AI Is Killing SaaS 💀

It is the other way around: SaaS will kill AI. What I mean is that incumbent SaaS will kill the software opportunity with AI. When we talk about AI in this context we usually refer to LLMs and open source is a serious contender. Read the memo from Google's internal staff: we have no moat. So most incumbent SaaS vendors, large or small, from Salesforce to upcoming startups like Notion, were able to add amazing generative AI capabilities overnight removing pure play AI as an opportunity for any new entrants. So I agree with the comments below confirming that SaaS will continue to be dominant because it will be decades before someone can build a serious solution completely using an LLM. The real opportunity I believe is to examine an existing solution and think how you can make it better with an LLM and build a niche SaaS around the new idea. This could be making the workflow easier to automate using an LLM, or enrich it with AI generated content

if you look far enough into the future, you will see no sun, and no earth whatsoever

Anyway starting with wrong assumptions, drawing wrong conclusions is all you can get.

Look at this from different perspective. There are hundreds of thousands developers who know how to build SaaS. Yet not everyone of them is building something that is used by millions. Obviously it's going to be easier to build new SaaS, but running a successful business is combination of couple factors.

You are probably right, regarding the cost of building software going down, this trend is not only due to AI - Building a website in 1995 was super hard and expensive, today it cost $10 per month + its faster, with millions of available features at your fingure tips. AI is simply going to exellerate it and apply it in other software fields, not just websites.

However, there are 3 aspects to consider:

1. Brand: People are willing to pay extra for a brand if it make them feel good. So if you have a Saas brand you can chrage more than the new competing saas tools that will be built cheaply to compete with you. Think about it, Gucci still has high pricing, even though its super cheap to make stuff in china. Building a brand is an asset and its about the info in people heads and AI is not changing this at the moment.

2. Product & your expertise: Code is not the only thing you bring to the table, when building a software solution to a problem, you should know the problem well and eventually be an expert in that problem. An AI coder will not be able to give that knowledge to your competitors.

3. Marketing: If you know how to sell your stuff, you'll have a huge advantage on the 99% who dont know how to do it. You can learn it and it's a skill most software building are not focusing on. And AI is not solving this currently either.

If your thoughts are holding you from building stuff, stop thinking about it too much & start building.

Hope it helps.

I agree with this 100%. However it’s as big of a problem as you make it.

People buy from people and if you have an audience of true fans online that want to from you, AI will never touch you.

That’s just my opinion but would love to hear your thoughts!

It’s true: AI disrupts industries, intensifying competition and challenging traditional pricing models. What I find particularly intriguing is the transformative aspect, where it opens doors to fresh opportunities and empowers individuals with limited coding or niche expertise. This shift amplifies the potential for innovation and inclusion.
The result : anyone has to put more hard work in to, and that includes everyone, no matter the level of expertise.

It will definately decrease the barrier to entry for SaaS - and every idea can quickly become a product. So it will all comes down to marketing.

As a developer and saas founder, i've been a bit worried about it. But again this will be interesting to see what means to the amount of all the solo entrepreneurs out there.
Hopefully this will push us to create even better products, and faster :)

Trying not to be biased here but I think this make more sense if you reverse it. AI is lowering the barrier to build - this is something large companies depend massively on.

Large companies are targets because they already have a validated market so it makes sense to build their product and take a segment of their customer base - this was manageable when it's a couple of solo developers looking to build a business online but when it's open to everyone I think there'll be a massive shift in the way we choose what to buy.

The differentiator of a product will likely be how fast it can implement new features (i.e. shipping), large companies are notoriously poor at this. This is where individuals will shine because no matter how good AI is there is still the case for maintenance (until AI handles that and then that's a very different world) which I don't think large companies are going to want to handle.

I'm actually quite excited for the next 5-10 years being an individual building businesses on the internet.

Although AI is having a significant impact on SaaS, it is not yet clear whether this will ultimately lead to the demise of SaaS companies.

The main impact of AI on SaaS is that it is automating many of the tasks that were previously performed by humans. This is leading to a reduction in the need for human resources, which is saving SaaS companies money. For example, AI is now being used to automate customer service tasks, sales tasks, and marketing tasks.

In addition, AI is being used to develop new SaaS products and services. This is giving SaaS customers more options and is making it easier for them to find the right SaaS solution for their needs. For example, AI is being used to develop new customer relationship management (CRM) software, sales force automation (SFA) software, and marketing automation software.

However, it is important to note that AI is still in its early stages of development. While AI is already having a significant impact on SaaS, it is not yet clear whether this impact will be positive or negative in the long term.

Here are some statistics on AI and SaaS:

A 2022 survey by Gartner found that 52% of SaaS companies are using AI in some form.
A 2023 study by Forrester found that AI is expected to save SaaS companies $30 billion by 2025.
A 2023 survey by McKinsey found that 70% of SaaS companies believe that AI will be a major driver of growth in the next five years.

These statistics suggest that AI is having a significant impact on SaaS and is likely to play an even greater role in the future. However, it is too early to say whether AI will ultimately lead to the demise of SaaS companies. Only time will tell.

Your concerns about the potential impact of AI on the SaaS industry are indeed thoughtful. While AI might lower barriers to entry and increase competition, it could also enhance SaaS solutions, making them more efficient and customized. It's worth wondering how SaaS businesses can leverage these advancements to their advantage, rather than perceiving them as a threat.

In a way, I'm seeing even more emphasis being put on how you present things and how you build your brand, than what you actually offer under the hood.

Yes, within five years we will have an app that does it all, an ai app that quickly executes code on your machine to satisfy ANY request, owned by no-one. We will all be launching 3D printed products or ecommerce or something harder than software (for the ai).

Mohamad, your concerns about AI commoditizing SaaS businesses are valid and thought-provoking. However, I believe not many people understand or fully comprehend what's happening right now. AI is not just a new technology; it's a paradigm shift that will fundamentally change how we solve problems and conduct business.

As AI continues to evolve and mature, it will indeed make it easier to build software that solves various problems, potentially lowering the barrier to entry for SaaS. However, this doesn't necessarily mean that SaaS will become less profitable or valuable. Instead, it means that the nature of the problems we solve and the solutions we build will change.

As AI ushers in this new paradigm, many of the old problems that current SaaS businesses address will no longer be relevant, as those systems and processes will no longer be used. As verticals evolve with the new technology, the whole concept of traditional and existing problems will cease to exist.

But with every new technology, as people discover new ways, new systems, new processes, they also discover and become aware of new problems. This is where the new gold will be mined. The most successful SaaS businesses in the AI era will be those that can identify these new problems and build innovative AI-powered solutions to address them.

So, while the landscape is changing, I believe the future of SaaS is still bright. It's just that the nature of the game is changing, and we need to adapt and evolve with it.

I run a price tracking AI that uses RLHF and sell it as a SaaS. I wouldn't say AI is killing SaaS.

The industrial revolution killed manual labour factory jobs, people were replaced by machines, and even the machines began creating the machines. Factory work transformed from manual labour (at-least in the west) to maintenance, QA, machine engineering, and manufacturing design.

We will see peoples careers transform drastically over the next few years with AI. Expectations of efficiency will go up by employers, and employee's breadth of work will increase as well. This will bring about new challenges as employees are trying to wield these new tools to meet the increasing expectations of their employers, which will create opportunities for entrepreneurs.

Automation makes work more abstract in nature, where people are doing more to service, maintain, and organize the machines that directly do the labour.

That makes me think though... just like companies during the industrial revolution began to manufacturing machines for their own purpose, the same will happen with AI. You mentioned the bar is so low for people to enter into SaaS, it may even be low enough for companies to design their own tools. Making that easier for companies will be a major opportunity.

Just my perspective anyway!

I mean it's like the two sides of a coin... Yes, it is actually good that we are able to build tools using AI because for me its more convenient ... But on the contrary we cannot fully depend on AI because AI only has the resources that humans have... AI cannot build something on its own it will be a mix of some other ideas or tools(As per what ive heard feel free to correct me im just new in IT world exploring marketing). So i think in my conclusion AI unless its self dependant it wont be a massive threat and also the main reason for saas sales is the trust factor within the two companies.. if i trust a company I will be in touch to do the necessary things to be done else it is a violation of trust. which we cannot get from AI. SO as of now it is not a threat I guess.

AI is poised to revolutionize the way tasks are accomplished, but it doesn't necessarily spell the end for SaaS or service-based businesses.

On the contrary, it opens doors to new markets and opportunities while expanding existing ones.

While AI-driven automation may lead to increased competition and price pressures in some areas, businesses that focus on innovation, user experience, and specialization will still thrive, as they have always been!

I run a price tracking AI that uses RLHF and sell it as a SaaS. I wouldn't say AI is killing SaaS.

Maybe. But then ... AI may just usher in a shift of what kind of SAAS product is able to succeed. Example (?): Who needs another low code tool if you can just tell the robot your requirements and it writes perfectly (or mostly...?) good Python for you? It could be that there are whole categories of problems which are no longer worth solving. A "Wow, these new-fangled automobiles are a great way to transport horse feed to the pony express waystations" kind of thing. On the other hand, new opportunities will probably emerge. Example: QA. How do you test an AI enabled system? Seems a bit tricky at the moment.

It's really difficult to predict where this is all going with AI, but I think there are definitely certain tasks it will displace more easily than others. Most notable, we're already seeing that with writing.

However, there's so much AI is out there trying to do right now that's completely mediocre. In some cases, it does things to an average level, and in other cases, it's dreadful.

Is that what we want?

There's also the argument that "Yeah, sure, right NOW it's mediocre, but it'll get better" and that's an assumption at best. Will it definitely get better? Right now it learns from information its fed, and we're seeing more and more information being produced by AI. So it ends up learning from itself in what becomes a loop of bad quality and disinformation in many cases, led by the biases of its developer.

So yeah, it's fascinating to watch unfold, and in some ways a little scary. However, I honestly believe that it will only displace average people who do average work. It won't outdo experts, brilliant minds, creative thinking and business acumen. These are traits some of the best SaaS products are founded on.

For those who are happy with mediocre, homogenized and average, AI will be fine - but for those who want to achieve a higher standard and uniqueness, it won't be enough.

It's def gonna kill a lot of SaaS, but by evolution, new problems will arise, and demand to solve it. So I guess, new type of SaaS will be born, of course, all based on Ai.