AI Was Supposed to Replace Sales Teams. Here’s What’s Happening Instead

“Distribution is the new moat” is the hot new phrase in business circles. VCs are saying it. Consultants are saying it. Entire frameworks have been built around it. They’re right that distribution matters. They’re wrong about what distribution actually means. The popular argument goes something like this: AI has collapsed the cost of building software, so the only remaining advantage is to build an audience and get to those customers before a competitor. That’s the starting point. But it’s not a moat. Distribution is more than building an audience Anthropic, the mega-AI company behind Claude, has millions of social media followers and created one of the most viral products in history. Yet as of this writing, the most in-demand role at the company is… sales. You read that right. Anthropic is currently hiring more salespeople than engineers and product managers. The company that predicted AI would replace salespeople is now hiring hundreds of them. Here’s what Anthropic knows better than anyone: Building a viral product and massive audience is not the same as having a distribution moat. Real distribution muscle comes from the capacity to build relationships at scale, expand your footprint within organizations, and turn one-time customers into repeat business. In other words, real distribution muscle is built in the sales organization. The distribution moat is created through expansion and retention So, distribution is about landing new business? Yes, but that’s just the beginning. The real distribution moat starts to form when you have a system designed to retain and expand existing customers. Wasabi, a Boston-based cloud storage company, is a case study I’ve taught at Harvard Business School for years (full disclosure: I’m also on the board). They scaled from a few hundred thousand dollars in revenue to hundreds of millions. Their strategy? Good ol’ fashioned channel sales. Working with resellers is not sexy or on trend, but it’s one of the most durable distribution channels around. Resellers have relationships with the end users you want. You are creating essentially two layers of lock-in: One with the resellers and one with the resellers’ customers. Today, over 14,000 channel partners work hard to sell and expand Wasabi’s install base. But making this channel a success was not easy. Wasabi made two key changes: First, they aligned sales incentives to compensate their own salespeople for selling through channel partners. They created a special version of their product to encourage channel salespeople to sell Wasabi cloud storage over competing cloud and on premises storage. Channels sales reps started pushing Wasabi over Amazon cloud storage or EMC on premises storage. Second, they changed how they measured success. Onboarding channel partners is one thing. But could they actually sell the product? Wasabi decided on a KPI of “Time to Second Sale,” to measure and incentivize their top partners. Anyone can make one sale. The second sale is proof of a relationship. And relationships, not features, are what competitors can’t copy. Relationships—not distribution—are the real moat In the age of AI, everyone can build. But not everyone can sell, expand, and retain. Founders who treat distribution as audience-building are playing a different, shallower game than founders who treat it as relationship-building at scale. The moat isn’t how many people have heard of you. It’s how many people can’t imagine operating without you, because someone at your company took the time to understand their business, earn their trust, and keep showing up. AI can help you reach people faster. It cannot replace the human judgment, persistence, and relationship-building that turn a first sale into a second, a second into an expansion, and an expansion into infrastructure. Before you hire your next engineer, ask yourself: do you have the sales and customer success capacity to actually turn your distribution into a moat? BY LOU SHIPLEY, SENIOR LECTURER, HARVARD BUSINESS SCHOOL

Bots Now Outnumber Humans Online. Here’s What It Means for Your Business

It was only a matter of time before bots outnumbered humans on the internet, but many experts thought the flesh and blood majority would stand for a few more years. They were wrong—and the impact on business owners could be significant. New data from Cloudflare shows the number of bots accessing websites over the past seven days outnumbers human web users, with about 57 percent of web traffic coming from bots, who are busy browsing, querying, summarizing, shopping, researching, and scraping, increasingly via AI agents. “Welp, that happened faster than I predicted,” wrote Cloudflare CEO Matthew Prince in a social media post. “Thought it would be end of 2027, then early 2027, but agentic traffic [is] growing so fast that bots have now passed human traffic online for the first time in the internet’s history.” For business owners, that could mark the beginning of a new phase in how to handle business online. Instead of using the internet to attract human customers, it could be time to consider whether to structure your site to attract bots, say some experts. “Stop building for the human eye and start building for the machine mind,” says Rajiv Garg, a professor at Emory University’s Goizueta School of Business. “If an AI agent can’t read your data, you don’t exist.” The hurdle with that approach, though, is just as human visitors might either be customers or hackers looking for a weakness, not all bot traffic is the same. Some bots are malicious. Some are crawling for search engines. And some are sent from AI agents on behalf of potential customers. The challenge for businesses — and their tech teams — is figuring out which bots are which. “There is no protocol to verify whether an AI agent is acting on behalf of a real person, whether it has been authorized to perform its actions, or whether it is benign or hostile,” says Zach Meltzer, CEO and founder of Miami-based VeryAI, a ‘proof of reality’ platform designed to verify human identity and prevent AI-driven fraud. “Platforms cannot differentiate between a personal AI assistant booking a flight for its owner and a bot farm scraping data. The current workaround — forcing agents to impersonate humans via browser automation — is inefficient for legitimate agents and trivially bypassed by malicious ones.” There are also cost issues with bot traffic that business owners need to consider. Automated traffic can chew up bandwidth and impact analytics without generating any revenue. That could result in higher than expected bills, which could hurt the bottom line of companies that have smaller infrastructure budgets. While customer acquisition is expensive, human visitors are more likely to result in a sale, a subscription, or a viewing of content. Additionally, as bot visitors increase, it becomes more difficult for business owners to connect web traffic with customer demand. Garg suggests that the era of winning customers with creative web design is coming to a close, and future online iterations should move away from visual interfaces and more toward lean sites that emphasize behind-the-scenes data exchanges. “The internet is shifting from a destination [that] humans visit to an invisible infrastructure that AI agents navigate for us,” he says. “Your tech budget needs to shift from beautiful UIs to robust bot interfaces. Don’t build a better website. Build an MCP (Model Context Protocol) server that lets the AI ecosystem seamlessly transact with your business.” For instance, one SaaS company, Monday.com, has created an AI agent-only sign-up flow on its website. It employs a reverse CAPTCHA system that it says only AI can get through. That could increase your business’s chances of AI chatbots recommending your site to users, much like today’s search engines do. The shift from primarily human users to primarily bots is one experts have been predicting for quite some time. Automated traffic across the internet grew almost eight times faster than human activity in 2025, according to the 2026 State of AI Traffic report from cybersecurity firm Human Security. Cloudflare calls it the next phase of the internet’s evolution, but cautions that it will create challenges that current IT infrastructure and cybersecurity were not designed to handle. “IT leaders now face fundamental questions about trust, visibility, and control that traditional architectures can’t answer,” the company said in a blog post. “The organizations that recognize this shift — and redesign their infrastructure accordingly — will shape how the internet evolves. Those that don’t will find themselves constantly outmaneuvered.” BY CHRIS MORRIS @MORRISATLARGE

The Flaws in Mass Layoffs for AI Productivity Are Beyond Obvious Now

Just when I thought I was done calling out tech CEOs for horrible mass layoff decisions, one of those CEOs doubles down on the mass layoff rhetoric. So here’s what we’re gonna do. You know how, when your mom or dad tried to give you solid life advice that just didn’t stick, they ended up sitting you down and listing out the flaws in your reasoning one by one? Well, sit down, kid. And like I tell all my kids: Look, I’m gonna yell at all of you, but I’m really only yelling at one of you. You’ll quickly figure out if you’re the one I’m actually yelling at, but it’s not gonna hurt any of you to hear what I have to say. This Could Be Any Corporate Tech CEO My opening histrionics aside, I want to make it clear that I’m not really trying to smack anyone individually. What I’m about to criticize is not the work of a single misguided leader, it’s the culmination of a spreading misguided follow-on leadership strategy. I also want to apologize if any of this comes off as flaming the writer or the publication behind the article I’m going to use as an example, because it literally could have been any tech CEO speaking to any publication after cutting double-digit percentages of their workforce and being all super-pumped about the future. It is such a bad look, so good job exposing it. But I guess we’re all numb to it now, when we read things like: “What [tech company’s] mass layoff tells us about the future of work” I encourage you to read the article. Go ahead and give the author some respectful clicks, because they get it right at the end, with facts. But ultimately you don’t have to read it because I’m about to take apart the “fire-all-the-humans-and-replace-them-with-AI” strategy point by point. This Isn’t a New or Novel Strategy Let’s start at the top: “Zeb Evans, CEO of the collaboration software startup ClickUp, claims that this shift is imminent. Last Thursday, Evans announced on X that the company, which was last valued in 2021 at $4 billion, had laid off 22% of its workforce.” A couple of things are quickly evident. First, this appears to be the same “everybody’s gonna eventually do it” reasoning that Jack Dorsey used when Block laid off 4,000 people just a couple months ago. Second, it’s not a coincidence that the company was last valued in 2021 at $4 billion or that that might have been its peak. 2021 was the acceleration point of the Great Labor Arms Race, and Corporate Tech companies across the industry started hiring people ill-equipped for poorly-defined roles at salaries that would have broken the bank if money wasn’t so cheap—or even free, via automatically forgiven loans. But the pretzel logic that gets used here is what makes this follow-on strategy especially obtuse. When Cutting Costs Isn’t Cost-Cutting The CEO “characterized that reduction as not a cost-cutting measure, but rather a radical embrace of AI that will propel the company to the next level.” Quick question: When is cutting 22 percent of your labor costs not a cost-cutting measure? I’ll just let that one hang. I’m not a mean person, really. The Biggest Mistake a CEO Can Make “‘Most savings from this change will flow directly back into the people who stay. We’ll be introducing million-dollar salary bands. If you create outsized impact using AI, you’ll be paid outside of traditional bands,’ Evans wrote.” One of the best lessons a mentor ever gave me about leadership is: The worst mistake a leader can make is looking at a chart that goes up and to the right and believing that chart will always go up and to the right. It never works out that way, but the temptation to think it will is always there. Using my mentor’s advice, I have several questions: Is this CEO talking about paying a percentage of profits based on whatever metrics they invent to show “outsized impact created by using AI”? Does the CEO plan to keep paying that employee their $1-million salary when the “outsized impact created using AI” returns to the mean? Quick follow up: Does that keep going until it breaks the budget or is this just, like, an MLM thing? If not, and the CEO does the sensible thing that every other company in the history of companies has called “commission,” won’t that employee just hop to the next company when that company offers them a $1-million salary to do what they just did? And then finally, let’s do the cut-throat AI thing that serves as the reason for the 22 percent “savings” in human labor: Once that “outsized impact created by using AI” materializes, why do you still need that employee? Especially if you’re now paying them a million-dollar salary? Isn’t that more “savings” just waiting to be “saved”? Making a Fortune Babysitting That last question kind of introduces another question: What are we paying these employees a $1-million salary for? “ClickUp recently introduced roughly 3,000 internal AI agents to handle a wide range of complex tasks on behalf of its employees…. Instead of performing the work themselves, staff members are now expected to direct these agents and ultimately review the output to ensure it meets the company’s standards.” Are we planning on paying million-dollar salaries to babysit agents? Because the last year has shown us that’s not where the seven-and-eight figure salaries are going. The 100x Productivity Myth “Evans’s goal, according to his X post, is for AI to turbocharge ClickUp into a ‘100x org.’” I’ve been on the AI front for over 16 years, and I get called a “100x guy” or a “10x guy” a lot. I don’t know what that means, but it sounds cool so I just smile and say thank you and get back to the data. Actually, I do know what it means, in another context, because I’ve spent my entire career as an entrepreneur and/or consultant, and have worked with a vast array of venture capital and private equity firms and their strategies. One of those strategies, familiar to everyone, is to create ROI by what I’m going to dub “numerator-maxxing” (see, I can make up buzzwords too). The strategy starts out logical enough. The company that the firm is investing in is doing something very right. Their numerator—the value that the company is generating—is a lot higher than their denominator—the money and sweat effort and brainpower being put into the company. The firm believes that the company’s numerator is artificially low and is being constrained by a weak denominator. So the firm dumps a bunch of money into the denominator. That’s their bet. When this happens, the numerator almost always increases. Where it goes wrong is when, a couple years into it, the numerator has not increased by orders of magnitude to compensate for being weighted down by a heavy denominator. One hundred over 10 is a much bigger number than 1,000 over 1,000,000. Sorry for the math. So yeah. Machines are less weight in the denominator than humans, and you can also add exponentially more of them to the denominator without it getting much heavier. But what do they add to the freaking numerator? Where AI and agent productivity is concerned, no one—no one—is looking at the numerator. Well, no, wait. Gartner took a look. Vindication Isn’t What It Used to Be Like I said, the writer gets a lot right at the end, and does it without my cartoonish fist shaking. In response to the metric most commonly used to measure that “outsized AI impact”: “[C]ritics argue that “tokenmaxxing”—as this concept is known—is the wrong metric because it simply racks up AI expenses.” In response to the company’s incredibly circular claim that people who automate their jobs with AI will always have a job: “But if AI keeps taking over more tasks, ClickUp will eventually need fewer and fewer people.” However, the most damning truth came from a quick mention of a quiet study from Gartner on ROI from AI-as-labor-replacement, just three weeks ago, from which I wish the writer had pull-quoted: “Many CEOs turn to layoffs to demonstrate quick AI returns; however, this disposition is misplaced,” said Helen Poitevin, Distinguished VP Analyst at Gartner. “Workforce reductions may create budget room, but they do not create return. Organizations that improve ROI are not those that eliminate the need for people, but those that amplify them by aggressively investing more in skills, roles and operating models that allow humans to guide and scale autonomous systems.” Am I still Don Quixote for screaming about this for the last 16 years? In fact, I said the same thing yesterday when highlighting the unintended consequences of this misguided follow-on leadership strategy, and it still feels like the loud part being said far too quietly. It will always be the humans behind the tech that will make the tech successful—not the babysitters, not gamification, not agentmaxxing, tokenmaxxing, or numerator-maxxing. So if any of those leaders see this rhetoric and still believe these mass layoffs are about AI and not about mistakes made by leadership a few years ago in hiring the wrong people for roles that were never clearly defined at salaries that never should have been offered, I’m begging you, think twice before you agentmaxx. The flaws are now obvious and documented. There is nowhere left to hide. EXPERT OPINION BY JOE PROCOPIO, FOUNDER, JOEPROCOPIO.COM @JPROCO

Anthropic suspends all access to Mythos model after US government bans foreign nationals use

AI company Anthropic has disabled customer access to its most capable systems after the US government ordered it to suspend all use by foreign nationals, Anthropic said in a statement Friday evening. The move is the latest in a series of adverse Trump administration actions targeting the company. The broad directive to Anthropic’s Mythos 5 and Fable 5 models is one of the furthest-reaching actions the government has taken in response to the advanced capabilities of an AI model. Anthropic said the US government gave it the directive, citing “national security” issues. The company said the government didn’t provide specific details about the national security concerns, though it believed the government had “become aware” of a method of “jailbreaking” Fable 5, or getting around its internal safety guardrails. “We reviewed a demonstration of this specific technique being used to identify a small number of previously known, minor vulnerabilities,” Anthropic said in its statement. “These vulnerabilities all appear relatively simple, and we have found that other publicly-available models are able to discover them as well without requiring a bypass.” Anthropic said it had instituted several safeguards for its newest models to “greatly reduce the likelihood” that they are “misused for tasks related to cybersecurity,” noting they’ve received complaints from users about those guardrails being too strict. Anthropic also noted it has worked with the US government to “red team” Fable’s safeguards and that no model is completely resistant to any jailbreak. Anthropic said that while they are complying with the directive and removing access to the models for everyone, “we disagree that the finding of a narrow potential jailbreak should be cause for recalling a commercial model deployed to hundreds of millions of people.” “If this standard was applied across the industry, we believe it would essentially halt all new model deployments for all frontier model providers,” the company added. The restriction means that many foreign nationals working for Anthropic will not be able to touch those models. The Commerce Department, which issued the restriction, did not immediately respond to a request for comment. Axios reported the government’s directive would require Anthropic to obtain a license “for the export, re-export or domestic transfer of those Anthropic models.” Anthropic’s newest model, Mythos, has spooked the US government and Wall Street with its capabilities, which experts say can exploit cybersecurity vulnerabilities at an unprecedented pace. The model was seen as so capable, Anthropic initially limited its release to a group of key partners in order “to secure the world’s most critical software.” Anthropic released Fable 5 last week as a version of Mythos that is safe for general use. The model also helped spark the Trump administration’s recent executive order on AI, which asks companies to voluntarily share new models deemed to have advanced cyber capabilities with the government up to 30 days before providing access to other partners. One source with knowledge of early discussions of the executive order said the idea of banning foreign nationals from working on such models had been floated for that order, but the idea never made it into a draft. The government has had a complicated relationship with Anthropic. Earlier this year, the Trump administration blacklisted the company, declaring it a “supply chain risk” in military dealings over Anthropic’s insistence that the Pentagon include certain safety guardrails for the government’s use of AI in warfare. Anthropic sued the government over the designation as “unprecedented and unlawful” and notched at least one early win in the ongoing case. Despite President Donald Trump’s directive at the time of the designation for all of the federal government to cease working with Anthropic products, the White House has stayed in close touch with the company, and some parts of the federal government have found a workaround to continue accessing Anthropic’s models, especially after the release of Mythos. Anthropic was also deeply involved in helping draft the latest executive order, sources familiar with the situation told CNN, and its executives had been invited to the White House for a signing ceremony that was ultimately canceled at the last minute. By Hadas Gold