RIP entry-level employment.

If the cost of intelligence and production rounds to zero, everything we invest in (including our careers) now has to pass a AI durability screen.

Case in point - consider the recent experience of a mid-level software engineer:

Life comes at you fast.

Imagine grinding away for decades, perfecting your craft and then poof….you’re no longer a coder, you’re now an AI supervisor.

A year ago the market was convinced software was the greatest business model ever created. Now we’re watching some software P/E multiples slowly “bleed out”.

Plenty of software businesses will survive but their long-term value is suddenly in doubt. You can’t pay a premium multiple on businesses that have lost a lot of pricing power (aka durability).

Of course there will be new, unforeseen jobs created by AI. But, entry-level knowledge work is already under pressure.

Candidly, I don’t see why an accounting firm would ever hire another entry-level bookkeeper. Small business accounting is essentially free as of today.

The same pressure applies to entry-level lawyers, management consultants, and “Excel monkeys” (aka financial analysts, which I once was). AI is getting close to expert-level financial modeling delivered in seconds at a tiny fraction of the cost.

I’m not going AI doomer here.

I tend to take the non-alarmist, long-term view. But pretending its business as usual feels naive. Thinking from first principles: How can ALL knowledge workers possibly complete with 24 hour, cheap, genius-level productivity?

Has everyone you’ve ever worked with been a super-productive, near flawless, co-worker with zero drama? Or have you worked with a few bozos over the years?

If AI simply replaces incompetence, whoops…there goes 10%+ of the workforce.

Production will rise, a meaningful percentage of jobs will be lost and plenty of us will need to adapt to a new playing field.

Otherwise we risk spending the next decade building careers, companies and investment portfolios around advantages AI is rapidly commoditizing.

This topic is for another post, but society impact of losing lower skill white collar labor will be profound. I’m excited my children don’t have to grind in Excel like I did but it’s a bit troubling.

Maybe I’m wrong, but I don’t think we get to put our head in the sand on this. The pace of change is accelerating and therefore, it is extremely difficult to predict what technology wins and who in the value chain captures most of the value.

Jeff Bezos has a framework I come back to constantly (apologies if you’re heard this from me before - I’m a broken record but we need to be reminded more than we need to be taught).

People always asked him what was going to change in the next decade. Almost nobody asked what wasn't going to change.

He argued the second question is more useful, because you can build a strategy around something stable. Customers were always going to want lower prices, faster delivery, and more selection. So that's where he invested.

To succeed in this new agentic era, we need to filter every investment decision through that same question: what won't change?

For example:

Ubiquitous robots be damned, people are still going to need / pay for:

Notice some themes? A lot of toll-booth type businesses. Physical necessities with real world, scarce assets.

Sure, there might be robots picking up your garbage someday, but guess who will still own the trucks, distribution routes, and most important landfills (which are local monopolies)….Waste Management.

Because trash companies are HARD TO KILL.

I’ve always had a soft spot for these “ugly”, Mike Rowe style of dirty businesses.

Things with permits, pipes, tracks, and rights of way that can’t be disrupted by a brilliant teenager and a computer in an afternoon. Companies that deliver services that we can’t possibly live without.

Notice what's not on the above list: the sexy story stocks, the "this changes everything" pitches, the businesses whose competitive edge is being just a little smarter than the competition.

Before you put money, time or effort into something, ask yourself:

That last one is the heart of how Evergreen invests. We’ve held some investments for close to a decade. The dividends were small out of the gate but have grown to double-digit yields over time.

Because the nature of moats is changing. Capital and code aren’t enough anymore. The mercenaries are breaching the castle walls. Businesses that look untouchable today might look a lot less special 5-10 years from now.

The same logic applies to how we spend our time.

Analysis, information, and output are being commoditized in real time. But skills built on trust, judgment, relationships, taste, and accountability aren't going anywhere. Human needs won't change.

So if you're deciding where to allocate your resources over the next decade, bet on what remains scarce.

Bet on the human part.

Either way, it’s a new day.

Welcome to the Thunderdome.

Brad Johnson

Evergreen Capital