Many SaaS stocks have been getting clobbered in public markets. Some see the “end of software“.
Is SaaS dead?
What seems to be happening:
- tough macro, cost cutting
- AI sucking the air out of the room
- SaaS vendors perceived as “last generation” despite best efforts to add AI quickly
- enterprise budgets for AI are not net new, they’re taken from somewhere (SaaS budgets cut)
- Bulk of budgets going to OpenAI/Azure etc because low hanging fruit to “do AI” (knowledge bot, coding)
- for the more specialized enterprise apps, customers feel like they can/should “build” internally rather than “buy”
What happens next:
- customers realize that “build” is a headache, not always the best option
- OpenAI / Azure etc can’t / doesn’t want to build hundreds of problem specific/ vertical specific apps
- Takes time, but legacy and new SaaS companies truly become AI-first (not just marketing), abstract away complexity of deploying LLMs
- macro environment eventually rebounds
- AIaaS becomes the new SaaS – what is old is new (unedited Sat morning thoughts)
- Question is what happens to all current SaaS unicorns and public companies as this transition happens
(unedited Saturday morning thoughts)