Hi {{first_name | Investor Club}},

Here’s another founder take on the world of business and technology.

You see, for a long time, software was the best business in the world.

It scaled fast, margins were high, and it did not take much capital to grow.

That is changing.

I read a Business Insider piece last week that put words to something I’ve been feeling for a while: AI is shifting tech’s center of gravity from “bits” to “atoms.” In plain terms, value is moving back toward the physical world.

The part that caught my attention most was Travis Kalanick.

The Uber cofounder has launched a new company called Atoms, focused on manufacturing, food logistics, mining, and robotics. His thesis is simple: “Software has automated tasks of language and math, but the complete automation of the physical world — autonomy — remains largely untouched territory.”

I think that is exactly right.

Joe Fath, a partner at Eclipse, made the same point from an investor angle. He told Business Insider that what used to be a major advantage for software businesses is changing quickly. He said AI is not just automating digital work, it is “starting to make the physical world more programmable,” and “for the first time, AI is making physical industries meaningfully programmable.”

That idea matters.

Because once AI starts driving down the cost of digital work, the value starts moving somewhere else.

Michael Bloch, a partner at Quiet Capital, asked the question directly: “If AI commoditizes software, what’s actually safe?” One of his answers was “Anything touching the physical world,” along with operationally intense businesses and hard assets.

That is a big shift.

It also explains what the biggest tech companies are doing right now. As the article points out, Microsoft, Google, Amazon, and Meta are pouring huge amounts of capital into data centers, chips, networking gear, and energy. Even the largest software companies are leaning harder into physical infrastructure.

That’s a huge point that I think is easy to miss: AI complements physical businesses more than it replaces them.

Joe Fath said it well: “In physical industries, you still must build and operate real things. AI can't fully replace that, in the way it can take over a call center or act as a coding agent.” He also said, “Capital that once flowed primarily into software and consumer internet will increasingly shift in this direction over the coming years.”

Even Elon Musk framed it in a similar way. He said AI can improve the productivity of people doing physical work, but “anything that is digital” is what AI is likely to take over fastest.

None of this means physical businesses are easy.

Scaling in the physical world is hard. Musk has called it “production hell.” Joe Fath added, “You're not just solving a technical problem — you then must scale it. And when you're physically building things, scaling well is incredibly hard.”

But that is also the point.

The hard things are becoming more valuable again.

And that is why I’m excited.

At RYSE, we have always believed that the long-term opportunity was not just another software layer. It was bringing intelligence, automation, and control into the physical world.

That is where I believe the moat is going.
That is where I believe more capital will go.
And that is why this shift from bits to atoms feels so important.

Rohan Pandey, a former OpenAI researcher, summed it up in one line: “The future is physical.”

I think he’s right.

What do you think? I would love to hear your thoughts! And stay tuned for next week’s take.