It's a tale as old as time that developers, particularly junior developers, are convinced they could "slap together something in one weekend" that would replace expensive SAAS software and "just do the parts of it we actually use". Unfortunately, the same arguments against those devs regular-coding a bespoke replacement apply to them vibe-coding a bespoke replacement: management simply doesn't want to be responsible for it. I didn't understand it before I was in management either, but now that I'm in management I 100% get it.
I don't do tea leaves so I wouldn't commit to that, particularly because I think SAAS was oversold in general even before LLMs came out. But I think the idea that the industry as a whole will shrivel away just isn't feasible, even if there is a correction.
The B2B startup motto of "where someone is using Excel to do something other than accounting, there's a startup waiting to happen" has been shockingly resilient over the decades, and I suspect will continue to be.
Clubbing all saas products together just means you can’t really have a productive discussion. Saas products are on a spectrum of quality, from amazing (stripe, datadog) to terrible (fivetran, github). Its upto you as a user to make a call as to which will serve you best, what you should focus your limited resources on etc.
There are of course exceptions to every rule, and I'm sure some companies have been successful in building their own in-house tooling.
At the end of the day these decisions are all series of trade-offs, and the trick is understanding your requirements and capabilities well enough to make the right trade-offs.
And don't forget the safety in getting to say "our systems are down because of [X TRUSTED SOFTWARE FROM LARGE KNOWN BRAND] and we're just waiting for them to fix it" instead of "our shitty internal tooling is broken and no one knows how to fix it"
If I understand correctly many organizations will not develop original stuff internally, because nobody internally wants to be the one is shouted at if something goes wrong.
That's a huge part of it. But also you presumably hired a full-time programmer for a reason, and in almost every case that reason was not to have somebody to write and maintain your CRM system. So any system they build and maintain is not just another thing for you to worry about, it's a huge chunk of time that the developer isn't doing what you hired them for.
I'd actually say the opposite is the case. B2B (even SaaS) is probably the most robust when it comes to AI resistance. The described "in house vibe coded SaaS replacement" does not mirror my experience in B2B at all. The B2B software mindset I've encountered the most is "We'll pay you so we don't have to wrestle with this and can focus on what we do. We'll pay you even more if we worry even less." which is basically the opposite of...let's have someone inhouse vibe code and push to production. B2B is usually fairly conservative.
There was no chance that everyone would be running their own email server, but if it wasn't for the lack of IPv6 adaptation a plug and go home email server solution would probably see a decent amount of use. I'd bet we'd already be seeing it as a feature in most mid-ranged home routers by now.
The mail server in a router is easy to host, the problem is:
1) Uptime (though this could be partially alleviated by retries)
and most of all:
2) "Trust"/"Spam score"
It's the main reason to use Sendgrid, AWS, Google, etc. Their "value" is not the email service, it's that their SMTP servers are trusted.
If tomorrow I can just send from localhost instead of going through Google it's fine for me, but in reality, my emails won't arrive due to these filters.
The specific concern around uptime & reliability was baked into email systems from almost the start - undeliverable notifications (for the sender) and retries.
But yes, the “trust / spam score” is a legit challenge. If only device manufacturers were held liable for security flaws, but we sadly don’t live in that timeline.
Its not a device/MTA issue, SMTP just is not a secure protocol and there is not much you can do in order to 'secure' human communication. Things like spoofing or social engineering are near impossible to address within SMTP without external systems doing some sort of analysis on the messages or in combination with other protocols like DNS.
I agree with you. In B2B SaaS you don't sell the software, you sell your expertise in a specific domain and the responsability you take for owning that expertise. The fact that the development costs are nearly zero will make them more valuable and more protifable
Maybe you are right and the companies do want to pay and not worry about these problems. But now they have a lot more SaaS options to chose from. The incumbent companies like Salesforce and Atlassian have less of a moat. Maybe they'll keep the power users but if a customer is only using 80% of the feature set there is new competition.
Competition might come in the form of a startup but it can also come from existing SaaS companies expanding into adjacent domains. Canva now does docs. Hubspot has a kanban boards. Notion does email. etc
My experience is that SMBs are generally not run by people who feel confident doing any kind of self managed IT.
No amount of LLM usage is going to change them into full stack vibe coders who moonlight as sysadmins. I just don't see it happening.
Not until, that is, a new generation, that has grown accustomed to the tech, takes over.
Until then the current SMBs will for the most part fulfill their IT needs from SaaS businesses (of which I think there will be more due to LLMs lowering the barrier for those of us who feel confident in our coding and sysadmin skills already).
I'm considering SaaS replacements with in house code in situations where my general thoughts are "how can this possibly be the pricing for this?" which is not uncommon.
Well before vibe coding, tons of open source software existed (and exists) to replace SaaS. With lots of features and knobs and real communities. But I still often pay for SaaS because managing it is a headache. Some human has to do it. I can pay the human or I can pay the company. I really don’t see how vibe coded toys can replace real battle tested SaaS products. A better explanation is the bubble in PE ratio is deflating and it’s happening all over, regressing to the mean. AI is a convenient explanation for everything
How many SaaS companies are public? How is that bubble deflating?
These are real risks to these companies.
Your in-house teams can build replacements, it's just a matter of headcount. With Claude, you can build it and staff it and have time left over. Then your investment pays dividends instead of being a subscription straight jacket you have to keep renting.
I think there's an even faster middle ground: open source AI-assisted replacements for SaaS are probably coming. Some of these companies might offer managed versions, which will speed up adoption.
> Your in-house teams can build replacements, it's just a matter of headcount. With Claude, you can build it and staff it and have time left over. Then your investment pays dividends instead of being a subscription straight jacket you have to keep renting.
Lets take Figma as an example, Imagine you have 1000 employees, 300 of them need Figma, so you are paying 120k per year in Figma licenses. You can afford 1 employee working on your own internal Figma. you are paying the same but getting 100x worst experience, unless your 1 employee with CC can somehow find and copy important parts of Figma on his own, deploy and keep it running through the year without issues, which sounds ludicrous.
If you have less than 1000 employees it wouldnt even make sense to have 1 employee doing Figma
Now you have an entire in-house product to manage and build features on. It could potentially work but so much of what my company pays for is about much more than the software itself. One example would be BrowserStack for very specific browser and mobile app testing edge cases. Can’t vibe code this. Another would be a VPN service with the maximum number of locations to test how our system behaves when accessing from those locations. Another would be hosted git. Another is google suite and all of its apps. How can we vibe code Google Docs and Sheets and Drive and all of the integrations and tooling? It simply isn’t going to happen.
I, on the other hand, can't wait to fire every single B2B subscription we've got.
B2B SaaS is a VULN. They get bought out, raise prices, fail. And then you have extremely large amounts of unplanned spend and engineering to get around them.
I remember when we replaced the feature flags and metrics dashboards with SignalFX and LaunchDarkly. Both of those went sour. SignalFx got bought out and quadrupled their insane prices. LaunchDarkly promised the moon, but their product worked worse than our in-house system and we spent nearly a year with a couple of dedicated headcount engineering workarounds.
Atlassian, you name it - it's all got to go.
I just wish I could include AWS in this list. Compute and infra needs to be as generic as water.
If you're working at SaaS, find an exit. AI is coming for you. Now's a great time to work on the AI replacement of your product.
> And then you have extremely large amounts of unplanned spend and engineering to get around them.
I have no idea how you are spending "large amounts" of unplanned spend on Saas products. Every company I worked for had Saas subscription costs being under 1% of capex. Unless you add AWS, which is actually "large amounts" but good luck vibe coding that.
Metrics at a fintech processing billions of dollars of daily GPV, plus the signals from every microservice in the constellation are enormous. Huge scale time series data.
We had an in-house system that worked, but it was a two pizza team split between time series and logging. "Internal weirdware" got thrown around a lot, so we outsourced to SignalFx for a few years. It was bumpy. I liked our in-house system better, and I didn't build it.
Splunk then buys SignalFx and immediately multiplies the pricing at a conveniently timed contract renewal. Suddenly every team in the company has to plan an emergency migration.
What agents are you using? If you stick to opentelemetry and open source agents and develop a collector infrastructure -
You can switch across different vendors with lower impact and ramp off time.
Your supply chain is messed up. You need sign longer contracts with price guarantees.
> we want recent examples just look at tailwindui since it's technically a SaaS.
This is a terrible example. Show me someone ripping out their SAP ERP or SalesForce CRM system where they're paying $100k+ for a vibe coded alternative and I'll believe this overall sentiment.
>> This is a terrible example. Show me someone ripping out their SAP ERP or SalesForce CRM system where they're paying $100k+ for a vibe coded alternative and I'll believe this overall sentiment.
I cannot imagine an SMB or fortune 500 ripping out Salesforce or SAP. However, I can see a point-tool going away (e.g., those $50/mo contracts which do something tiny like connect one tool to another.)
TailwindUI isn't really what I'd consider SaaS -- it was a buy once and download software product.
That means to keep making money they need keep selling new people. According to them, their only marketing channel was the Tailwind docs, AI made it so not nearly as many people needed to visit the tailwind docs.
If they had gone with the subscription SaaS model, they'd probably be a little better off, as they would have still had revenue coming in from their existing users.
TailwindUI unfortunately sits in a position of being an easy to disrupt business with current AI.
Now attempt the same with Zoom, I suspect vibe coding will fall down on a project that complex to fit the mental model of a single engineer maintained a widely used tool
Sorry but tailwindui is not a SAAS. There is no service or hosting. You buy a coded template once and then receive updates. It is totally not the same as a critical B2B SAAS that is running 24-7 on the vendor's servers providing real support and service.
Perhaps the case for premium CSS SaaS businesses, I guess (which seems particularly primed for disruption even pre-AI), but there are many more robust B2B categories out there that aren't literal code + docs as a service.
> I mean if we want recent examples just look at tailwindui since it's technically a SaaS.
How is it in any way B2B? At most B2C + freelancers / individuals / really small SME.
It didn't have any clues a med/large B2B would look for e.g. SSO, SOC2 and other security measures. It doesn't target reusability that I as a B would want. The provided blocks never work together. There aren't reusable components.
Tailwind UI or now Tailwind Plus is more like vibe coding pre-AI.
how dont people understand? if you have a VC funded b2b saas, you need to charge huge margins for the investors to get a return. now, small teams can vibe code a replacement and charge 90% less money. AI is going to kill saas margins.
i literally cannot understand why people keep repeating that non tech companies will build their own software, thats not the bear case for saas
Did vanilla Jira for a while, battled with a web app that is actively trying to make you hate it—switched our team to Linear, couldn't be happier ever since.
Yeah.... The code isn't the hard part. That's not where the value is.
This hard part when you're doing in house stuff is getting a good spec, ongoing support, and long term maintenance.
I've gone trough development of a module with a stakeholder, got a whole spec, confirmed it, coded it, launched it, and was then told it didn't work at all like what they needed. It was literally what they told me... I've said 'yes we can make that report, what specific fields do you need' and gotten blank stares.
Even if you're lucky and the original stakeholder and the code are on the same page, as soon as you get a coworkers 'wouldnt it be nice if...' you're going to have a bad day if it's hand coded, vibecoded, or outsourced...
This has always been the problem, it's why no-code never _really_ worked, even if the tech was perfectly functional.
1. This isn't rooted in data but anecdotes "One Series E CEO told me that they’re re-evaluating the quarterly renewal of their engineering productivity software because they along with an engineer reimplemented something using Github and Notion APIs. They were paying $30,000 to a popular tool3 and they were not going to renew anymore."
2. These anecdotes are about tech startups spend, not your <insert average manufacturing business>. Nor or they grounded in data that says "we interviewed 150 SMB companies and 40% of them have cancelled their SaaS subscriptions and replaced it with vibe coded tools"
Yeah, also if a SaaS costs, 10k a year, I promise its not not more cost effecient to pull your 10k a month engineer off their usual work to build and then maintain some vibe coded slope everytime an edge case occurs.
Also many customers of SaaS have little to zero engineering staff, they are in construction, resturaunts, law offices ect. These takes are so assanine.
"For example, to create a data visualization I won’t seek any SaaS. I’ll just code one myself using many of the popular vibe coding tools (my team actually did that and it’s vastly more flexible than what we’d get off-the-shelf)."
That maybe doable in your 10-people startup, Namanyay. Try doing it in a larger organisation with layers upon layers of firewalls, databases, authentication systems and not the least importantly - management. Not to mention the vastly different audience, both in size and interest. Your own experience is not the experience of everyone else.
I guess they mean BI, but for a company of any scale, they aren't paying for a chart, they're paying for a permissions system, query caching, a modeling layer, scheduling, export to excel, etc.
Stand alone BI tools are going to struggle, but not because they can easily be vibe coded. It'll be because data platforms have BI built-in. Snowflake is starting down this direction and we're (https://www.definite.app/) trying to beat them to it.
- A company vibe codes their own app to replace a SaaS. Great when they only wanted a small chunk of the functionality.
- Startups benefitting from AI coding are copying mature SaaS companies and competing on price.
- Mature SaaS companies are branching out into each others domains. Notion is doing email. Canva is doing an office suite. HubSpot has a Kanban board.
I see that Software as a Service banked too much on the first S, Software. But really customers want the second S, the Service.
When you sell a service, it's opaque, customer don't really care how it is produced. They want things done for them.
AI isn't killing SaaS, it's shifting it to second S.
Customers don't care how the service is implemented, they care about it's quality, availability, price, etc.
Service providers do care about the first S, software makes servicing so much more scalable. You define the service once and then enable it to happen again and again.
They didnt, dont make the mistake of thinking Saas companies are just software companies. They are Sales companies who happen to sell software. Companies like Dropbox & Atlassian have long been surpassed in Tech but they live only because they continue selling even when demand was hard to get. Their moat is sales & networking and software has to be just good enough. And other part is service, these companies still have one of best costumer service since the start of early 2010s. You can still get refund on Uber quite easily, but if you try doing that at a regular old school company you would require a prayer and couple of business weeks.
Nah it's not that at all. Most of the services are totally fungible and everyone has a short attention span. You need to be in a market which is extremely difficult to disrupt and have a product which people are totally dependent on. And those tend to have a rather large cost to enter unless you were in early.
I just don't want to pay $50/user/month for an initially open source product that was relicensed and then crippled that the initial group giving something away decided they wanted to make a business of it.
Yes, many don't like Sharepoint, but still they use it. It's the tool they can use.
Customers don't care if Sharepoint uses LLM, they just want to share ideas, files, reports, pages, etc. If LLM makes it easier, great! If some other product makes it easier, great!
It's not about the product it's about the results.
You're proving the point? Sharepoint, teams: availability + price. Every company has microflows, sharepoint and teams are automatically available and part of the price or lower priced than the competition.
I think one of the interesting things here is that AI doesn't need to be able build B2B SaaS to kill it. So much of the overhead of B2B SaaS companies is thinking about multitenancy, intergrating with many auth providers and mapping those concepts to the program's user system, juggling 100 features when any given customer only needs 10 of them, creating PLG upsell flows to optimize conversions, instrumenting A/B tests etc...
A given company or enterprise does not have to vibe code all this, they just need to make the 10 features with the SLA they actually care about, directly driven off the systems they care about integrating with. And that new, tight, piece of software ends up being much more fit for purpose with full control of new features given to company deploying it. While this was always the case (buy vs build), AI changes the CapEx/OpEX for the build case.
Until a given company decides they need access control for their contractors that's different from their employees, etc. etc. etc. - seen it all before with internal often data scientist written applications that they then try to scale out and run into the security nightmare and lack of support internally for developing and taking forward. Usually these things fizzle out when someone leaves and it stops working.
there's no shortage of software engineers, if it was so easy for an organization to replace a saas with something built in-house they'd be doing it all the time. In my experience in enterprise consulting implementing a well defined requirement is the easiest part. Getting everyone to agree on the requirement, getting it defined, and stopping it from changing after every demo is the hard part.
And in many cases, it's 12 features, with 2 of the features not even existing in the big SaaS.
I'm pretty sure every developer who has dealt with janky workflows in products like Jira has planned out their own version that fits like a glove, "if only I had more time".
If companies wanted to build thier own simple-JIRA they could have built themselves before. I dont think making a kanban board was hard even before AI.
JIRA especially, and I'm always shaking my fist at Atlassian that simple APIs or workflows or reports aren't already included in the tool. I have to pay some other company $10/user/month to get this dumb report your tool should already be able to do?? Insane.
Pretty much. My employer was looking to cut costs and they were spending ~500k a year on a product that does little more than map entra roles/groups to datasets and integrated with a federated query engine through a plugin. Took a couple days to build a replacement. The product had only a few features we needed.
As niche SaaS provider, I'm trying to avoid succumbing to the same fate. The product I built carefully for years would now be within the reach of a senior dev with a couple focused weeks -- if they knew all the requirements. To avoid being overtaken, I'm working to increase my customer's requirements -- getting them hooked on new reports and features I never had time to build before LLMs could do it for me. This makes it less likely for a competitor to be able to afford to quickly replace me.
At the same time, I have no idea what the cost of LLMs usage will be in the future. So I'm working to ensure the architecture stays clean and maintainable for humans in case this kind of tooling becomes untenable.
That sounds like a good strategy to me. We have a couple other products we're looking to knock out to reduce costs, and the decision comes down to me and another colleague. The thing these businesses have in common - difficult to partner with, rough edges for the use cases we need, and no appetite on their end to shore them up. We're paying premium prices for a subpar experience. If instead they adopted your thinking, perhaps we would've looked for savings elsewhere.
I've found in the embedded space that people sell lots and lots of products that do everything you could ever want, and the most efficient thing to do is not buy those things and instead find a way to do just the subset of things you care about with your own back-end systems. The upshot of that is that because you're in total control if something goes wrong you can fix it without getting 6 people on a phone call to point fingers at each other.
I don't think it is killing SaaS. I have definitely had to extend my sales cycle when a potential customer vibe-coded a quick fix for a pain point that might have triggered a sale a few weeks earlier, but eventually the benefit delivered by someone else caring about the software as their entire mission really wins out over a feature here and there.
If you are selling SaaS consider that a vibe-coding customer is validating your feature roadmap with their own time and sweat. It's actually a very positive signal because it demonstrates how badly that product is needed. If they could vibe code a "good enough" version of something to get themselves unstuck for a week, you should be able to iterate on those features and build something even better in short order, except deployed securely and professionally.
Everyone's going to talk about how cool their custom vibe-coded CRM is until they get stuck in a failed migration.
The other thing is bringing in the knowledge about what other customers in the same field want. For business-focused software this can be a boon, customers often can't really envision the solution to their problem, it's like the Henry Ford attributed "If I had asked people what they wanted, they would have said faster horses"
Yeah I have been saying this since the start of vibe coding, Saas companies rely on their sales, who are good enough to sell ther products even in tougher conditions. Software costs for the companies is 100% tax deductible, and they spend a very little on it (Most of times its less than 1% of CapEx). Only reason to optimize this cost is if the Execs of those companies think you can sell the same product.
> Everyone's going to talk about how cool their custom vibe-coded CRM is until they get stuck in a failed migration.
Failed/partial/expensive migrations is the name of the game with SaaS as well. Lock-in is the bottom line.
Migrations become much less scary when you truly own your data and can express it in any format you like. SaaS will keep sticking around, especially those that act like white-hat ransomware.
This feels a lot like the old RPA hype cycle to me — more sales narrative than structural change.
Most companies are not going to replace stable SaaS with a pile of AI-generated internal tools. They don’t want the maintenance or the risk.
If there’s a real B2B game changer, it’s Microsoft.
The day Excel gets a serious, domain-aware AI that can actually model workflows, clean data, and automate logic properly, half of these “build vs buy” debates disappear. People will just solve problems where they already work.
Excel has always been the real business platform. AI will just double down on that, not kill SaaS.
> The day Excel gets a serious, domain-aware AI that can actually model workflows, clean data, and automate logic properly, half of these “build vs buy” debates disappear. People will just solve problems where they already work
Best they can do is more adware in windows. Sorry.
Simple CRUD app sure, but we're nowhere near being able to vibe code even a relatively low-complexity enterprise SaaS product.
If it's got customer data in it and/or you're making important business decisions based on it, you really need your system to be accurate and secure. My experience is the people who procure enterprise software know this and tend to care a lot about it. They often have legal and contractual obligations around that.
In the 1990s there were people who thought OOP with point and click tools like FoxPro and Delphi would make it so easy to create software that everything could be built in-house without expert programmers. The invention of SQL was supposed to eliminate roles like Report Writer and Data Analyst because now business people could just write their own queries "in English" and get back answers.
> In the 1990s there were people who thought OOP with point and click tools like FoxPro and Delphi would make it so easy to create software that everything could be built in-house without expert programmers. The invention of SQL was supposed to eliminate roles like Report Writer and Data Analyst because now business people could just write their own queries "in English" and get back answers.
And yet, precisely that happened in the end, just not with the tools envisioned. Excel, VBA and, where you had one knowledgeable employee, MS Access makes for incredibly powerful and incredibly hard to maintain "shadow IT" - and made even more difficult when someone sneaked in a password, because that takes a bit of an effort to remove [1], knowledge that is easy for us today to find, but not when I was young.
Also, back in the IE6 era, there was a lot of point-and-click created web interfaces... just that it wasn't HTML5 or even HTML. It was an <object> tag loading some ActiveX written by some intern in VB6, or Java, or Flash. I sort of miss that era but also, it was a damn security nightmare. Flash with its constant stream of security vulnerabilities was ripe for exploits, but at least it didn't run native code with full user privileges by design. I'm not kidding, theoretically you could go and import/use functions from any system DLL up to and including Kernel32. OLE/OCX, ActiveX... a design way ahead of its time.
> How to keep asking customers for renewal, when every customer feels they can get something better built with vibe-coded AI products?
Wrong take. You don't need to build something better, you only need something good enough that matches what you actually need. Whether you build it or not and ditch the SaaS is more of an economic calculus.
Also, this isn't much about ditching the likes of Jira not even mentioning open source jira clones exists from decades.
This is more of ditching the kind of extremely-expensive-license that traps your own company and raises the price 5/10% every year. Like industrial ERP or CRM products that also require dedicated developers anyway and you spend hundreds of thousands if not millions for them. Very common, e.g. for inventory or warehouse management.
For this kind of software, and more, it makes sense to consider in-housing, especially when building prototypes with a handful of capable developers with AI can let you experiment.
I think that in the next decade the SaaS that will survive will be the evergreen office suite/teams, because you just won't get people out of powerpoint/excel/outlook, and it's cheap enough and products for which the moat is mostly tied to bureaucratic/legal issues (e.g. payrolls) and you just can't keep up with it.
Having participated in the build of an inventory system / system of record for a large national retail company, I can't see vibe coding helping anything more than the prototyping in the discovery / requirements gathering parts of the process.
The sheer volume of data, the need for real time consistency in store locations, yada yada means that bad early decisions bite hard down the road.
Lots of drudge work can be assisted by AI, especially if you need to do things like in ingest excel sheets or spit out reports, but I would run far away from anything vibe coded as hard as possible.
Its funny you mention excel, I see vibe coding in the business sense right now being a gateway to replace all of the ad hoc uses of excel. We've basically leveled up the quality of the software you can build before buying a SaaS product or a hiring an in house engineer.
One of my clients spends 500k+ on XXX licensing per year (for a 200M revenue company that's not peanuts), and on top of that has to employ 12 full time XXX developers (that command high figures just for their expertise on that software while providing very little productivity) and every single feature takes months to develop anyway. Talking about stuff like adding few fields to a csv output.
So the total cost of XXX is in the 2M/year range, and it keeps ballooning.
My (4 men) team already takes care of the entire warehouse management process except inventory, the only thing that XXX provides, we literally handle everything: picking, manufacturing, packaging, shipping phase and many others.
In any case, nobody has mentioned vibe coding.
I stated that a handful of good engineers with the aid of AI in a couple of months can provide a working prototype to evaluate. In our case it's about extending our software that already does everything, except inventory management.
When you spend 2M/year on a software (1% of your revenue), growing every year by 100/150k it makes sense to experiment building a solution in house.
While the author is wildly overstating things, I do think AI is striking at the heart of the SaaS problem, which is the business model of "pay us $10-100+ per employee per month in perpetuity or we will hold all your data and your company's operations hostage". There is always going to be value in good software, but it is shitty vendors relying on the lock-in effect that are in danger. And good riddance.
The other issue is valuations - B2B SaaS stocks have never been rooted in reality, and the 100+ P/E ratios were always going to come down to earth at some point.
This isn't happening. The past six months has been rough on public B2B SaaS valuations, but the impact is a lot wider than just B2B SaaS (its all non-S&P10 software), and valuations are just vibes in the end. Most of these companies are, financially, doing pretty well; seeing key metric growth, including revenue and profit. This makes sense: AI does not fundamentally change the bargain SaaS brought to the table, that companies would rather pay someone to solve their problems than solve them themselves. However, the stock market doesn't care about this. The stock market doesn't care about anything; it behaves irrationally and non-sensically, and trying to derive any sense of how stable, strong, or successful a company is from stock market valuation is like using lines of code to claim that a software project is really good.
>that companies would rather pay someone to solve their problems than solve them themselves.
Are they not able to just engage AI to solve those problems now? E.g. this morning I saw an app that did something interesting to me for $20 a month. 20 minutes in Gemini and I had a functional app that replicated the behavior. SaaS are more complex but give me a small team and a couple months and we could replicate most any of them.
Maybe it's mostly from AI, maybe it's mostly general economic cutbacks. I also feel like these "wrapper" style SaaS products are the first ones companies are dropping when they are looking to cut costs, and I think a lot of companies are looking to cut costs. I do agree with the overall conclusion either way, that System of Record products/companies are the most likely to survive. There are a lot of SaaS companies with questionable long-term businesses who are getting hit, but that was bound to happen.
I think it's a combination of budgeting, upward price pressure from the SaaS companies themselves, plus bringing things in-house through vibe coding, but there's another factor that I think is harming existing SaaS products. Many of them are becoming legacy solutions with AI bolted on top so they don't really feel that effective or next-level. The underlying tech might even be a generation older too - but the SaaS value-add is providing support, scaling, etc to maintain whatever some old tech that's still a requirement. At some point someone looks at all of these interconnected systems and just says 'start over'.
Vibe coding might not be supplanting all SaaS solutions but it's definitely shaking out "last-gen" solutions.
The stocks of a lot of these SaaS companies were priced on the expectation that they could become the next IBM: become entrenched with the customer and then hike prices until their eyes bleed.
A lot of companies have been too smart for that, and a lot of SaaS offerings are too small to be truly entrenched. Arguably the investment horizon is too short (IBM took decades getting to that point).
The only real vendors who managed to become the next IBM are the cloud providers.
Analytical systems. I see a lot of add-on services that will add intelligence/analytics/etc and companies try them out to solve some issue they have and bounce off them frequently due to growing costs. I can only assume as mentioned that over time these are also easier for companies to in-house vibe-code as well, I just haven't seen a ton of that yet, but people are definitely trying which still shrinks the available pie.
Anecdata sample size of one, but this is not my experience at all. My business has only continued to grow over the past couple years, and I don't think I've had a single customer mention AI to me at all (over the phone or email).
Most people who've been in a business SaaS environment know that writing the software is relatively the easy part aside from in very difficult technical domains. The sales cycle + renewals and solution engineering for businesses is the majority of the work, and that's going nowhere.
It's not and I really doubt it will, for true SaaS platforms. A desktop .gif recorder (frequent example I've read about) is not a SaaS, even if you charge monthly for it.
Let's put an example an exception-tracking SaaS (Sentry, Rollbar). How do the economics of paying a few hundred bucks per month compare vs. allocating engineering resources to an in-house tracker? Think development time, infra investment, tokens, iteration, uptime, etc. And the opportunity cost of focusing on your original business instead.
One would quickly find out that the domain being replaced is far more complex and data-intensive than estimated.
There are many cases where the company might only use a fraction of the features (and therefore complexity) of the SaaS and so only need to develop and maintain those features they actually need. That's when ditching the SaaS can make sense if you can easily develop/maintain what you specifically need on your own with AI assistance.
Even if they use it less, if you combine all of the Saas products used by a company, thats a tiny fraction of the overall CapEx. And this cost is tax deductible, so there is no reason to optimise it unless Execs are really penny pinching, but at that point that company isn't worth selling to anyway.
I don't see that happening because companies need to concentrate on their differentiators. Is your enterprise vibe coding its own SaaS? Who's taking care of it?
We wouldn't do it for tools that are purpose made and have sane pricing in the market place. We do it for stuff that would traditionally go on a 'platform' like Salesforce or something that requires a lot of customization to begin with. It's so much easier to just roll your own than even just going through the procurement process of those kinds of tools much less the integration and change process (hiring consultants, etc). I'm not hands on with it, but I know our small group of AI are helping us eliminate $5m recurring annual spend this year and that's directly impacting the topic article. I won't be surprised if at some point we replace our more sticky ERP software or use this leverage to negotiate prices that are sane. Businesses have been gouged by enterprise software long enough.
Yes to some extent. We wrote a CRM that works for what we needed. It's not a full blown SaaS product we could sell to any company as a tenant, as they would all want other features that aren't important to us. This is what happens during an implementation anyways, we only implement what we care about.
No names, but my company is service companies (mostly residential) - many logos with different verticals (think electric, hvac, etc). Having a SaaS CRM that served all our brands needs was always a challenge and made aggregating anything difficult (we basically were running multiple CRMs)
We were using dozens of SaaS tools per logo - and just going through them all and figuring out what features we need/want and rolling them into the larger system. We've also built handful of things for internal operations, finance, etc
One problem with centrally produced and distributed software is that a small subset of users demanding certain features results in feature bloat for everyone. Costs for all features are shared by all users.
Probably one way SaaS companies will adapt is to break up their offerings into more modular low cost components. While many customers will end up paying less, the addressable market will probably increase because of the new low cost options.
To a degree but most enterprise focused software usually has differential pricing. Often that pricing isn't public so different companies get different quotes.
AI isn't killing SaaS exactly, but instead of selling UIs, SaaS companies are going to have to focus on infrastructure and data. You have to host stuff somewhere, so there's an inescapable cost and transaction that has to take place. If businesses can pay one bill for infra + data management and get nice apps and stuff on top of that (without being locked in), that makes more sense than trying to roll stuff together even if you have a platform team.
As a founder, there is another angle here that is worth mentioning. Not only does AI B2B SaaS allow insourcing, it also allows there to be 10x (imaginary number) the number of companies building SaaS for the same use case. What we see in healthcare or finance for example is executive fatigue from demos, in many cases mostly vibe coded frontend UIs that entrepreneurs are using to test the market. This creates friction for businesses / SaaS companies that are unable to show how their solution is unique, well built or has a clear moat over the many others they have seen.
“Killing” is a bit strong, but is there a world where folks just vibe code solutions that they would have bought previously? Absolutely and and I think that world is here now.
I’ve seen many startups recently were it was like “guys I could vibe code your ‘product’ in the afternoon.” Yes someone needs to look after it etc, but the bar on where companies buy vs build is getting much, much higher.
(Insert rant from dev teams about the code sucks, who will maintain it, etc). Yes all valid points, but things are changing regardless of if folks like it or not.
A lot of startups/small businesses are like "with AI we can build more than ever". The problem is so can everyone else and capitalism rewards scarcity not value. The bar for startups and small software business has risen quite substantially. I know we are avoiding buying software now where I work if possible unless we previously committed to it (contracts).
Focus is a currency and you have a limited amount of it, if all SaaS is built internally, teams would go bankrupt. There's likely always going to be a band of experts focused on solving a problem and everyone pays them to solve it for them, because they do it better and can handle the hassle of maintaining it.
A link shortener is such an easy thing to code, it's essentially one database table with a redirect. To add to that, there are many open source libraries to implement link shortening, including analytics and stuff. Even then Bitly and Rebrandly have customers (from their website) like Toyota, Cisco, Oracle, Monday.com, New York Times, etc.
Are these companies unable to build a link shortener? It's also so easy to migrate off shortener service. If they can and still choose to use these shortening services, there must be other reason. And that reason is that they simply don't want to. This has nothing to do with AI.
I run a software company and one of the reasons customers say they want to migrate from their homegrown spreadsheet is because the guy who built it left. A freaking spreadsheet!
Such blog posts and probably many comments here are the perfect answer to "Tell me you don't run a real business without telling me you don't run a real business"
For the most part, you can replicate any B2B SaaS product in a spreadsheet. The same reasons why spreadsheets didn't kill B2B SaaS apply to "in house vibe coded SaaS replacements." The original in house apps are (and continue to be) spreadsheets.
The framing of 'vibe coding replaces SaaS' misses the more interesting shift: the value SaaS provided was never really the software — it was workflow automation. Software was just the best delivery mechanism we had.
What's changing is that agents + APIs are becoming a better delivery mechanism for many workflows than a UI you manually operate. A company paying $50k/year for a marketing analytics dashboard doesn't actually want a dashboard — they want answers about what's working. An LLM with API access to their data sources often delivers that faster than navigating someone else's opinionated interface.
The SaaS most at risk isn't infrastructure (Stripe, Twilio) or systems of record (Salesforce, Workday). It's the 'pretty UI on top of data you already own' tier — analytics, reporting, simple automation, basic CRM. That's where the compression happens. The products that survive will be the ones that become the system of record, or that offer value AI genuinely can't replicate (regulatory compliance, deep integrations with legacy systems, etc).
Saas companies will survive for the same reason they do today. The operational overhead of any sufficiently complicated piece of software is too much, even more so if it's vibe coded.
I would assume one major thing here is that many orgs only need a small subset of functionality from what most products provide. Many times, that small subset of functionality is only "good enough" in and of itself, but the org is paying the premium for the entire suite of whatever it is. This makes realizing that an LLM can get them to MVP and beyond much easier.
Charging hundreds of thousands if not millions per year for very basic functionality is what is "killing" b2b SaaS.
Sure, vibe coding has impacted user's expectations. They know you can ship a new update easier and faster than before - and you actually can.
But, not sure which successful SaaS companies just stopped shipping any updates to the product, never talked to their customers and never added any new features to win over major new accounts - and still managed to survive and thrive?
And the author actually confirms this:
> AI isn’t killing B2B SaaS. It’s killing B2B SaaS that refuses to evolve.
Something notable for SaaS which this article doesn't mention is that in some cases the reason to buy rather than make yourself is due to needing to handle a bunch of different regulations which LLMs don't threaten (barring businesses which would rather have lawsuits than pay for a SaaS).
Until Claude Code comes with indemnity insurance for HIPAA / GDPR / etc… B2B SaaS is here to stay. You want me to convince my auditor that the vibe-coded in house software handles PII correctly?
Making the audit someone else’s problem is 90% of the ‘buy’ value in ‘build vs buy’
here's the secret saas can vibe code features too on top of their paid well developed and secured api. they can get off their ass and vibe code a mcp wrapper, so user can use the ai tooling they pay for to interact with their saas. and they'd be called visionary hero of the agentic revolution.
but they don't want to. and they will be replaced, as it's good and well.
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.
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.
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.
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.
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.
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 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.
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.
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.
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
Yup it's definitely not because _customers_ are coding solutions, but the trend and motivation seems to come from the fact that customers are realizing there's something else possible except being tied into expensive recurring yearly subscriptions.
I was surprised when I saw the numbers from Bloomberg myself as well!
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.
It's a tale as old as time that developers, particularly junior developers, are convinced they could "slap together something in one weekend" that would replace expensive SAAS software and "just do the parts of it we actually use". Unfortunately, the same arguments against those devs regular-coding a bespoke replacement apply to them vibe-coding a bespoke replacement: management simply doesn't want to be responsible for it. I didn't understand it before I was in management either, but now that I'm in management I 100% get it.
So you think this downturn will be short lived?
When management realise that the vibe coded projects are not maintainable, SAAS will be as popular as ever
I don't do tea leaves so I wouldn't commit to that, particularly because I think SAAS was oversold in general even before LLMs came out. But I think the idea that the industry as a whole will shrivel away just isn't feasible, even if there is a correction.
The B2B startup motto of "where someone is using Excel to do something other than accounting, there's a startup waiting to happen" has been shockingly resilient over the decades, and I suspect will continue to be.
what if this time it's senior developers and they actually can slap something together better then the expensive SAAS offerings?
what if the expensive SAAS offering is just as vibe coded and poor quality as what a junior offers?
Clubbing all saas products together just means you can’t really have a productive discussion. Saas products are on a spectrum of quality, from amazing (stripe, datadog) to terrible (fivetran, github). Its upto you as a user to make a call as to which will serve you best, what you should focus your limited resources on etc.
There are of course exceptions to every rule, and I'm sure some companies have been successful in building their own in-house tooling.
At the end of the day these decisions are all series of trade-offs, and the trick is understanding your requirements and capabilities well enough to make the right trade-offs.
sorry, what do you mean?
1. Enthusiastic employee (vibe-)codes a replacement for a turnkey SaaS product that the company uses.
2. Company uses it, maybe even starts to rely on it for important business operations, and for a time the employee supports that app.
3. Bugs creep in, feature request pile up.
4. Employee either leaves the company or moves on to another project.
5. Pain
And don't forget the safety in getting to say "our systems are down because of [X TRUSTED SOFTWARE FROM LARGE KNOWN BRAND] and we're just waiting for them to fix it" instead of "our shitty internal tooling is broken and no one knows how to fix it"
Yes that's reverse-implied(??) in the "Pain" step. ;-)
If I understand correctly many organizations will not develop original stuff internally, because nobody internally wants to be the one is shouted at if something goes wrong.
That's a huge part of it. But also you presumably hired a full-time programmer for a reason, and in almost every case that reason was not to have somebody to write and maintain your CRM system. So any system they build and maintain is not just another thing for you to worry about, it's a huge chunk of time that the developer isn't doing what you hired them for.
I'd actually say the opposite is the case. B2B (even SaaS) is probably the most robust when it comes to AI resistance. The described "in house vibe coded SaaS replacement" does not mirror my experience in B2B at all. The B2B software mindset I've encountered the most is "We'll pay you so we don't have to wrestle with this and can focus on what we do. We'll pay you even more if we worry even less." which is basically the opposite of...let's have someone inhouse vibe code and push to production. B2B is usually fairly conservative.
Reminds me of a blog post a while back saying that gigabit fiber at home would lead to everyone running their own email server.
There was no chance that everyone would be running their own email server, but if it wasn't for the lack of IPv6 adaptation a plug and go home email server solution would probably see a decent amount of use. I'd bet we'd already be seeing it as a feature in most mid-ranged home routers by now.
The mail server in a router is easy to host, the problem is:
1) Uptime (though this could be partially alleviated by retries)
and most of all:
2) "Trust"/"Spam score"
It's the main reason to use Sendgrid, AWS, Google, etc. Their "value" is not the email service, it's that their SMTP servers are trusted.
If tomorrow I can just send from localhost instead of going through Google it's fine for me, but in reality, my emails won't arrive due to these filters.
If everyone ran a mail server at home spam scores wouldn't be so strict
Not to detract from your wider point, but there's a few ISPs which own IP blocks which aren't blacklisted.
I had quite a bit of success with it and of course, DKIM and the other measures you can take some years back.
For personal emails, I don't think I had any which fed straight into spam.
The specific concern around uptime & reliability was baked into email systems from almost the start - undeliverable notifications (for the sender) and retries.
But yes, the “trust / spam score” is a legit challenge. If only device manufacturers were held liable for security flaws, but we sadly don’t live in that timeline.
Its not a device/MTA issue, SMTP just is not a secure protocol and there is not much you can do in order to 'secure' human communication. Things like spoofing or social engineering are near impossible to address within SMTP without external systems doing some sort of analysis on the messages or in combination with other protocols like DNS.
SMTP isn't at fault, the social ecosystem is at fault. Every system where identities are free has a spam problem.
> "Trust"/"Spam score"
See jwz's struggles with hosting his own email. (Not linking to his blog here with HN as the referrer...)
With email, the 800 lb gorillas won, and in the end it didn't even solve the spam problem.
I agree with you. In B2B SaaS you don't sell the software, you sell your expertise in a specific domain and the responsability you take for owning that expertise. The fact that the development costs are nearly zero will make them more valuable and more protifable
Maybe you are right and the companies do want to pay and not worry about these problems. But now they have a lot more SaaS options to chose from. The incumbent companies like Salesforce and Atlassian have less of a moat. Maybe they'll keep the power users but if a customer is only using 80% of the feature set there is new competition. Competition might come in the form of a startup but it can also come from existing SaaS companies expanding into adjacent domains. Canva now does docs. Hubspot has a kanban boards. Notion does email. etc
B2B is a large corp is like you describe, but it's very different in SMBs, and there are many, many more SMBs.
My experience is that SMBs are generally not run by people who feel confident doing any kind of self managed IT.
No amount of LLM usage is going to change them into full stack vibe coders who moonlight as sysadmins. I just don't see it happening.
Not until, that is, a new generation, that has grown accustomed to the tech, takes over.
Until then the current SMBs will for the most part fulfill their IT needs from SaaS businesses (of which I think there will be more due to LLMs lowering the barrier for those of us who feel confident in our coding and sysadmin skills already).
What new generation? Younger generations are less accustomed to self-managed tech.
This 100% most of new devices are locked, mobile etc.
I assume a vibe coded agent would moonlight as the sysadmin to maintain the vibe coded LoB app.
The reality is anyone generate useful code with an AI agent now. Dores in accounting can now automate all her spreadsheets in a single afternoon.
Not trying to hype AI, but we are in an interesting transitional period.
I'm considering SaaS replacements with in house code in situations where my general thoughts are "how can this possibly be the pricing for this?" which is not uncommon.
Well before vibe coding, tons of open source software existed (and exists) to replace SaaS. With lots of features and knobs and real communities. But I still often pay for SaaS because managing it is a headache. Some human has to do it. I can pay the human or I can pay the company. I really don’t see how vibe coded toys can replace real battle tested SaaS products. A better explanation is the bubble in PE ratio is deflating and it’s happening all over, regressing to the mean. AI is a convenient explanation for everything
How many SaaS companies are public? How is that bubble deflating?
These are real risks to these companies.
Your in-house teams can build replacements, it's just a matter of headcount. With Claude, you can build it and staff it and have time left over. Then your investment pays dividends instead of being a subscription straight jacket you have to keep renting.
I think there's an even faster middle ground: open source AI-assisted replacements for SaaS are probably coming. Some of these companies might offer managed versions, which will speed up adoption.
> Your in-house teams can build replacements, it's just a matter of headcount. With Claude, you can build it and staff it and have time left over. Then your investment pays dividends instead of being a subscription straight jacket you have to keep renting.
Lets take Figma as an example, Imagine you have 1000 employees, 300 of them need Figma, so you are paying 120k per year in Figma licenses. You can afford 1 employee working on your own internal Figma. you are paying the same but getting 100x worst experience, unless your 1 employee with CC can somehow find and copy important parts of Figma on his own, deploy and keep it running through the year without issues, which sounds ludicrous.
If you have less than 1000 employees it wouldnt even make sense to have 1 employee doing Figma
Now you have an entire in-house product to manage and build features on. It could potentially work but so much of what my company pays for is about much more than the software itself. One example would be BrowserStack for very specific browser and mobile app testing edge cases. Can’t vibe code this. Another would be a VPN service with the maximum number of locations to test how our system behaves when accessing from those locations. Another would be hosted git. Another is google suite and all of its apps. How can we vibe code Google Docs and Sheets and Drive and all of the integrations and tooling? It simply isn’t going to happen.
So how much Constellation Software stock are you buying since the market seems to think they are dead in the water after a 50% drawdown?
I, on the other hand, can't wait to fire every single B2B subscription we've got.
B2B SaaS is a VULN. They get bought out, raise prices, fail. And then you have extremely large amounts of unplanned spend and engineering to get around them.
I remember when we replaced the feature flags and metrics dashboards with SignalFX and LaunchDarkly. Both of those went sour. SignalFx got bought out and quadrupled their insane prices. LaunchDarkly promised the moon, but their product worked worse than our in-house system and we spent nearly a year with a couple of dedicated headcount engineering workarounds.
Atlassian, you name it - it's all got to go.
I just wish I could include AWS in this list. Compute and infra needs to be as generic as water.
If you're working at SaaS, find an exit. AI is coming for you. Now's a great time to work on the AI replacement of your product.
If you’re working in engineering, find an exit. AI is coming for you.
> And then you have extremely large amounts of unplanned spend and engineering to get around them.
I have no idea how you are spending "large amounts" of unplanned spend on Saas products. Every company I worked for had Saas subscription costs being under 1% of capex. Unless you add AWS, which is actually "large amounts" but good luck vibe coding that.
Metrics at a fintech processing billions of dollars of daily GPV, plus the signals from every microservice in the constellation are enormous. Huge scale time series data.
We had an in-house system that worked, but it was a two pizza team split between time series and logging. "Internal weirdware" got thrown around a lot, so we outsourced to SignalFx for a few years. It was bumpy. I liked our in-house system better, and I didn't build it.
Splunk then buys SignalFx and immediately multiplies the pricing at a conveniently timed contract renewal. Suddenly every team in the company has to plan an emergency migration.
What agents are you using? If you stick to opentelemetry and open source agents and develop a collector infrastructure - You can switch across different vendors with lower impact and ramp off time.
Your supply chain is messed up. You need sign longer contracts with price guarantees.
hard disagree, several b2b categories are going extinct because AI just completely replaced them.
I mean if we want recent examples just look at tailwindui since it's technically a SaaS.
> we want recent examples just look at tailwindui since it's technically a SaaS.
This is a terrible example. Show me someone ripping out their SAP ERP or SalesForce CRM system where they're paying $100k+ for a vibe coded alternative and I'll believe this overall sentiment.
These examples are going to be lagging indicators of the underlying sentiment.
Just because it cannot be done today, doesn't mean there is not a real appetite in large enterprises to do exactly this.
Without naming names, I know of at least one public company with a real hunger for exactly this eventuality.
>> This is a terrible example. Show me someone ripping out their SAP ERP or SalesForce CRM system where they're paying $100k+ for a vibe coded alternative and I'll believe this overall sentiment.
I cannot imagine an SMB or fortune 500 ripping out Salesforce or SAP. However, I can see a point-tool going away (e.g., those $50/mo contracts which do something tiny like connect one tool to another.)
TailwindUI isn't really what I'd consider SaaS -- it was a buy once and download software product.
That means to keep making money they need keep selling new people. According to them, their only marketing channel was the Tailwind docs, AI made it so not nearly as many people needed to visit the tailwind docs.
If they had gone with the subscription SaaS model, they'd probably be a little better off, as they would have still had revenue coming in from their existing users.
There is a paradigm shift but personally I like to zoom out a little:
It used to be that your new b2b product has to try and displace a spreadsheet. Now it has to displace an agent.
TailwindUI unfortunately sits in a position of being an easy to disrupt business with current AI.
Now attempt the same with Zoom, I suspect vibe coding will fall down on a project that complex to fit the mental model of a single engineer maintained a widely used tool
Sorry but tailwindui is not a SAAS. There is no service or hosting. You buy a coded template once and then receive updates. It is totally not the same as a critical B2B SAAS that is running 24-7 on the vendor's servers providing real support and service.
Perhaps the case for premium CSS SaaS businesses, I guess (which seems particularly primed for disruption even pre-AI), but there are many more robust B2B categories out there that aren't literal code + docs as a service.
> I mean if we want recent examples just look at tailwindui since it's technically a SaaS.
How is it in any way B2B? At most B2C + freelancers / individuals / really small SME.
It didn't have any clues a med/large B2B would look for e.g. SSO, SOC2 and other security measures. It doesn't target reusability that I as a B would want. The provided blocks never work together. There aren't reusable components.
Tailwind UI or now Tailwind Plus is more like vibe coding pre-AI.
how dont people understand? if you have a VC funded b2b saas, you need to charge huge margins for the investors to get a return. now, small teams can vibe code a replacement and charge 90% less money. AI is going to kill saas margins.
i literally cannot understand why people keep repeating that non tech companies will build their own software, thats not the bear case for saas
Atlassian: surviving since 2002 because no-one could previously build a kanban board or project management app
I think the value is lost on the end user, but it’s more readily apparent to everyone above them.
I’ve talked to many non engineering managers that love Jira, love the reports, the way they can see work flows, do intake etc.
Engineers and even alot of engineering managers loathe it, largely, but I think we’re the collective afterthought
Also, FWIW, a lot of pain people have with Jira is self inflicted by the people who setup the instance and how it works, vs vanilla Jira
Did vanilla Jira for a while, battled with a web app that is actively trying to make you hate it—switched our team to Linear, couldn't be happier ever since.
As far as the Atlassian suite goes I do much prefer Trello.
I only mean this all to be fair to Atlassian, that not all issues with Jira derive from anything they’re doing specifically
no the difference is 90% cost savings, which was previously impossible
How does a company charging 10% their competitor afford to compete on marketing, sales, design, user testing or customer service?
(this is even granting that AI is a 10x speedup for developers, which I don't agree with and no-one has shown)
Yeah.... The code isn't the hard part. That's not where the value is.
This hard part when you're doing in house stuff is getting a good spec, ongoing support, and long term maintenance.
I've gone trough development of a module with a stakeholder, got a whole spec, confirmed it, coded it, launched it, and was then told it didn't work at all like what they needed. It was literally what they told me... I've said 'yes we can make that report, what specific fields do you need' and gotten blank stares.
Even if you're lucky and the original stakeholder and the code are on the same page, as soon as you get a coworkers 'wouldnt it be nice if...' you're going to have a bad day if it's hand coded, vibecoded, or outsourced...
This has always been the problem, it's why no-code never _really_ worked, even if the tech was perfectly functional.
1. This isn't rooted in data but anecdotes "One Series E CEO told me that they’re re-evaluating the quarterly renewal of their engineering productivity software because they along with an engineer reimplemented something using Github and Notion APIs. They were paying $30,000 to a popular tool3 and they were not going to renew anymore."
2. These anecdotes are about tech startups spend, not your <insert average manufacturing business>. Nor or they grounded in data that says "we interviewed 150 SMB companies and 40% of them have cancelled their SaaS subscriptions and replaced it with vibe coded tools"
3. "Analysts are writing notes titled “No Reasons to Own” software stocks." - there is just one analyst saying this: https://finance.yahoo.com/news/no-reasons-own-software-stock...
4. Most of these SaaS tech stocks have been trading at all time highs...this smells of "explain something very complex with a simple anecdote"
EDIT: Oh lol, the author has a vibe coding SaaS offering...there ya go.
Exactly. This sounds like a barber advising which haircut to get.
Yeah, also if a SaaS costs, 10k a year, I promise its not not more cost effecient to pull your 10k a month engineer off their usual work to build and then maintain some vibe coded slope everytime an edge case occurs.
Also many customers of SaaS have little to zero engineering staff, they are in construction, resturaunts, law offices ect. These takes are so assanine.
"For example, to create a data visualization I won’t seek any SaaS. I’ll just code one myself using many of the popular vibe coding tools (my team actually did that and it’s vastly more flexible than what we’d get off-the-shelf)."
That maybe doable in your 10-people startup, Namanyay. Try doing it in a larger organisation with layers upon layers of firewalls, databases, authentication systems and not the least importantly - management. Not to mention the vastly different audience, both in size and interest. Your own experience is not the experience of everyone else.
also, who pays for "a data visualization" SaaS?
I guess they mean BI, but for a company of any scale, they aren't paying for a chart, they're paying for a permissions system, query caching, a modeling layer, scheduling, export to excel, etc.
Stand alone BI tools are going to struggle, but not because they can easily be vibe coded. It'll be because data platforms have BI built-in. Snowflake is starting down this direction and we're (https://www.definite.app/) trying to beat them to it.
I can see three forms of competition here:
- A company vibe codes their own app to replace a SaaS. Great when they only wanted a small chunk of the functionality. - Startups benefitting from AI coding are copying mature SaaS companies and competing on price. - Mature SaaS companies are branching out into each others domains. Notion is doing email. Canva is doing an office suite. HubSpot has a Kanban board.
I see that Software as a Service banked too much on the first S, Software. But really customers want the second S, the Service.
When you sell a service, it's opaque, customer don't really care how it is produced. They want things done for them.
AI isn't killing SaaS, it's shifting it to second S.
Customers don't care how the service is implemented, they care about it's quality, availability, price, etc.
Service providers do care about the first S, software makes servicing so much more scalable. You define the service once and then enable it to happen again and again.
They didnt, dont make the mistake of thinking Saas companies are just software companies. They are Sales companies who happen to sell software. Companies like Dropbox & Atlassian have long been surpassed in Tech but they live only because they continue selling even when demand was hard to get. Their moat is sales & networking and software has to be just good enough. And other part is service, these companies still have one of best costumer service since the start of early 2010s. You can still get refund on Uber quite easily, but if you try doing that at a regular old school company you would require a prayer and couple of business weeks.
Good point, sales is the winning factor in most cases. Why is Microsoft one of the largest software companies? Sales.
Nah it's not that at all. Most of the services are totally fungible and everyone has a short attention span. You need to be in a market which is extremely difficult to disrupt and have a product which people are totally dependent on. And those tend to have a rather large cost to enter unless you were in early.
That 2nd S is sometimes engineered into the product design to maximize vendor lock in, and consulting revenue.
Yes and that is exactly why they are losing. They have hostages not customers.
I just don't want to pay $50/user/month for an initially open source product that was relicensed and then crippled that the initial group giving something away decided they wanted to make a business of it.
Use the original open source version. They can’t relicense anything they can just use a new license for future versions.
Why not, if it solves your problem?
> it's quality, availability, price, etc.
Are you sure? Companies still use SharePoint Online, Teams etc.
The F in SharePoint stands for fast
Yes, many don't like Sharepoint, but still they use it. It's the tool they can use.
Customers don't care if Sharepoint uses LLM, they just want to share ideas, files, reports, pages, etc. If LLM makes it easier, great! If some other product makes it easier, great!
It's not about the product it's about the results.
You're proving the point? Sharepoint, teams: availability + price. Every company has microflows, sharepoint and teams are automatically available and part of the price or lower priced than the competition.
I think one of the interesting things here is that AI doesn't need to be able build B2B SaaS to kill it. So much of the overhead of B2B SaaS companies is thinking about multitenancy, intergrating with many auth providers and mapping those concepts to the program's user system, juggling 100 features when any given customer only needs 10 of them, creating PLG upsell flows to optimize conversions, instrumenting A/B tests etc...
A given company or enterprise does not have to vibe code all this, they just need to make the 10 features with the SLA they actually care about, directly driven off the systems they care about integrating with. And that new, tight, piece of software ends up being much more fit for purpose with full control of new features given to company deploying it. While this was always the case (buy vs build), AI changes the CapEx/OpEX for the build case.
Until a given company decides they need access control for their contractors that's different from their employees, etc. etc. etc. - seen it all before with internal often data scientist written applications that they then try to scale out and run into the security nightmare and lack of support internally for developing and taking forward. Usually these things fizzle out when someone leaves and it stops working.
Bingo; the exact same arguments against regular-coding it in-house apply to vibe-coding it in-house.
there's no shortage of software engineers, if it was so easy for an organization to replace a saas with something built in-house they'd be doing it all the time. In my experience in enterprise consulting implementing a well defined requirement is the easiest part. Getting everyone to agree on the requirement, getting it defined, and stopping it from changing after every demo is the hard part.
And in many cases, it's 12 features, with 2 of the features not even existing in the big SaaS.
I'm pretty sure every developer who has dealt with janky workflows in products like Jira has planned out their own version that fits like a glove, "if only I had more time".
If companies wanted to build thier own simple-JIRA they could have built themselves before. I dont think making a kanban board was hard even before AI.
You’re describing Excel.
AI will be used to do “excel better” more than “replace a managed, compliant, feature-rich-carefully-engineered, service”.
JIRA especially, and I'm always shaking my fist at Atlassian that simple APIs or workflows or reports aren't already included in the tool. I have to pay some other company $10/user/month to get this dumb report your tool should already be able to do?? Insane.
Pretty much. My employer was looking to cut costs and they were spending ~500k a year on a product that does little more than map entra roles/groups to datasets and integrated with a federated query engine through a plugin. Took a couple days to build a replacement. The product had only a few features we needed.
As niche SaaS provider, I'm trying to avoid succumbing to the same fate. The product I built carefully for years would now be within the reach of a senior dev with a couple focused weeks -- if they knew all the requirements. To avoid being overtaken, I'm working to increase my customer's requirements -- getting them hooked on new reports and features I never had time to build before LLMs could do it for me. This makes it less likely for a competitor to be able to afford to quickly replace me.
At the same time, I have no idea what the cost of LLMs usage will be in the future. So I'm working to ensure the architecture stays clean and maintainable for humans in case this kind of tooling becomes untenable.
That sounds like a good strategy to me. We have a couple other products we're looking to knock out to reduce costs, and the decision comes down to me and another colleague. The thing these businesses have in common - difficult to partner with, rough edges for the use cases we need, and no appetite on their end to shore them up. We're paying premium prices for a subpar experience. If instead they adopted your thinking, perhaps we would've looked for savings elsewhere.
I've found in the embedded space that people sell lots and lots of products that do everything you could ever want, and the most efficient thing to do is not buy those things and instead find a way to do just the subset of things you care about with your own back-end systems. The upshot of that is that because you're in total control if something goes wrong you can fix it without getting 6 people on a phone call to point fingers at each other.
Exactly, a lot more focus -- and most importantly specific domain knowledge -- allows the end-user to build exactly what they need, fast.
I don't think it is killing SaaS. I have definitely had to extend my sales cycle when a potential customer vibe-coded a quick fix for a pain point that might have triggered a sale a few weeks earlier, but eventually the benefit delivered by someone else caring about the software as their entire mission really wins out over a feature here and there.
If you are selling SaaS consider that a vibe-coding customer is validating your feature roadmap with their own time and sweat. It's actually a very positive signal because it demonstrates how badly that product is needed. If they could vibe code a "good enough" version of something to get themselves unstuck for a week, you should be able to iterate on those features and build something even better in short order, except deployed securely and professionally.
Everyone's going to talk about how cool their custom vibe-coded CRM is until they get stuck in a failed migration.
The other thing is bringing in the knowledge about what other customers in the same field want. For business-focused software this can be a boon, customers often can't really envision the solution to their problem, it's like the Henry Ford attributed "If I had asked people what they wanted, they would have said faster horses"
Yeah I have been saying this since the start of vibe coding, Saas companies rely on their sales, who are good enough to sell ther products even in tougher conditions. Software costs for the companies is 100% tax deductible, and they spend a very little on it (Most of times its less than 1% of CapEx). Only reason to optimize this cost is if the Execs of those companies think you can sell the same product.
> Everyone's going to talk about how cool their custom vibe-coded CRM is until they get stuck in a failed migration.
Failed/partial/expensive migrations is the name of the game with SaaS as well. Lock-in is the bottom line.
Migrations become much less scary when you truly own your data and can express it in any format you like. SaaS will keep sticking around, especially those that act like white-hat ransomware.
This feels a lot like the old RPA hype cycle to me — more sales narrative than structural change.
Most companies are not going to replace stable SaaS with a pile of AI-generated internal tools. They don’t want the maintenance or the risk.
If there’s a real B2B game changer, it’s Microsoft.
The day Excel gets a serious, domain-aware AI that can actually model workflows, clean data, and automate logic properly, half of these “build vs buy” debates disappear. People will just solve problems where they already work.
Excel has always been the real business platform. AI will just double down on that, not kill SaaS.
> The day Excel gets a serious, domain-aware AI that can actually model workflows, clean data, and automate logic properly, half of these “build vs buy” debates disappear. People will just solve problems where they already work
Best they can do is more adware in windows. Sorry.
I don't really agree with this.
Simple CRUD app sure, but we're nowhere near being able to vibe code even a relatively low-complexity enterprise SaaS product.
If it's got customer data in it and/or you're making important business decisions based on it, you really need your system to be accurate and secure. My experience is the people who procure enterprise software know this and tend to care a lot about it. They often have legal and contractual obligations around that.
In the 1990s there were people who thought OOP with point and click tools like FoxPro and Delphi would make it so easy to create software that everything could be built in-house without expert programmers. The invention of SQL was supposed to eliminate roles like Report Writer and Data Analyst because now business people could just write their own queries "in English" and get back answers.
> In the 1990s there were people who thought OOP with point and click tools like FoxPro and Delphi would make it so easy to create software that everything could be built in-house without expert programmers. The invention of SQL was supposed to eliminate roles like Report Writer and Data Analyst because now business people could just write their own queries "in English" and get back answers.
And yet, precisely that happened in the end, just not with the tools envisioned. Excel, VBA and, where you had one knowledgeable employee, MS Access makes for incredibly powerful and incredibly hard to maintain "shadow IT" - and made even more difficult when someone sneaked in a password, because that takes a bit of an effort to remove [1], knowledge that is easy for us today to find, but not when I was young.
Also, back in the IE6 era, there was a lot of point-and-click created web interfaces... just that it wasn't HTML5 or even HTML. It was an <object> tag loading some ActiveX written by some intern in VB6, or Java, or Flash. I sort of miss that era but also, it was a damn security nightmare. Flash with its constant stream of security vulnerabilities was ripe for exploits, but at least it didn't run native code with full user privileges by design. I'm not kidding, theoretically you could go and import/use functions from any system DLL up to and including Kernel32. OLE/OCX, ActiveX... a design way ahead of its time.
[1] https://stackoverflow.com/questions/272503/removing-the-pass...
Software got easier to develop, but we just came up with more problems to solve with software.
The new tools didn't shrink demand for COTS enterprise software - it grew massively since the 90s!
> How to keep asking customers for renewal, when every customer feels they can get something better built with vibe-coded AI products?
Wrong take. You don't need to build something better, you only need something good enough that matches what you actually need. Whether you build it or not and ditch the SaaS is more of an economic calculus.
Also, this isn't much about ditching the likes of Jira not even mentioning open source jira clones exists from decades.
This is more of ditching the kind of extremely-expensive-license that traps your own company and raises the price 5/10% every year. Like industrial ERP or CRM products that also require dedicated developers anyway and you spend hundreds of thousands if not millions for them. Very common, e.g. for inventory or warehouse management.
For this kind of software, and more, it makes sense to consider in-housing, especially when building prototypes with a handful of capable developers with AI can let you experiment.
I think that in the next decade the SaaS that will survive will be the evergreen office suite/teams, because you just won't get people out of powerpoint/excel/outlook, and it's cheap enough and products for which the moat is mostly tied to bureaucratic/legal issues (e.g. payrolls) and you just can't keep up with it.
Having participated in the build of an inventory system / system of record for a large national retail company, I can't see vibe coding helping anything more than the prototyping in the discovery / requirements gathering parts of the process.
The sheer volume of data, the need for real time consistency in store locations, yada yada means that bad early decisions bite hard down the road.
Lots of drudge work can be assisted by AI, especially if you need to do things like in ingest excel sheets or spit out reports, but I would run far away from anything vibe coded as hard as possible.
Its funny you mention excel, I see vibe coding in the business sense right now being a gateway to replace all of the ad hoc uses of excel. We've basically leveled up the quality of the software you can build before buying a SaaS product or a hiring an in house engineer.
> I see vibe coding in the business sense right now being a gateway to replace all of the ad hoc uses of excel
I rather use Excel. It's likely More robust and safer than the vibe coded app that could trigger data loss / incorrectness / issues any time.
The example I made about inventory wasn't random.
One of my clients spends 500k+ on XXX licensing per year (for a 200M revenue company that's not peanuts), and on top of that has to employ 12 full time XXX developers (that command high figures just for their expertise on that software while providing very little productivity) and every single feature takes months to develop anyway. Talking about stuff like adding few fields to a csv output.
So the total cost of XXX is in the 2M/year range, and it keeps ballooning.
My (4 men) team already takes care of the entire warehouse management process except inventory, the only thing that XXX provides, we literally handle everything: picking, manufacturing, packaging, shipping phase and many others.
In any case, nobody has mentioned vibe coding.
I stated that a handful of good engineers with the aid of AI in a couple of months can provide a working prototype to evaluate. In our case it's about extending our software that already does everything, except inventory management.
When you spend 2M/year on a software (1% of your revenue), growing every year by 100/150k it makes sense to experiment building a solution in house.
While the author is wildly overstating things, I do think AI is striking at the heart of the SaaS problem, which is the business model of "pay us $10-100+ per employee per month in perpetuity or we will hold all your data and your company's operations hostage". There is always going to be value in good software, but it is shitty vendors relying on the lock-in effect that are in danger. And good riddance.
The other issue is valuations - B2B SaaS stocks have never been rooted in reality, and the 100+ P/E ratios were always going to come down to earth at some point.
This isn't happening. The past six months has been rough on public B2B SaaS valuations, but the impact is a lot wider than just B2B SaaS (its all non-S&P10 software), and valuations are just vibes in the end. Most of these companies are, financially, doing pretty well; seeing key metric growth, including revenue and profit. This makes sense: AI does not fundamentally change the bargain SaaS brought to the table, that companies would rather pay someone to solve their problems than solve them themselves. However, the stock market doesn't care about this. The stock market doesn't care about anything; it behaves irrationally and non-sensically, and trying to derive any sense of how stable, strong, or successful a company is from stock market valuation is like using lines of code to claim that a software project is really good.
>that companies would rather pay someone to solve their problems than solve them themselves.
Are they not able to just engage AI to solve those problems now? E.g. this morning I saw an app that did something interesting to me for $20 a month. 20 minutes in Gemini and I had a functional app that replicated the behavior. SaaS are more complex but give me a small team and a couple months and we could replicate most any of them.
No one is replacing Jira or Salesforce with an internally-AI'd analogue.
Give it a year.
Maybe it's mostly from AI, maybe it's mostly general economic cutbacks. I also feel like these "wrapper" style SaaS products are the first ones companies are dropping when they are looking to cut costs, and I think a lot of companies are looking to cut costs. I do agree with the overall conclusion either way, that System of Record products/companies are the most likely to survive. There are a lot of SaaS companies with questionable long-term businesses who are getting hit, but that was bound to happen.
I think it's a combination of budgeting, upward price pressure from the SaaS companies themselves, plus bringing things in-house through vibe coding, but there's another factor that I think is harming existing SaaS products. Many of them are becoming legacy solutions with AI bolted on top so they don't really feel that effective or next-level. The underlying tech might even be a generation older too - but the SaaS value-add is providing support, scaling, etc to maintain whatever some old tech that's still a requirement. At some point someone looks at all of these interconnected systems and just says 'start over'.
Vibe coding might not be supplanting all SaaS solutions but it's definitely shaking out "last-gen" solutions.
The stocks of a lot of these SaaS companies were priced on the expectation that they could become the next IBM: become entrenched with the customer and then hike prices until their eyes bleed.
A lot of companies have been too smart for that, and a lot of SaaS offerings are too small to be truly entrenched. Arguably the investment horizon is too short (IBM took decades getting to that point).
The only real vendors who managed to become the next IBM are the cloud providers.
System of Records especially for boring industries is the way to go. What kind of wrapper SaaS are you seeing getting dropped?
Analytical systems. I see a lot of add-on services that will add intelligence/analytics/etc and companies try them out to solve some issue they have and bounce off them frequently due to growing costs. I can only assume as mentioned that over time these are also easier for companies to in-house vibe-code as well, I just haven't seen a ton of that yet, but people are definitely trying which still shrinks the available pie.
> AI is killing B2B SaaS
Anecdata sample size of one, but this is not my experience at all. My business has only continued to grow over the past couple years, and I don't think I've had a single customer mention AI to me at all (over the phone or email).
I just don't buy it.
Most people who've been in a business SaaS environment know that writing the software is relatively the easy part aside from in very difficult technical domains. The sales cycle + renewals and solution engineering for businesses is the majority of the work, and that's going nowhere.
It's not and I really doubt it will, for true SaaS platforms. A desktop .gif recorder (frequent example I've read about) is not a SaaS, even if you charge monthly for it.
Let's put an example an exception-tracking SaaS (Sentry, Rollbar). How do the economics of paying a few hundred bucks per month compare vs. allocating engineering resources to an in-house tracker? Think development time, infra investment, tokens, iteration, uptime, etc. And the opportunity cost of focusing on your original business instead.
One would quickly find out that the domain being replaced is far more complex and data-intensive than estimated.
There are many cases where the company might only use a fraction of the features (and therefore complexity) of the SaaS and so only need to develop and maintain those features they actually need. That's when ditching the SaaS can make sense if you can easily develop/maintain what you specifically need on your own with AI assistance.
Even if they use it less, if you combine all of the Saas products used by a company, thats a tiny fraction of the overall CapEx. And this cost is tax deductible, so there is no reason to optimise it unless Execs are really penny pinching, but at that point that company isn't worth selling to anyway.
Here is the list of evidence the author gives for why AI is the reason software company stocks are down:
I don't see that happening because companies need to concentrate on their differentiators. Is your enterprise vibe coding its own SaaS? Who's taking care of it?
> Is your enterprise vibe coding its own SaaS?
Yes, a lot.
> Who's taking care of it?
It's not hard.
We wouldn't do it for tools that are purpose made and have sane pricing in the market place. We do it for stuff that would traditionally go on a 'platform' like Salesforce or something that requires a lot of customization to begin with. It's so much easier to just roll your own than even just going through the procurement process of those kinds of tools much less the integration and change process (hiring consultants, etc). I'm not hands on with it, but I know our small group of AI are helping us eliminate $5m recurring annual spend this year and that's directly impacting the topic article. I won't be surprised if at some point we replace our more sticky ERP software or use this leverage to negotiate prices that are sane. Businesses have been gouged by enterprise software long enough.
Am I to understand your company wrote a CRM? What other applications did you replace? What company is this?
Yes to some extent. We wrote a CRM that works for what we needed. It's not a full blown SaaS product we could sell to any company as a tenant, as they would all want other features that aren't important to us. This is what happens during an implementation anyways, we only implement what we care about.
No names, but my company is service companies (mostly residential) - many logos with different verticals (think electric, hvac, etc). Having a SaaS CRM that served all our brands needs was always a challenge and made aggregating anything difficult (we basically were running multiple CRMs)
We were using dozens of SaaS tools per logo - and just going through them all and figuring out what features we need/want and rolling them into the larger system. We've also built handful of things for internal operations, finance, etc
AI
It's hard to tell when people are joking.
Imagine working at a company who has it own Figma, Docker etc... Thats a recipe for disaster.
And you'd have to relearn everything every time you changed companies.
> build once, sell the same thing again ad infinitum, and don’t suffer any marginal costs on more sales.
Unless you consider customer acquisition cost. Not considering cost of sales is one of the big mistakes software developer entrepreneurs make.
One problem with centrally produced and distributed software is that a small subset of users demanding certain features results in feature bloat for everyone. Costs for all features are shared by all users.
Probably one way SaaS companies will adapt is to break up their offerings into more modular low cost components. While many customers will end up paying less, the addressable market will probably increase because of the new low cost options.
> Costs for all features are shared by all users.
To a degree but most enterprise focused software usually has differential pricing. Often that pricing isn't public so different companies get different quotes.
AI isn't killing SaaS exactly, but instead of selling UIs, SaaS companies are going to have to focus on infrastructure and data. You have to host stuff somewhere, so there's an inescapable cost and transaction that has to take place. If businesses can pay one bill for infra + data management and get nice apps and stuff on top of that (without being locked in), that makes more sense than trying to roll stuff together even if you have a platform team.
As a founder, there is another angle here that is worth mentioning. Not only does AI B2B SaaS allow insourcing, it also allows there to be 10x (imaginary number) the number of companies building SaaS for the same use case. What we see in healthcare or finance for example is executive fatigue from demos, in many cases mostly vibe coded frontend UIs that entrepreneurs are using to test the market. This creates friction for businesses / SaaS companies that are unable to show how their solution is unique, well built or has a clear moat over the many others they have seen.
Bang on. I mentioned this as well. Mature SaaS companies are also expanding into each others domains. Notion is now doing email for example.
“Killing” is a bit strong, but is there a world where folks just vibe code solutions that they would have bought previously? Absolutely and and I think that world is here now.
I’ve seen many startups recently were it was like “guys I could vibe code your ‘product’ in the afternoon.” Yes someone needs to look after it etc, but the bar on where companies buy vs build is getting much, much higher.
(Insert rant from dev teams about the code sucks, who will maintain it, etc). Yes all valid points, but things are changing regardless of if folks like it or not.
A lot of startups/small businesses are like "with AI we can build more than ever". The problem is so can everyone else and capitalism rewards scarcity not value. The bar for startups and small software business has risen quite substantially. I know we are avoiding buying software now where I work if possible unless we previously committed to it (contracts).
Focus is a currency and you have a limited amount of it, if all SaaS is built internally, teams would go bankrupt. There's likely always going to be a band of experts focused on solving a problem and everyone pays them to solve it for them, because they do it better and can handle the hassle of maintaining it.
A link shortener is such an easy thing to code, it's essentially one database table with a redirect. To add to that, there are many open source libraries to implement link shortening, including analytics and stuff. Even then Bitly and Rebrandly have customers (from their website) like Toyota, Cisco, Oracle, Monday.com, New York Times, etc.
Are these companies unable to build a link shortener? It's also so easy to migrate off shortener service. If they can and still choose to use these shortening services, there must be other reason. And that reason is that they simply don't want to. This has nothing to do with AI.
I run a software company and one of the reasons customers say they want to migrate from their homegrown spreadsheet is because the guy who built it left. A freaking spreadsheet!
Such blog posts and probably many comments here are the perfect answer to "Tell me you don't run a real business without telling me you don't run a real business"
For the most part, you can replicate any B2B SaaS product in a spreadsheet. The same reasons why spreadsheets didn't kill B2B SaaS apply to "in house vibe coded SaaS replacements." The original in house apps are (and continue to be) spreadsheets.
The framing of 'vibe coding replaces SaaS' misses the more interesting shift: the value SaaS provided was never really the software — it was workflow automation. Software was just the best delivery mechanism we had.
What's changing is that agents + APIs are becoming a better delivery mechanism for many workflows than a UI you manually operate. A company paying $50k/year for a marketing analytics dashboard doesn't actually want a dashboard — they want answers about what's working. An LLM with API access to their data sources often delivers that faster than navigating someone else's opinionated interface.
The SaaS most at risk isn't infrastructure (Stripe, Twilio) or systems of record (Salesforce, Workday). It's the 'pretty UI on top of data you already own' tier — analytics, reporting, simple automation, basic CRM. That's where the compression happens. The products that survive will be the ones that become the system of record, or that offer value AI genuinely can't replicate (regulatory compliance, deep integrations with legacy systems, etc).
Saas companies will survive for the same reason they do today. The operational overhead of any sufficiently complicated piece of software is too much, even more so if it's vibe coded.
The bus factor is gonna be pretty high if your enterprise relies on an internal tool that some guy at your company vibe coded at some point.
Bus factor would be 0 because even he wont be able to debug it.
This was true pre-AI, but now, the bus factor is actually way lower in any software than it was before:
- Hey Claude, what is the project in XXXXX/ about and how does it work ? What should be improved there ?
Anybody who says this doesn't understand build vs buy, and why companies buy in the first place, or they'll selling AI.
The trick is to build stuff that is hard to vibe code
if you're a software company and all your clients are in tech...you're gonna have a bad time. godspeed.
I would assume one major thing here is that many orgs only need a small subset of functionality from what most products provide. Many times, that small subset of functionality is only "good enough" in and of itself, but the org is paying the premium for the entire suite of whatever it is. This makes realizing that an LLM can get them to MVP and beyond much easier.
Charging hundreds of thousands if not millions per year for very basic functionality is what is "killing" b2b SaaS.
Not sure about that, however agents in low code tools are certainly taking over old school integrations.
Nice, what kind of agents and integrations are you seeing being used?
Platforms like Boomi, Workato, Optimizely Opal,
Sure, vibe coding has impacted user's expectations. They know you can ship a new update easier and faster than before - and you actually can.
But, not sure which successful SaaS companies just stopped shipping any updates to the product, never talked to their customers and never added any new features to win over major new accounts - and still managed to survive and thrive?
And the author actually confirms this:
> AI isn’t killing B2B SaaS. It’s killing B2B SaaS that refuses to evolve.
> They know you can ship a new update easier and faster than before - and you actually can.
And all of those updates are just AI features.
> Sure, vibe coding has impacted user's expectations. They know you can ship a new update easier and faster than before - and you actually can.
Can you though? With major bugs? We've been getting more and more crashes, downtime, issues etc lately and a lot of it has had to do with vibe coding.
The whole point of these B2B SaaS is meant to be quality.
i.e. it's set users' expectations but in the wrong way.
>They know you can ship a new update easier and faster than before - and you actually can.
How's that going for Microsoft?
https://www.windowscentral.com/microsoft/windows-11/2025-has...
Something notable for SaaS which this article doesn't mention is that in some cases the reason to buy rather than make yourself is due to needing to handle a bunch of different regulations which LLMs don't threaten (barring businesses which would rather have lawsuits than pay for a SaaS).
AI isn't killing B2B SaaS. It's killing the service economy. Perhaps, the correct term, technically, is just shrinking it to very very small fraction.
Until Claude Code comes with indemnity insurance for HIPAA / GDPR / etc… B2B SaaS is here to stay. You want me to convince my auditor that the vibe-coded in house software handles PII correctly?
Making the audit someone else’s problem is 90% of the ‘buy’ value in ‘build vs buy’
Well it definitely killed mine so I can't say this is not true
> Well it definitely killed mine so I can't say this is not true
I feel like there's an interesting story in there.
I'm sorry to hear that ... if not too painful, would you mind sharing more (so others can learn).
Oh no...
Be a System of Record, not just a Wrapper™ is excellent advice.
Thank you! I hope you enjoyed the little ™ at the end as well.
here's the secret saas can vibe code features too on top of their paid well developed and secured api. they can get off their ass and vibe code a mcp wrapper, so user can use the ai tooling they pay for to interact with their saas. and they'd be called visionary hero of the agentic revolution.
but they don't want to. and they will be replaced, as it's good and well.
Some founders are realizing this, we're helping a lot of B2B SaaS achieve exactly this with our whitelabelled solution.
well then, happy first billion, where I send a resume?
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.
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.
Time will tell.
the procurement bypass was the best part. now watching ai devs ship faster than our salesforce admin could configure flows
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.
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.
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.
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 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.
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.
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.
I know this is petty but I stopped reading when I saw the “c-t” ligature in the article headings. Obnoxious and pretentious.
I'm the biggest typography nerd and I'll fight to death in the defense of ligatures! Bring them back
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
Yup it's definitely not because _customers_ are coding solutions, but the trend and motivation seems to come from the fact that customers are realizing there's something else possible except being tied into expensive recurring yearly subscriptions.
I was surprised when I saw the numbers from Bloomberg myself as well!
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
And if I understand correctly the author is running a business that helps SaaS companies overcome the risk of using their own vibe-coded solutions.
Good point -- removed for being biased and partial. Thanks for the feedback!
> Good point -- removed for being biased and impartial. Thanks for the feedback!
??? Do you mean biased or do you mean impartial?
"biased" and "impartial" are antonyms. Pick one or the other.
Edited, allow me blame it on my ~12 hour workday today :^)