyway, I hope you enjoyed this video. Definitely check out both the articles. You can just go to my X account, x.com/ericossu, to learn more. And if you enjoyed this video, please check out this next one over here on whether Hermes or OpenClaw are better for making money. We'll see you over there.