Tomasz Tunguz - Rewriting the RFP for AI
Tomasz TunguzVenture Capitalist If you were forwarded this newsletter, and you'd like to receive it in the future, subscribe here. Rewriting the RFP for AI
My first job as a teenager was a dishwasher in a local coffee shop, earning $6 per hour. With my first paycheck, I bought a portable CD player & a pair of yellow Sony Sport headphones to listen to music. I asked the manager for a better scrubber, different soap, & a three-part sink for rinsing, scrubbing, & rinsing again. Then I fell into a groove washing dishes. Until the owner bought a commercial dishwasher. It changed the the way the kitchen worked. Within 90 seconds, the new Hobart washer cleaned & dried the plates, cups, & silverware that would have taken me 30 minutes. I spent my time loading & unloading instead of scouring : managing the inputs & outputs of the machine. The workflow software of the last 20 years will see a similar change. Since Salesforce catalyzed the SaaS movement with its IPO in 2004, software companies have been hard at work identifying & optimizing components of workflow. In sales, some of the workflows include lead capture, enrichment, scoring, outreach sequencing, CPQ (cost-per-quote), pipeline management, call recording/conversational intelligence, pipeline review, & forecasting. Some of these will become the sponges & three-part sinks of the future. As AI capabilities improve, software RFPs will change because the buying criteria will change. That’s an opportunity for startups : to redefine how software is bought. I wasn’t there when the salesman pitched the cafe owner on the Hobart. But that account executive rewrote the RFP - changed the buying criteria. Unlike the scrubber maker or the soap producer, a new dishwasher upstart doesn’t manage a legacy business. Older software companies have spent years and hundreds of millions of dollars training buyers to buy software in a particular way and much of that will change soon. As every great salesperson knows, the person who writes the RFP is most likely to win a prospect’s business. The RFP is the blueprint for the buying process. The dishwashing budget in the cafe remained & so did I, but our money shifted to mainitaining the machine to ensure maximum throughput : spare parts, maintenance, special detergent. My role was to keep the machine running. The Hobart is coming for workflow software. The companies that define the RFP - the new criteria for evaluating the software - will be the ones that thrive in the next era. |
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