Enterprise AI's teenage years

A few weeks ago, a prospective customer told us they wanted to pause their POC with us. They were in the middle of migrating their core observability stack, they’d been talking to two other vendors in our space, and someone on their team had spent a weekend at an internal hackathon building a homegrown version of what we do. They wanted to see how the hackathon project held up before deciding what to do next. As we kept talking, we learned the observability data migration had been running for a few months but other parts of the stack hadn’t been figured out yet, so they weren’t sure how to evaluate AI SRE vendors — and they didn’t know we could help with some of the key pieces. The team invested months into evaluating, building, and migrating, but there were no clear priorities or timeline.

Enterprise AI is in a critical transition and maturation period – we’re calling these the teenage years. From 2023-2025, we were the “kid in a toy store phase” – budgets were unconstrained, and most shiny demos could find an excited buyer. The teenage years are going to be awkward and uncertain and that means that traditional enterprise sales patterns don’t work. This phase won’t last — the market will eventually settle back into something resembling traditional enterprise software — but the vendors who navigate the window well will be the ones still standing when it closes. That means giving up on the old playbook and meeting customers where they actually are.

Three things define how enterprises are buying AI right now, and none of them line up with how the enterprise sales motion was designed to work.

The first is genuine uncertainty about the future, and it’s the most obviously understandable of the three. The last twelve months of model and tooling progress have made any multi-year commitment feel risky. Buyers are looking at what happened when Claude Code and Codex took a step-function leap last fall, and they’re correctly inferring that there very well might be a next equivalent sea change in six or twelve months. Locking into a three-year contract with any vendor right now feels like signing a lease on a house you might want to leave before the paint dries.

The second is a sharply increased appetite for building in-house. The quality of coding agents has shifted the build-vs-buy calculus so dramatically that “let’s also throw together an internal version and see how it compares” has become a standard step in evaluations. We’re doing this ourselves: instead of keeping a web design consultancy on retainer, we recently rebuilt our entire website from scratch and wired it into a headless CMS, and the whole thing cost us less than $100 in tokens. The math that used to make in-house an obvious act of engineering hubris is no longer obvious. Of course, this doesn’t take into account the ongoing maintenance and the fact that same DIY effort could be applied to 10 other initiatives.

The third is genuinely chaotic decision-making. VPs who missed the last big trend – cloud, mobile, etc. – don’t want to miss AI. The customer we mentioned at the top isn’t unusual. We regularly see deals where buyers are simultaneously evaluating multiple vendors, building something themselves, and migrating an underlying tool that affects the whole evaluation — none of which they bring up until something forces it into the conversation. The speed of change has compressed everyone’s planning horizon to the point that sequential decision-making has stopped working.

If you’ve sold enterprise software before, your instincts are wrong.

The default response to a build-curious customer is to argue them out of it. You walk them through the maintenance burden, the opportunity-cost of engineering cycles, and the advanced features they haven’t considered. Normally, this is pretty compelling. Today, it almost guarantees you lose the deal. Building something yourself is fun and exciting and feels like an exercise of agency. The harder you push against it, the more it seems like you’re a vendor making a desperate argument.

You have two options here, and you have to pick the one that works best for you. The first option is to build something that adds value faster than the DIY solution takes shape – your product has to be configured and onboarded immediately. Anything longer than a weekend loses to DIY. The hackathon project isn’t going to have the same quality, but if your alternative is a 6-month enterprise sales cycle, a half-good solution today is better. By the time you’ve finished your POC, the customer has either built their own muscle around the homegrown version or moved on to whatever the next exciting thing is.

The second option is to become an enabler for the DIY engineers: Let them build an interface on top of your expertise, so they both get a sense of agency from building and move faster than they would have otherwise. This isn’t necessarily something every company can do, but enabling DIY-curious engineers can be very powerful.

The second instinct that’s wrong is pushing for longer commits and more structured POCs. Traditional enterprise selling rewards discipline here: show value, propose a multi-year deal, get the procurement process running, and get the buyer locked in. In the current market, the opposite is winning. The best AI companies we see are offering zero or minimal commitment upfront, getting customers onboarded fast, and growing contracts over time as value becomes obvious. This gives the vendor a quicker win while giving the buyer the flexibility in case the world changes again in a few months. An interesting paradox we’ve seen is that the flexibility to leave sometimes produces more investment in making the product successful – investment feels safe because optionality exists.

Finally, there’s the chaos of enterprise decision-making. Your risk is again in timing – time kills all deals, and the solution is, again, flexibility. Land quickly and efficiently, enable your product to become entrenched, and grow from there.

The transitional phase isn’t permanent, and the playbook that wins it isn’t the playbook you’ll need for the next phase.

On pricing, the current vogue for usage-based and outcome-based pricing is going to run into the wall of enterprise quarterly planning. Aligning what you charge for with the unit of actual work done is conceptually clean — it’s how consulting contracts have always worked — but enterprises are going to struggle to reconcile unpredictable monthly bills with quarterly forecasts. We’re already hearing about public companies having end-of-quarter panics over engineering budgets because spend ran wildly over. The likely endpoint is a return to longer-term, more fixed commitments — but with more sophistication about right-sizing commitments. The short-term will stay messy, because enterprises are correctly prioritizing flexibility now. The vendors who win the transition will be the ones who use the flexibility window to get embedded, then transition into more predictable commercial structures.

On the build-vs-buy front, we’ll likely see the euphoria tamped down. In the next year or two, an enterprise is going to make headlines for trying to homegrow a CRM, ERP, or payroll system, and it’s going to backfire spectacularly. The lesson won’t be “stop building”; it’ll be “build the things that are genuinely different for your business, and buy everything else.” In other words, the conventional wisdom will be true again.

Longer term, we think the market will eventually head back toward something that looks like traditional enterprise software — well-understood buying cycles, comparable feature matrices, predictable evaluation processes. The difference is that the companies running those cycles two years from now will be the ones who survived the in-between by abandoning the old playbook.

The temptation in a market this strange is to keep trying to make it behave the way the old market behaved – or to throw caution to the wind and do something totally different. Reality is as always somewhere in between. To push for a formal sales cycle or for the long commit doesn’t work right now. At the same time, we aren’t in an alternate dimension where the laws of physics are backwards. Enterprise software vendors like Notion, Vercel, and Datadog figured out how to deliver value to companies quickly over the past decade. That trend has spread everywhere today. What you ultimately need to understand is what your customers’ incentives are – those genuinely are different from 5 years ago – and how you can best enable them.

The transition phase is going to keep being chaotic for a while. The after is going to look a lot more like the traditional enterprise software market we all know. The window between the two is open right now, and the vendors who use it well will be the ones still standing when it closes.