Economists Andrew McAfee and Erik Brynjolfsson write about becoming an indispensable complement to cheap technology. As we prepare for a sale using the Step by Step Exit framework, how do we practically apply this economic principle to protect our margins from collapsing before we go to market?

Question

Tyler Smith · Accepted Answer

When technology makes a core service cheap and plentiful, the market value of that specific service plummets. If your business model relies solely on selling that commoditized output, your margins will collapse, and prospective buyers will heavily discount your valuation during your exit. To protect your business, you must transition your model to become the indispensable complement to that cheap technology. This means you use AI to generate the raw work product at a fraction of the traditional cost, and then you reposition your human staff to provide the strategic analysis, interpretation, and execution that machines cannot handle. In the Step by Step Exit framework, we focus on building a business that operates through Traction, where your systems and teams are optimized for high-value strategic delivery. Show potential buyers that your proprietary data and human expertise are what make the commoditized AI outputs useful to your clients. By packaging your services around outcomes and strategic advisory rather than hourly execution, you protect your margins and prove that your business model is highly defensible. This transition maximizes your valuation and ensures you can achieve a clean exit on your own terms.