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AI agents are starting to eat SaaS

martinalderson.com

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Re: AI agents are starting to eat SaaS

#211

Post by f311a »

mikert89 wrote: post #203
benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

A year or two from now it will be trivial to copy your product

It was always relatively easy to copy many SaaS services, especially bootstrapped ones. Unless everybody wants to make and run their service locally, very little changes.

Re: AI agents are starting to eat SaaS

#212

Post by ben_w »

j45 wrote: post #202
ben_w wrote: post #194

Earlier quoted context omitted.

> The technology of LLMs is already applicable to valuable enough problems, therefore it won’t be a bubble. Dot-com was a bubble despite being applicable to valuable problems. So were railways when the US had a bubble on those. Bubbles don't just mean tulips. What we've got right now, I'm saying the money will run out and not all the current players will win any money from all their spending. It's even possible that…

Ai is much more developed at its entrance to the economy than most anything during the dot com boom. Dot com is not super comparable to AI. Dot com had very few users on the internet compared to today. Dot com did not have ubiquitous e-commerce. The small group of users didn’t spend online. Search engines didn’t have the amount of information online that there is today. Dot com did not have usable high speed mobile d…

None of that matters to this point, though I'd dispute some of it if I thought it did.

"Can they keep charging money for it?", that's the question that matters here.

Re: AI agents are starting to eat SaaS

#213

Post by lwhi »

benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

I completely agree.

Corporates are allergic to risk; not to spending money.

If anything, I feel that SaaS and application development for larger organisations stands to benefit from LLM assisted development.

Re: AI agents are starting to eat SaaS

#214

Post by thorawaytrav »

agwp wrote: post #198
Crowberry wrote: post #136

Earlier quoted context omitted.

I second this. Most of our customers IT department struggle to look at the responses from their failed API calls. Their systems and organisations are just too big. As it stands today; just a bit of complexity is all that is required to make AI Agents fail. I expect the gap to narrow over the years of course. But capturing complex business logic and simplifying it will probably be useful and worth paying for a long ti…

Also, for many larger companies, access to internal data and systems is only granted to authorized human users and approved applications/agents. Each approval is a separate request. This means for any "manual" or existing workflow requiring a access to several systems, that requires multiple IT permissions with defined scopes. Even something as simple as a sales rep sending a DocuSign might need: - CRM access - DocuS…

It is much easier to use an AI API in my bank than to use any other tool. Since the AI is from MS, it's ready to go, whereas other tools require a few months of budgeting, licenses, certs, and so on. Since AI/Azure/AWS is already there and 'certified to use,' it is easier for me to patch something together using this stack than to even ask for open-source software

Re: AI agents are starting to eat SaaS

#215

Post by ethbr1 »

cm277 wrote: post #190
benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

Same background as you and I fully agree. Again and again you see market/economic takes from technologists. This is not a technology question (yes, LLMs work), it's an economics question: what do LLMs disrupt? If your answer is "cost of developing code" (what TFA argues), please explain how previous waves of reducing cost of code (JVM, IDEs, post-Y2K Outsourcing) disrupted the ERP/b2b market. Oh wait, they didn't. Th…

I'll take a crack.

> what do LLMs disrupt? If your answer is "cost of developing code" (what TFA argues), please explain how previous waves of reducing cost of code (JVM, IDEs, post-Y2K Outsourcing) disrupted the ERP/b2b market. Oh wait, they didn't. The only real disruption in ERP in the last what 30 years, has been Cloud.

"Cost of developing code" is a trivial and incomplete answer.

Coding LLMs disrupt (or will, in the immediate future)

(1) time to develop code (with cost as a second order effect)

(2) expertise to develop code

None of the analogs you provided are a correct match for these.

A closer match would be Excel.

It improved the speed and lowered the expertise required to do what people had previously been doing.

And most importantly, as a consequence of especially the latter more types of people could leverage computing to do more of their work faster.

The risk to B2B SaaS isn't that a neophyte business analyst is going to recreate you app overnight...

... the risk is that 500+ neophyte business analysts each have a chance of replacing your SaaS app, every day, every year.

Because they only really need to get lucky once, and then the organization shifts support to in-house LLM-augmented development.

The only reason most non-technology businesses didn't do in-house custom development thus far was that ROI on employing a software development team didn't make sense for them. Suddenly that's no longer a blocker.

To the point about cloud, what did it disrupt?

(1) time to deploy code (with cost as a second order effect)

(2) expertise to deploy code

B2B SaaS should be scared, unless they're continuously developing useful features, have a deep moat, and are operating at volumes that allow them to be priced competitively.

Coding agents and custom in-house development are absolutely going to kill the 'X-for-Y' simple SaaS clone business model (anything easily cloneable).

Re: AI agents are starting to eat SaaS

#216

Post by bpavuk »

benzible wrote: post #124

I'm CTO at a vertical SaaS company, paired with a product-focused CEO with deep domain expertise. The thesis doesn't match my experience. For one thing, the threat model assumes customers can build their own tools. Our end users can't. Their current "system" is Excel. The big enterprises that employ them have thousands of devs, but two of them explicitly cloned our product and tried to poach their own users onto it.…

> The bottleneck is still knowing what to build, not building.

shit, I'm stealing that quote! it's easier to seize an opportunity, (i.e. build a tool that fixes the problem X without causing annoying Y and Z side effects) but finding one is almost as hard as it was since the beginning of the world wide web.

Re: AI agents are starting to eat SaaS

#217

Post by gizmo »

If businesses are rational agents that seek to maximize profit then yes you would expect agentic AI to eat SaaS. But this is not the world we live in. So much of business could be automated with 1990s technology. A model that predicts societal change should also be able to explain why this time it's different. Historical precedent says we should expect:

- modest incremental gains in productivity

- society will remain mostly the same

- very few people will take advantage of the opportunities unlocked by AI

Re: AI agents are starting to eat SaaS

#218

Post by raw_anon_1111 »

xtiansimon wrote: post #210
raw_anon_1111 wrote: post #206

Earlier quoted context omitted.

And? How easy will it be to iterate the product and build features and a user experience as it is used in the wild? How easy will it be to find customers willing to pay you money for it?

Doesn’t have to be a commercial solution to change the game. There’s a lot of room between the commercial product and ‘Our end users… current "system" is Excel.’ Especially if the market moves towards making useful APIs at the ERP and vendors endpoints.

And how would the outcome be different after a couple of years than the internally built Excel file with VBScript, Access and VB6 apps built by non developers back in the day?

Re: AI agents are starting to eat SaaS

#219

Post by immibis »

nprateem wrote: post #182
TeMPOraL wrote: post #168

Earlier quoted context omitted.

SaaS products rely on resisting commoditization. AI agents defeat that.

Yes, except for the fact that any non-trivial saas does non-trivial stuff that an agent will be able to call (as the 'secretary') while the user still has to pay the subscription to use.

That's the brilliance of AI - it doesn't matter if the product actually works or not. As long as it looks like it works and flatters the user enough, you get paid.

And if you build an AI interface to your product, you can make it not work in subtly the right ways that direct more money towards you. You can take advertising money to make the AI recommend certain products. You can make it give completely wrong answers to your competitors.

Re: AI agents are starting to eat SaaS

#220

Post by hrimfaxi »

adriand wrote: post #193
jeswin wrote: post #148

Earlier quoted context omitted.

> For one thing, the threat model assumes customers can build their own tools. That's not the threat model. The threat model is that they won't have to - at some point which may not be right now. End users want to get their work done, not learn UIs and new products. If they can get their analysis/reports based on excels which are already on SharePoint (or wherever), they'd want just that. You can already see this hap…

The president of a company I work with is a youngish guy who has no technical skills, but is resourceful. He wanted updated analytic dashboards, but there’s no dev capacity for that right now. So he decided he was going to try his hand at building his own dashboard using Lovable, which is one of these AI app making outfits. I sent him a copy of the dev database and a few markdown files with explanations regarding cer…

At a certain scale the CEO's time is likely better spent dictating the dashboard they want rather than implementing it themselves. But I guess to your point, the future may allow for the dictation to be the creation.
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