Adapt to Gen AI or Die
I singled out FactSet (FDS) the other day as a company that should be able to take Operating Margins from 33% to 50% if management (FDS is looking for a COO), is serious about forcing all employees to leverage Gen AI tools. FDS is not alone. Companies need to adapt in order to capture LLM-driven efficiencies or die.
Anthropic’s engineers are 200% more productive (as measured by the number of commits), versus a year ago given all engineers have adopted Claude Code. There is no reason why FactSet, S&P Global (SPGI), Verisk (VRSK), Fiserv (FISV), Solera (private), CCC (CCC), FIS (FIS), MSCI (MSCI) and many other Info Services, FinTech, InsurTech and Enterprise Software companies can’t drive substantial Op Margin expansion by driving use of Gen AI tools across the entire organization, not just Product Development.
LLMs enable users to build automations that until now were too expensive, too complex, and simply not possible a year ago. For example, the personal AI agent that I experimented with over the weekend was 100% custom code generated by Claude Code, not the pre-configured integrations that Anthropic has rolled out. That simply would not have been possible for me to build and wire up last year. On the CEORater side, 80% of our data maintenance and on-boarding is now automated. That is up from 40-50% last month.
Terminal as a force multiplier: Claude Code in terminal has made me 4-5x faster than I was using Claude in the cloud (ditto for Codex on the OpenAI side).
Bloodbath coming. Employees who do not become well-versed in AI tools are about to get run over by AI. This applies to all facets of the organization: Product Development, Finance, Marketing, Sales, Support, etc. Employees who leverage LLM tools will be force multipliers for their employers. Employees who do not develop their AI chops will eventually get chopped.
I know of C-level execs who are playing with Claude Code and are building stuff. They are not former developers. So if your CEO/COO/CFO is playing with the tools and you aren’t, you’re in trouble.
Different companies will move at different speeds, but once C-Level execs start playing with the tools and see what’s possible, they think about the world differently. That’s when they take action within the organization.
Corporate staffs are about to shrink. Marketing organizations will be right-sized. Corporate Finance will flatten hiring. Customer support orgs will get nuked.
Great time to be an activist investor. Finding targets will be like shooting fish in a barrel. If a CEO is not moving fast on capturing LLM-driven efficiency gains, it is time for that person to be shown the door. Right now.