Saas Isn't Coming Back. Something Much Bigger Is Replacing It
The next wave of software will be AI-native, industry-specific platforms, writes guest author Richard de Silva who believes the biggest winners will be vertical AI companies with deep domain expertise, proprietary data and strong customer relationships, as these advantages create durable competitive moats that generic horizontal SaaS products cannot match.
Key Takeaways
- Guest Author By Richard de Silva It used to be that if you invested in SaaS, you slept well at night.
Returns were predictable because the business model was subscription-based and incredibly scalable: build a horizontal cloud-based platform to target as wide a market as possible, charge per seat and grow by expanding the user base.
- We would argue that these infrastructure platforms enable the next wave of software innovation: AI-native software that automates and enables the $2 trillion white-collar services market.
Generic, horizontal SaaS, as we know it, is a declining legacy model (like on-premise software before it), but investors still have reason to be optimistic about the software market.
- Technology companies facing that reality have to choose a new path forward beyond connecting people's workflow: perform and charge for the actual work done (usage) or based on outcomes (ROI).
A legal AI platform charges per contract drafted, doing the work of a lawyer.
- The companies that adapt will build faster, deliver more value and command a premium for it.
Horizontal is a liability Generic horizontal SaaS is the most vulnerable to this changing market.
- Proprietary data that drives decision-making and is closely held by customers and inaccessible to frontier models.
Stats & Key Facts
- #January's $300 billion single-session wipeout is a leading indicator that the old SaaS model has passed its peak.
- #We would argue that these infrastructure platforms enable the next wave of software innovation: AI-native software that automates and enables the $2 trillion white-collar services market.
- #A company that once needed 100 CRM licenses for its sales operations team may soon need just 50.
The next wave of software will be AI-native, industry-specific platforms, writes guest author Richard de Silva who believes the biggest winners will be vertical AI companies with deep domain expertise, proprietary data and strong customer relationships, as these advantages create durable competitive moats that generic horizontal SaaS products cannot match. Guest Author By Richard de Silva It used to be that if you invested in SaaS, you slept well at night. Returns were predictable because the business model was subscription-based and incredibly scalable: build a horizontal cloud-based platform to target as wide a market as possible, charge per seat and grow by expanding the user base.
Salesforce 1 , Workday and their peers returned billions to investors on that model. But now, due to AI, where AI agents are replacing humans as the user (through what the industry calls "headless" models) and upending the per-seat model, the SaaS market has lost its predictability. January's $300 billion single-session wipeout is a leading indicator that the old SaaS model has passed its peak.
Investors are retrenching and trying to predict what's next as the three frontier AI companies vault into the public markets at multitrillion-dollar valuations. We would argue that these infrastructure platforms enable the next wave of software innovation: AI-native software that automates and enables the $2 trillion white-collar services market. Generic, horizontal SaaS, as we know it, is a declining legacy model (like on-premise software before it), but investors still have reason to be optimistic about the software market.
For more details please read the original article at Crunchbase News.
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