How AI agents will be the new software buyers

This article summarizes an episode of 20VC’s video series featuring Jerry Murdock, co-founder and former managing director of Insight Partners.

Image credit: Timmy Loen

Jerry Murdock, co-founder and former managing director of Insight Partners, warns that the tech industry is underestimating a major shift. AI assistants are about to become the primary buyers of software. If that happens, the traditional way of building and selling software will no longer work. Companies will need to rebuild their products from the ground up.

In his view, surviving this transition requires building for AI assistants first. Companies that adopt tools designed specifically for autonomous agents may win customers that legacy firms can no longer reach.

A coming market change

Many leaders think AI is just a new type of product. Murdock sees it as something that could destroy companies that don’t change. He compares the arrival of AI assistants to a tsunami that is still far out at sea but getting stronger.

He argues the force causing this change is not AI in general, but one part of it. “In this case, it’s autonomous agents,” Murdock notes. “Autonomous agents are, in my opinion, what the tsunami is about… We’re in the anticipatory period where we can see it coming.”

For older companies, this comparison is a warning not to feel safe. “What we have with the tsunami happening is a wake-up call to move to higher ground,” Murdock advises. “Don’t get caught on the beach when the damn thing hits.”

The problem with adding AI later
The usual response from older companies is to add a simple AI feature to their old products. Murdock argues this is a bad plan that, at best, only leads to a quick sale of the company before it becomes useless.

“The idea of ‘oh, I can just bolt on AI to my company’… It’s possibly true you can maybe get an exit,” he says, “but being AI native and thinking that way is going to make you a better company.”

This idea is already changing the market, as new founders who start with AI see older companies as outdated. Even large companies must change, or they will fail, as Murdock says, “In the AI business, you’ve got to be going where things are going to be. You can’t be thinking about yesterday.”

The new set of tools

A world run by AI assistants needs a new set of technology tools. Murdock describes a four-part system he calls the “Claw Stack,” which is designed to work in this new environment.

• Management: An AI assistant sits at the top, controlling the work and deciding which AI models and hardware to use for a task.
• Choosing models: The assistant chooses between different AI models, using expensive private models for some tasks and cheaper open-source ones for others.
• Using open-source tools: This system uses and helps build open-source models to save money and work better.
• Specialized chips: The system moves from all-purpose chips (GPUs) to more efficient, specialized chips called ASICs.

To explain the idea, Murdock compares this to the LAMP stack (Linux, Apache, MySQL, PHP), a set of open-source tools that helped build the web we use today. He predicts a similar set of open-source tools will power the economy of AI assistants.

As a result, this new system has a big effect on the computer chip market. As assistants choose the best tools, companies will use fewer of the same chips.

The new software customer

The new business plan