Rapid Structural Diagnosis
These five questions can be answered in a first meeting with the right prompts. Here’s exactly what to ask:
For Question 1 (AI Replication):
“Walk me through what happens if a well-funded competitor decides to replicate your core functionality using AI.”
Listen for:
- Integration depth
- Proprietary data
- Workflow complexity
- Regulatory embedding
For Question 2 (Switching Cost):
“If one of your customers decided to switch to a competitor tomorrow, what would that process look like? How long? How much would it cost them?”
Listen for:
- Specific friction points
- Migration complexity
- Integration dependencies
- Not vague claims
For Question 3 (System of Record):
“What data do your customers have in your system that they couldn’t get anywhere else? How often do they query historical data?”
Listen for:
- System-of-record language
- Historical analysis use cases
- “Source of truth” references
For Question 4 (Services Layer):
“What does your implementation process look like? How long does it take? What does your professional services revenue look like?”
Listen for:
- Meaningful services investment
- Implementation timelines
- Services revenue percentage
For Question 5 (Compounding Data Gravity):
“Is a customer who’s been with you for 5 years more locked-in than a customer who joined last year? Why specifically?”
Listen for:
- Compounding mechanisms
- Not just habit
- Specific value accumulation
The Decision Rule
If the answers are clear, you have your classification.
If the answers are ambiguous, it’s middle. Pass.
This is part of a comprehensive analysis. Read the full analysis on The Business Engineer.
