Products are out, brains are in | Mr. Market

Often, something that should be free is expensive. Ex: bottled water, pre-washed lettuce, filing your taxes, and a bunch more stuff.<br>Soon, softwar...">

Often, something that should be free is expensive. Ex: bottled water, pre-washed lettuce, filing your taxes, and a bunch more stuff.<br>Soon, softwar...">

Often, something that should be free is expensive. Ex: bottled water, pre-washed lettuce, filing your taxes, and a bunch more stuff.<br>Soon, softwar...">

Products are out, brains are in

15 May, 2026

Often, something that should be free is expensive. Ex: bottled water, pre-washed lettuce, filing your taxes, and a bunch more stuff.

Soon, software may become one of those things.

The question is: as the marginal cost of software production trends toward zero and the number of capable tools in any given category multiplies, does software still command the prices it does today? Or does the cost of software just freefall?

My guess is no to both. The cost probably goes down, but it doesn't death spiral.

Instead, the primary reason people buy software will change. Rather than buying it because they can't build it themselves, they may buy it because they don't want to build it or they don't have the time to spin it up or maintain it.

And when they're deciding which tool to go with, most will base their decision on one thing and one thing only: the judgement of the people running the software.

Liability in enterprise

One thing for sure is that massive enterprises in highly-regulated industries probably do not wanna build their own internal tooling, even when software is fully commoditized and democratized.

Rather than thinking purely about ROI, enterprise companies will ask the following when they're evaluating tools:

Who will probably not get me in huge trouble

Who can I trust to handle this part of my organization's future (ex: for a CRM, you're asking, 'who can handle my customer data safely and make sure my reps never look stupid or let anybody fall through the cracks')

Who is operating with enough foresight that I won't have to rip out this system, with all this data that I've spent all this time putting in, and start the long, slow, painful process of doing another eval and switching my whole team over and training everybody?

Soon, even small companies will be asking these questions. It'll be like how institutional investors evaluate fund managers. The fund's strategy can be replicated, but the alpha can't.

Investors have learned, after decades of painful experience, that past returns are a poor predictor of future returns, but decision-making process and intellectual rigor are somewhat better predictors. This is why the best funds pitch philosophy and mental models, not just track records. Software companies IMO should dedicate themselves to doing the same.

Decision quality as the #1 non-fungible asset

Classical economics identifies land, labor, and capital as the three factors of production. The twentieth century added a fourth: technology, or total factor productivity. The twenty-first century's contribution to this list, still underappreciated, is decision quality at scale.

To break it down real quick:

The cost of executing a decision has been falling relentlessly fast for a while because of automation, software, and now AI

But the cost of making the BEST decision about what to execute has not fallen at all IMO.

Decision quality is bounded by something that scales poorly: the clarity of understanding of a complex, uncertain situation. You can automate the execution of a decision but you can't automate judgement about the best decision to make in the presence of true uncertainty/novelty/imperfect information. And the future is nothing if not uncertainty/novelty/imperfect information.

While there are always adequate decisions that you can make mostly using historicals, historicals will not give you the BEST decision. That changes in little ways constantly based on dozens of small contextual differences.

If I'm a company, and I'm handing off some part of my business to somebody, I want to bet on the team I think is most likely to make the highest number of right decisions most of the time. Especially now, with things changing so quickly.

Companies that can see the future still have something valuable to sell.

Metaphor time :) Think of a tug of war

Say you have two companies with the same CRM/data warehouse/LLM APIs. They're both operating under the same market conditions and chasing the same customers. Almost everything is the same.

In this scenario, the outcome is determined by the cumulative quality of a large number of small decisions made by the teams at each firm.

These questions:

Should we prioritize enterprise or mid-market this quarter?

How do we sequence the product roadmap?

When do we invest in a new channel, and which one?

Each of these decisions has a distribution of possible answers. The best answer in each case is...