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Title: What's Driving the SaaSpocalypse

Link: https://tech.slashdot.org/story/26/03/02/0482...

An anonymous reader quotes a report from TechCrunch: One day not long ago, a
founder texted his investor with an update: he was replacing his entire
customer service team with Claude Code, an AI tool that can write and deploy
software on its own. To Lex Zhao, an investor at One Way Ventures, the
message indicated something bigger -- the moment when companies like
Salesforce stopped being the automatic default. "The barriers to entry for
creating software are so low now thanks to coding agents, that the build
versus buy decision is shifting toward build in so many cases," Zhao told
TechCrunch. The build versus buy shift is only part of the problem. The whole
idea of using AI agents instead of people to perform work throws into
question the SaaS business model itself. SaaS companies currently price their
software per seat -- meaning by how many employees log in to use it. "SaaS
has long been regarded as one of the most attractive business models due to
its highly predictable recurring revenue, immense scalability, and 70-90%
gross margins," Abdul Abdirahman, an investor at the venture firm F-Prime,
told TechCrunch. When one, or a handful, of AI agents can do that work --
when employees simply ask their AI of choice to pull the data from the system
-- that per-seat model starts to break down. The rapid pace of AI development
also means that new tools, like Claude Code or OpenAI's Codex, can replicate
not just the core functions of SaaS products but also the add-on tools a SaaS
vendor would sell to grow revenue from existing customers. On top of that,
customers now have the ultimate contract negotiation tool in their pockets:
If they don't like a SaaS vendor's prices, they can, more easily than ever
before, build their own alternative. "Even if they do not take the build
route, this creates downward pressure on contracts that SaaS vendors can
secure during renewals," Abdirahman continued. We saw this as early as late
2024, when Klarna announced that it had ditched Salesforce's flagship CRM
product in favor of its own homegrown AI system. The realization that a
growing number of other companies can do the same is spooking public markets,
where the stock prices of SaaS giants like Salesforce and Workday have been
sliding. In early February, an investor sell-off wiped nearly $1 trillion in
market value from software and services stocks, followed by another billion
later in the month. Experts are calling it the SaaSpocalypse, with one
analyst dubbing it FOBO investing -- or fear of becoming obsolete. Yet the
venture investors TechCrunch spoke with believe such fears are only
temporary. "This isn't the death of SaaS," Aaron Holiday, a managing partner
at 645 Ventures, told TechCrunch. Rather, it's the beginning of an old snake
shedding its skin, he said.

Read more of this story at Slashdot.

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