The main point everyone seems to be making is that now with AI anyone can make a SaaS.
The initial reaction I think most people have to this is "SaaS companies/devs are in trouble."
I actually think the opposite is true.
With an outpouring of vibe-coded apps/SaaS, you have the new wave of vulnerabilities/leaks/problems that happen even with the best software. Except now, it's worse because it's being done on platforms "built" by people who haven't the slightest clue how they work.
This I imagine will, over time, erode trust in most apps/SaaS products. With that erosion of trust will come skepticism and with that, will come trust in the "old faithful" of SaaS products/companies. Basecamp is a good example of this.
I could be wrong on this one, but it seems to me those that have built credibility for privacy/security/competence will become more valuable in the AI age, not less.
This is basically why I buy the tech dip. When you pay for software, you pay for infrastructure, expertise, QA, consumer relations, having staff on call, etc. It was always possible to replace enterprise software by 2 guys coding a product in 6 months, but you still need everything around the code before serious clients will want to work with you, and at that point you're a regular software company. All these vibe coded products are one untested push away from getting dropped.
SaaS companies/devs are in trouble - but for slightly different reason. That was the case already for something like 10 years.
Earlier if you had developers and no domain knowledge you were able to land a contract building application for a company and maybe spin it off to get more customers in that niche.
If you got lucky and you landed law firm and made case management for them you probably had nice little niche.
But as it turns out lawyers can also use JIRA, Trello, Basecamp or whatever and they really don't need Facebook for lawyers so those gigs dried up.
Main point is, software development alone is not going to bring as much money as it did earlier. You will have to have backing of domain experts to get the business going to offer something special in your SaaS. Like possibility to actually have call with those domain experts or their oversight on whatever it is you are doing but you not having budget or enough work to hire domain expert full time.
> The main point everyone seems to be making is that now with AI anyone can make a SaaS.
I agree with you that is incorrect.
With AI, not everyone needs a SaaS.
They can make a bespoke tool for themselves with 5% of the SaaS features they actually need. If it's only used by authorized, internal, users and never exposed to the outside, many of the risks you mention disappear.
That's not to say everyone will vibe-code their Slack replacement, but a bar for relying on an external SaaS vendor will go up (and I think that's a good thing).
This is essentially what Jensen Huang (Nvidia CEO) was predicting a few months ago. Incumbents in most software spaces will probably see a lot of short and medium term benefits from the new tooling as being trustworthy and truly understanding the problem space.
The default has been pay $x/month for every service. I've seen startups that require a dozen service accounts just to run the software, and dozens more to get onboarded org wide. One service for feature flags. One service for logs. One service for traces. One service for error handling. Another service for ticket tracking, which is completely separate from your planning, design, and CI services. Jesus. What do people hope to accomplish here besides just defering blame?
Replacing SAAS isn't about building a replacement services 1:1. It's about figuring out what you actually needed in the first place! Often we only use a tiny fraction of what the full-blown SAAS offers. IOW it's about eliminating the service entirely and building something that fits your actual needs, rather than following what some VC thinks your needs are.
AI or not, the "build vs buy" pendulum is now swinging hard to build. And IMO that's a real opportunity to consolidate, trim some fat, and actually apply engineering practices rather than just blindly signing up for every SAAS that crosses your path.
You're most certainly wrong on this one. Superior models give superior products and security over time. Until every 3-6 months stops bringing a large improvement in coding capability and scaffolding, there's no reason to assume we are nearing a hard limit.
You also have to factor in that bespoke software is... bespoke. ie. much more suited to your org's use-cases than the primary solution is. Way less bloat. Way less vulnerability when you don't need an enterprise SaaS solution and instead can host on your private networks.
And as far as security considerations: Imagine you had a separate Opus 4.6 agent tasked with managing and monitoring and updating devoted to a specific slice of vulnerabilities. Of course this is highly inefficient, but it would take care of the vast majority of vulnerabilities that even enterprise SaaS have. This is simply a scaffolding issue at this point, not model ability. Scaffolding issues like this will continue to dominoe.
I think people fundamentally misunderstand what "non-techies writing software" means.
Nobody is going to ask Chat GPT to write them an app. They'll just ask something like "show me all the nearby restaurants that don't have any shellfish products for allergic reasons and let me browse like on ubereats", and Chat GPT will (eventually) do the right thing.
People will just see some UI, which will be like many UIs they've seen before. They won't care whether that UI is some UberEats embed designed by a programmer in California, or something that Chat GPT just came up with on the spot to wrap some API.
"Eventually, everybody is going to use computers" was a ridiculous thesis in the age of mainframes. It was a slightly less ridiculous (if still unlikely) thesis in the age of minicomputers. In the DOS days, it started to look likely, in the Windows days, it seemed inevitable, iOS and Android is what made it actually happen.
Neither am I. It feels like the dotcom in the sense that people will be spitting out new apps all overt the place. Down the line they will have problems maintaining them (and will say it's not core to their business) and they will revert to SaaS. However i expect the SaaS apps to have super low margins compared to today. Instead of 20-30% it will be 5-7% and the companies will be a shadow of themselves.
100%. Saas isn’t going away, but the economics are changing drastically and that’s bad for one-size-fits-all tools, and excellent for niche solutions. But it’s still saas, just more specific.
I don’t disagree if models stay as capable as they are today. But devils advocate: the point of the saaspocalypse isn’t just that anyone will be able to make their own software, it’s also that the AI will be good enough and interconnected enough to maintain it.
The world these investors are envisioning is not one where a software engineer gives a detailed spec to a model and reviews its output, deploys the resulting files and monitors said application. It’s where Jo-shmo at the law firm can tell the model “give me a new billing system”, and the AI does everything correctly and better than a team of software engineers, in a matter of minutes or hours. And that AI maintains it for them, better than the engineers would have
I couldn’t disagree with this more. And at least anecdotally I’ve seen the opposite. I have one friend who has built and launched an app for diagnosing skin disease from a photo. Do I think it’s a good idea? No, but he built it. I have another friend that has completely automated her job in accounts receivable. She literally doesn’t have to work anymore and her employer has no clue. And another friend of mine is cranking out a new consumer app every few days. None of these people are even remotely technical. This is just the beginning.
> they're almost always people who already had some pull toward software
I think this is probably true, and basically how I got into software myself.
I always dabbled in writing software and things for the web, but for some reason I never thought studying computer science would be any fun and that a career as a software developer sounded boring. But then I got an actual full time office job and oh boy, did my perspective on things change fast.
That first job did not have anything to do with writing software at all. But I saw people struggle with things that seemed to me trivial to automate, such as making annotations on paper bank statements and entering them into the system line-by-line. The bookkeeping system did support electronic bank statements, but lacked features to match certain descriptions to certain cost places. In the end it was indeed faster to go the paper route... It took me a couple of hours to write something that saved hours every week and that basically kick started my software career.
Would AI have made much of a difference here? Yes, in terms of getting to the correct solution faster, but probably not in terms of who would have done that. People would still come to the person who came up with the solution to ask for maintenance and new features.
The doomsday saying the past months that everyone will now vibecode a solution instead of paying for SaaS as a big logic error… These people could have switched to self-hosting an open source clone of any popular SaaS but they didn‘t! Why? Because they dont want to be the person maintaining this, so we should those people not self-hosting a free software now go one step further and also build those products?
I vibe coded a saas and it went nowhere because it wasn't a good enough idea to begin with. I consulted with multiple varied models along the way for competitive analysis, pricing structure etc.
AI doesn't solve for ideas and product market fit. But it did allow me to fail pretty fast before I sunk too much time into it. But also, I should have spoken to potential users earlier rather than vibe coding.
Why are SaaS margins apparently dropping? The cost of producing saas is going down, no one is investing in new saas companies, the build your own saas will crumble as described in this article, meanwhile corporate IT departments will be decimated to pay for ballooning AI costs leaving saas as the only option to run companies.
Are any saas companies actually reducing their prices?
At the individual level, I think most people will be writing software, whether they realise it or not. Asking Claude to do something for you will often result in a purely generated script built for that one specific task. Some might even take it further, generating custom dashboards or whatever else they need to support their work.
At the company level though... most companies can hardly maintain opensource deployments, let alone write and maintain their own bespoke software. Pick any company that uses GitLab, they're probably a few major versions behind. It's across the board.
There's no doubt people will try to write more software.
But we've all seen how this plays out.
The smart engineer who built a weekend solution leaves, and nobody supports the software afterward. Coding agents certainly help, and only time will tell, but my bet is that for most organisations it will end up miserably.
I buy it. SaaS doesn’t have to go extinct for this to be true.
I’m building an app and many things I’d normally pay for like metrics and emailing I can just do myself.
A friend has a law firm employing 100+ people and they are building so many internal tools they would otherwise be delaying or paying salesforce consultants for.
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The initial reaction I think most people have to this is "SaaS companies/devs are in trouble."
I actually think the opposite is true.
With an outpouring of vibe-coded apps/SaaS, you have the new wave of vulnerabilities/leaks/problems that happen even with the best software. Except now, it's worse because it's being done on platforms "built" by people who haven't the slightest clue how they work.
One of many examples: https://dig.watch/updates/women-only-dating-app-tea-suffers-...
This I imagine will, over time, erode trust in most apps/SaaS products. With that erosion of trust will come skepticism and with that, will come trust in the "old faithful" of SaaS products/companies. Basecamp is a good example of this.
I could be wrong on this one, but it seems to me those that have built credibility for privacy/security/competence will become more valuable in the AI age, not less.
Earlier if you had developers and no domain knowledge you were able to land a contract building application for a company and maybe spin it off to get more customers in that niche.
If you got lucky and you landed law firm and made case management for them you probably had nice little niche.
But as it turns out lawyers can also use JIRA, Trello, Basecamp or whatever and they really don't need Facebook for lawyers so those gigs dried up.
Main point is, software development alone is not going to bring as much money as it did earlier. You will have to have backing of domain experts to get the business going to offer something special in your SaaS. Like possibility to actually have call with those domain experts or their oversight on whatever it is you are doing but you not having budget or enough work to hire domain expert full time.
> The main point everyone seems to be making is that now with AI anyone can make a SaaS.
I agree with you that is incorrect.
With AI, not everyone needs a SaaS.
They can make a bespoke tool for themselves with 5% of the SaaS features they actually need. If it's only used by authorized, internal, users and never exposed to the outside, many of the risks you mention disappear.
That's not to say everyone will vibe-code their Slack replacement, but a bar for relying on an external SaaS vendor will go up (and I think that's a good thing).
People want to outsource some things. Thats what markets are for.
The internet will become even more scammy and noisy.
Hence trusted vendors will be like beacons, and not drown.
Replacing SAAS isn't about building a replacement services 1:1. It's about figuring out what you actually needed in the first place! Often we only use a tiny fraction of what the full-blown SAAS offers. IOW it's about eliminating the service entirely and building something that fits your actual needs, rather than following what some VC thinks your needs are.
AI or not, the "build vs buy" pendulum is now swinging hard to build. And IMO that's a real opportunity to consolidate, trim some fat, and actually apply engineering practices rather than just blindly signing up for every SAAS that crosses your path.
You also have to factor in that bespoke software is... bespoke. ie. much more suited to your org's use-cases than the primary solution is. Way less bloat. Way less vulnerability when you don't need an enterprise SaaS solution and instead can host on your private networks.
And as far as security considerations: Imagine you had a separate Opus 4.6 agent tasked with managing and monitoring and updating devoted to a specific slice of vulnerabilities. Of course this is highly inefficient, but it would take care of the vast majority of vulnerabilities that even enterprise SaaS have. This is simply a scaffolding issue at this point, not model ability. Scaffolding issues like this will continue to dominoe.
That means we'll see even more niche apps, and more custom apps.
That doesn't mean everyone becomes a builder.
It means that the people who can build can now do so much more cheaply. Custom apps that were previously too expensive may now be cost-effective.
Nobody is going to ask Chat GPT to write them an app. They'll just ask something like "show me all the nearby restaurants that don't have any shellfish products for allergic reasons and let me browse like on ubereats", and Chat GPT will (eventually) do the right thing.
People will just see some UI, which will be like many UIs they've seen before. They won't care whether that UI is some UberEats embed designed by a programmer in California, or something that Chat GPT just came up with on the spot to wrap some API.
"Eventually, everybody is going to use computers" was a ridiculous thesis in the age of mainframes. It was a slightly less ridiculous (if still unlikely) thesis in the age of minicomputers. In the DOS days, it started to look likely, in the Windows days, it seemed inevitable, iOS and Android is what made it actually happen.
It’s not about personal software it’s about how 1-3 people team will deliver a SaaS that actually works at scale for the 1/10th of the price.
In terms of personal software, he’s absolutely right, it’s great for hobbyist and things like in house tooling but that’s it.
The world these investors are envisioning is not one where a software engineer gives a detailed spec to a model and reviews its output, deploys the resulting files and monitors said application. It’s where Jo-shmo at the law firm can tell the model “give me a new billing system”, and the AI does everything correctly and better than a team of software engineers, in a matter of minutes or hours. And that AI maintains it for them, better than the engineers would have
> they're almost always people who already had some pull toward software
I think this is probably true, and basically how I got into software myself.
I always dabbled in writing software and things for the web, but for some reason I never thought studying computer science would be any fun and that a career as a software developer sounded boring. But then I got an actual full time office job and oh boy, did my perspective on things change fast.
That first job did not have anything to do with writing software at all. But I saw people struggle with things that seemed to me trivial to automate, such as making annotations on paper bank statements and entering them into the system line-by-line. The bookkeeping system did support electronic bank statements, but lacked features to match certain descriptions to certain cost places. In the end it was indeed faster to go the paper route... It took me a couple of hours to write something that saved hours every week and that basically kick started my software career.
Would AI have made much of a difference here? Yes, in terms of getting to the correct solution faster, but probably not in terms of who would have done that. People would still come to the person who came up with the solution to ask for maintenance and new features.
AI doesn't solve for ideas and product market fit. But it did allow me to fail pretty fast before I sunk too much time into it. But also, I should have spoken to potential users earlier rather than vibe coding.
Are any saas companies actually reducing their prices?
At the individual level, I think most people will be writing software, whether they realise it or not. Asking Claude to do something for you will often result in a purely generated script built for that one specific task. Some might even take it further, generating custom dashboards or whatever else they need to support their work.
At the company level though... most companies can hardly maintain opensource deployments, let alone write and maintain their own bespoke software. Pick any company that uses GitLab, they're probably a few major versions behind. It's across the board.
There's no doubt people will try to write more software.
But we've all seen how this plays out.
The smart engineer who built a weekend solution leaves, and nobody supports the software afterward. Coding agents certainly help, and only time will tell, but my bet is that for most organisations it will end up miserably.
I’m building an app and many things I’d normally pay for like metrics and emailing I can just do myself.
A friend has a law firm employing 100+ people and they are building so many internal tools they would otherwise be delaying or paying salesforce consultants for.