Artificial intelligence is going to rewrite how businesses operate and enterprises are going to avoid chasing existing markets to create new categories, drop the obsession with transformation and add-on approaches, treat AI as a co-founder and cut the latency from idea to prototype to near zero.
Those are some of the takeaways from the latest DisrupTV episode, which was essentially a college course in an hour.
Christopher Lochhead, 13-time #1 bestselling co-author and "godfather" of Category Design, and Sunil Karkera, Founder & Chief Engineer at Soul Of The Machine, were on DisrupTV providing a glimpse of what it'll take to build an AI-native company.
Here are some of the takeaways from DisrupTV Episode 403.
Avoid the "Existing Market Trap" in AI investments. Lochhead said in doing the research for "The Existing Market Trap: (a Primer) Escaping The 13 Deadly Sins that Destroy Companies, Careers and Portfolios," the data indicates that about $13 trillion in AI startup investments is at risk because too many companies are competing in existing markets rather than creating new ones.
Lochhead said:
"You can't create a new thing and let it be positioned as an old thing. Roughly $13 trillion is about to be lost inside the existing market trap. We have so many AI vendors today chasing existing AI markets. Everybody wants to be ChatGPT, everybody wants to be Claude. Everybody is chasing Nvidia. The big ah-ha here is the companies that will win are companies that choose not to compete in existing markets, but create their own."
AI is core, not an add-on. Successful companies view AI as foundational rather than supplementary, said Lochhead. "AI represents the greatest mega category creating technology in the history of humanity and so but yet, people still suffer from Google Brain. They treat AI like it's Google on steroids. They don't realize they should be creating every single element of their business with AI," said Lochhead. "If you look at the vendors, most of them have the wrong lens on AI."
Lochhead explained that you have to listen to the words and what they're telling you. When a vendor calls AI a companion, copilot or assistant, the company is really saying they're selling software and AI is an add on. "AI is not an add-on to a thing. It is the thing," he said.
Karkera has taken that AI-first approach and ran with it to build a company with digital and human labor. Soul of the Machine has been able to scale with a few dozen humans to do what would have taken hundreds. Soul of the Machine also charges differently with its new model.
Karkera said:
"Pricing is gross margin and milestone and outcome based. We're not charging for head count and equal in time. We're not running a spreadsheet for that. There's a big shift in how things are done. Our biggest team members are actually agents. We consciously use them, we drive them, we plan them and they provide so much augmentation to creativity and engineering."
The "Stop, Change, Start" approach and AI. Lochhead said people need to think of businesses and careers as pre-AI things that have run their course. AI is a co-founder of your career and company. When you build with AI that's what you should be doing. Designing new categories now begins with AI as a co-founder. "Our belief is that if you ae not using proprietary AI to do your work you're out of your mind," said Lochhead, who added that companies that don't use AI from the ground up will fall into the existing market trap. OpenAI and Nvidia created new markets and didn't chase existing demand.
"AI is essentially a giant 'stop, change, start,'" said Lochhead. "We're not transforming old businesses."
Karkera's company, Soul of the Machine, is an example of creating new categories. Karkera is a TCS and Wipro veteran and now is designing his startup to be an AI-native disrupter. "AI definitely is our co-founder," he said. "AI is the new soul of the new machine we're building."
"Vibe Creating" meets "Vibe Coding." New collaborative approaches with AI are transforming work: "Just like we've all heard the term vibe coding, which is how you have a conversation with AI to build software, you converse with software about a set of outcomes that you want to create, and the AI goes and builds that," said Lochhead, who added that AI democratizes technical skills.
Karkera said the AI democratization of technology is real. "I have non engineers in my team who are doing amazing engineering right now. It's basically a function of how much you can stretch your brain in terms of the creativity side, more than how much of algorithmic knowledge you have taught from school," he said.
Creative functions hit the same themes. Every creative effort needs to include AI.
Lochhead explained Vibe Creating.
"There's a vibe creating framework that goes like this: Puke prompt, partner, know. What most people understand is we've all been taught for our whole careers that when you interact with tech, you need to be precise. So when you're working with a spreadsheet, you need to have precise numbers. When you're building a document or a business plan or PowerPoint, you want to be precise. Garbage in, garbage out. We've all heard that a million times. Guess what? That's not how AI works."
Lochhead sat down with his AI, Lucy, said he wanted to work on his new book about the existing market trap and gave it a thesis. The thoughts were put into Lucy, and Lochhead went back and forth.
Forward deployed engineering. Karkera said Soul of the Machine's approach is to put engineers at the source of ideas. It's working since Soul of the Machine is landing enterprises at the expense of much bigger consulting firms.
Karkera explained.
"The forward deployed engineer or creator is right where the ideas are originated, and the latency between idea to concept is zero because of this you're actually creating and seeing while it's being created. That's a completely new way of doing things. There was an idea that was sketched out on paper by one of my customers. I actually took a picture of it and used AI to convert it to a real working prototype within 15 to 20, minutes. Then I added the customers' design system and it became an application by the end of the day."
