The $1.2 Trillion Professional Services Iceberg
General Catalyst's Playbook for Transforming Professional Services with AI
What are Professional Services?
Professional services are specialized services provided by skilled professionals to help businesses solve complex problems. These services typically involve expertise in areas like consulting, legal counsel, and accounting to name a few. Their core value comes from skilled human capital performing language-intensive, knowledge work.
Who is General Catalyst?
For those of you unfamiliar, General Catalyst (GC) is an “investment and transformation company”. This label is purposefully broad as they’ve borrowed strategies from both private equity and venture capital, while pioneering some of their own. They command over $30B in assets under management, and their portfolio included some of the most successful tech companies (e.g. Airbnb, Stripe, Snap).
What are AI-Enabled Roll Ups?
In August of this year, General Catalyst published an article titled “The Future of Services” which explained their AI-enabled roll up strategy. Here’s the TLDR of their strategy in 6 steps:
Identify a Legacy Service Sector: Target fragmented, traditional service industries (like property management, insurance, or accounting) that haven’t been meaningfully transformed by AI.
Assemble the Founding Team: Build a team combining three critical capabilities:
AI technologists with deep applied AI experience in that vertical
Industry experts who understand legacy service business pain points
Operators with proven M&A and integration experience
Build the AI Foundation: Develop applied AI tools that dramatically improve service delivery, delivering measurable change to profit (EBITDA margin).
Acquire Service Businesses: Acquire existing service companies in the target sector through M&A.
Integrate and Transform: Apply the AI tools to acquired businesses, transforming replicating the dramatic improvements to service delivery.
Scale Through Additional Acquisitions: Use the now proven playbook to acquire more companies, creating compounding growth while maintaining operational excellence.
They also revealed they have already put this strategy to work across at least 9 portfolio companies over the past 3 years and have achieved amazing results:
“The companies we back aim to take businesses growing in single digits to 10-20% growth through a combination of organic capability-led growth and acquisitions. They simultaneously aim to double profit margins, often targeting 30-40% margins. They are setting their sights on a new Rule of 60 standard.” - GC
What’s the “Rule of 60”?
The Rule of 40 is a key benchmark for SaaS businesses, stating that a company’s year-over-year revenue growth rate plus its EBITDA margin should equal or exceed 40%.
The idea is that a financially strong SaaS business should balance rapid expansion with profitability, and achieve net 40% growth across both for any given year. GC’s proposed Rule of 60 is a complete game changer, setting a significantly higher bar for their portfolio companies and investors’ expectations.
“Double-digit growth and operational efficiency are no longer a tradeoff; they reinforce each other. By expanding service capabilities and capacity, unlocking markets that once looked unreachable, and setting new standards of customer experience, these businesses are creating a new baseline for what services can achieve.” - GC
Why Professional Services?
The professional services sector represents one of the largest and most compelling opportunities for AI-enabled transformation. This broad sector encompasses legal, finance, insurance, accounting and many other industries, commanding a combined $3.1 trillion in annual revenue. Although a diverse category, what all members share is a breadth of language-intensive, knowledge work that AI is uniquely positioned to transform. The 2023 study from Felten et al. systematically ranked which industries face the highest exposure to AI language modeling capabilities. Reflecting on GC’s article, the top 10 results are striking:
Legal services #1
Financial services #2
Insurance agencies, funds, and carries ranked #3, #4, and #7 respectively
Private credit #5
Talent agents #6
Alternative investments #8
Accounting #9
HR #10
Further validating the potential for professional services, the recent 2025 MIT Iceberg Index highlighted these same industries as the opportunity 5x larger than today’s visible AI adoption.
Sizing The Opportunity
The Iceberg Index’s estimates the professional service occupations value at $1.2T
Orb’s SaaS value-based pricing formula reports 10-20% conservative value capture
The Professional Services’ AI Opportunity Conservative TAM = $120B - $240B
The professional services opportunity isn’t speculative, it’s validated by academic research, quantified by MIT, and already being executed by sophisticated investors like General Catalyst. The $1.2 trillion in occupational exposure identified by the Iceberg Index represents real labor value sitting in fragmented, legacy industries that have remained largely untouched by technology for decades.
What makes this moment different is the convergence of three forces: AI capabilities that can finally perform language-intensive knowledge work, a proven transformation playbook pioneered by GC’s portfolio, and fragmented markets ripe for consolidation. The Rule of 60 isn’t aspirational—it’s already being achieved by companies that combine AI-first operations with disciplined M&A.
For investors and operators watching from the sidelines, the window is narrowing. General Catalyst has a three-year head start and $30B in capital to deploy. The firms that move now to partner with the right AI teams will define the next generation of professional services. Those that wait will find themselves either acquired or outcompeted by AI-native players delivering superior service at a fraction of the cost.
About Rosenblatt
MIT also reports that partnering externally on AI-first products brings them live 6 months sooner and twice as successfully as internal builds. Rosenblatt specializes in AI transformation for mid-market, tech-enabled, professional services. We bring together AI leaders from big 4 consulting firms and founders from exited AI startups to lead companies from AI pilots to complete transformations. Click below to schedule a 30-minute meeting with our CEO and founder.