In Era 3, Scaling Is Easy. Solving the Right Problem Is Harder.

Lately, I’ve been revisiting some of the most basic fundamentals of professional services. Not because they’re broken, but because Era 3 is changing how fast firms can scale, and what gets exposed along the way. AI has made it possible to grow a firm faster than most founders ever imagined. Work that took weeks now takes days. Teams can do more with fewer people. Margins can expand quickly. On the surface, it feels like a new playbook.

But underneath the excitement, one truth hasn’t changed: If the problem you solve isn’t something a client is willing to pay to fix, no amount of technology will make your firm successful.

In fact, AI makes this more dangerous, not less. Because in Era 3, you can scale a firm rapidly while quietly scaling the wrong thing. That’s why I’ve been thinking again about Chapter One of The Boutique: the problem and how the definition of a “problem worth solving” is shifting.

Chapter One Still Matters, But the Context Has Changed

Chapter One starts with a simple idea: begin with the problem you solve for clients.

Is the problem real?
Is it urgent?
Will someone pay to solve it?

Those questions still matter. They always will but what’s changed is the environment around them. In earlier Eras, weak fundamentals slowed you down. Poor positioning, low willingness to pay, or fuzzy demand showed up as stalled growth or delivery strain. Friction acted as a natural governor. Era 3 removes many of those governors. AI collapses effort, accelerates delivery, and smooths execution. Firms can now grow despite underlying weaknesses that would have stopped them before. That doesn’t make fundamentals less important. It makes them easier to ignore, until they’re impossible to avoid.

What AI Actually Changes About “The Problem”

Most conversations about AI focus on tools and productivity. What is really interesting to explore is how it changes buyer behavior. AI makes many forms of work cheaper and easier to replicate:

• Research
• Analysis
• Synthesis
• First-pass thinking

As those capabilities become more accessible, buyers shift what they’re willing to pay for. Problems that were painful because they required time, labor, or specialized analysis are much easier to solve. Insight alone is no longer enough. What still commands premium fees are problems that involve:

• Judgment under uncertainty
• Tradeoffs with real consequences
• Accountability for decisions
• Alignment across stakeholders

AI doesn’t eliminate demand, instead it moves it. Firms that don’t revisit the problem they’re built around risk scaling into a shrinking pool of value. And all of this will happen faster than anything we’ve experienced before.

A Firm We’ve Observed

We’ve observed this dynamic with a firm north of $7M in revenue. For years, their value proposition centered on deep analysis and executive-ready insights. Clients paid premium fees because the work reduced uncertainty and helped leaders feel confident in their decisions.

When AI arrived, the firm moved quickly. They integrated AI into their research process. Delivery timelines were cut nearly in half. Margins improved. The team took on more work without adding headcount. From the outside, it looked like an Era 3 success story.

Then something subtle changed. Clients began pushing back on fees. Not dramatically, just consistently. They asked questions like:

• “How much of this is automated now?”
• “Can’t our team do something similar internally?”
• “This is helpful, but what should we do next?”

The firm hadn’t lost capability or talent. They’d lost pricing power. Why? Because the problem they were built to solve, producing analysis and insight, was being commoditized. AI didn’t hurt the firm. It exposed that the pain point they anchored to was shifting upstream. Clients no longer wanted more insight. They wanted help making decisions, aligning teams, and executing in a more complex environment.

The New Bar for a Problem Worth Solving

In Era 3, the original Chapter One questions are still necessary, but they’re no longer sufficient. A problem worth building a firm around today tends to share a few traits:

• It survives automation. If AI removes most of the pain cheaply, clients won’t pay premium fees.
• It sits close to revenue, risk, or reputation. Consequences drive urgency.
• It requires judgment, not just answers. Clients want confidence, not outputs.
• It creates second-order impact. The value is what changes after the work is done.
• It becomes more valuable as complexity increases. More ambiguity increases demand, not less.

These are the problems that resist commoditization, even as technology improves.

Why This Matters Most Above $5M

Firms above $5M are uniquely exposed in Era 3.

They already have credibility, clients, and momentum. AI allows them to scale faster than ever, adding services, increasing capacity, and improving efficiency with ease.

That’s what makes this moment risky. Revenue growth can mask eroding pricing power. Efficiency gains can hide weakening differentiation. Firms can look healthy right up until buyers stop valuing what they sell. In Era 3, success can carry you forward even as the ground shifts beneath you.

The Bottom Line

AI will separate firms faster than any previous shift in professional services. Not because some firms adopt it and others don’t, but because it accelerates everything underneath the surface.

If you’re solving a problem that is urgent, consequential, and resistant to automation, AI will help you scale faster than ever.

If you’re solving a problem that is becoming easier, cheaper, or automated, AI will help you discover that sooner.

Era 3 doesn’t reward effort. It rewards relevance. Before asking how AI can help you scale, ask the more uncomfortable question:

Is the problem we’re built around still one our best clients are willing to pay a premium to solve?

Because in Era 3, speed doesn’t save you. Only the right problem does.