Another Casualty of AI Progress: Professional Services

The professional services industry, ripe for disruption, is about to get a heavy dose of AI, potentially shifting a $20 trillion market and leaving traditional firms in the dust. In his telling, Ethan Batraski, General Partner at the VC firm Venrock, says AI doesn't just offer incremental improvements; it fundamentally reshapes how expertise is delivered. He thinks legacy firms, built on "historical reputation and prestige rather than measurable performance," are about to face a reckoning.

There's more: he also says AI-native firms will offer clients superior performance, transparency, and scalability. As he notes, "when a new tax advisory firm identifies 40% more deductions or a legal firm wins 30% more cases, reputation becomes secondary to measurable performance." For smaller clients, AI democratizes access to expertise, while larger enterprises benefit from comprehensive analysis and seamless integration. This is a huge shift for professional services; we'll move from hourly billing to value-based pricing, shifting the power dynamic.

He thinks the key lies in AI's "software-like margins." This will allow firms using AI to operate at dramatically lower costs while delivering better outcomes, making the traditional, labor-intensive model obsolete. Think of it this way: AI will allow clients to get better services at competitive prices, while investors can reap the rewards of a high-margin, scalable business.

Batraski believes AI isn't just automating tasks; it's expanding the very definition of what professional services can achieve. I agree. And it looks like we're embarking on a new era where expertise is amplified, knowledge is institutionalized, and measurable results outweigh reputation. The writing is on the wall: embrace AI or become another casualty of progress.