Incumbent SaaS faces a valuation doom loop
The bear case argued for legacy SaaS incumbents is that their '60% AI solutions' cannot be monetized, leading to a lack of revenue reacceleration and a permanent shift to lower value-stock multiples.
The argument
The speakers argued that legacy workflow software companies like Salesforce and ServiceNow are building mediocre, 60% AI agents that customers expect to be bundled for free. Unless these incumbents can build agents good enough to charge for independently, they will fail to reaccelerate growth and will be valued as low-growth, legacy tech utilities.
The thesis, stress-tested
✓ What validates it
- ✓SaaS incumbents reporting flat or declining organic growth rates despite launching new AI features
- ✓Customers refusing to renew high-priced contracts that bundle mediocre AI agents
▸ Risks discussed
- ▸A company successfully transitions to a high-performing agentic workflow that customers willingly pay extra for
- ▸Extremely low valuations (e.g., 11-12x forward PE excluding SBC) make these stocks attractive deep-value plays
Hear it yourself
"As most databases are now built by AI, as more and more apps are built by AI, the number of issues is gonna explode. And if Mythos and Friends lets bad actors find every site the second it launches with any PII and steal it, we may enter an era later where sites get more secure as as it's flipped on the other side."
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