StrictlyVC Download Mayfield's Navin Chaddha on the $5 trillion AI services revolution
Jul 15, 2025
Navin Chaddha, Managing Partner at Mayfield and early investor in Lyft and Poshmark, discusses the revolutionary potential of AI in the $5 trillion services sector. He highlights how startups can thrive by combining human expertise with AI, making services more accessible to small businesses. Chaddha examines the vulnerabilities of legacy firms like Accenture and McKinsey as they struggle with AI integration. He also shares insights on outcome-based pricing and the ongoing conversation around job displacement versus the creation of new roles.
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AI to Transform Services Sector
- The $5 trillion services sector will be reimagined by AI teaming with humans to create intelligent businesses with software-like margins.
- The future services companies will serve small businesses priced out of traditional knowledge worker models using outcome-based pricing.
Groove's AI Success Anecdote
- Groove acquired a $5 million security consulting company and grew it from $5M to $15M in six months using AI-driven outcome-based pricing.
- They achieve 80% gross margin by charging only per security event, appealing to clients who can't afford full-time security staff.
Innovator's Dilemma for Legacy Firms
- Large legacy firms face the innovator's dilemma due to disruption in predictable revenue models shifting to usage-based pricing.
- Startups gain advantage by targeting underserved small businesses instead of competing head-on with incumbents.