Navin Chaddha, managing director at Silicon Valley’s storied Mayfield venture firm, anticipates that artificial intelligence will dramatically reshape traditionally labor-intensive industries like consulting, law, and accounting. Recently speaking about AI’s transformative potential, Chaddha argued that “AI teammates”—digital companions designed to collaborate with humans—could deliver software-like margins even in human-driven sectors. However, he acknowledged that disrupting markets where relationships and trust matter profoundly involves greater complexity than many tech investors realize.
During a discussion on this topic, Chaddha pointed towards historical tech shifts—from mainframes to personal computing, from internet-driven business models to cloud computing—each transforming how industries operate. He sees AI as not just another innovation but a categorical leap forward, enabling the automation of repetitive tasks, reducing workloads, and subsequently driving margins upward. Specifically, Chaddha described scenarios such as Salesforce software implementation, where traditional manual processes could increasingly be managed by AI, leaving only complex or unforeseen tasks for human oversight. In these circumstances, customers will pay primarily for AI-driven outcomes, effectively shifting away from time-based billing models toward outcome-driven pricing plans.
Crucially, Chaddha advocates focusing on underserved markets rather than directly competing against incumbent giants like Accenture, Infosys, or TCS. He cited a massive base of small to medium enterprises worldwide—tens of millions of businesses that currently lack affordable access to skilled knowledge workers. Offering tailored AI-powered services on demand would allow these companies to adopt advanced capabilities they previously could not access. Rather than charging by the hour or through fixed monthly contracts, startups utilizing AI-enabled solutions can adopt flexible, event-based pricing, aligning expenses directly to realized benefits.
Illustrating practical success, Chaddha highlighted a recent investment into Gruve, an emerging AI-focused tech consulting startup. Gruve’s founders, chefs behind multiple successful enterprises, acquired a modest security consulting firm and leveraged AI to materially raise its growth trajectory and profit margins. The company’s innovative, AI-driven approach resonated greatly with customers, employing outcome-based pricing structures significantly advantageous to both sides. Gruve quickly demonstrated the power of AI integration, tripling its revenues within just six months and achieving margins previously unimaginable for a typical service-based firm.
Asked whether McKinsey or Accenture could simply adopt these AI techniques and rapidly outmaneuver challengers, Chaddha explained the classic “innovator’s dilemma” facing large incumbents. Established firms often grapple with shifting from stable, predictable revenue models—such as long-term licensing or steady consulting fees—to riskier, asset-light, AI-based utility models. Thus, incumbents, captive to market expectations and revenue pressure, tend to delay adoption of genuinely disruptive innovations, inadvertently leaving significant market opportunities open for agile startups. Eventually though, Chaddha envisions that the major consulting and professional services companies themselves will have no choice but to incorporate the same AI-powered frameworks—transforming the marketplace long-term, though this conversion will likely take several years.
Mayfield recently dedicated a $100 million carve-out specifically targeting companies that build what it calls “AI teammates,” highlighting Chaddha’s bullish sentiment toward this rapidly developing niche. These teammates are envisioned as collaborators rather than replacements, designed to augment human efforts in shared tasks and responsibilities. On concerns about potential job displacement from AI’s rise, Chaddha acknowledged short-term challenges but expressed confidence in the long-term resilience of people and workforce dynamics. He compared current worries about AI disruption to past fears—for instance, administrative jobs endangered by automated software like Microsoft Word and Excel—only to see new professional categories emerge and markets expand rather than shrink.
Chaddha concluded by cautioning investors eager to enter the vibrant AI startup sector. He advised sticking firmly to disciplined strategies, refusing to succumb to FOMO impulses popularized by the markets. While massive potential exists, Chaddha noted that inexperienced investors stand to lose significantly amid frothy valuations and rapid hype cycles. Success, he states, lies in experience, patient evaluation, and maintaining an unwavering sense of long-term purpose rather than chasing fleeting trends.
