What’s 🔥 in Enterprise IT/VC #459
The debates continue: SaaS is Dead ? and how long can VC subsidize AI?
The “SaaS is dead” conversation accelerated this week as headlines like this dominated the press.
from that story:
“Software valuations remain under pressure from the ‘death of software due to AI’ narrative, which likely drives continued volatility in the short term,” RBC Capital Markets analysts led by Matthew Hedberg wrote in a note on Tuesday.
Software is among the weakest performers within tech this year, with shares of Salesforce Inc (CRM). down more than 30% and Adobe down by about 25%. A basket of software stocks is trading near the lowest levels since January versus a group of semiconductor shares.
While many believe we can vibe code our way to the enteprise and rip and replace, Bucco Capital sums it up well.
Bessemer’s State of AI 2025 report shows the proof - the growth 📈 of these AI native startups is simply astonishing 🤯. The path to $100M ARR compressed from 7 years to 1.5 years for the best!
The future is already here — it’s just not evenly distributed
I, for one, believe in William Gibson’s quote.
Not all incumbents will die and some will make the transition like a ServiceNow or Palantir who sell mission critical software and continue to innovate and lead with AI. Other who don’t embrace AI 100% will eventually die.
I wrote more about this SaaS debate here 👇🏼
What’s 🔥 in Enterprise IT/VC #436
Debating the future of SaaS + what many VCs are thinking...
Lots of debate on the future of SaaS - the reality none of us really know and these are all guesses
Also when it comes to the enterprise, it's so early
But here's what many VCs are thinking 🤔:
Software is eating the world
AI is eating software but that is just cannabalizing itself.
If AI/Agents can eat into labor, then opportunity for apps get much bigger. If not, we are in for a world of hurt as many apps can get easilly cloned. Yes, the enterprise and large incumbents won't disappear overnight as security, privacy, embedded workflows that just work won't get ripped out. Also enterprise wide licenses where lots of stuff gets bundled for free won't go away but yeah, on margins, on the long tail, folks will build their own for simple apps instead of paying $25-50k.
Do gross margins matter?
If there are a few questions related to this AI native growth, one big one is if we are living in the past, the VC subsidized consumer era where growth was fueled by negative gross margin businesses like Uber. The game, of course, was that gross margins don’t matter to start if you can finish, and well Uber, is quite profitable now.
The question though is whether or not these startups can maintain their growth with low margins as competition is fiercer than ever spawning dozens of competitors versus just a Lyft, for example. Most VCs at the leading firms will tell you that right now its the land grab era, they are willing to fund growth, and that cheap subsidized VC services is more a marketing cost of acquisition expense. Companies like Cursor are already scrambling like mad to get off the Anthropic API, especially as it competes with them. Only time will tell.
Here’s a great rant from Mitchell Green from Lead Edge Capital on this exact topic. There is lots of truth in this, but I also don’t agree fully. 👇🏼 clickthrough and watch, and yeah, if you ask me, there will be tons of money lost from AI apps and large majority of funded startups that look great today but don’t have durability will fail…but I 100% believe that the value created will far exceed the money lost!
Zoomer tells it like it is - 👇🏼 click for 🧵 below
Adam Butler wrote a great post after the less than stellar GPT-5 release that perhaps we have hit a wall, but even so, the impact from embedding AI into how we work is just getting started.
I do agree with that comment. It’s still so early for AI and agents in the enterprise. This chart says it all.
The “SaaS is dead” narrative is great one to debate, but it’s still so so early in this GenAI and agentic boom, and one must just get on the field and play ball. It’s going to be an interesting next 12-18 months!
As always, 🙏🏼 for reading and please share with your friends and colleagues!
Scaling Startups
#one to keep in mind, especially as an investor, where pattern recognition can help but also kill any opportunities to invest in what couldn’t be done before
#everyone needs a little more Steve Jobs
#the ultimate AI-native startup guide from:
This is the guide we both wish we had at Super.com and Glean.com. We’re Henry Shi and Deedy Das. Henry founded Super.com, a $200M annual revenue startup that raised $150M in VC funding, and Deedy was on the founding team of Glean, a $X00M ARR startup with a $7B valuation, and is currently a venture capitalist at Menlo Ventures. Between us, we’ve invested in over 100 startups.
#for the VCs out there, how do institutional LPs think?
Enterprise Tech
#the future of shopping with agents - must watch - also shares how Shopify makes it easy for agents to discover - catalog, universal cart, and secure checkout kit 👇🏼 - every piece of software must be built for agents!
#so Microsoft said 3 million agents were built on Copilot studio, well this is scary stuff and IMO just the tip of the iceberg as enteprises vibe code and deploy agents and AI at breakneck speed without proper guardrails - data leaks, privacy, etc…read 🧵 - MSFT was great in response and fixed in 60 days but issues with promps in general…
which is why this needs to exist in the world 👇🏼
also wrote more about it here in What’s 🔥 #443
What’s 🔥 in Enterprise IT/VC #443
Two seemingly unrelated posts stopped me in my tracks this week—each an urgent call to action, but from very different angles.
#as mentioned above, still so early for agents in the enterprise, this report from Evident Insights tracks the top banks - only 9 0f 50 banks it tracks have documented an agentic AI use case in production or pilot (Capital One, JPMorgan Chase, BNY)
#is the market for dev tools bigger than ever or just fueled by subsidized services? IMO if you think about agents eating into labor vs. thinking SaaS revenue, then yeah, the market potential is massive
#so agree on this - need some new UI/UX for AI
#what happenened with the gpt-5 release?
#they’re already here and coming…
#how are leading CIOs, CXOs at the Fortune 500 thinking about agents? Read more about Rani Johnson, CIO of Workday and find many more profiles on execs at JP Morgan, Goldman Sachs, Capital One and more below…
#insane amount of data processed for robotics to scale…🧵 👇🏼
#🤦🏼♂️
Markets
#Modelbusters and building companies far bigger than one thought - great post from David George who heads up a16z growth investing
