My prediction is that this will lead to a margin free-fall for many software products where the main moat is the software itself. And a lot of SaaS companies will also become redundant when the AI can code up a tailored solution in an hour for free.
Counterpoint: Windows, Oracle DB, etc. have had free/cheaper alternatives for decades and still thrived.
The median dev salary across the entire US is something like $130k/yr. There are huge numbers of new or self-taught software devs in low cost of living areas of the country making $50-60k/yr.
Not to mention having the right mindset for startups and building a business.
The code and product is maybe only 20% of the story.
If you don't have some kind of cult following like Apple eventually you'll get margin-squeezed till death and all that marketing, sales, etc. will get cut down to stay afloat.
Of course all of the above is just my theory how this will play out in the long run, I'm no oracle by any means.
> that offer the same for 10x less money.
But beyond that, it's not likely that there are 10x the number of people who know the domain and have the right mindset plus appetite for risk.
They'll be squeezing margins out of a lot more than just the tech.
But that is also a reason to be cautious of chasing capital and think hard about whether you can spend it sensibly fast enough to improve your own ROI...
E.g. I have a project right now where I won't consider taking VC cash because I don't think I can spend it fast enough to buy me enough additional leverage to make enough additional money to compensate for the dilution and the other usual shenanigans before I expect margins will be squeezed out of the niche in question. It also means I don't think the opportunity will ever scale above a certain level, but that's fine - it'll be a quick attempt at grabbing what profit I can.
Also, while we of course shouldn't diminish the potential moat created by understanding the product in favour of only value the tech, we need to also consider that AI's are a levelling factor there too. Claude knows (I've verified what it's said) more about the niche I'm vaguely talking about than I do - it knows pricing, it knows positioning/marketing, it knows conventions and requirements of the niche, and while I'm sure I could have found all of it myself starting from scratch too it shortcircuited an enormous amount of effort to get an infodump that let me know precisely what to look for to verify it. A lot of tech companies will find the institutional knowledge they thought would shore up their moat is worth a lot less than they thought.
I totally agree. I think going forward the primary value of SAS will be the embedded domain expertise in a pre-built product. The comparison of Asana versus Notion comes to mind for project management. Asana forces abstractions of good project management upon you, whereas Notion lets you build it yourself. I think this principle will scale to all software in the future, where the only real value of software or it becomes exported maintenance obligations and a predetermines domain abstraction.
But as you mentioned, I think companies will rapidly find that their own specific abstraction is worth a lot less than they believed.
SaaS is extremely vulnerable, companies will be able to modify open source tools to do exactly what they need, and agents will make managing those services easier. This will lead to downward pressure on SaaS prices, and cause them to become more like cloud data management platforms that they let customers build on top of rather than one-size-fits-all apps.
Sure, there was some lead, but not nearly enough to 2x the team's productivity, let alone 10x.
Even when presented with something, there was still lead time turning that into something actually actionable as edge cases were sussed out.
At least 1 person on the team needs to have domain experience and if solo, that solo founder needs to have domain experience and good connections or the wherewithal to get the first handful of paying customers via cold calling, cold emails. The main challenge remains sales, marketing, and branding. There are free CRMs and anyone can build a CRM. Why do some CRMs succeed while others fail? Branding, marketing, awareness.
So I don't see it as "there will just be 10x more competitors" because I've built enough stuff that I failed to sell and used enough shitty software to know that the software itself is rarely the reason why people buy X over Y. It's because they didn't even know Y existed.
I would love to start my own SaaS company, even if it generates $1000 a month I will be elated. And I have 20+ years of experience programming and in FinTech, but what do I build? Not to mention, without sales & marketing nothing will really work.
So you definitely still need strong sales and marketing and a deep understanding of a business domain.
1 person and AI is not sufficient to create a business.
I could see AI coding leading to more attempted startups, and more people shipping initial products and attempting to get traction with them, but whether they do get traction and achieve PMF, and are able to actually grow it into a business is going to come down to the startup expertise of the founders, not how quickly/cheaply the code of the product was written.
Shipping something workable is easier now, but understanding which problems are actually worth solving — and getting consistent feedback early — still seems to be the main separator between hobby projects and real businesses.
[0] https://mikelovesrobots.substack.com/p/wheres-the-shovelware...
2 of the 3 existed as entities for more than a year already, but pivoted at least once (both were VC-funded but now doing something very different than what they started with when I first met founders) and ultimately let go of their offshore and contract engineers once AI became good enough some time early last year. Founders basically realized that the quality of code was as good or better than what they were getting from their engineers while reducing the turnaround time; now they can go from talking to customers to having a working prototype in the same day instead of waiting 24h+ for an offshore team. The other one started in November of 2024 and found traction around March.
So two companies went from multi-person teams to 1 person teams and 1 team was a 1 person eng team from the get-go (with a business-oriented partner).
I'd also point out that 2025 was a particularly volatile year because of shifts in the political and economic environment (including very high interest rates) so I wouldn't take your stat at face value without considering external factors that might affect the total number of net new business registrations.
It still remains true that building a product is not the same thing as building a business. It may be that we'll see less SaaS startups as companies find that they can just in-house software instead of buying. Who knows? Startup I'm at canceled one of our subscriptions because we ended up building an in-house replacement because it is now cheap enough and easy enough that we could.
I'm not saying your three friends/acquaintances don't exist, I'm saying the evidence suggests they aren't representative of a trend. This is consistent with the other evidence we have (e.g. studies which show that LLMs produce at best relatively modest gains in productivity, not enough for a one person team to do the work of even two people.
> I'd also point out that 2025 was a particularly volatile year because of shifts in the political and economic environment so I wouldn't take your stat at face value without considering external factors that might affect the total number of net new business registrations.
Sure, it's always possible that without LLMs there would have been a significant contraction in these metrics. The issue is exactly that though: you can always make that argument. In other words, you've rendered your claims unfalsifiable.
We’ve found that building the product got easier, but turning it into a sustainable business still required just as much manual effort around sales, onboarding, and retention.
I’d have to say when I hire someone in Fiverr to make a logo for my app I’m not suddenly a multi-person team. If I use AI to make my logo instead of paying a human $50 to make one I didn’t exactly experience a productivity revolution.
The other thought that popped into my head is that offshore contractors have access to AI, too. So shouldn’t we see their output go up and prices go down? Again we have another facet of this lack of market indicators.
Some had employees (which were let go when they pivoted). Some were contractors doing all of the engineering work.
Are they using AI because it’s better or because they have no other choice?
If I hire two sandwich artists for 6 months but nobody buys my sandwiches, I don’t have much choice but to fire them.
This word “pivot” is strong.
> Are they using AI because it’s better
> If I hire two sandwich artists for 6 months but nobody buys my sandwiches
Because they went back to the drawing board, they ended up letting go of their teams and started using AI to build MVPs and then found that they could ship faster and better.
They literally changed to doing an entirely different business.
This would be like saying I hired two sandwich artists, but sandwiches don’t sell well, so I fired my sandwich artists and now I run a coffee shop on my own.
I'm sharing information, not presenting an argument. You seem to want to argue that... something, but it is not apparent to me what it is.
Whatever you choose to do with this information, it did not change reality.
> you better take a half dozen executives with you or you'd never get the first meeting no matter how good the product was
In my specific space, clinical trials can run for years. A company that might fold if they run out of runway? Non-starter. I was a member of a small company that did make this work and it required that we put our code in escrow with a large multi-national IT company that owned the support contract (customer paid us for licensing, paid multi-national IT company for support, our source code went into escrow).
I know 3 such founders; none would advertise to their customers the extent of their AI usage. There is also a consideration that if they advertise their 1 eng status and success, it might attract other competitors or the customers might think they can do it themselves (maybe possible, but not for 95% of them since some tech know how is still required) or customers would see it as a business risk.
All 3 have blown me away with what they are doing. All 3 have real, paying customers. (They occasionally reach out for some higher order architecture questions)