Get my next post the minute it drops.

Howard Marks is not a passing commentator. He co founded Oaktree Capital Management and built his name by navigating credit cycles with a cool head. His memos are written for serious investors who want judgement rather than slogans. Warren Buffett has previously said they are the first thing he reads when they land in his inbox, which gives a sense of how widely they are respected.

The boardroom conversation around artificial intelligence has, until now, fixated on model capabilities and upfront licence fees. This narrow lens is proving dangerously inadequate. Across FTSE 350 companies and mid-market PLCs, a silent cost escalation is underway, one driven not by the AI models themselves but, by the context they consume. Every document ingested, every customer interaction logged, every agentic workflow executed: each carries a chain of token consumption,

Recent research by NBER economists suggests these AI agents in particular, could drive a "Coasean singularity," a point where transaction costs fall towards zero, radically reshaping how markets function. In essence, tasks like finding information, negotiating deals, and enforcing contracts which are traditionally costly frictions in commerce, may become nearly instantaneous and costless.

Most leadership teams cannot articulate which they are pursuing. Or worse, they pursue all three simultaneously without acknowledging the different cultural infrastructures each requires. Productivity demands training and enablement. Automation requires trust and transparent communication about displacement. Opportunity needs permission to experiment and tolerance for failure. When you try to do all three at once without cultural foundations, you get confusion, resistance, an