mikemcglade retweetledi
SaaS is being dismantled as we speak!
We're witnessing the slow-motion collapse of an entire business model that dominated tech for two decades. The $1.3 trillion SaaS is being quietly hollowed out from within by AI agents.
Here's how I see it playing out:
Phase 1 (Now): AI as co-pilot. We're seeing this everywhere, Copilot for developers, Gamma for presentations, Harvey for legal research etc. These AI layers sit atop existing software, making it more efficient.
The SaaS companies feel safe, even excited, as AI seems to make their products more valuable. They're bringing knives to what they think is a knife fight.
Phase 2 (Next 12-18 months): The agent invasion. AI moves from co-pilot to autonomous operator. They're replacement workers that can fully operate existing software on your behalf.
The dam breaks when someone can say "analyze our Q2 performance" rather than clicking through Tableau, or "optimize our ad campaigns" instead of navigating Meta's ad manager. The expertise previously bundled with the software gets unbundled by agents.
Phase 3 (2-3 years): Software invisibility. The final phase happens when the agents bypass the human interfaces altogether. Why render dashboards, buttons and menus when AI can just access the APIs directly?
The value proposition of SaaS, bundling software, workflow, and expertise into user-friendly interfaces unravels completely. The interfaces were designed for humans, but agents don't need them.
Most SaaS incumbents don't see it coming because this isn't a classic disruption pattern. It's not about competing products with better features. It's about the evaporation of the core assumption that humans will operate software.
What's more, the barrier to creating custom, internal software is collapsing simultaneously. Companies that once had to choose between expensive custom development or off-the-shelf SaaS can now spin up bespoke solutions in days instead of months. Why pay Hubspot $1,500/month for a CRM when your team can build 'HubspotForUs' with an AI coding assistant over a weekend? The same features, perfectly tailored to your workflow, with no ongoing subscription costs.
This democratization of software creation means every company becomes a potential software producer rather than just a consumer. The specialized knowledge that SaaS companies monopolized is now available to anyone with access to an AI coding agent and domain expertise.
It went from $1M to build an MVP to build a SaaS to basically free overnight.
I bet the metrics will be puzzling at first, DAUs remain strong while feature usage mysteriously declines. The power users who drive revenue suddenly need fewer seats.
Customer success calls shift from "how do I use this feature?" to "can your software work with my AI agent?"
Or worse: "we built our own version that better fits our workflow."
The survivors won't be those with the best features or even those who add AI features fastest (from no AI to "ai-assisted").
The winners will be companies that expose their software's capabilities through agent-friendly APIs and position themselves as the most trustworthy information sources and execution engines in their domain.
There's also the shift from monthly subscriptions to outcome based software (pay per outcome, pay per task etc) but that's a tweet for another day!
The $1T question: Will Microsoft, Atlassian, Adobe etc. successfully navigate this transition, or will they be the Digital Equipment Corporation of our era too invested in the previous paradigm to adapt to the new one?
All I know is this will be a golden era for startups in the space.
SaaS is being dismantled, piece by piece, workflow by workflow, interface by interface.
Am I wrong?
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