IP firms move from billing hours to building products

A year ago, I was afraid of private equity-backed IP software companies – they were going to eat me alive.

Then, they all got eaten by AI.

Now, everyone is using AI to run away from AI.

Before 2025, “normal” IP firms lived a precarious life. They had to make profit to survive and keep the team together. But, the competition was private equity-backed software companies – valued on a multiple of earnings, with new investments covering negative cash-flow. It’s difficult to compete against a competitor that’s structured to make a loss. Try, and you’ll go out of business.

Well, they’re no longer a problem – private credit dried up and revenue-multiple valuations are in the bin … thanks to AI.

Now the monster is bigger, but less scary. Why?

AI enables IP firms to develop new products. Faster. Although there’s a bigger, nimbler monster chasing you, IP firms can also speed up. Sure, ultimately, we’ll all get caught. Accept this, and you’ll again appreciate the joy of children playing catch – the faster they run, the closer the chase, the greater the joy.

A year ago, IP firms could spend 100% of their time standing still, billing hours. Today, a balance must be found between building products to run and billing hours for profit.