By Zain Jaffer
The recent AI shake-up courtesy of DeepSeek’s R1 launch opened the industry’s eyes to new trends, and one that’s not as talked about as others: the race to build foundational models is sunsetting. DeepSeek’s LLM caused a stir, but with the industry settling down again, its lasting impact is unclear. Only time will tell if it proves to be transformative or a small ripple.
Meanwhile, companies like OpenAI and Anthropic are aiming higher, their sights are set on artificial general intelligence (AGI), for which LLMs will be a component. No matter how fast, powerful, or efficient they get, LLMs alone won’t be enough to achieve AGI.
There’s an ever-moving target now from building bigger models to creating real-world applications. The next breakthroughs will come from how AI is used, not just how it’s built. And the winners of this phase will be those creating AI-native applications that transform industries.
From Infrastructure to Application
Every technological revolution follows a pattern. The early days are defined by infrastructure building: laying the foundation for what’s to come. Then, as the technology stabilizes and becomes widely accessible, the competitive edge shifts from those who build the tools to those who use them most effectively.
So, what seismic changes can we expect?
- The Death of SaaS
SaaS as we know it now is fast becoming outdated. In a December 2024 interview, Microsoft CEO Satya Nadella suggested that traditional enterprise software could be on its last legs, and I believe that shift is already happening. Software has long been built around human users, charging by seat or subscription. But now AI agents are removing the need for humans in many workflows. Soon, AI-native platforms will not just help with tasks but will own entire workflows. AI agents will negotiate deals, process legal contracts, manage customer support, and optimize supply chains without manual intervention. - A $10 Trillion+ Disruption of the Services Economy
The $24 trillion services sector is one of the largest economic opportunities for AI-driven automation. We will see a whole host of careers change in what they mean, especially in less rigorous industries like marketing and sales. With enough innovation, this will be followed by regulated professions like law, accounting, and banking. Aligned with the point above, AI is set to handle much of the work traditionally done by large teams. As AI gets smarter and continues to lower costs and barriers to entry, many professional services industries will experience a complete structural change. - Singularity and Scientific Revolutions
Some AI veterans believe we’re on the brink of “the singularity.” Meaning, AI may soon surpass human intelligence, and in turn accelerate breakthroughs at an unprecedented pace. If this does happen soon, it will have an overarching impact across key science sectors. In healthcare and biotech, this means faster drug discovery, AI-driven diagnostics, and predictive and preventative care. Genetic engineering and longevity research could extend human lifespan, while AI models analyze vast biological datasets to unlock cures for diseases once thought untreatable.
Beyond medicine, AI will reshape energy, materials, and space exploration. Smarter battery storage will make renewable energy more efficient. AI-designed materials will be lighter, stronger, and more durable, which will transform construction and aerospace. If we were truly to reach singularity in this decade, then we’d be reckoning with something beyond redefining intelligence. It can very well redefine what’s possible.
What Companies Must Do to Stay Ahead
The next phase of AI adoption demands proactive leadership. Organizations must take decisive action to remain competitive. Here’s what I learned from scaling a company in a prior tech boom and what leaders should prioritize today:
- Adapt to the shift from SaaS to AI-native. The old model of selling software as a tool for humans is being replaced by AI-driven services that take action on their own. Now’s the best time to move beyond software licenses and user seats and start designing systems where AI automates entire workflows. Companies still operating as traditional SaaS businesses should ask whether AI can replace the service itself rather than just enhance it.
- Rethink organizational structures and hiring priorities. The standard Fortune 500 model, where large teams handle finance, HR, legal, and operations, is changing. AI-powered companies will be leaner, with fewer employees managing AI-driven departments. Rethink hiring strategies. Focus on AI-native talent who knows how to train, oversee, and optimize AI agents instead of manually executing tasks.
- Act like a startup (even if you’re not one). AI moves fast. Large enterprises that operate on five-year innovation cycles will lose to startups that iterate in weeks. Instead of waiting for fully polished AI solutions, leaders should adopt a test-and-learn mindset. Iterate quickly, deploy AI early and adjust based on real-world feedback to win a clear advantage.
- Stop thinking of AI as a productivity tool. Because it’s so much more than that! Many companies still see AI as “just a way to improve efficiency,” but that’s only half the equation. Just as mobile didn’t simply digitize existing platforms but redefined industries, AI will birth solutions none of us have probably yet imagined. Visionary leaders should ask: “If my industry were being built today, how would AI redefine it from the start?” This shift is already visible in AI-powered drug discovery, fintech platforms, and autonomous business operations.
- Build AI Partnerships. No company can succeed as a lone wolf. The most successful businesses will integrate into AI ecosystems, collaborating with AI-native startups, research institutions, and infrastructure providers. Be it gaining access to cutting-edge AI models, embedding AI into supply chains, or co-developing AI-driven solutions, being part of an AI ecosystem will be better than going at it alone.
AI’s evolution is entering a more pragmatic, results-driven phase. Companies that fully integrate AI into their DNA, rather than treating it as a side project, will become the defining industry leaders of the next decade.
Zain Jaffer is a tech entrepreneur, investor, and co-founder of Vungle, a mobile advertising platform that pioneered in-app video advertising and monetization. Now active as a VC and board member of PropTech companies, he focuses on AI applications and emerging technology trends.
