Be bearish slow SaaS, not all SaaS
Why it's not time to panic for all SaaS companies, only slow moving ones
Some SaaS are in trouble. They move too slowly to adapt. Being slow is extremely damaging because slowness has second order effects. Slow companies are not just slow to change. They are slow to realize they must change.
On top of this, we are going through a paradigm shift that requires major change, and in an environment that is moving at breakneck speed.
All of these compound, so slowness is a very good and valid reason to be bearish some SaaS. The problem is not “vibe coding” and SaaS getting replaced or margins contracting. It’s not being able to move quickly and adapt to a new paradigm, which may involve disrupting themselves.
Slow moving companies won’t be able to pull this off.
The AI software opportunity trident
The AI paradigm for SaaS requires embracing what I call the AI “software opportunity trident” (maybe we need a better name):
Using AI internally to ship faster, better and be more efficient. Across functions, not just product development.
Shipping products and features using AI. Taste and customer value are important here. AI is like spices when cooking, don’t abuse it.
Making the product easily consumable by AI and agents: What Biilmann called Agent Experience (AX). The important thing here is that AX is not just for developer products, his main focus in the post. It’s for all products as next section shows.
Each company will have different priorities. For example, for companies building developer products demand is off the charts for AX. And we’ve seen most of them, both private and public, prioritize it over the other two.
Shopify: the trident in action
Shopify and Tobi Lütke (Shopify's CEO) are great examples of moving fast on all three trident forks:
Using AI internally: Shopify is adopting AI across functions and pushing for it. Tobi’s industry trend setting memo is well documented. It is very clear: “Reflexive AI usage is now a baseline expectation at Shopify”.
Shipping products and features using AI: Sidekick keeps getting new capabilities. Latest being more agentic capabilities.
Making the product easily consumable by AI and agents: Anyone using Gemini will be able to directly shop from the Chat Agent.
Staying alive
Some rules of thumb for what I think is needed in our current environment for a company to stay alive:
Founder + CEO: The magnitude of the shift and its speed means change needs to come from the top. I think it’s war time for all CEOs across the industry. Companies without a CEO founder will have a very hard time pulling this off.
CEO + AI: The CEO and leadership also needs to be using AI, reflexively, every day. As Tomasz Tunguz put it recently: “Teams who don’t use AI daily miss the pace of change. The technology moves too fast for quarterly strategy reviews. If leadership isn’t prompting Claude or GPT every day, they’re already behind.”
Skate to where the puck will be: Because things move so fast, you can’t be in reactive mode. Companies need to take risks, aiming to anticipate trends and be ready when the market is.
Fast iteration: Iteration speed is key. You won’t get everything right. Goal posts will move. Companies that have been shipping and iterating slowly, with long feedback loops, will have a hard time making it through this. Because they are slow, it’ll be slow for them to change this. Cloudflare is an example of a public, large company moving very fast.
Accept disruption: Shipping AI features/products and enabling AX is where disruption can happen: new pricing models (usage over seat based), features becoming obsolete (do we still need some UIs when agents use APIs?) and revenue cannibalization among others. Making it through will likely mean leaving revenue on the table short term. Be OK with that.
AI must be the top priority: AI is an exponential. Riding the exponential should be the top priority. Not getting on the ride means you’ll lose. Messaging should be crisp internally about this. It might mean reshaping teams, changing priorities, moving away from yearly plans, etc.
These are hard. Companies that can do these though, can make it through and succeed.
So: be bearish slow SaaS. But not all SaaS. The ones embracing the trident? They are just getting started.