From SaaS to AI-First: How Companies Are Reshaping Innovation

**Sarah** (0:00)
The anxiety that I see is, if you can generate an enormous amount of code and no one is reading it, you don't know the quality of the code. Nobody deeply understands the codebase, and there's more fragility, right? It's like the slop problem, vibe coding slop in my actual production codebase. But I think the broader problem that new company could go solve is, nobody knows how to manage that issue of human attention to engineering. I think it's like open season around this really big problem.
Hi, listeners, welcome back to No Priors. Markets are melting down about the end of software. Today, Elad and I are hanging out and asking, is SaaS actually dying, or are people just projecting five-person startup behavior onto the Fortune 100? We'll talk about what's real, incredible revenue growth, collapsing token costs, and faster turnover of vendors. What's just hype and how to size the opportunity. We also discussed the changing bottlenecks in building a software company and some parallels to the internet and cloud eras. Let's get into it. It's good to hang. The market is freaking out around us. So in all that noise, what are you thinking about?

**Elad** (1:15)
I mean, the SaaS, the SaaS Pocalypse.

**Sarah** (1:17)
SaaS Pocalypse, the end of software.

**Elad** (1:19)
Yeah. Yeah, that's kind of interesting. I feel like there's some meta trends that people are getting right. And then a lot of specific companies that people are getting wrong. And so, you know, I think I guess the basic premise is that SaaS software and first seed software will no longer exist and everything is going to be replaced by AI and everything's just going to get vibe coded. So why would you pay X dollars for a Salesforce instance when you can just vibe code it internally? And all that stuff strikes me as incredibly short sighted in the near term. Over the long run, who knows what happens in 20 years or whatever. But there's lots and lots of companies that are quite durable. I think an interesting example of that where I'm still a shareholder is Samsara, where, you know, nobody's going to vibe code a fleet management app that will then get distributed through, like, what, vibe sales? Vibe, you know, enterprise sales or something.
And you're going to build a vibe, like, in cab camera sensor that everybody will install in these fleets. And then you're going to support them using vibe agents or something. It's just very overstated. So I feel like it's one of those things where there's a massive market correction around something that in the long run has a lot of truth to it. And maybe in the short run for certain types of companies has a lot of truth, right? Ultimately, I think that Gagana and Sierra are examples of companies where you're moving from proceed software to basically utilization based customer support related agents, right? That is a real shift. That may impact some of the prior wave of sort of proceed software companies, but this isn't going to be every single SaaS company. So I view it as very short term overstated in the long run. Who knows? How about you? How do you think about it?

**Sarah** (2:49)
I mean, I think the idea of vibe enterprise sales is hilarious because we have portfolio companies with hundreds of millions of dollars of revenue who are very committed to as much token usage as we can, as few great people as we can have. And today, they have less than 50 engineers and they went from zero to, let's say close to a hundred salespeople very quickly, right? And so it's just a view from the growing AI natives that vibe sales is not happening, right?

**Elad** (3:20)
Oh, yeah, my sales is definitely never going to happen. It's not happening anytime soon. And so it's just, again, all this, it just seems like a very strong market reaction and market correction. And it seems like it's very overstated, especially relative to a handful of companies that you're just like, why, like, how will you despise this company with bad coding? And you know, in the fleet example, you're not going to have the fleet managers like writing their own apps to do all this giant surface area of stuff. It just doesn't, it's just not going to happen in the short run.

**Sarah** (3:48)
I think a lot of it is actually driven by some assumptions that, you know, persona close to my heart, but engineers and builders are making about like the rest of the world, right? Because there's this implied belief that like everyone will want to make their own software. And I think it's like probably...