Extract from Jae Um’s article “In the AI Era, Coherent Investment is the Cost of Entry”
Out of the box, it is closer to a utility than a tool. Its impact depends on user capability, varies widely across contexts, and is difficult to measure cleanly. These challenges break feedback loops that typically inform investment decisions.
In more dramatic but hidden ways, AI shifts work, introduces validation burden, and often displaces demand invisibly through substitution or in sourcing. A few clients recognize these opportunities and are acting now to exploit them. These comments from in-house counsel across Fortune 20 and PE-backed growth companies give concrete shape to scenarios of AI impact:
- • Threat of substitutes: “In some practices, I suspect ‘the phone stops ringing’ on certain types of work first, and the firm does not know why. The reason will be because clients find a substitute that costs a fraction of their fees.”
- • Bionic in-sourcing: “I recently did a ~$10,000 fee project with a $20/month product [and] a few of hours of my time. No demand or price signal ever entered the market.”
- • Competitive rivalry: “If a firm isn’t cannibalizing its own inefficient billable hours, we will find a firm that will.”
