Workflows workflows workflows…I’ve probably written about this in the past (hard to keep track of everything I’ve written at this point, so I’m sure there will be some repetitive content!) but I wanted to circle back to it.
For SaaS companies, the conventional wisdom was that you developed a moat if you built a system of record - a platform that stored data. If you owned / controlled the data, you had a moat! Data has gravity. True, but that wasn’t the real moat. The real moat was the hundreds of workflows that grabbed data from that system of record and then got work done. Sometimes those workflows originated from the system of record platform itself. Sometimes the workflows originated elsewhere, and one stop of the workflow grabbed data from the system of record.
The real moat is owning the platform that the most workflows touched (and the platforms the most workflows touched was almost always the system of record). Swapping out the system of record was nearly impossible because it didn’t just mean porting the data to a new system of record, it meant rebuilding / verifying / testing / securing / etc ALL of the workflows. Many of these workflows were in the critical path or customer facing. The cost of going through this change management was nearly always greater than the value of swapping to a new system of record.
I think the same thing is repeating with AI, with a twist. In SaaS, the moat lived at the data layer. Workflows formed around to the system of record, and this is what made it so hard to rip out. With agents, we still have workflows, but those workflows start to become more dynamic vs static (for SaaS workflows). So now the moat / anchor moves up a layer. The moat isn’t a derivative of where the data sits (ie workflows touching data), it’s where the work gets orchestrated. This is similar to what I wrote about last week about the value of becoming the Clearinghouse.
So what would my take away be for founders? I think the instinct when you read this (the moat is now the orchestration) is to go try to build the orchestration layer from the start. I don’t think this should be the takeaway! At least that’s not how systems of record because what they did. Salesforce wasn’t the platform a thousand workflows touched from day 1. They started with something more narrow / niche, owned a single use case, got really good at that one thing, and then slowly expanded outward until more and more workflows were built around them.
I believe the agentic version will have the same playbook (albeit from a different starting point). Pick a single workflow (probably something that looks like it’s about to get commoditized), something that will become more important in the future but appears niche today (you want to be riding the right wave), and do this much better than anyone else. People will assume there’s no defensibility in this one niche (and why you’ll get underestimated).
Then use this one workflow / wedge as strategic real estate. Build other workflows around it that are adjacent. Then slowly build the orchestration layer around it all (the thing that manages, routes, and governs the agents doing the work). One of my favorite sayings is “startups aren’t static.” What you do today isn’t the only thing you’ll do. You’ll expand, go deeper in certain areas, etc. What’s important is that where you start is strategic real estate you can build around. Then you earn the right to “manage” (ie orchestrate) all of these workflows (ie agents)
The end state really is a new kind of system of record. In SaaS, the database held data and the moat formed around it in the form of workflows. In an agentic world, the “database” from the SaaS world becomes workflows. And the company that owns where those workflows get orchestrated I think will own the next moat.
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