Inflections & Business Models

I have been tentative at articulating what Moative is.

Are we an AI consulting company? Sure. We do conceive and implement AI solutions across the spectrum, ML to Automation. But, consulting isn’t a mere billing-rate game for us: It is a way to being in the know of what problems are worth solving with AI.

This choice informs the consulting company’s business model.

Consulting with a daring business model

We are premium (considering our team has a limited presence in the US and largely staffed by ivy league alums and returning expat data scientists who all are back in India after their global stints) but we also are daring with outcome-based models where we work at-cost and tag outcomes to equity- and revenue-share models.

Why do we do these skin-in-the-game type deals? We want the shortest path to trying out AI interventions in industries we like. Traditional consulting models create a vendor-buyer relationship. The partner spirit rarely goes beyond the vendor’s website copy. We cannot ask our clients to take a chance without putting our neck on the line.

Why not build a startup instead?

We do – not one but many; they just may not be startups in the traditional sense where you raise capital, build products, discover market fit, and scale.

We are not new to the startup rodeo. We intimately understand data, and intelligence products. We have built, scaled, and sold them from the ground up. So why aren’t we building agentic startups now?

Simply because, we don’t know the nature of the invisible asymptotes that we would encounter in each market.

We are not good at horizontal, foundational ideas like writing code engines or building AI context systems that are 1 or 0 ideas, that consume significant capital all the time. Eventually we have to become a prominent platform or will get eaten up by a hyperscaler. Single products in the AI infra space will hit the asymptote once the enterprise starts demanding consolidation.

Why aren’t we building a function automation company (like an ERP or Customer Success Agents), then? There are incumbents with moats. Not only do we have to play at the action layer (agents) but also own the workflow/context layers. Rillet is doing a fantastic job of this. We may have to raise capital, forward-deploy engineers, and manage ERP migrations to build critical momentum. We won’t have to displace SAP but just irk them enough to get acquired. With frothy valuations, unproven tech, and unproven adoption rates exit timings are just as hard as timing when to dock a spacecraft at the space station.

Building a decentralized S-curve launcher

Labels are important. We can easily be mistaken for a venture studio, a holding company, or an incubator. We are none of those.

We don’t come up with ideas and fund initiatives all by ourselves. What’s a studio without a fund? We may have hold-co structures but they don’t control the entities. We don’t incubate ideas for others.

I have been struggling to define who we are. Then I heard Krish (Co-founder of Chargebee) talk about S-curves in their recent podcast. When you hit the shoulder of the ‘S’ curve, growth slows. How soon can you stack various ‘S’ curves to continue the scale momentum separates the massively successful companies from the rest.

But ‘S’ curves are not easy. The parent organization is designed to induce friction against ideas (speed, org design, capital, etc.) as the scale becomes larger. The challenge for a scaling company is to resist this friction.

If only there is a magic wand wherein the ideas get all the support but none of the friction, they will take it.

Moative is building that decentralized ‘S’ curve enabler.

Courting conflcits. Enabling innovation.

Valley wisdom says that strategic deals in early stages never work. But when markets inflect, primitives change. What is changing now?

• The playfield is being levelled in every market. Distribution is an unassailable moat for scaled companies. They are willing to bring that to new ideas that sit at the edge of their roadmaps.

• AI of all kinds – forecasting, machine learning, deep learning, and automation – have gained legitimacy even among industrial segments. They are slow by design but are willing to adopt. They have the choice between Accenture and a startup that has raised their seed or series A. A boiler efficiency AI company that won’t be around in 3 years – that is unimaginable for a chemical plant. Data is available. Capital is available (not just the risk capital like VC). But what’s missing is the ‘skin-in-the-game.’

We asked ourselves:

1. What’s hard – building AI products or distribution? The answer is distribution.

2. What’s insurmountable – building AI products or speaking the language of the industry and breaking into their insular clubs? It’s the latter.

We worked backwards. We are front-running consulting in traditional verticals to embed ourselves into the industries through carefully cultivated relationships. We are building our vocabulary. We are delivering solutions through consulting, but our clients show where the problems are.

But what’s in it for our clients?

Shared upside. Our clients do not know what is possible with AI but they clearly know what does not work for them well now. Moative does not just offer solutions but gives them a second bite into the upside potential of the solution that goes beyond their organziations. We build solutions for our clients or their clients but once we see value, we build them out as companies.

Moative is only a year old. It’s all still early for us. But building a company through a platform inflection phase, where scaled companies struggle because of centralized structures, and multi-generational industrial companies open their checkbooks for ideas that are put to test within their own shop floors, is a once-in-a-century opportunity.

We do not want to be dogmatic about the play books of the last decade. We are iterating on our model seeking to unravel the friction in each conversation and turning it into an opportunity where the upside is shared as partners on a common pursuit.

Enjoy your Sunday!