AI is killing B2B SaaS

Well it definitely killed mine so I can't say this is not true

Be a System of Record, not just a Wrapper™ is excellent advice.

if you're a software company and all your clients are in tech...you're gonna have a bad time. godspeed.

at last, TrueAnon has arrived at hackernews

no. High interest rates and a cautionary view of future economic growth are killing B2B SaaS. Money is no longer free, and so there is a bigger push for cost-cutting rather than growing your buisness with free money.

"The SaaS model was built on a simple premise: we build it once, you pay forever."

I've never seen a SaaS product that fits this description. There are always things to do. Libraries to upgrade, performance bottlenecks to diddle around with, an endless stream of nonsense feature requests from people at the customer who never actually use the product, fun experiments your developers want to try out, and so on.

The hard part in SaaS is to delete code, and that's what you should do, at least some of the time. Either through simplifications, or just outright erasing functionality that very few if any of your customers rely on.

What you should not do is let your customers grow the liability that is code in your production environment, unless your entire product set is designed to handle things like this, e.g. the business models of Salesforce and SAP.

Vibe coding seems to be the iPhone camera to DSLR moment for programming.

- No professional used an iPhone for years. Most don’t today.

- Professional scoffed at it as a toy

- The toy shifted the balance of volume through everyday enablement of amateurs to a degree that professional were right, but now in a severely lopsided terrain.

The value ends up in the most engaged paradigm, rather than the most perfect one.

I've worked in SaaS for most of my career, only recently working at a big corp who is largely the buyer and user of SaaS tools to meet their objectives. From the perspective of the corp business buyer, they want something that works for their needs and they want to buy something instead of build it because the support costs are gnarly. They already have engineers dedicated to the tools they've purchased. Much better to put the risk on someone else they can yell at. And the permissions and access to these tools, reports, data, is usually its own special problem to manage. Building a lot of one-off tools is going to just give IT a huge headache and they will push the org to buy before vibe coding a solution.

I don't think AI is killing B2B SaaS so much as companies are finally reckoning with the immense costs of SaaS in a markably different environment than when SaaS exploded in popularity, and AI offers an off-ramp to some. Let's break it down camp-by-camp to show you what I mean:

1) The must-haves. These are your email and communication systems, the things you absolutely have to have up and available at all times to do business. While previously self-hosted (Exchange/Sendmail, IRC/Skype/Jabber, CallManager/UCS), the immense costs and complexities of managing systems ultimately built on archaic, monolithic, and otherwise difficult-to-scale technologies meant that SaaS made sense from a cost and a technical perspective. Let's face it, the fact nobody really hosts their own e-mail anymore in favor of Proton/Microsoft/Google/et al shows that self-hosting is the exception here, not the norm - and they're not going anywhere regardless of how bad the economy gets. These are the "housing stock" of business, and there's plenty of cheap stock always available to setup shop in without the need for technical talent.

2) The juggernauts. The, "we can do this ourselves, but the pain will be so immense that we really don't want to". This is the area where early SaaS solutions cornered and exploded in growth (O365, ServiceNow, Google Workspaces), because managing these things yourself - while feasible, even preferable - was just too cheap to pass up having someone else wrangle on your behalf with a reasonable SLA, freeing up your tech talent for all the other stuff. The problem is that once-focused products have become huge behemoths of complex features that most customers neither need nor use on a regular basis, at least after the initial pricey integration. Add in the ease of maintainability and scalability brought by containers or microservices, along with the availability and reliability of public cloud infrastructure, and suddenly there's more businesses re-evaluating their relationships with these products in the face of ever-rising prices. With AI tooling making data exfiltration and integration easier than ever from these sorts of products, I expect businesses to start consolidating into a single source of truth instead of using dozens of specific product suites - but not toppling any outright.

3) The nice-to-haves. The Figmas, the HubSpots, the myriad of niche-function-high-cost SaaS companies out there making up the bulk of the market. Those whose products lack self-hosted alternatives risk having vibe-coded alternatives be "good enough" for an Enterprise looking to slash costs without regard to long-term support or quality; those who compete with self-hosted alternatives are almost certainly cooked, to varying degrees. If AI tooling can crank out content similar in quality to Figma and the company has tech talent to refine it for long-term use, why bother paying for Figma? If AI tooling can crank out a CRUD UI for users that just executes standard REST API calls behind the scenes, then why bother paying for fancy frontends? While it's technically interesting and novel at how these startups solved issues around scaling, or databases, or tenancy, the reality is that a lot of these niche products or services could be handled in-house with a container manager, a Postgres instance, and a mid-level IT person to poke it when things go pear-shaped. The higher per-seat prices of a lot of these services make them ripe for replacement in businesses comfortable with leveraging AI for building solutions, and I expect that number to grow as the tools become more widely available and IT-friendly in terms of security.

Ultimately, the core promise of SaaS to business customers was all the functionality with none of the costs of self-hosting support. Nowadays, many of them have evolved into solutions that are more expensive than self-hosted options, and businesses that have shifted IT into public clouds or container-based systems have realized they can do the same thing for less themselves, at the cost of some UI/UX niceties in the process. Now that we (IT) can crank out integrations with local LLMs with little to no cost, we're finally able to merge datasets into singular pools or services - and I'm not talking about Snowflake or its "big data" ilk so much as just finally getting everything into Salesforce or ServiceNow without having to bring in consultants.

The must-haves and many of the juggernauts will remain - for now. It's the niche players that need to watch their moats.

No it isn’t. Writing the code was never the issue with making software, it was designing it.

You can shit out an app with AI, just like you could with Indian workers. But that doesn’t mean it will work properly or that you’ll be able to maintain it.

And most importantly, it only works for code they could steal from GitHub. It has no idea how to replicate sensitive systems which aren’t publically documented, and those are some of the most valuable contracts.

If that would be true, expect in the next decade a frantic search for seclusive grey beards, those who haven't given up their rituals and ancient languages.

If your workforce is vibing all day, they will have no capacity for maintenance, because it isn't their code. So the maintenance that happens will be slop and more spaghetti. I am not saying cases like that never existed before, but such companies will face a moment of truth sooner or later.

“Software is eating the world” and “AI is eating software”

the procurement bypass was the best part. now watching ai devs ship faster than our salesforce admin could configure flows

Time will tell.

Just because it's possible to build equivalent software by vibe coding doesn't necessarily mean that companies will stop using SaaS. There are multiple reasons why...

First of all, many big companies pay a fortune to use inferior SaaS solutions instead superior Open Source solutions; possibly because one of their CTO may have received kickbacks or promises of a lucrative job at the SaaS provider as a consequence of this deal. There are a lot of politics going on behind the scenes when it comes to procurement.

Execs at big corporations are often looking for plausible ways to spend investors' money in a way that they can capture some of it for themselves. If they choose open source or they choose cheap vibe coded solutions; there is not much money changing hands. No opportunities for insiders to covertly monetize.

And then there are a lot of security implications to using a complex vibe coded app. The AI won't be able to identify the vulnerability in any decent sized codebase unless you know what you want it to look for.

Maybe the type of SaaS that's akin to stock media (photos, video, music). Just hard enough to do from scratch, but not important enough that it needs to be exceptional in it's field. I've made some money off software like that, and it was nice, but I always knew it couldn't last. Better developers took most of it from me years ago.

I know this is petty but I stopped reading when I saw the “c-t” ligature in the article headings. Obnoxious and pretentious.

I used to be a big advocate for Salesforce in my organization. And it was really great .. allowing us to deliver new functionality without the usual IT procurement bureaucracy.

Now with cloud maturity and Vibe coders who will get better and cheaper, I think it's possible to replace all the features we use on Salesforce at a fraction of the cost of our Salesforce licensing cost.

Are B2B sales actually impacted or is the stock market just randomly predicting AI will impact B2B and selling off?

Since when does stock price / valuation have to match actual business realities?

I didn't realize B2B SaaS products were in freefall like his numbers suggest. I'm not convinced customers are leaving to vibe code their own products but I do believe we're seeing a major shift in the market, pushed by the sudden relative ease of coding. There are a lot of B2B SaaS products which are outdated and I wouldn't be surprised if they're supplanted by much faster competition

I disliked how SaaS CEO's were decrying the death of engineers. Their coordinated layoffs over the past years or so was excruciating to watch and experience. Their language was aggressive and inflammatory.

Although the article may also be hyperbolic, I'm not going to comment on reasons why it might be. Instead, I will agree, and think SaaS companies stock performance this year will be proof. Sure, it might not be the collapse that AI doomers are hoping for, but all the FUD they spread over the past few months to years will signal that they're not insulated from it. They made their cake, now they have to eat it too.

Having worked in enterprise B2B SaaS for a long time, almost every feature I built could have been a simple spreadsheet or some emails. So I'm highly skeptical AI is going to change anything.

Enterprise sales basically works like this: A non-technical sales team aggressively promises everything to win a deal to a non-technical procurement or exec team. When the deal is won, the SaaS sales team tells engineers "go build this" regardless of how stupid it is. And the customer tells their employees "you now have to use this SaaS" regardless of whether it makes sense.

This immediately lost credibility for me with this quote:

> And vibe coding is fun. Even Bret Taylor, OpenAI’s chair, acknowledges it’s become a legitimate development approach.

Color me shocked! Bret, who directly profits by how his product is perceived, thinks it's legitimate???? /s