It seems that current advantages would compound with AI. I.e., if I am making a SaaS for Popsicle stick makers today, why I am disadvantaged with AI vs a new competitor in the space? I guess the hypothesis is the Popsicle stick maker will vibe code all of the software that they need instead. For that, we need significantly better AI than we have today - perhaps something like a 1000X improvement. Basically, this is a world in which non-technical grandparents can vibe code anything that they want. This means, it understands what you want without you being able to articulate it well in the first place.

That's not a 1000X improvement in current AI. That's more like a 2x ~ 5x improvement in current AI, which is measured in months.

So, within months your prompt can simply be "increase NPV" and machines will do the rest? If not, what prompt will work perfectly in your estimation by the end of the year?

“Analyze these business requirements and create a software solution for the problems you identified”.

Right now it can get part way there but quickly falls flat.

In 12-24 months? It’ll be able to audit itself and determine how to fix issues as they come up, mid-stream. That’s (all of) what a human dev does.

How detailed are the business requirements however? "Increase NPV" is certainly a business requirement, albeit a very abstract one. "Add a checkbox to this form" is another, far more concrete business requirement.

Good AI asks clarification questions. Codex plan mode is already getting there-ish.

I suppose it is really only possible to know how close something is until it arrives. When I type in "Maximize NPV" into Codex / Claude Code, I feel like it is incredibly far away from full autonomous capability. I guess we will see.

What do you get when you type in “Maximize NPV” to a human?

"Maximize NPV" is exactly what shareholders prompt boards of directors with. Not all humans can do it, but some can. Perhaps your argument is that AGI isn't required to solve software. This would imply that human level intelligence isn't actually required today to build software.

I don't do tea leaves so I wouldn't commit to that, particularly because I think SAAS was oversold in general even before LLMs came out. But I think the idea that the industry as a whole will shrivel away just isn't feasible, even if there is a correction.

The B2B startup motto of "where someone is using Excel to do something other than accounting, there's a startup waiting to happen" has been shockingly resilient over the decades, and I suspect will continue to be.

Paper forms used to be our main competitor.

Paper forms have some amazing features that software really can't compete with. And also some significant downsides that software fixes.

We need a new one: "Where someone is using a vibe-coded internal tool made by the creative department that keeps needing bug fixes, there's a start up waiting to happen."

In many cases, it's not a downturn, just a return to reasonable valuations. Other sectors should follow

I dont even blame management. I believe most of them are well-aware that much of what is going on right now is pure hype.

However, they dont have a choice. The sentiment of shareholders is that they want their cash (yes it is their cash that managers re-invest on their behalf) to be invested in AI-related projects.

So...... you get what you get, and investors will get what they deserve. But they will still blame the management in the end ;)

All of the hype surrounding AI will subside when a SaaS company eventually deploys a moltbot version of their software and the company is driven out of existence due to the chaos that ensues.

So… next week then?

I wish I knew:). I kind of think Palantir is particularly at risk here. Image a company with siloed data behind APIs and access to other external data APIs. Using something like Claude I could tie all the separate sources into an easily digestible dashboard without any help from Palantir.

They will magically realize this when their huge bonuses will be tied to something longer lasting than last quarter/year performance on some very narrow metric (which has nothing to do with sane stuff like adding long term value to some part of the company).

They are not stupid, far from it, most are (very) high functioning sociopaths. And out and up there its everybody for themselves first.

I've seen some bad some SaaS that management insists is an integration they need and no one else provides. I can easily see some vibe coded projects replace them.