How AI Could Democratize Technology Access For Small & Medium Businesses

Amid all the noise around artificial intelligence, I'm focused on how AI could democratize technology access for small and medium businesses.

The built world is highly fragmented. As the above graphic shows, 98% of construction firms in the U.S. have less than 100 employees—and construction is just one example of a sector in the built world where SMBs make up a majority of the market. For example, the same dynamic is true for single-family rental owners and materials suppliers.

What makes SMBs challenging customers?

SMBs have historically been a tough market to reach because they often:

• Have a high churn rate, which leads to an outsize customer acquisition cost relative to their lifetime value
• Require high-touch implementation and support, despite the generally small annual value of their contracts
• Desire full-stack services, which have lower margins than providing software alone

How AI can increase margins with SMBs

The next generation of SMB enablement winners will be built by entrepreneurs who combine SaaS and AI-enabled services into a centralized platform with product-led growth, because AI now makes it easier to service SMBs close to, or even at, software margins of 65% or above.AI-enabled services can include:

• Customer Relationship Management
• Customer Support
• Invoicing and Payments
• Miscellaneous Back-Office Support Functions

And if you layer in fintech and lending, it gets even more interesting...

Who is doing this well right now?

Fifth Wall portfolio company Construex, a LATAM-based construction materials marketplace with 300K vendors on their platform.