Navin Chaddha, managing director of venture capital firm Mayfield, believes AI will soon revolutionize traditional industries like consulting, law, and accounting transforming people-heavy services into scalable, software-like businesses
Speaking at TechCrunch’s StrictlyVC event, Navin Chaddha shared why he thinks “AI teammates” will eventually produce margins rivaling SaaS businesses though he also noted that trust-heavy industries like consulting won’t fall overnight.
AI + Humans = Better Business Models
AI won’t immediately replace human consultants, but it automates repetitive tasks, reducing dependency on billable hours. Instead of chasing major players like McKinsey or Accenture, Chaddha advises startups to focus on underserved markets:
AI-driven platforms can implement software (like Salesforce), create startup legal documents, or manage cybersecurity charging only when value is delivered, not for idle labor.
The Economics of AI Services
Chaddha foresees a future where service firms achieve blended margins of 60–70% by combining AI efficiency with selective human expertise. In this model, AI performs 80% of the work at a 90% gross margin, while humans handle the rest at a lower 30–40% margin making overall profits highly scalable.
He pointed to Mayfield’s investment in Gruve, a security consulting startup that grew from $5M to $15M in just six months using this model. Gruve boasts 80% margins and uses an event-based pricing model: “If you don’t get hacked, you don’t pay.”
Why McKinsey & Accenture Can’t Pivot Easily
Consulting giants like McKinsey, BCG, and Infosys are caught in the innovator’s dilemma, constrained by legacy models built on hourly billing, long-term contracts, and high human capital costs. Transitioning to outcome-based, AI-powered services could hurt their short-term revenue something investors may resist.
As one observer put it, “They’re addicted to predictable revenue and too tied up with existing clients to pivot.” In contrast, agile startups are moving fast from the bottom up, targeting underserved SMBs and gaining ground where incumbents hesitate to go.
What Is an AI Teammate?
Chaddha draws a clear line between trendy terms like “copilot” and what he calls true AI teammates digital collaborators that actively work alongside humans toward shared goals.
These AI teammates are domain-specific, such as an HR partner or security analyst, designed to enhance rather than replace human roles. Unlike copilots that mainly automate tasks, AI teammates have the potential to unlock entirely new markets and opportunities, delivering value beyond just efficiency gains.
Conclusion
While AI is set to devour labor-intensive industries, giants like McKinsey won’t vanish overnight. But startups that build AI-powered, outcome-based solutions for the long tail are laying the groundwork for a dramatic shift.
In 10 years, Chaddha predicts, today’s AI-first challengers will directly compete with industry titans by which time the very definition of consulting may be unrecognizable.
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