AI pressures software seat-based pricing
The guest argued that AI tools will disrupt traditional software companies by reducing necessary seat counts and eroding pricing power.
The argument
While some software segments may benefit from Jevons paradox where lower costs drive massive volume expansion, others face a hard cap on demand. This makes them highly vulnerable to AI-driven price deflation, as seen in the market's forward-looking anxiety over Adobe's long-term moat.
The thesis, stress-tested
✓ What validates it
- ✓Software companies reporting declining seat licenses or average revenue per user (ARPU)
- ✓Competitors releasing free or low-cost AI alternatives that replicate core software features
▸ Risks discussed
- ▸Jevons paradox driving massive volume expansion that offsets lower per-seat pricing
- ▸Software companies successfully integrating proprietary AI to justify higher prices
Hear it yourself
"He he had a both thesis on Teradyne in the the middle of June, and this you know, the stock is up 342% since since then. I participated on on that. I got out too early, of course, but, you know, hope hopefully, some people were in in the ride with us. And, you know, the the VanEck team as well, there, we actively were marketing their ETF as SMH and SMHX, and it's great to see the performance of of some of those of some of those those those two ETFs. As I say, I I write I love the feeling of marketing and ETF and then having the ETF go up 70% 78%, simply simply incredible."
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