⚙️ From Filing Cabinets to AI-Powered CRMs

Happy Sunday Operators ⚙️

Today, we're witnessing another significant shift in how people manage their information. Large Language Models (LLMs) are ushering in the next evolution of information systems.

To create the best experience, the tools you use everyday to scale your operations will need to be rethought from the ground up.

Working with LLMs will lead to turning your unstructured data into structured data and then automated “agents” to help you make decisions. 

How did I come up with this idea? Attio gave me a sneak peek of their manifesto. (Read it here).

Attio is one of the few companies rebuilding what a B2B tech stack can do.

Let’s jump in. 

The Brief Timeline of Information Management

But first, a history lesson. How did we get here?

The 1890s brought the filing cabinet revolution. Previously, businesses were drowning in loose papers, making it hard to find specific documents. Enter Dr. Henry C. Yeiser.

In 1898, he patented the first vertical filing system, and suddenly, businesses could breathe.

For over a century, nothing changed. Even though document searches were simplified, they could still take hours. Organized chaos simply replaced pure chaos. 

But then we hit a new era. The digital revolution started in the 1980s with on-premise CRMs like those from Oracle and IBM, but they were expensive. This left small businesses behind.

The 2000s brought cloud-based CRMs, freeing data from the office. Salesforce, with a "No Software" mantra, launched in 1999 and went public in 2004.

• Work from anywhere? Check.

• No expensive on-site servers? Check.

• Need more storage? Click, not buy.

Now, small businesses could compete with larger corporations without breaking the bank. But in the 2010s, the one-size-fits-all approach began to falter.

This led to the rise of vertical CRMs. Industries have unique workflows and a doctor doesn't work like a car salesman (I hope).

Companies like Veeva for pharma, Procore for construction, and Clio for the legal field proved that tailored solutions were essential. Adoption rates soared because, for the first time, they fit how people worked.

The CRM market reached $58 billion in 2023 and is projected to hit $128 billion by 2028. Despite this, many are just digital Rolodexes with a sophisticated UI.

Until now.

Two Shifts in Software

We're on the verge of two major changes in how software is used. 

First Shift: The Great Data Unification

Throughout this evolution, information management systems have been in an eternal battle: structured vs. unstructured data.

Structured data is easy to analyze but rigid. It consists of neat rows and columns in databases and spreadsheets. It provides the what but not the why.

Unstructured data – emails, social media posts, and call transcripts – is rich in context and insights but challenging to analyze at scale. 80% of organizational data is unstructured.

Traditional CRMs store structured data but struggle to predict client churn or identify likely leads. This is where AI, particularly Large Language Models (LLMs), comes in to change that unstructured data. 

LLMs can analyze messy, context-rich interactions. Every customer interaction, support ticket, and LinkedIn comment can become a valuable data point.

We're moving from CRMs as passive data repositories to active business strategy partners.

LLMs don't just process information; they can generate action. Your AI-powered CRM can draft a personalized email for a high-value prospect, referencing their recent promotion. 

It'll suggest the best time to reach out to a client, based on their past behavior and current market trends.

Second Shift: The Rise of Silicon Valley Small Business (SVSB)

Let's be clear: automating these tasks isn't about taking away jobs. It's about increasing what one person can do.

AI-powered CRMs will free up your team from data entry, guesswork, and repetitive customer queries. They'll focus on building relationships, being creative, and making complex decisions.

These tools will give rise to Silicon Valley Small Businesses (SVSBs).

Here’s a definition of Silicon Valley Small Business:

1. Founding teams may resemble a Silicon Valley startup, but they’re different. They value autonomy and flexibility.

2. Teams stay small and run fast. Silicon Valley Small Business has 20 or fewer employees.

3. They’re growth-oriented and aim for efficient scale. Unlike small businesses, SVSBs aren’t just trying to build businesses for personal comfort. They want to scale quickly and efficiently, focusing on profitability and efficiency.

4. They bootstrap to profitability instead of relying on venture capital. They’re VC-literate yet uninterested in status, signal, or stability. “Success” doesn’t require a billion-dollar exit. Making millions is a win. These are lean, AI-driven businesses that can compete effectively with well-capitalized players.

Imagine a five-person startup using these tools to predict market trends, automate sales processes, and make data-driven decisions.

These folks specialize in problem-solving, critical thinking, and project management. As AI takes over tasks, there's already a resurgence in hiring business operations generalists.

With AI handling routine tasks like data entry, generalists can focus on strategy and cross-functional optimization.

Let's break it down:

• Productivity on Steroids: AI multiplies human capability. With an AI-enabled CRM, a single ops professional can perform the tasks of an entire department.

• Decision-Making 2.0: Making better decisions, not just faster. AI turns intuitive feelings into data-driven strategies.

• Customer Relationships on Autopilot... Kind Of: AI can handle most customer management tasks, but it also allows humans to build deeper, more meaningful relationships in crucial areas.

• The Death of Silos: Generalists ensure AI-driven processes work together as AI agents cross department boundaries.

How does an industry leader believe this will unfold?

I reviewed Attio’s CRM and AI manifesto before the public launch. Let's explore how Attio plans to make this shift a reality.

The Future of CRM: A System of Record, Context, and Action

How do we move from CRMs storing knowledge to taking action on our behalf? Attio plans to go from a system of record to a system of context to a system of action.

Let's break down the three systems Attio is building. 

System of Record: Attio Objects

This is where we are now. At the core of Attio's product plan is Attio Objects, which is like LEGO for your business data, but with infinitely customizable data structures.

Traditional CRMs force businesses into pre-defined boxes. If a company has a unique business model, tough luck. But with Attio Objects, you can design a data model that aligns with your specific needs, not the other way around.

Imagine running a software company selling to restaurant groups. With Attio Objects, you can create a data model to track store usage, tie it to the brand level, and roll it up to the group in one system. Can your off-the-shelf CRM do that?

It's about seeing your business as it is, not as a software developer thinks it should be.

System of Context: The All-You-Can-Eat Data Buffet

If structured data forms the skeleton of our data models, unstructured data provides the muscle that powers our understanding of what’s happening in the business.

Because the data in emails, calls, and social posts couldn’t be easily stored, the true meaning behind each interaction isn’t trackable.

Some consultants have tried to solve this issue with system context diagrams. These diagrams show the system as a single process at the center, surrounded by its external entities, interacting systems, and environments.

Can you imagine how many hours have been wasted building diagrams like this? After all that effort, you wouldn’t have the context behind each interaction, only a high-level overview.

This is where Attio doesn't just organize your data, it aims to understand it.

The goal is to pick up on context, sentiment, and hidden patterns quickly.

With Attio’s vision for a System of Context, your tools can automate data entry by ingesting your data into one tool.

(Attio’s ability to process massive workloads and millions of records in milliseconds is a positive sign.)

We’ll move from static diagrams guessing the impact of each touch point to dynamic, AI-driven understanding filled with context for each interaction.

In a traditional CRM, a customer email complaint is a support ticket. In Attio's world, it's a data point cross-referenced with product usage, interactions, and market trends.

System of Action: Your New AI Workforce

Now the fun part. Here’s where we get AI agents that don’t just suggest, but act. Every user interaction with the platform will provide intelligent guidance based on your work. 

An AI agent will not only remind you to follow up with a lead, but draft, personalize, and send the email at the best time while you concentrate on high-level strategy.

These AI agents can manage entire workflows, handling tasks like sending welcome emails and setting up training sessions when onboarding a new customer, adapting in real-time based on the customer's engagement. 

It's about letting AI handle repetitive tasks so humans can focus on relationships, problem-solving, and innovation.

Your (Potential) Future

I’ve painted a pretty picture, but how far are we from this existing in the real world?

Today's AI excels at pattern recognition and data analysis, but struggles with nuanced context. Right now, a tool would flag a customer's frustrated email as a churn risk, but miss the subtle sarcasm or cultural references.

Also, AI excels at decision-making when there is historical data, but struggles with unprecedented scenarios or ethical dilemmas.

But these tools will improve. And Attio? They're leading the way, focusing on the future of CRM.

Close your eyes and imagine.

It’s 2027, and you’re a one-person ops team logging onto your computer in the morning. Your CRM system displays a morning update:

• Pipeline analysis complete.

• Follow-up drafts prepared for top leads

• Ad spend optimized based on last week's performance.

What used to take 40+ hours of work now takes 5 hours.

The outcome?

You’ll focus on the important work - like talking to humans and dreaming up the next big thing.

Want to learn more about the future of CRMs? Check out Attio’s product vision and manifesto here.