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upGrad Enterprise aims to build the world’s largest GenAI learning initiative to enable high-growth companies to embrace technology’s transformative business impact. Hosted by Srikanth Iyengar, CEO, upGrad Enterprise, the GenAIrous Podcast, will curate an exciting roster of global experts and guests, who are at the cutting-edge of Generative AI, and its varied applications in the world of business.
Welcome to the GenAIrous Podcast where we unravel the fascinating world of generative AI and its transformative impact on business globally. I'm your host, Srikanth Iyengar, CEO of upGrad Enterprise. At upGrad enterprise, we're building the world's largest Gen AI learning initiative, empowering high growth companies to leverage cutting edge technology. Each week, join me and the roster of global experts as we explore innovations shaping the world of work as we know it. Let's get generous.
Srikanth Iyengar, CEO upGrad Enterprise:Welcome to another episode of the GenAIrous Podcast. I am delighted today to have with me Sangeet Paul Choudary. Sangeet is a global thought leader, in the area of platform strategy. I think, you know, talking to Sangeet, it's very clear that his passion is at the intersection of technology and economics. And my conversations with him have been fascinating, and I'm sure that's what you will find as well. Sangeet is, of course, the author of a bestseller Platform Revolution.
Srikanth Iyengar, CEO upGrad Enterprise:Some or many of you on this, podcast would probably have heard it. He lives in Dubai, but he spends his time across the globe all the way from Seattle to Sydney. He travels talking to Fortune 500, Footsie 100, and, you know, CXOs and boards. So, Sangeet, it's a real pleasure to have you on the show today. Thank you so much for joining us.
Sangeet, Founder - Platformation Labs:Thank you, Srikanth. My pleasure.
Srikanth Iyengar, CEO upGrad Enterprise:Wonderful. Wonderful. And, Sangeet, I think the tenor of today's conversation will be slightly different. As you've seen, we've had other guests, on the show before, and many of them have been, practitioners who've committed from a specific point of view given their role or given the context of the organization that they work with. But I guess in your case, given the holistic vantage point that you have, I'm actually really looking forward to looking at how this inflection point impacts companies at a strategic level and how it could potentially be a source of competitive advantage or if not used properly, maybe even value destruction or value, recession in that sense.
Srikanth Iyengar, CEO upGrad Enterprise:So with that, let's jump straight into it. Right? So, you know, obviously, technologies over the years have significantly impacted competitiveness, but AI clearly seen as something that could have magnitudes of impact. So any initial thoughts there in terms of the the linkage between AI and competitiveness?
Sangeet, Founder - Platformation Labs:Yeah. Absolutely. I think, you know, when we think about technology, one of the things that I like to look at is, what is the key friction that is being removed? And if we just, run through a few technologies, you know, when, indexing and search came up and Google first came up on the scene, the key friction that was removed within search. Right?
Sangeet, Founder - Platformation Labs:And when you remove the friction in search, many more searches start happening, and, the market essentially grows because search costs have been eliminated. If you move a little further and you get to the sharing economy, Airbnb, and so on, the friction that was eliminated was on trust. And so when you eliminate that friction on trust, many more, transactions that depended on peer to peer trust now can happen in a centralized market based trust for the first time. And so if we now take it to where things are headed with AI, the question is, you know, what's the friction being removed over here? And in particular, I believe there are two forms of friction that are removed to a large extent.
Sangeet, Founder - Platformation Labs:When you think of Gen AI, your obvious reaction would be, well, the friction that's removed is in creative content. But that is, you know, part of the story. I don't don't, see that as the biggest piece. The friction with predictive AI has been, removing the friction in creating predictions. The friction with generative AI is more removing the friction with, in knowledge management and in really understanding deep, highly structured knowledge bases.
Sangeet, Founder - Platformation Labs:And over the past 5 to 7 years or so, good part of a decade, we've kind of been creating the enabling technologies to bring us to this point. Just like before predictive AI came into the scene, we had this whole decade of big data management preceding it. Similarly, prior to Gen AI I we've been, you know, investing in knowledge graphs. We've been investing in enterprise knowledge management. So we've kind of created a lot of the enabling technologies that need to come to the fore, to support, you know, removing the friction in knowledge management.
Sangeet, Founder - Platformation Labs:So then the question that comes in is, you know, when this friction gets removed, where does value get created? Right? And that's where a simple framework that I have in terms of how to think about, you know, who wins or, where competitive advantage is is that in any system, there are 3 key sources or key forms of advantages that you can create. You can create a relationship advantage. So if you look at a consulting firm, it's really exploiting a relationship advantage.
Sangeet, Founder - Platformation Labs:Right? If you have a really good relationship with the client, you don't, you need to be intelligent, but it's you're really monetizing the relationship than the quality of insight beyond a point. So there's a relationship based advantage. You could see the same thing for investment banking and for a lot of relationship based businesses. There's a workflow based advantage, which is where software plays a big role.
Sangeet, Founder - Platformation Labs:If you can solve a workflow and create an alternate workflow, then you have, your customers embedded in it and that creates an advantage. And then there's a decision based advantage. If you can own a very important decision for the particular client, then or a customer, then you have the ability to influence a lot of activities around that. Now when we think of AI, AI impacts all these three advantages to different extents. So a clear way in which AI first impacts is the decision advantage because if you make predictions more frictionless, decisions can abound even further.
Sangeet, Founder - Platformation Labs:Because in the past, if I had to work through Excel spreadsheets and I have to run my own calculations and now I have these predictions at different levels of certainty, and I just need to decide on the basis of all of that information, my ability to make decisions and trust those decisions improves. And so, what happens then is that if I've been using, say, another solution for making the same decision, it could be a solution like a, you know, a software solution or it could be just a consulting firm helping me do that or team helping me do it, and suddenly AI now can take over a lot of that, decisioning or decision support, then the power has shifted to whoever is providing the AI solution as an example. Right? So the power shifts from the previous source of decision to the new source of decision. In a similar way, a workflow advantage can be replaced by AI because if I'm if I'm currently working in a workflow and it's not solving my most important decision within that workflow, and if AI comes in and, takes over that decision let's take a simple example, corporate travel.
Sangeet, Founder - Platformation Labs:You know, they're corporate travel companies that essentially charge a premium not because they provide you the best travel solution, but because they provide you the best compliance solution with your corporate travel requirements. Right? Now if that if if that, you know, if if you embed an AI within that to manage to plan your trip and to, you know, work with a particular employee and really think through their, considerations and provide them the best trip, That AI solution has now taken over the decision. And so that then takes over the ability to start owning more and more of the workflow and take the workflow away from the the traditional compliance based advantage that the previous provider had. And similarly, you know, AI can, replace, a relationship advantage as well.
Sangeet, Founder - Platformation Labs:A simple way to think about it is if you think about resellers in any supply chain, resellers, exploit a relationship based advantage. If you are, you know, a a product provider and your resellers know the customers, they basically are able to translate the product benefit to the customer. But if you could product if you could really productize the product knowledge, which is you could create an AI assistant about the product knowledge, the first thing is that your base of resellers dramatically can increase because the friction in learning about the product has gone down. So over time, it can take away more and more of the power away from resellers. So these are, you know, three illustrations of how, AI can impact competitive advantage by attacking, you know, relationship advantage that exists, so workflow advantage that exists, or, a decision advantage that might exist.
Srikanth Iyengar, CEO upGrad Enterprise:Thank you for that very, very illuminating framework. The reduction of friction is something I relate to personally. And I think that example in corporate travel; I have traveled through my work as you have as well. So I can completely understand the number of minutes or hours I would have spent earlier in my career trying to figure out the best option that works for me and works for the company. So if that makes people's lives easier, nothing like it. So so for sure.
Srikanth Iyengar, CEO upGrad Enterprise:But, I think it's a very interesting point around the, unlocking of value because clearly, as you take friction out along the three dimensions you mentioned, relationship, workflow, and decision, a lot of value gets unlocked. And this is something we've seen happen again and again in industries. So I think I remember a conversation with, a telecom client almost 10 years ago who said that in the, you know, era of the fixed phone, the value lay with the telecom company. But in the area of the mobile phone, the value is shifted to the mobile services provider and so on. So talk us a bit through different ways in different industries how this value could be unlocked at a scale that we probably haven't seen before.
Sangeet, Founder - Platformation Labs:Yeah. So, you know, the the the interesting thing about any technological revolution is that, you unlock value, but at the same time, you do not necessarily have it redistributed in the same way that it is being distributed today. You know, there's always a migration in value. Now when the locus of value creation shifts with this it's not just the value being unlocked, it's also the value creation locus shifting, then you have an important choice in terms of how you structure your business model to capture this new value. So if you again take the Apple versus Android example, it's very interesting how the two companies have, you know, to to take fundamentally different approaches to capturing it. So both of them provide an operating system, but both of them have very different value capture pools. Apple captures value by creating highly integrated, highly, you know, high functioning devices. Android captures value in a very different way by ensuring that its search engine is being distributed to the maximum number of people. And so you'll see in their value chains.
Sangeet, Founder - Platformation Labs:And so the same thing then, you know, if we bring it back to AI, this the question that comes in over here is once value gets unlocked, where does it, you know, where does it move? Where does it get captured? Now there are 2 or 3 points of view on that.
Sangeet, Founder - Platformation Labs:The first point of view is that we'll see something similar to what happened with the Internet of things. When the Internet of Things first came up, there were a lot of startups that came up, which essentially said, we're going to provide hardware for cheap. We're gonna capture data, and we'll provide services and monetize those services, which sounded interesting because that is what the SaaS companies had done before that to some extent, and that is what, you know, social media companies were doing. But all of those companies were distributing software where the marginal cost of distributing software was nearly zero. But the marginal cost of producing and distributing, a physical product is not 0. So, eventually, what ended up happening was that the value was captured not in the software but in the hardware.
Sangeet, Founder - Platformation Labs:The traditional hardware companies like Honeywell, they bundled the software and they made their hardware even more valuable. So even though the value was unlocked at the software layer, the it was difficult to capture it at the software layer because of this dynamic, because the distribution cost of hardware was high and because incumbents already had solid profit pools.
Sangeet, Founder - Platformation Labs:Now if you look at today's cloud computing providers, it's very similar in terms of how AI fits with what they're doing because they've already invested heavily in building out cloud computing. And cloud computing is, in a way, one of the most defensible businesses today because it takes away all the fixed cost from the economy and concentrates all the fixed cost with 3 companies.
Sangeet, Founder - Platformation Labs:And if you have really high fixed cost and really high user basis, that's a very, very defensible business. It's a, if your fixed costs are being amortized across such a large number of users, it's very difficult for the new player to enter them. Now for these these few companies to then take in and say we're also going to run the models and, you know, what we're gonna subsidize the models and we'll continue monetizing the cloud compute. That's a very effective way for them to play that game where it becomes very difficult for somebody who's only a model provider to compete directly with them. Because, you know, the they they have the ability to to, cross subsidize it using the existing profit pool.
Sangeet, Founder - Platformation Labs:A similar question then comes up even with respect to, you know, when when a startup is coming in, into the space. If a startup comes in and it fundamentally uses one of these foundational models to create a workflow on top because today, the problem with, you know, LLMs as general purpose technologies is that they provide a standardized chat interface and then it's up to the learning curve of the user how well they're able to use that chat interface to solve different workflow than to what extent they can cover that workflow. And what you know, to some extent, the initial set of, wrappers that were created on these LMS were trying to solve that workflow problem. Eventually, I believe that where the value will shift will be up to a combination of a really tight workflow that is highly customer centric that has been solved with some advantage of a proprietary dataset. So if the dataset is not clean, is not proprietary, the advantage doesn't really set with that particular, you know, start up that's be that's running on top of a foundational model.
Sangeet, Founder - Platformation Labs:And you and, you know, essentially using this to then create, you know, an an inroad into the customer around which then you can either own the decision as I mentioned. If you can then own the decision, you can take over the workflow, you can take over the relationship. So those are, you know, ways in which, say, a start up can unlock value in the space right now.
Srikanth Iyengar, CEO upGrad Enterprise:Yep. Yep. Makes sense. Let me come to a specific industry because there's a lot of talk, especially in tech services about code generation that AI will really replace a lot of code generation that happens. And so what's your perspective as a technologist? How do you see that, working out? Because companies have armies of people working on code. Right? And then some of it is truly innovative. A lot of it is work that just gets need to then needs to get done if you if you put it that way. So how do you see AI impacting that space?
Sangeet, Founder - Platformation Labs:Yeah. And you're absolutely right about that. I mean, it's it's not just coding. It's a range of knowledge services where AI can start playing an important role. And I think that the key point over there is that when, you know well, one thing is that we already see AI acting as, an augmenting solution for a lot of service delivery, whether it is coding, whether it is writing, whether it is, you know, legal document checking and so on, AI is already playing that that particular piece, which going back to the, you know, original question, the original framework is that AI is reducing the friction in a lot of these knowledge based services.
Sangeet, Founder - Platformation Labs:Now when if whenever AI whenever you reduce friction, you dramatically expand the base of users who can now engage in that particular activity. So if I take coding as an example again, if you reduce friction and, you you simplify the whole, coding activity, you can you can basically have less trained, and and, you know, less trained coders now take on more sophisticated, programming work. So one, you know, one effect of that is that in general, there's an impact on the wage Mhmm. Levels in in in in any industry where technology comes in and starts augmenting at that level. Right?
Sangeet, Founder - Platformation Labs:But the the second, you know, play that's playing over here, which is that, just just as I give the example of the resellers, it's not just that now a lesser trained person can start coding as well. It's also and and that they, you know, the number of coders increases. Also that with the number of coders increasing, any system where they are working is getting trained on in real time to get even better at replacing them and at augmenting them. Right? And so I think, you know, in general, what I would start, what I would expect is that the p and l's of a lot of these services companies will dramatically change.
Sangeet, Founder - Platformation Labs:I think it is less effective for us to predict how many jobs will go versus how many jobs will remain. But what will certainly happen is that there will be wage pressure. There will be, you know, significant influx of lesser qualified talent doing, more sophisticated work because of which there's gonna be wage pressure, which then means that more and more of the returns will accrue to capital than it accrues to labor, if you if you think of it in those terms. But the second order prediction that I feel will definitely play out is that there will be these these businesses will become either higher margin or better, you know, better value to the client because the the cost at which you can deliver it will decrease. But I I really believe it will be more about higher margins because they will continue to exploit the relationships that they have.
Sangeet, Founder - Platformation Labs:And most of that higher margin advantage will accrue to the owners of capital in these these businesses. So I think that's the real way in which services businesses, whether it's software, whether it's consulting, will get impacted, as AI becomes more sophisticated in those domains.
Srikanth Iyengar, CEO upGrad Enterprise:I think that's a very critical point, the shift of value or accretion of value to capital over labor because I completely agree that, you know, jobs that exist today will not exist in their current shape or form, but I think new jobs will get created. Like you said, people with certain skills will probably do jobs that they would not have done before, and that value, the margin expansion will accrue with the people, the owners of capital. Obviously, what this means is that companies across the globe and even individuals are gonna have to reskill very, very rapidly. There's no question. And what we are sensing is there are different AI hotspots emerging across the globe.
Srikanth Iyengar, CEO upGrad Enterprise:Given your sort of global holistic view, where do you see AI skills being built at scale? Because clearly, this also is gonna lead to talent shifts in some cases.
Sangeet, Founder - Platformation Labs:Right. So, you know, I think the the obvious suspects are obviously the the US West Coast companies, the big tech companies that have been, you know, that that benefit, from not just the fact that they have business models that can support this, but that there's that they are in that talent ecosystem. They are, in, a funding ecosystem where startups are given the license to try all of this, and so they're, you know, available to be acquired and so on. So there's that part of it. There's a very significant push towards this that's happening, for example, in the Middle East as well.
Sangeet, Founder - Platformation Labs:And, that is one of the, big bets that say, you know, a a country like UAE is placing on it. There are very significant, bets in China. In in India with the, you you know, with with the with the DPI and the, you know, public data framework in place, there's a very different approach that is being taken, in terms of creating a more, transparent, AI and, an AI that can, where where you can actively meter to what extent a certain dataset has been used to train a certain model and and so on. So the the approaches are very different. I I I believe that, you know, unlike unlike, some of the previous, you know, shifts that happened, for example, with the shift towards consumer Internet and so on, where countries themselves were less strategic about it and they realized only much later how big that shift was.
Sangeet, Founder - Platformation Labs:With AI, it's been the other way down where countries have understood the geopolitical importance of being, you know, being a first mover in the space. And so I think of, you know, what a UAE is doing and, to a much bigger extent, obviously, what India is doing as an outcome of the efforts over the past decade. As as, you know, again, Singapore is another player similarly that is not just doing it at a from geopolitical perspective, but is also creating that AI ecosystem internally. These are, you know, some of the hot spots where you see a convergence of, a mandate or a push from the country itself, a significant ecosystem of talent and funding internally as well, and all of those things coming together. I see less of it frankly happening within Europe, which has taken which always takes more of a regulatory approach and it has taken even more so at this point in time. And now that there's such a significant amount of big tech regulation that is actually gathering steam, I would expect Europe to taking increasingly more of that, stands on this, front. But, you know, broadly, those are the places where I'm seeing, most of the hot spots emerge.
Srikanth Iyengar, CEO upGrad Enterprise:Makes sense. And, like, you know, just to relate to what you said, some of the locations you talked about have large sovereign wealth funds. So capital can also be brought into play at scale, which further changes the game. So so so understood completely. Sangeet, it's been an absolute pleasure having you on the show today. I mean, we've covered a wide range of topics. And once again, you know, I I enjoyed your book. And so the thought process, the clarity is, I think, something our listeners will really enjoy. So thank you so much, and thanks to all our listeners for listening in. And, hope to hear you all soon on another episode of The GenAIrous Podcast.
Srikanth Iyengar, CEO upGrad Enterprise:Thank you, Sangeet.
Sangeet, Founder - Platformation Labs:Thank you, Srikanth.
Srikanth Iyengar, CEO upGrad Enterprise:And that concludes another episode of The GenAIrous Podcast. We are very grateful to our guests for their time and expertise. A big thank you to our producer, Shantha Shankar in Delhi, and our audio engineer, Nithin Shams in Berlin for making magic happen behind the scenes. Join us next time, and don't forget to subscribe to GenAIrous wherever you listen to your podcasts.