The increased capabilities in AI, brought on by large language models, have greatly expanded the scope of work that can be automated by computers. Similar to the cost reduction introduced by offshoring in the 2000s, digital work is about to undergo another step change in cost reduction.
AI today is “hobbled”—it’s unable to drop-in and replace the work that humans do because of its limited planning ability, hallucinations, and inability to use legacy software tools. However, we can overcome these limitations with the right system design. There is an opportunity today to drive rapid adoption of AI-automation in existing industries, leading to an increase in free cash flow which can be used to fuel further growth at attractive margins.
The ability to improve operating margin through automation is dictated by Amdahl’s Law: “the overall performance improvement gained by optimizing a single part of a system is limited by the fraction of time that the improved part is actually used”.
We look for businesses that will succeed under Amdahl's Law. As of today, we're focused on accounting, compliance, medical coding, and commercial insurance—though we are constantly exploring businesses in new industries with high automation potential and loyal customers.