AI is Killing B2B SaaS

SaaS is the most profitable business model on Earth.1 It’s easy to understand why: build once, sell the same thing again ad infinitum, and don’t suffer any marginal costs on more sales. I have been writing software for more than half my life. In the last year itself, I’ve talked to hundreds of founders and operators in SF, from preseed to Series E companies. And everyone is constantly talking about the threat looming over the industry, that has changed how our entire industry thinks an operates: agentic AI a.k.a. your very own overzelous intern that always listens to you, available almost as cheaply as drinking water from a tap2 This isn’t just talk – the market is pricing it in. Morgan Stanley’s SaaS basket has lagged the Nasdaq by 40 points since December. HubSpot and Klaviyo are down ~30%. Analysts are writing notes titled “No Reasons to Own” software stocks. This is bringing an existential threat to a lot of B2B SaaS executives: How to keep asking customers for renewal, when every customer feels they can get something better built with vibe-coded AI products? The market is reflecting our new reality (Source: Bloomberg) Whenever I bring a new friend to the Salesforce Park, they are in absolute awe. And, the meme remains true that no one even knows what Salesforce does. Whatever they’re doing, they’re clearly earning enough revenue to purchase multiple blocks in SF. ↩ if you’re a tech company in SF, that is ↩