AI lowers barriers to entry for SaaS
The guest suggested that the SaaS industry will face heightened competition and shifting margin structures as AI dramatically lowers the cost and time required to build software.
The argument
With software development becoming cheaper and faster, the barriers to entry for creating niche enterprise applications will fall. This could lead to a less consolidated software environment and pressure traditional seat-based pricing models, forcing a shift toward outcome-based pricing.
The thesis, stress-tested
✓ What validates it
- ✓An increase in the number of micro-SaaS competitors entering established markets
- ✓Major SaaS vendors transitioning from seat-based to usage- or outcome-based pricing
▸ Risks discussed
- ▸Incumbents successfully bundling AI features to maintain high switching costs
- ▸Difficulty in implementing and measuring outcome-based pricing models
Hear it yourself
"to wait for, like, the Internet to happen. And the Internet didn't need to wait for PCs, and PCs didn't need to wait for consumer electronics and semiconductors and so on. So you always got this accelerating adoption. And, you know, when when when your boss, my old boss, Marc Andreessen, was working on Netscape, there were, like, double digit millions of PCs on the entire planet. So, like, no. You couldn't have 900,000,000 weekly active users because there weren't 900,000,000 PCs. So there's always that acceleration."
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