Jared Sleeper on Which Software Companies Will Survive the "SaaSpocalypse"

Jared Sleeper (0:03)

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Joe Weisenthal (0:18)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:22)

And I'm Tracy Alloway.

Joe Weisenthal (0:24)

Tracy, we're recording this February 11th in IGV, the software ETF, down another 3% today.

Tracy Alloway (0:31)

It has been ugly in software. Everyone's throwing around the term SaaSpocalypse. I mean, the great thing about SaaS is there are a lot of things that like rhyme with it, and a lot of homonyms, so you can make all those puns. Yeah, exactly, SaaS is trash, whatever.

But I'm looking at the share price of Salesforce in particular, because I always think of Salesforce as sort of like emblematic.

Joe Weisenthal (0:53)

The poster child.

Tracy Alloway (0:54)

Yeah, poster child of like a software company that I'm not really sure what they do, but yeah, it's just ugly.

Joe Weisenthal (1:03)

It's basically been cut in half, hasn't it? Since its peak, like in early 2025 Right now, it's 184.84.

Tracy Alloway (1:10)

It's all your fault, Joe.

Joe Weisenthal (1:12)

It's all my fault, that's right, because earlier in the year, after we got back from Christmas vacation or Christmas break, you know, around that, I'd seen everyone playing around with cloud code and then I had to do it. We did an episode. And so people were like, Oh, if Joe Weisenthal can like figure out cloud code, that there must not be any value to any of these companies at all. There are, you know, you mentioned Salesforce. That's far from the ugliest one I'm looking at Atlassian, which makes a lot of like workforce productivity. Like some Slack competitors and stuff. That was a $450 stock back in 2021 That's an $86 stock. So like, yeah, it's ugly. And yeah, as you said, everyone is realizing that if any old fool can write software, maybe these companies, yeah, they don't have much value.

Tracy Alloway (1:55)

I mean, I will just say it's not just software right now. So we're seeing this sort of rolling series of concerns where like every time AI does something or create some new product, it hits a particular industry. So on Monday, it was the insurance industry, insurance brokers. And today, Wednesday, February 11th, I think it's some of the stock broker firms.

Joe Weisenthal (2:19)

And all you have to do is just say AI industry. And there's a lot of anxiety. But there's something that doesn't make any sense to me about this or the thing that I'm wrapping my head around is like, sure, any of us could easily write some software. But writing software is a cost center for these companies, right? If you're Salesforce, and you can trivially reduce the cost of building software, that's also a benefit for you. And there's a lot more to a software company than just code generation, because there's all kinds of, you know, network effects and links into this. It's like a software company is clearly more than just code. And so the fact that maybe code can be generated a lot cheaper does not scream to me like, oh, these companies are worth less than they used to.

Tracy Alloway (3:01)

Sure, but at the same time, they've been pricing, their pricing is based on that assumption, right? Like that there is no competitor for what they're doing, and suddenly you might have an in-house competitor.

Joe Weisenthal (3:12)

Absolutely, but you know, it's like network effects, and do companies want to start like building their own, like payroll software? Anyway, I have a lot of questions about this sell-off. It's your point.

Tracy Alloway (3:23)

No, no, no, this is you doing like penance for causing, causing the sell-off.

Joe Weisenthal (3:29)

All right, let's talk to someone who actually might be able to answer some of these questions for us. We're going to be speaking to someone who's been in the software space and investor in the software space for a long time, recently put out a great deck, really diving into SaaS, the SaaS apocalypse and what kinds of companies are thriving, and what kinds of companies were struggling even before everyone started talking about AI code generation and all that. We're going to be speaking with Jared Sleeper. He is a partner at Avenir, which does growth investing private company. So Jared, thanks for coming on Odd Lots.

Jared Sleeper (4:00)

Yeah, my pleasure. Excited to be here.

Joe Weisenthal (4:01)

Why are we talking to you, just for our listeners? Apparently, this is your first time on a podcast, which is crazy. But why are we talking to you? Give us a little bit about your background investing in software and understanding the space.