Schellekens Guy

⚡️ The most honest version of what’s happening is that a massive price correction is coming to professional services, and the correction isn’t AI destroying jobs. It’s AI revealing that those jobs were being paid 3 to 5 times more than they were worth, and now the price is coming down to what the work actually costs. The whole professional services industry has been systematically overcharging clients for decades. The pyramid model is a price discrimination mechanism dressed up as a service model. Clients paid premium rates for work that was mostly done by 24 year olds who Googled things and made PowerPoint slides, because the industry convinced them that the partner stamp on top made the work worth five times what it actually cost to produce. The associates were never worth $800 an hour. They were worth maybe $150 an hour as raw labor. The firm charged the higher rate because they could, because clients had no way to verify what the work was actually worth, and because the prestige of the firm name gave the output credibility that the output itself couldn’t have earned on its own merits. The partner doing narrative wasn’t worth $10,000 an hour either. The partner was worth maybe $2,000 an hour for actual judgment and relationship work. The rest of the rate was extracted because the partner could point at the pyramid of associates and justify the price through billable hours that were themselves marked up four or five times over actual cost. This is why AI is so threatening to these firms. Not because AI does the work better. Because AI makes visible what the work is actually worth. When a client can get a passable deck from Claude in twenty minutes, they start asking why they paid $500,000 for a McKinsey deck last quarter. The answer was always “you weren’t really paying for the deck, you were paying for the judgment and the brand.” But now clients can see the deck was mostly the deliverable they were paying for, and the judgment layer was a small fraction of the actual value, and they were getting charged ten times what the whole engagement was really worth. The industry has operated as a protected cartel for a century. The prestige of the firms, the credentialing of MBA programs, the networks of former partners placed throughout corporate America, all of it created a system where nobody asked too hard whether the fees made sense. It was just what you paid to be advised by McKinsey or Bain or BCG or Goldman or White and Case. The fees were part of the signaling function. Paying the fee proved you were serious. AI breaks that because it gives every executive an alternative that produces comparable output at a fraction of the cost. Once they try it and see the output is acceptable, they can’t unsee it. The entire premium pricing structure was based on the premise that you couldn’t get this quality of work anywhere else. When you can, the structure collapses.