StartUp / Ai Startups
Startup ecosystem signals, funding, and strategy insights. Topic: Ai-Startups. Updated briefs and structured summaries from curated sources.
Is SaaS Dead? | The Brainstorm EP 119
Full timeline
0.0–300.0
The discussion centers on the current state and future of SaaS companies amidst rising uncertainty and changing market dynamics. Key points include the impact of AI on software development, the compression of revenue multiples, and the increasing competitiveness of the sector.
- Questions around growth, multiples collapsing, layoffs everywhere
- Uncertainty has risen dramatically about the sustainability of future cash flows for most software companies
- AI models are progressing and getting cheaper, enhancing knowledge worker productivity
- The space is getting re-rated generally with a lower multiple due to rising uncertainty
- Entry to create software is low, allowing for quick feature copying
- Nimble teams that ship fast will outperform those relying on customer renewals
- The Besmir Cloud Index shows cheaper forward revenue multiples than since 2014
- Payback periods for owning software businesses have increased significantly
- SaaS is not dead but will become more competitive
- VCs are likely to fund new AI native SaaS companies
300.0–600.0
SaaS companies are experiencing slower growth compared to those in infrastructure software and platform services, with AI expected to drive growth in new AI-native SaaS applications. Incumbent SaaS firms are struggling to translate new features into significant revenue increases, while venture-funded AI companies are seeing unprecedented revenue growth.
- Companies building SaaS applications are growing at slower rates compared to those building infrastructure software and platform as a service offerings
- AI is likely to accelerate growth in new AI native SaaS apps
- Companies that apply digital intelligence in unique ways are expected to stand out and grow
- Palantir contextualizes enterprise data and charges based on delivering business productivity
- Most existing SaaS companies are decelerating revenue due to reliance on seat-based pricing
- Venture funded AI companies are experiencing unprecedented revenue growth
- Incumbent SaaS companies struggle to translate new features into meaningful growth
- Microsofts co-pilot subscriptions are a small fraction of Office 365 subscriptions
600.0–900.0
Salesforce's agent force and data products are experiencing significant growth, with an annual recurring revenue of 1.4 billion and over 100% year-on-year growth. The market currently views SaaS companies as under pressure, raising questions about their long-term durability and adaptability in a rapidly changing environment.
- Walmart has adapted to e-commerce and is thriving
- Salesforces agent force and data products are at 1.4 billion in ARR growing over 100% year-on-year
- Salesforces agent force is about 500 million in run rate
- The market is not treating SaaS companies as durable right now
- OpenAI and Anthropic reportedly use Salesforce and Slack internally
- Salesforce is expected to have more customers in five years
- AI products are expected to drive a huge acceleration in the overall software market
900.0–1200.0
The discussion focuses on the challenges SaaS companies face in transitioning from seat-based to engagement-based business models. It highlights the potential for easier top-line growth through value-based models and the implications of the innovator's dilemma in the context of AI advancements.
- Top line growth may be easier than expected
- Business model mismatch is a challenge when transitioning from seat-based to engagement-based charging
- Companies historically faced choppy quarters transitioning from outright software sales to subscription-based models
- The need for companies to shift to value-based models is emphasized
- The innovators dilemma may be easier to solve due to lower costs of experimentation
- Companies may not need to deploy human resources to disrupt their own business
- Well-run companies listen to their customers, who may not want new technologies
- Successful companies may overlook new technologies due to their existing market success
1200.0–1500.0
The discussion centers on the significant opportunities presented by AI, projected to be a $7 trillion software market by 2030, and the challenges faced by major automakers in transitioning from electric vehicles to autonomous technology. It also highlights the lack of innovative neighborhood electric vehicles in the market and the rise of AI-generated content.
- The more well-resourced companies decided not to pursue certain paths
- Googles response is to treat AI seriously and not rely on bureaucracy
- Founders having control can steer companies aggressively in new directions
- AI is seen as a $7 trillion software opportunity by 2030
- Major automakers are giving up on electric vehicles at a time of transition to autonomous technology
- There is a lack of compelling tech-forward neighborhood electric vehicles in the market
- The market for neighborhood electric vehicles should exist
- There is a microcar boom in China that was quelled by regulation
- AI-written micro dramas are spreading rapidly on platforms like TikTok
1500.0–1800.0
The discussion addresses the safety concerns associated with cars and the potential impact of Robotaxi technology on urban environments. It also examines the recent challenges faced by digital asset treasury companies in the cryptocurrency market.
- The problem with cars is that they dont survive in dangerous situations, similar to a prisoners dilemma regarding car size
- There is a concern about the safety of families due to cars, pedestrians, and bikes
- The idea of Robotaxi infiltration could significantly change urban environments and improve safety
- Bitcoin and crypto had a rough week, with comparisons made to 1920s investment trusts
- Digital asset treasury companies are seen as a temporary solution for investing in crypto assets
- There are tax advantages to digital asset treasury companies in some regions
- The structure of digital asset treasury companies appears unstable, with potential for a market reset
- Recent sell-offs in the crypto market may not be directly related to digital asset treasury companies
1800.0–2100.0
The discussion highlights the maturation of the crypto industry, noting a transition from retail to institutional investors. It emphasizes the anticipation surrounding the market structure bill as a catalyst for further adoption.
- Crypto as an industry is much more mature than in prior cycles
- There is a handoff happening between early retail investors and institutional holders
- Large financial institutions are actively using public blockchains or offering digital asset investment services
- The market is waiting for the market structure bill to pass for the next wave of adoption
- Retail speculation has moved to the prediction markets
- Institutions are recognized as important and are ready to build
- Many banks that talked about stablecoins have not launched one