The 3rd Form Factor: How AI Is Creating a New Class of Digital Products

I grew up in direct response advertising.

Not the brand kind.

The kind where every dollar you spend has to produce a return:

• bootstrapped businesses

• owner’s budgets

• no room for guessing

If an ad didn’t convert, you didn’t get to blame the algorithm.

You had to look at the offer and figure out why the market said no.

That world drilled this into my mind:

The market votes with money, or it doesn’t vote at all.

I spent years in that arena.

• Managing over $25M in ad spend across campaigns where every dollar had to make a return

• Building and leading a revenue team that produced $50M in a single year and landed us on the Inc. 5000 Fastest Growing Companies list

• Training thousands of entrepreneurs in workshops, programs, and live events..

Along the way, I was part of the agencies that helped some of the largest info product businesses online grow.

I’ve seen the full arc up close:

• Ebooks that became courses

• Courses that became coaching programs

• Coaching that became cohorts and communities

• Communities that turned into live events

Information is always the starting point.

But what actually becomes an asset is the ongoing transformation you facilitate for a community of people around that information.

I’ve also helped build service companies and agencies from the inside.

Scaling delivery, managing remote teams across 12+ time zones, serving clients at a level that earns multi year relationships.

I’ve lived on both sides of this: helping companies sell their expertise AND building the operations that deliver it.

All of that experience has led me to something I’ve been thinking about for a while now.

Every digital product follows a similar arc.

• You start with a thing (your offering)

• The market tells you whether it’s valuable

• If it is, you keep building on it until it generates consistent, recurring, exchangeable value

• Until it becomes an asset

I’ve been sitting with this idea because I believe there are now 3 distinct form factors of digital products.

And the 3rd one is the one most people in our industry haven’t fully worked out yet.

What Is a Digital Form Factor?

Before going further, let me define what I mean.

A form factor is the shape a digital product takes. Not just what it does, but how it delivers value and how it evolves over time.

Think of it this way:

An ebook and a coaching program can contain the exact same knowledge. But they’re different form factors. They deliver value differently and they evolve differently, and they become assets in different ways.

There are NOW 3 form factors:

Not stages nor a ladder you climb from 1 to 3. Each form has their own rules.

Form Factor 1: Information Products

This is where I grew up:

• Ebooks

• Courses

• Templates

• Playbooks

• Coaching programs

• Cohorts

• Communities

• Live events

The original information stays at the core. But the asset that emerges is the ongoing transformation you facilitate for a community of people around that information.

The evolution:

An ebook becomes a course. A course becomes coaching. Coaching becomes a cohort. A cohort becomes a community. A community turns into live events.

The requirement:

You’re always the one driving it.

The information doesn’t work without you in front of it. Your presence is the product.

Information products require YOU to evolve them. You go from author to coach to community leader. Every step up requires more of your time, more of your energy, more of you.

These are not drawbacks they are the limits of scale AND they are tradeoffs. You can still build a solid business here if you evolve this with form factor 3…

Form Factor 2: Software Products

• SaaS

• Tools

• Platforms

They evolve into more software. Sometimes into adjacent info plays: training libraries, certifications, communities built around the product.

The evolution:

New features, new integrations, new markets. The product grows through engineering and distribution.

The requirement:

Software requires a TEAM to evolve. Engineers, support, infrastructure, capital. The product doesn’t grow without a dedicated team behind it.

Form Factor 3: Actors

This is the new one.

An actor is an agent or orchestration that acts on your behalf.

It takes input, makes decisions, produces outputs, and moves things forward without requiring your ongoing presence at every step.

• It’s not a tool you log into

• It’s not a course someone takes

• It’s not software your client has to learn

It performs.

Yes, the 3rd one sounds like software. It’s not though.

Software still requires a user to log in, learn the interface, and do the work inside the tool. There’s always a learning curve.

There’s always a gap between “I bought the tool” and “I got the outcome.”

An actor produces the outcome.

You don’t log in. You don’t learn it. You don’t operate it. It operates for you.

Here’s what makes this 3rd form factor different from the other 2:

• Information products require YOU to evolve them

• Software requires a TEAM to evolve

• Actors require YOUR EXPERTISE to evolve, but not your ongoing presence in the delivery

You improve the orchestration & the orchestration handles the delivery.

When an Actor Becomes a Producer

Prob the most important thing to know about the 3rd form factor:

An actor that just automates a task is… well an automation. Nothing new.

An actor that generates market tangible value is a producer (aka it helps drive REVENUE)

An actor acts on your behalf. A producer generates VALUE on your behalf (that you can measure as revenue)

You can build an agent over a weekend.

There are hundreds of tools that will let you put together something functional in a few hours.

That’s cool..

But building an actor doesn’t automatically generate revenue.

An actor becomes a producer when the market pays for what it produces.

In other words: your actor CREATES VALUE.

What makes an actor a producer is:

• Your methodology baked into how it works

• Your accumulated knowledge driving its decisions

• Your positioning determining whether the output is something the market will pay for

A random agent that automates a generic task is not a producer.

An actor that applies your specific methodology, your distinct point of view, and delivers it at scale that wasn’t possible before… that can become a producer.

The expertise is still the asset. The actor is how you deploy it.

What I Built Inside My Own Practice

I want to be transparent about what this looks like because I’m building this right now.

Here’s 1 example:

Content scheduling alone used to take about 4 hours a month.

Getting the ideas together, writing posts, finding images, uploading everything into a scheduling platform, setting dates and times.

Necessary work, easy to fall behind on. And every time I let it slide, I felt it. Even with an assistant they still needed ME.

So I built a solution…

I created an internal series of agents that handles the entire content pipeline.

It extracts insights from my digital interactions, drafts content ideas, then when it’s ready: formats everything for the platforms, and handles the scheduling itself.

I don’t touch a scheduling interface. I don’t open an app. I don’t upload images or videos.

What used to take 4 hours takes about 15 minutes.

AND Im able to produce better quality images and videos to syndicate posts like this one.

But that’t not all.

That evolution now FREEs me to focus on the thinking that produces real value.

Instead of spending hours on scheduling logistics, I’m spending that time discerning the big questions and writing pieces like this one.

You may not believe me but Im actually typing into my keyboard right now, editing this for you 🙂

Im able to now use my time to deepen my ideas about value creation, about where our industry is heading, about how to help clients go further.

The 15 minutes of scheduling is nice but the space to think deeply is the real producer.

That’s the actor becoming a producer.

The work was already happening. The calls Im on, notes from calls, the conversations, the thinking.

All of that was already there. The orchestration stopped requiring my time to turn it into output, and that gave me the bandwidth to create at a level I couldn’t sustain before.

(And yes content drives revenue for me)

How the Assets You Build Become Producers AND Sales Assets

In my portfolio of clients, a few have this baked into their offering:

They’re creating entry level offerings that deliver immense value to their clients.

The kind of value that would normally cost 2-3x the going rate.

But they’ve encoding their methodology into a product that delivers value for the client, not just teaches the client what to do.

Here’s the best part:

These products aren’t just delivery tools or artifacts, they become sales assets.

When a prospect engages with the product, they get immediate value.

Real insights. Real progress toward their goal. And that experience naturally demonstrates why working with my client is the next logical step.

I’ve written about this in the post scope era (see below )

The idea that we have to earn the right to go deeper with clients. That we can’t just pitch and close. We have to demonstrate that we can move the client forward first.

These assets do that automatically:

• The actor over delivers on value

• takes my clients OUT OF execution

• That same asset becomes a sales mechanism because the value speaks for itself

• The relationship evolves naturally because trust was already built through the experience

In the old information product model, the course sold the transformation but the client still had to do the work. The gap between buying and achieving was large.

Most people don’t make it across.

These products close that gap by design.

They don’t just promise value.

They create value in the act of being used.

And what makes them work isn’t the technology.

It’s the YOUR methodology, baked into how the product functions, what it surfaces, and how it frames the next step.

I’ve written about the New Value Quadrant (how to sell in the agentic era) and Services Stack (what you’re actually selling) (see below)

If I were to map what these clients are building onto those frameworks, they’re operating at the top of the stack. The product is executing at the bottom. The value they create is happening at the level of transformation, not delivery.

Scaling Expertise, Not Just Deliverables

Let me add 1 more from my own practice.

Part of the go to market work I do for clients includes:

• Full scope research

• Signal detection

• Business case development

• Custom curated lead generation

• Growth strategy and roadmap

This used to take over a month to deploy from scratch. Not because the process was inefficient. That’s just how long it takes when you’re doing it right.

Now I’m able to produce this work significantly faster BUT that’s not the point. The point is Im now able to go MILES further with my clients and over deliver on value

To be clear:

I’m not outsourcing the thinking.

I’m producing value that other agencies legitimately charge at least $5,000/month for. Just for the lead gen alone… not including the signal detection, account scoring, ICP matrix, offer match, account dossiers, triangulation… etc.

I know because I helped build those agencies in the past 🙂

I’m able to do custom curated lead generation, signal detection, business case research, and help my clients execute on all of it. And I include this as part of my growth work because for me, the value is in the relationship and helping clients go further.

I wouldn’t be able to deliver at this level without developing and training my ai agents to do this work with me.

These actors are producers for me.

Now, the strategy is still mine. The positioning judgment, the market reading, the prioritization of what matters versus what’s noise… that’s still me.

The agents handle the research, the assembly, the documentation.

What this frees is my capacity to serve more clients at a depth I couldn’t have maintained before.

=

• More relationships + happier clients

• More value + clients stay longer (and get service they cant get elsewhere)

• More revenue + impact

I’m doing more of the work that actually requires me. And the agents are producing the activity that supports it.

Efficiency is doing the same thing faster. A producer creates something the market values that the previous form factor couldn’t sustain.

From a Decade to Months: The Speed of Value Creation

A friend of mine built a digital agency coming from a life in music ministry.

He wasn’t a business person in the traditional sense. He had expertise, genuine knowledge in a specific domain, and he built something around it. About a decade later, he’s exiting with earnouts.

That’s remarkable.

Yes he built a business that works on his behalf, generates real value in the market, and compounded over time into an asset he could sell. He deserves every bit of what that exit represents because he put in the years, the relationships, the iterations to make it real.

And I keep coming back to his story.

Because what he built is exactly what I’m describing.

His business is another form of a producer:

Something that ran largely without his daily presence and generated market tangible value. He built it through the long arc of a digital business finding its footing.

The question I’ve been wrestling with:

What if the speed to value creation is fundamentally different now?

Not by cutting corners or skipping the expertise.

By starting with the right form factor.

The expertise you’ve already built IS the asset.

The actors you deploy are how you let that expertise do work in the world at scale. What used to require building a full business with employees, infrastructure, and a decade of iteration can now be encoded into an orchestration and deployed in months.

Most people in our industry haven’t fully internalized this yet.

They’re thinking about AI as a productivity tool. A way to do more of the same, faster. And that’s fine. Efficiency is real.

But that’s not the 3rd form factor.

The 3rd form factor is a fundamentally different way of packaging expertise. Where the expertise keeps working whether you’re on a call or not. Where the market pays for the output of your thinking, not just your hours.

My Hidden Agenda: Human Flourishing

I want to be honest about why I care about this.

The best thing that can happen to a consultant, agency owner, or coach in this moment is to stop being trapped in delivery.

Not because delivery doesn’t matter.

Because when you’re trapped in delivery, you stop building. You stop thinking at the level that actually creates net new value for the people you serve.

There’s a meaningful difference between doing the same things more efficiently and creating something that genuinely didn’t exist before. Actors are only producers when they’re creating net new value, either for your clients or in how you run your practice.

You’re not less in the work. You’re more in the work that matters.

• You’re focused on improving the producer

• You’re serving clients at a deeper level

• You’re creating things you previously couldn’t because you were buried in execution

The actors handle the delivery. You handle the improvement.

That’s a different relationship with your expertise than most people in this industry have ever had.

The technology isn’t to simply replace you.

I believe this is what technology at its best should do.

Help humans go further than they could go without it.

So that more people can access your expertise, real thinking, and experience a transformation.

The end goal is flourishing.

You win

Your clients win

The impact of your work wins

Your team wins

Their families win

The community they live in win

and so on.

Here’s What I’d Do Next

If you’re sitting on expertise that could become a producer, you probably already feel the gap.

You’re doing work the market values. You’re delivering real results. But the model still requires you at every step. Your hours are the ceiling on what the business can produce.

You can close that gap.

Not by buying a tool or subscribing to a platform.

By:

• Mapping your methodology clearly enough that it can drive an orchestration

• Identifying what in your delivery actually requires you and what just requires your thinking

• Building actors that carry your thinking into the world while you focus on improving it

This is exactly the kind of work I do with clients.

If you’re a consultant, agency owner, or coach with proven expertise and you want to explore what the 3rd form factor looks like for your business, I’d love to have that conversation.

Connect with me here and let’s talk through it.

Do Good Work,

Raul

If this is your first time here:

Hi 👋🏼 I’m Raul, I help service founders redesign how they price, sell, and operate in the agentic AI era.

dogoodwork.io

When you’re ready to build the next version of your firm, let’s talk

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This essay originally appeared in the Do Good Work newsletter. Read on Substack and subscribe →

Frequently Asked Questions

What is the 3rd form factor of digital products?

The 3rd form factor is a new class of digital product that sits beyond services and SaaS. The first form factor was human-delivered services, where expertise required your hours to produce value. The second was SaaS, where software gave users a tool to do work themselves. The 3rd form factor is an AI-native producer: an orchestration of actors that carries your methodology into the world and generates market-tangible value whether you are on a call or not.

What is the difference between an actor and a producer?

An actor is an agent that automates a task on your behalf. A producer is an actor that generates value the market will pay for. You can build an actor over a weekend with off-the-shelf tools, but that does not automatically create revenue. An actor becomes a producer when your methodology, accumulated knowledge, and positioning are baked into how it works so the output is something clients value enough to buy.

How can a consultant or agency owner build a 3rd form factor product?

Start with the expertise you already have. Map your methodology clearly enough that it can drive an orchestration. Identify what in your delivery actually requires you and what just requires your thinking. Then build actors that carry your thinking into the world while you focus on improving the producer. Most service founders are already sitting on the asset; the 3rd form factor is how you let that asset do work at scale.

How are 3rd form factor products different from information products or SaaS?

Information products sell the transformation but the client still has to do the work, and most never make it across the gap between buying and achieving. SaaS hands users a tool but leaves them to figure out the expertise. A 3rd form factor product closes both gaps by design. It does not just promise value, it creates value in the act of being used, because the consultant’s methodology is encoded into how the product functions, what it surfaces, and how it frames the next step.

Why does the 3rd form factor compress time-to-value compared to building a traditional digital business?

Building a traditional digital business takes a decade of relationships, employees, infrastructure, and iteration to compound into a real asset. The 3rd form factor starts from a different place. The expertise you have already built is the asset, and the actors you deploy are how you let that expertise do work in the world at scale. What used to require building a full business with headcount can now be encoded into an orchestration and deployed in months.