My current mental model basis what I am seeing around me and at InfoEdge in all our verticals - Naukri, 99acres, Jeevansathi and Shiksha.
1) AI is fundamentally deflationary for businesses.
2) When the cost of intelligence drops toward zero, the cost of doing many things drops with it.
3) Everyone becomes more productive but no one stays differentiated for long.
4) The natural outcome? Price compression. Margin pressure, Commoditization.
5) We’ve seen this with the internet, cloud, SaaS. AI is doing it to cognition itself.
But this is only half the story.
6) AI is deflationary for existing markets
and expansionary for new ones
The big mistake
7) Using AI just to do the same things cheaper. That’s a race to the bottom.
8) The real question is, What becomes possible now that was previously impossible?
Three ways I see AI creating real advantage
1) Solving problems that were too expensive to solve or not solvable earlier
2) Serving customers who couldn’t be served before
3) Delivering experiences and quality that wasn’t possible to deliver before
In other words
Don’t just lower costs. Expand the market. Because when capabilities commoditise , value shifts to,
– Distribution and Customer Relationships
– Brand
– Trust
– Proprietary data
– Ecosystems
The winners in the AI era won’t be the most companies which are the most efficient.
They’ll be companies with the best imagination