Sean Everett says 95% of AI projects are internal workflow automation, while external product AI is just 1-5%. Internal wins are easier to justify but often fail without real expertise. He argues companies need both tracks: quick operational wins plus a longer R&D engine for new customer capabilities, like ChatGPT did.
Chapters
Okay, happy New Year. It is basically the second day of 2026, and wouldn't you know it, I'm starting the year off feeling like, uh, a little under the weather, probably because of all the work and everything over the last year. So today we're going to talk about, uh, something that just keeps coming up. So in the world of AI, Have a lot of conversations with folks in 3 major markets: high-growth startups, mid-market private equity, and Fortune 250 companies. And there's really 2 approaches to this thing in terms of use case and strategy. The first one is internally focused operational workflow automation. Basically apply AI to running my company faster, better, cheaper, smarter, more efficiently, etc. The other one is external. So that would be delivering new capabilities to customers and potentially giving them new tools such that they can deliver new capabilities to their customers. So it's a bit of a fractal. It's like your customer and then their customer and then their customer, that sort of thing. So what about prevalence on these 2 things? Well, As you might imagine, prevalence for the first one, which is internal operations use case, way higher. I'd say probably something like 95% are focused on internal operations. And what's the reason for this? The reason for this is because it's easy for people to understand, right? So I own a company, I'm an executive or a board member at a company, I work inside a company. I spend all day, every day in my working life thinking about the job that I do. I know all the nuances. I know the frustrations. I know the pains. I know the things where it's like, man, this should be way easier, but it's not. And so, it's very easy for me to just easily leap and say, hey, just AI it. Add AI to that. Remember when there was like, hey, there's an app for that? Now, there's an AI for that. So, um, that's cool. So it's easy to understand. And so what you see a lot of these days is like some reports in the market where they're like, yeah, we've spent a lot of money hiring these giant consulting firms and strategy firms and build firms, and we did this thing and we had a pilot and we just pushed it off to the employees and said, hey, figure out a use case in this AI thing. And like, but we gave you training. Yeah. And we did some videos and some conferences and stuff. Shouldn't you be an expert on the world's most advanced technology that other people have spent decades of their life understanding? Aren't you a mathematician by now? You really should be. So, it stands to reason that, yeah, you're not going to get a lot of juice out of that turnip, especially if you're just kind of throwing— emerging tech spaghetti at a wall and hoping it's going to work out. I liken emerging tech to working with nitroglycerin. And given you have experience working with it, it's very powerful and you can do some pretty impactful things with it. But given you've never touched it before, it's probably going to blow you up. Same thing with rocket fuel is another analogy. If you don't know how to work with rocket fuel, your spaceship's going to blow up. The people that do, they know how to use rocket fuel, and it'll get you to the moon or Mars or, you know, maybe beyond the orbit of our solar system. So, that's the internal use case. So, everybody's doing it. They're having sort of mixed results because it's sort of like, yeah, we've never done this stuff before. So, you're going to need to hire somebody, an expert. To help you out with this stuff. I wouldn't settle for less. Like, if you go buy a lemon, you're going to get lemon results. I wouldn't suggest it. You're going to pay double, and it's not going to go well, and it's going to impact your job performance. So then, what's the next thing? Well, the next thing is the external use case. Why is this one far less prevalent? Like, 1 to 5% of the world is working on this. ChatGPT is a great example of this. Or Google's Nano Banana. They gave you something that you had never experienced before, and they said, hey, you can use this for free, and then after a certain point, pay us $20 a month because it costs us compute, costs us money to run this thing. Makes sense. But they gave you a new capability. Essentially, you've got your entire internet in your pocket, uh, at on-demand To get you whatever you want whenever you want it informationally. And now, in the last year, these reasoning and agentic AI things have come on board. And that's really like we're going to start doing some stuff for you, working in the background and doing these long-running tasks that can free up your time and, you know, have you spend some more time with your family instead of beating your head against the wall trying to like click a bunch of buttons on the internet all day. So, That's pretty cool. Why is this challenging? Why is the prevalence so low? Well, because you have to be creative. You have to think creatively. You have to be an inventor. You have to think of things new. You have to be an artist. You have to be in that mindset. And so, if you're not in that mindset, I'm going to say, hey, let's get a committee together and we'll get in a conference room and we're going to spend an hour. We're going to come up with, you know what, the world-changing product that's really going to like Change the trajectory in the course of our business, and we're going to make a ton of money, and recurring revenue is going to be off the charts, and we're going to be heroes, and like, we're going to be on the COVID of magazines, and I'm going to get a big old paycheck at the end of the year. But we're just going to spend an hour in a conference room with a bunch of folks that have literally never done anything creative before, nor have they worked with emerging technologies before. So yeah, that's going to go well too. So I sit here and, you know, I've been working with this stuff for like 3 decades, all the way on the foundations to math and like building creative next-gen wild projects. And a lot of my friends are creatives and artists and storytellers and you name it. And so even for us, this is a difficult challenge. And, it doesn't surprise me that like you're literally having some issues here. So, the question is like, what do we do with this whole thing? Hold on, we're going to take a water break here. Told you I'm not feeling so hot. Brought to you by Emergent, by the way. All right. So, what do we do about all this? Well, I think the first thing is you, you have to take it seriously, first of all, right? You're like, you're not going to nickel and dime this thing. And yeah, the whole world is going after this. It's everywhere. And so yeah, you may be sick of hearing about it, but it's coming for us all. I mean, this is a, this is a general technology that's going to be applied everywhere, every industry. Every level in every company, every use case possible in the physical and the digital world with robotics and, you know, internet AI agents. And so if you think about this as a matrix, right, where it's like every industry down the left side in like an Excel file, and then across the board is like every level, every operational workflow in an organization, that bingo card is just going to be completely filled out. Like every single square is going to be taken care of. So then, I liken it to email in the late '90s. So, in the beginning, the first couple of years, those companies that adopted email, it was different. It was differentiated. You could do more with less. You could run faster. You could deliver higher-quality service, better customer experience faster than sending snail mail or a fax isn't so great, kind of ran over the telephone wires. Picking up the phone, you have to do it one at a time instead of in a group. So those initial leaders earn some outsized penetration and market capture, right? Like, we're going to capture some more customers and deliver some more value, but pretty soon everyone catches up. And so the commoditization— everybody's doing the same thing. It's like having a website. Everybody's got a website. Like, Just because you have a website, it's not like, oh, magic, you've 10x'd your business in one day. It's just not. It's not a growth driver. So then what do you do? Then what is a growth driver? Well, that means you have to get creative. So the question really is, are you applying short-term thinking or long-term thinking or, you know, Like test question here, both simultaneously, where at the same time you've got these little, like a Gantt chart, right, of all these parallel activities happening. And you're sort of emerging tech innovation center, let's call it. But let's call this like operational and product invention department that drives growth. We'll come up with a better term for that, maybe emergence. Okay. Okay. Shameless plugs. And so if you run those in parallel, that means you can stack up these small little wins on workflow improvements. It means you may be a little bit further out in front of the market or catching up, right? Or staying static. And so you're executing that like drumbeat, da-dum, da-dum, da-dum, da-dum. Every week, every month, every quarter, you're releasing new updates. The team's being onboarded. They're getting more comfortable with working with these tools. You're doing some iterations on there. It's getting better. A flywheel starts to kick in and you'll get that kick where you'll start to accelerate. However, at the same time, you really need to be doing that like new capability aspect. And so this is like the R&D, where R&D in your organizations, research and development, innovation, invention, new product development, really meets growth, right? Because those 2 things overlap and they work together. To help really drive the future of the organization. So imagine if Apple stopped at the iPod, no iPhone, they just kept releasing iPods forever. Sure, mildly successful company, but they never would have had the iPhone systems integration project. Sure, like notwithstanding the technical difficulty of doing some of that stuff at a global scale and then the manufacturing and yada yada. And then the Apple Watch and the AirPods, etc. So You just gotta keep going. And so really, I think the new leaders of the new economy, which is now 2025 to 2035, the next decade, are gonna be these companies, these startups, these private equity firms that really take a different view. Even the Fortune 1000s, they take a different view and they say, hey, wait a second, like, I'm not gonna get just burned and like death by a thousand cuts by not executing these little small workflow improvement wins. Simultaneously, I'm going to marry that with our new capability engine, and I'm going to plug these things in. And so, basically, what you're doing is you're building a new engine for a new economy and a new generation. And that thing, as we always see, there's an S-curve, starts slow, starts slow, starts slow, and then boom, it tips, reaches critical mass, and that's when you get that upside. And so, the back end of that S-curve, we're 10 years away or whatever, Everything's accelerating much more rapidly now because we have all those infrastructure base layers. We've got data centers worldwide, we've got 5G internet, you know, we got Internet of Things, we've got a global 5.5 billion humans on the planet, we got social. So that's why these companies can go from $0 to $100 million ARR in like real quick, in 12 months, which is wild. So there's no reason why you can't as a business today, even if you're doing a physical product, right? Like, why can't you mix physical with digital? That is the real world we live in. Our attention is 100% digital, and then we walk around and sometimes interact with the physical world. So, that's a 10-to-1 difference. You're 10x attention digital to 1x attention in real world. And, 10x digital means I can move everywhere rapidly like wormholes all over the world, internet, products, brands, yada, yada. Physical, it takes me time. Like I gotta get on a plane, I gotta get in a car, I gotta like drive, I gotta walk somewhere, I gotta meet somebody. So that's a slower drip. So even if you're a physical product company or service company, like you've gotta find a way to like digitize and get some interesting internet products going to be touchpoints, even if it's like not loss leader, but just like break-even margin on that one. That flywheel works back around. I mean, this is an ecosystem play. And then you got to work with partners, right, who are like out there as well. And then like you're a distribution channel for them, they're a distribution channel for you, and like yada yada. So this stuff is really cool. It's really fascinating. Um, the strategy stuff, you can go insane a little bit. So my last piece of advice before we, you know, kind of call it here. Um, don't spend so much time like in the mental, in the spreadsheets, in the like, like fast-paced, uh, conference calls on Zoom or Teams or whatever. You gotta carve out some time where you're starting to feel like you get the quiet or you get something that hits you, the rhythm with the universe, and you start to build product from heart. from soul, because that's the connection point. We've all come across these products that just like land flat, or these companies, or these brands, or these services, or these restaurants. It's like real corporate, right? Where you walk in and it's like the antithesis of soul. It's just like cold, and it just like looks like it was designed on a spreadsheet. Like, I'm a spreadsheet guy, I love maths, but you get my point. So like, no shade, but, um, Like, that's just not gonna carry you forward. Like, and even in the design aesthetic of like homes and kitchens used to be stark white and flat. Now we're getting that richness back in. So, uh, I think overall, I think we're so much up here all the time that you really feel these artists' spirit coming out, especially now that these companies, brands, humans, even AIs that lean into these soulful approaches to product. And so, we're leading the charge on that. We're trying to be a lighthouse for that because we've been beating this drum for a long time. And, maybe the timing wasn't right, maybe the mindset wasn't right from folks, maybe it's just folks are busy. I got a life, I got a family, I got bills, I got expenses. I'm just trying to get dinner on the table. Get some rest and maybe spend 5 minutes scrolling to get some downtime. Lord knows I haven't even been to the gym. So, yeah, I think you got to dial down that intense, like, ah, running at supersonic speed, and you just got to carve out 5 to 10 minutes a day to just sit there and bake and think like, hmm. Some people do it in the shower. It's a good time to turn off a bit or do something else like the mindless cleaning and then Your subconscious can go. So, yeah, that's a little bit of thoughts on internal versus external AI use cases, a little bit of thought on brand, little thought on where things are headed in '26 through '35, '36, the next 5 to 10. Yeah. So, you know, we're around, reach out. We don't work with a lot of folks. Maybe, I don't know. 1 to 3 companies on a deep level every year. And then, we kind of skate the surface or do some specific one-offs here and there depending on where you are on that life cycle. We can drop in and help you get past a hump somewhere. But yeah, this is where a lot of our time, energy, and mental focus is these days because we feel it. It's we've done the strategy, but we also feel it. So when those two things like come together, and then you you start to see it like emerging there, it's just starting to peek out in the market across a number of different areas. And so we're starting to see like a boop boop boop boop boop boop, and you know, and then it's just going to keep coming. So we've been doing this long enough where like we see an early indication where that. beep on the sonar. The cultural sonar is starting to beep when it hasn't before. And, we've learned to listen after many years of pain and struggle and frustration. So, you can believe us or not. I'd say believe us. I believe us. I believe me. So, yeah, you got to trust your gut sometimes on this stuff. So, yeah, hit me up in the comments. Thanks, Sean. Yeah, if you're feeling similar stuff, let's chop it up. Let's talk about this. Uh, I love this stuff, so it'd be fun. Anyways, uh, here's to a great 2026. And, uh, yeah, love and light to everybody in the fam. And, uh, yeah, love to make some new friends this year, uh, especially if you're like an independent and like doing the thing the right way. Like, I'm here for it. All right, y'all, have a good one. Peace.
