Commoditizing Intelligence

Recently there has been a wave of uncertainty about the ability of the leading AI labs to defend your margins. There are two competing stories out there:

1. You always want to use the latest model for the best results.
2. Open source models are a few months behind, and so anything you do now, you will be able to do 10x cheaper in a few months when you switch to open source.

I think the right way to resolve this is through the jobs-to-be-done framework. LLMs are used for many many things. Some of them have a clear cap on performance - once you do the job, you can’t do it any better. Here are some examples:

• File a health insurance claim

• Call an API

• Extract structured data from a receipt

• Submit immigration paperwork

LLM usage for these will get commoditized - first people will perfect completing them with frontier LLMs and then switch to cheaper options.

Whereas other tasks have no skill cap and you can always do better on them:

• Design a fun videogame

• Write an oral argument to present in court

• Secure your application against hackers/hack into an application

• Write a tweet that gets attention today

The latter tasks frequently (but not necessarily) involve competitive dynamics. If those are present, you pretty much have to use the best LLM because your opponents will do that. Note that competition is not always direct - it can be general competition for attention, or a double sided dynamic like cybersecurity. The division between tasks cut across jobs and sectors, so there’s no clean “LLMs for law will get commoditized” statement that makes sense.

One implication for startups is pricing - if you are in the “defined success” category, you want to use flat pricing and drive your costs down. If you are in the “no skill cap” category, you will have to do cost-plus pricing.

---

Had my AI go through the various parts of white collar work and split them according to these categories - could be useful for people thinking about job security, business ideas, etc.:

Office, admin, and back-office operations
Defined success: scheduling, travel booking inside policy, CRM updates, invoice capture, expense checking, records lookup, document routing, standard status emails.
Hybrid: executive inbox triage, drafting sensitive follow-ups, coordinating across ambiguous preferences, prioritizing messy requests.
No skill cap: chief-of-staff synthesis, politically sensitive internal memos, stakeholder management, influence across departments.

Finance, accounting, insurance, and banking
Defined success: bookkeeping, reconciliations, AP/AR coding, statement extraction, expense audits, standard tax form population, claims intake, loan-pack assembly, KYC document collection.
Hybrid: close-review exceptions, standard underwriting, policy interpretation, baseline forecasting, routine investment memo prep.
No skill cap: investment theses, trading/investment strategy, M&A framing, capital-markets storytelling, complex tax strategy, fraud hunting against adaptive actors.

Procurement, operations, and real estate
Defined success: vendor onboarding, PO matching, shipment update communication, lease abstraction, title document review, contract metadata extraction.
Hybrid: demand planning, vendor scorecards, site screening, standard sourcing analysis.
No skill cap: supplier negotiation, sourcing strategy, site selection under uncertainty, development concepting, operational crisis response.

Legal and compliance
Defined success: filing forms, deadline management, e-discovery tagging, contract term extraction, redline comparison, policy checklist review, cite-checking, diligence extraction.
Hybrid: first-draft contracts from playbooks, research memos on settled issues, compliance analysis when rules are clear but facts are messy.
No skill cap: negotiation, litigation strategy, oral argument, novel deal structuring, jury persuasion, crisis response.

HR and recruiting
Defined success: resume parsing, interview scheduling, benefits Q&A, onboarding paperwork, policy document generation, candidate database cleanup.
Hybrid: candidate sourcing, debrief synthesis, performance-review drafts, compensation benchmarking, recruiter outreach that is somewhat personalized but still templateable.
No skill cap: executive recruiting, persuading scarce candidates, org design, manager coaching, culture work, delicate employee-relations handling.

Sales, account management, and customer support
Defined success: lead enrichment, CRM hygiene, quote generation, order-status communication, FAQ support, renewal paperwork, RFP compliance matrices.
Hybrid: account research, tailored outreach, discovery summaries, objection handling on standard products, success-plan drafting.
No skill cap: enterprise storytelling, multi-threaded account strategy, negotiation, save-the-account retention work, partnership development. Sales is often explicitly competitive, so “good enough” is rarely enough.

Marketing, PR, content, media, and design
Defined success: transcript cleanup, asset tagging, clipping quotes, template localization where fidelity matters more than style, routine reporting, metadata generation.
Hybrid: blog drafts, SEO briefs, campaign variants under an existing brand system, press-release first drafts, creative work inside a tight brief.
No skill cap: brand strategy, campaign concepting, viral or high-attention copy, narrative warfare, PR angle selection, art direction, editorial voice, game design, memetics.

Software engineering, IT, data, and cybersecurity
Defined success: calling APIs, boilerplate CRUD code, unit tests, code migration scripts, SQL generation for known schemas, ticket triage, dashboard building, ETL glue, documentation.
Hybrid: debugging in an existing codebase, code review, analytics interpretation, data-model design within known patterns, incident-response drafting.
No skill cap: product architecture, novel debugging, research engineering, security hardening, exploit development, red teaming, defense against live attackers. Cyber is the clearest case where relative quality matters continuously.

Product, strategy, management, and consulting
Defined success: meeting notes, KPI decks, status reports, requirements cleanup, market-data collection, standard business-case assembly.
Hybrid: PRDs, roadmap drafts, market research synthesis, operating plans, decision memos where the options are mostly known.
No skill cap: prioritization, pricing, org design, strategy under uncertainty, negotiation between stakeholders, consulting recommendations that actually change behavior.

Science, engineering design, architecture, and R&D
Defined success: literature extraction, regulatory submission assembly, CAD or spec documentation, standards checks, simulation scripting, prior-art search, lab note cleanup.
Hybrid: experimental analysis, design-option comparison, grant drafting, patent drafting from known claims, routine technical tradeoff analysis.
No skill cap: hypothesis generation, experiment design, novel mechanisms, architecture concepting, creative tradeoff selection, patent strategy, invention.

Healthcare administration and clinical knowledge work
Defined success: prior authorization, billing/coding, chart extraction, referral paperwork, discharge instruction templating, appointment and care-gap outreach.
Hybrid: draft assessments for common cases, patient messages, case summaries, routine care-plan generation.
No skill cap: difficult diagnosis, treatment strategy, counseling, multidisciplinary coordination, handling ambiguous cases. Human/regulatory oversight remains central, but the task economics still differ this way.

Education, training, and coaching
Defined success: objective grading, attendance/admin, rubric completion, quiz generation, standards-aligned lesson materials, routine tutoring for fixed-answer exercises.
Hybrid: essay feedback, lesson adaptation, curriculum mapping, progress summaries.
No skill cap: motivating a student, explaining an idea exactly right for a particular learner, classroom performance, curriculum invention, executive coaching.

Government, policy, and social-service casework
Defined success: permit intake, benefits forms, grant compliance reports, case-note summaries, records requests, standard notices.
Hybrid: case triage, investigation memos, inspection narratives, routine policy analysis.
No skill cap: policy design, legislative drafting, coalition management, speechwriting, diplomacy, crisis communications, intelligence analysis against adaptive actors.

Overall, I’d say there’s plenty of room for leading AI labs to defend their margins.