The $600B AI Gamble: Is Sales Tech the Answer?

If companies want the kind of returns that minstrels sing about, they have to be prepared to bet big on a future that isn’t quite visible to us.

Take AI infrastructure: Microsoft, Google and Meta together spent $40B+ on the space in Q2 – and there’s another $15B or so to add to the kitty when Amazon announces earnings Thursday.

“When will those bets pay off?” is what investors are asking. Based on current capex, Sequoia estimates a $600B “revenue hole.” Analysts are echoing this concern, asking Microsoft CFO Amy Hood for a timeline during the firm’s July 30 earnings call.

Her response: 15 years “and beyond” – a bit of candor that the markets didn’t love, with the stock plunging 7% in after-hours trading. It took Satya, with his futurecasting panache, to calm things down.

If the “revenue hole” is going to be plugged, Sales Tech will play a big part, which is a thesis that a16z has strong conviction around, shared through an article titled ‘the death of a Salesforce.”

For the record
The folks at a16z believe that the system of record – a $35B/Y cash cow for Salesforce alone – is up for the taking.

Platform shifts require a gut renovation of core architecture, they argue, and the AI revolution will require architecture that can thrive on unstructured data.

Salesforce and HubSpot are supertankers that can only slowly change direction, while upstarts like Day.ai can build natively for this new reality.

“No incumbent is safe,” the firm proclaimed.

Those keeping faith in the incumbents, however, believe that their clients – the Toyotas and Walmarts of the world in Salesforce’s case – aren’t going to switch that easily, which will give Salesforce time to adjust.

HubSpot, however, is in more immediate danger, because their core customers are SMBs, which move faster than Fortune 500s – that’s the low-hanging fruit for firms like Day.Ai, which was founded by HubSpot’s former Chief Product Officer.

a16z also highlighted how tools like Clay – (check out Topline E67 w/ the Clay Founders) – will enable intelligent pipeline development. They went on to paint a picture of AI agents managing the soup to nuts of sales, from prospecting to closing. I have a hard time with such predictions – especially from folks who have never sold a thing.

Sales is dead. Long live sales
The future of sales is closely tied to the future of Sales Tech, and we need time to get clarity on what that looks like – at least the colorful proclamations will provide some entertainment in the meantime.

In the near term, we still need to use today’s tools and our skills to drive revenue.

For many, this looks like automated data enrichment leading to AI-written emails (barf) sent to folks who show this new thing called a buying signal (eye roll again). It also includes AI telling sellers what to do.

For a select few, it might work.

See, those with Extreme Product Market Fit, low competition and a large TAM can drive momentum this way, just like in the past they could drive momentum with a sales team full of B players. The product and TAM plugged the sales talent gap. (Pre-Slootman Snowflake is proof of this.)

But for most of us, our reality is different. We’re trying to make a dent in crowded categories in which plenty of product substitutes exist. While many will still lean into maximum automation, others will put their chips on humans. They will recognize that it’s the harder strategy to get right, but in the struggle often lies the reward.

What does that look like? A focus on building a team of elite sellers and empowering them with great lead lists, top-tier research and easy-to-customize marketing collateral. Any tools will be just that – tools, to give the seller more time to use their drive, creativity and relationship-building to get results.

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