Jason M. Lemkin explains why most B2B AI unicorns will fail. Incumbents have massive data and customer bases but are weighed down by legacy debt and the need to keep existing customers happy. Startups need an aggressive CEO and must out-perform legacy players or they'll struggle to transition to AI-native solutions.
I will say at a higher level, nothing against this bet, but man, today having to support an installed base versus getting to invest just in AI-native customers, it's a drag. It is a drag. It is a drag.
I actually think every incumbent in these markets has one huge advantage and one huge disadvantage. And I'm gonna say it clearly here. I think the advantage is the customer base. And the data structures and the access to the data on your existing, on what the company's doing. Because I think for something like sales or customer support, the truth is it's gonna be a combo package for a long time to come, some automation and then some human agents, and being able to move seamlessly between them both has huge advantages, right? I think the disadvantage that every large existing incumbent has is they can't get outta their own fricking way. And therefore, they can't leverage the asset they have while at the same time embracing the AI technology.
In theory, it's great to have an install base, all of its data, rather than an AI company, new AI company hoping to have that data, all that in theory. The problem is all the technical debt, all the feature debt, all the features you've promised those 1,000 customers, those 5,000 customers that don't give a rat's ass about your shiny new AI feature. The fact you have to keep them happy, okay, and not let them deteriorate, that can consume the majority of your engineering development time. It really can. I may change my mind, but Right now, the startups I've invested in with large install bases, I feel like it's friggin' cement shoes. This is why I think most of our unicorns will fail. Because you've got to be as good or better than Owen to make this transition. Most of them are going to fail. When I look at so many of these B2B unicorns, they just— it's so hard to do both. It's so hard. Unless you have this aggressiveness, war mode, great CEO, there's just no way you can do both.
