{"id":12858280,"date":"2026-02-21T13:01:45","date_gmt":"2026-02-21T18:01:45","guid":{"rendered":"https:\/\/www.philstockworld.com\/?p=12858280"},"modified":"2026-02-21T18:10:23","modified_gmt":"2026-02-21T23:10:23","slug":"jared-sleeper-on-which-software-companies-will-survive-the-saaspocalypse","status":"publish","type":"post","link":"https:\/\/www.philstockworld.com\/2026\/02\/21\/jared-sleeper-on-which-software-companies-will-survive-the-saaspocalypse\/","title":{"rendered":"Jared Sleeper on Which Software Companies Will Survive the SaaSpocalypse"},"content":{"rendered":"<h2><a href=\"https:\/\/www.youtube.com\/watch?v=_Y5xAZKIGU0&amp;list=PLe4PRejZgr0OJbRzA6nWybYiThLJd_ouz\" target=\"_blank\" rel=\"noopener\">Jared Sleeper on Which Software Companies Will Survive the SaaSpocalypse<\/a><\/h2>\n<p>By Joe Weisenthal and Tracy Alloway, Odd Lots, <a class=\"yt-simple-endpoint style-scope yt-formatted-string\" style=\"font-family: Verdana, BlinkMacSystemFont, -apple-system, 'Segoe UI', Roboto, Oxygen, Ubuntu, Cantarell, 'Open Sans', 'Helvetica Neue', sans-serif;\" spellcheck=\"false\" href=\"https:\/\/www.youtube.com\/@BloombergPodcasts\">Bloomberg Podcasts<\/a><\/p>\n<div class=\"badge-shape badge-shape-style-type-verified-artist style-scope ytd-badge-supported-renderer style-scope ytd-badge-supported-renderer\">\n<div class=\"yt-badge-shape__icon\">\n<div>The start of the year has been an absolutely brutal one for software companies. There&#8217;s a big fear that the rise of AI and advanced coding models will pull the rug out from this industry. But even before these AI fears, software companies were seeing their growth slow. So how does the business actually work? And more importantly, what types of companies will actually survive the SaasPocalypse (or maybe the CaSaaStrophe)?<\/div>\n<\/div>\n<div class=\"yt-badge-shape__text\">\u00a0<\/div>\n<\/div>\n<p><a href=\"https:\/\/www.youtube.com\/watch?v=_Y5xAZKIGU0&amp;list=PLe4PRejZgr0OJbRzA6nWybYiThLJd_ouz\" target=\"_blank\" rel=\"noopener\">More here &gt;<\/a><\/p>\n<p><iframe loading=\"lazy\" title=\"YouTube video player\" src=\"https:\/\/www.youtube.com\/embed\/_Y5xAZKIGU0?si=jp8Brcv-qwAeM1qs\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p><strong>Timeline<\/strong><\/p>\n<p>00:00:00 &#8211; Cold Open<br \/>\n00:00:56 &#8211; Software Economics Fundamentals<br \/>\n00:04:48 &#8211; Guest Introduction: Jared Sleeper<br \/>\n00:07:11 &#8211; Historical Software Development Model<br \/>\n00:08:38 &#8211; Enterprise Software Complexity<br \/>\n00:11:01 &#8211; What Software Companies Actually Sell<br \/>\n00:14:37 &#8211; The Scapegoat Value Proposition<br \/>\n00:15:32 &#8211; Terminal Value Concerns vs Current Performance<br \/>\n00:18:37 &#8211; Data and Context in AI Era<br \/>\n00:21:28 &#8211; Platform vs Niche Software Risk Assessment<br \/>\n00:24:03 &#8211; DocuSign Case Study<br \/>\n00:25:03 &#8211; Bull Case Scenarios for Software<br \/>\n00:27:28 &#8211; New Pricing Models and Growth<br \/>\n00:29:48 &#8211; Economic Dynamics of AI Reselling<br \/>\n00:30:51 &#8211; Model Vendor Competition Risk<br \/>\n00:32:28 &#8211; Enterprise vs Consumer AI Adoption<br \/>\n00:37:57 &#8211; Need for Layoffs and Cost Discipline<br \/>\n00:39:59 &#8211; Career Implications and Adaptability<br \/>\n00:43:05 &#8211; Social Skills Premium<br \/>\n00:43:23 &#8211; Practical AI Coding Experience<br \/>\n00:45:47 &#8211; Hedge Fund Trading Dynamics<br \/>\n00:47:21 &#8211; Closing Thoughts<\/p>\n<h3>Summary<\/h3>\n<h4>Is the \u201cSaaSpocalypse\u201d Real \u2014 or Is This an Investing Opportunity?<\/h4>\n<div class=\"flex flex-col text-sm pb-25\">\n<article class=\"text-token-text-primary w-full focus:outline-none [--shadow-height:45px] has-data-writing-block:pointer-events-none has-data-writing-block:-mt-(--shadow-height) has-data-writing-block:pt-(--shadow-height) [&amp;:has([data-writing-block])&gt;*]:pointer-events-auto scroll-mt-[calc(var(--header-height)+min(200px,max(70px,20svh)))]\" dir=\"auto\" tabindex=\"-1\" data-turn-id=\"request-WEB:f0b5df80-df81-4d15-802a-3e9401dfeeee-12\" data-testid=\"conversation-turn-26\" data-scroll-anchor=\"true\" data-turn=\"assistant\">\n<div class=\"text-base my-auto mx-auto pb-10 [--thread-content-margin:--spacing(4)] @w-sm\/main:[--thread-content-margin:--spacing(6)] @w-lg\/main:[--thread-content-margin:--spacing(16)] px-(--thread-content-margin)\">\n<div class=\"[--thread-content-max-width:40rem] @w-lg\/main:[--thread-content-max-width:48rem] mx-auto max-w-(--thread-content-max-width) flex-1 group\/turn-messages focus-visible:outline-hidden relative flex w-full min-w-0 flex-col agent-turn\" tabindex=\"-1\">\n<div class=\"flex max-w-full flex-col grow\">\n<div class=\"min-h-8 text-message relative flex w-full flex-col items-end gap-2 text-start break-words whitespace-normal [.text-message+&amp;]:mt-1\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"f9bf9fcd-3bd6-478f-bf61-e1820bce73bc\" data-message-model-slug=\"gpt-5-2\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[1px]\">\n<div class=\"markdown prose dark:prose-invert w-full wrap-break-word light markdown-new-styling\">\n<p data-start=\"292\" data-end=\"508\">Software stocks have been hit hard. Companies that once traded at very high valuations have been cut in half \u2014 or worse. Investors are using dramatic language: \u201cSaaSpocalypse,\u201d \u201cAI disruption,\u201d \u201cterminal value risk.\u201d<\/p>\n<p data-start=\"510\" data-end=\"539\">But what exactly is going on?<\/p>\n<p data-start=\"541\" data-end=\"649\">And more importantly: are some of these companies becoming attractive investments \u2014 or are they value traps?<\/p>\n<p data-start=\"651\" data-end=\"738\">To answer that, we need unpack the two big fears driving this selloff.<\/p>\n<h4 data-start=\"745\" data-end=\"793\">The Two Big Fears Behind the Software Selloff<\/h4>\n<p data-start=\"795\" data-end=\"874\">There are really two different arguments weighing on software stocks right now.<\/p>\n<p data-start=\"876\" data-end=\"927\"><strong>Fear #1: \u201cSoftware Is Getting Cheaper to Build\u201d<\/strong><\/p>\n<p data-start=\"929\" data-end=\"1074\">Artificial intelligence can now generate working computer code. That means building software may cost much less than it did even a few years ago.<\/p>\n<p data-start=\"1076\" data-end=\"1282\">If it becomes easy and inexpensive to create new applications, then maybe established software companies lose some of their pricing power. Maybe customers build their own tools. Maybe competition increases.<\/p>\n<p data-start=\"1284\" data-end=\"1471\">This is essentially a margin concern. If software becomes commoditized \u2014 meaning it\u2019s widely available and no longer differentiated \u2014 then companies may struggle to maintain high profits.<\/p>\n<p data-start=\"1473\" data-end=\"1676\">But there\u2019s a key counterpoint here: cheaper code helps incumbents too. Large software firms spend enormous amounts on engineers. If AI makes development cheaper and faster, their costs may fall as well.<\/p>\n<p data-start=\"1678\" data-end=\"1771\">So the \u201ccheaper code\u201d argument alone does not automatically mean these businesses are doomed.<\/p>\n<p data-start=\"1778\" data-end=\"1824\"><strong>Fear #2: \u201cThe World Is About to Get Weird\u201d<\/strong><\/p>\n<p data-start=\"1826\" data-end=\"1868\">This is the bigger and more powerful fear.<\/p>\n<p data-start=\"1870\" data-end=\"2090\">The concern is not just that code becomes cheaper. It\u2019s that AI agents may eventually replace large portions of knowledge work \u2014 customer service representatives, sales reps, analysts, maybe even some software engineers.<\/p>\n<p data-start=\"2092\" data-end=\"2165\">If that happens, the traditional \u201cseat-based\u201d pricing model could shrink.<\/p>\n<p data-start=\"2167\" data-end=\"2370\">Most software companies today charge per user, often described as \u201cper seat.\u201d For example, a company might charge $80 per user per month for access to its customer relationship management (CRM) software.<\/p>\n<p data-start=\"2372\" data-end=\"2497\">But if AI replaces or dramatically reduces the number of employees doing that work, companies might not need as many \u201cseats.\u201d<\/p>\n<p data-start=\"2499\" data-end=\"2573\">That leads to the concept investors are worried about: <strong data-start=\"2554\" data-end=\"2572\">terminal value<\/strong>.<\/p>\n<h4 data-start=\"2580\" data-end=\"2632\">What Is \u201cTerminal Value,\u201d and Why Does It Matter?<\/h4>\n<p data-start=\"2634\" data-end=\"2762\">Terminal value is a finance term that refers to the value of a company far into the future \u2014 often 10, 15, or 20 years from now. When investors buy growth stocks (like software companies), they are not just buying next year\u2019s profits. They are buying the expectation that the company will continue generating profits for decades.<\/p>\n<p data-start=\"2966\" data-end=\"3106\">A large portion of a growth company\u2019s stock price reflects those distant future cash flows. That long-term portion is called terminal value.<\/p>\n<p data-start=\"3108\" data-end=\"3393\">So when investors worry that AI could permanently shrink or alter the business model five years from now, they are not necessarily reacting to today\u2019s earnings. They are reacting to the possibility that the company\u2019s long-term earning power could be much lower than previously assumed.<\/p>\n<p data-start=\"3395\" data-end=\"3496\">Even if today\u2019s revenue is stable, a perceived drop in terminal value can cause sharp stock declines.<\/p>\n<h4 data-start=\"3503\" data-end=\"3573\">Context: Most Software Companies Are Not Collapsing Today<\/h4>\n<p data-start=\"3575\" data-end=\"3647\">Most software companies are still growing. Revenue growth has slowed from pandemic highs, but it remains healthy in many cases. Customer churn \u2014 meaning the rate at which customers leave \u2014 is not spiking across the board. Many companies are still reporting stable expansion within existing customers.<\/p>\n<p data-start=\"3908\" data-end=\"3991\">In other words, the current financial statements do not show an industry implosion. The market is pricing in future uncertainty.<\/p>\n<h4 data-start=\"4044\" data-end=\"4105\">What Software Companies Actually Sell (It\u2019s Not Just Code)<\/h4>\n<p data-start=\"4107\" data-end=\"4229\">Enterprise software is not simply a collection of code files. Software companies sell:<\/p>\n<ul>\n<li data-start=\"4259\" data-end=\"4281\">Reliability and uptime<\/li>\n<li data-start=\"4284\" data-end=\"4345\">Integration with dozens (sometimes hundreds) of other systems<\/li>\n<li data-start=\"4348\" data-end=\"4369\">Regulatory compliance<\/li>\n<li data-start=\"4372\" data-end=\"4388\">Customer support<\/li>\n<li data-start=\"4391\" data-end=\"4402\">Brand trust<\/li>\n<li data-start=\"4405\" data-end=\"4455\">Familiarity (everyone already knows how to use it)<\/li>\n<\/ul>\n<p data-start=\"4457\" data-end=\"4621\">For example, a company may choose DocuSign not because it is the only way to sign documents electronically, but because it is widely trusted and legally recognized.<\/p>\n<p data-start=\"4623\" data-end=\"4815\">Switching enterprise software is painful and expensive. It involves retraining employees, migrating data, and risking operational disruptions. That stickiness gives incumbents real advantages.<\/p>\n<p data-start=\"4817\" data-end=\"4898\">This is why the simple argument \u201cAI can code, so software is dead\u201d is incomplete.<\/p>\n<h4 data-start=\"4905\" data-end=\"4956\">The Big Structural Shift: From Tools to Outcomes<\/h4>\n<p data-start=\"4958\" data-end=\"5014\">Where AI may truly change the game is in pricing models.<\/p>\n<p data-start=\"5016\" data-end=\"5061\">Traditional software pricing looks like this:<\/p>\n<ul data-start=\"5063\" data-end=\"5135\">\n<li data-start=\"5063\" data-end=\"5091\">\n<p data-start=\"5065\" data-end=\"5091\">Pay per employee per month<\/p>\n<\/li>\n<li data-start=\"5092\" data-end=\"5135\">\n<p data-start=\"5094\" data-end=\"5135\">The software is a tool your employee uses<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"5137\" data-end=\"5198\">AI-powered software could shift toward outcome-based pricing:<\/p>\n<ul data-start=\"5200\" data-end=\"5298\">\n<li data-start=\"5200\" data-end=\"5242\">\n<p data-start=\"5202\" data-end=\"5242\">Pay per customer service ticket resolved<\/p>\n<\/li>\n<li data-start=\"5243\" data-end=\"5273\">\n<p data-start=\"5245\" data-end=\"5273\">Pay per sales lead converted<\/p>\n<\/li>\n<li data-start=\"5274\" data-end=\"5298\">\n<p data-start=\"5276\" data-end=\"5298\">Pay per task completed<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"5300\" data-end=\"5361\">Instead of selling tools, companies would be selling results.<\/p>\n<p data-start=\"5363\" data-end=\"5388\">That is a profound shift. If software can replace a portion of labor \u2014 say a $250,000 sales role \u2014 then charging $50,000 for an AI-driven alternative still saves the customer money while massively increasing the software company\u2019s revenue per customer.<\/p>\n<p data-start=\"5642\" data-end=\"5705\">The best-positioned companies may expand.<\/p>\n<h4 data-start=\"5712\" data-end=\"5784\">The Underappreciated Risk: Profitability and Stock-Based Compensation<\/h4>\n<p data-start=\"5786\" data-end=\"5855\">There is another issue investors are focusing on: real profitability.<\/p>\n<p data-start=\"5857\" data-end=\"6031\">Many software companies report \u201cnon-GAAP\u201d profits. GAAP (Generally Accepted Accounting Principles) is the standardized accounting method used in official financial reporting.<\/p>\n<p data-start=\"6033\" data-end=\"6151\">Non-GAAP numbers often exclude stock-based compensation (SBC) \u2014 which is when companies pay employees partly in stock.<\/p>\n<p data-start=\"6153\" data-end=\"6347\">Stock-based compensation is a real economic cost. When companies issue stock to employees, it dilutes existing shareholders. Even if cash does not leave the company, ownership is spread thinner.<\/p>\n<p data-start=\"6349\" data-end=\"6475\">Some software firms look profitable on a non-GAAP basis but are barely breaking even \u2014 or losing money \u2014 on a true GAAP basis.<\/p>\n<p data-start=\"6477\" data-end=\"6609\">In a fearful market, that matters. Companies without strong cash flow or real profitability do not have a natural valuation \u201cfloor.\u201d<\/p>\n<p data-start=\"6611\" data-end=\"6708\">In calmer times, growth can support high valuations. In uncertain times, investors want earnings.<\/p>\n<h4 data-start=\"6715\" data-end=\"6751\">So Are These Stocks Worth Buying?<\/h4>\n<p data-start=\"6753\" data-end=\"6793\">This is not a simple yes-or-no question.<\/p>\n<p data-start=\"6795\" data-end=\"6826\">Some software companies may be:<\/p>\n<ul>\n<li data-start=\"6830\" data-end=\"6867\">Deeply embedded in customer workflows<\/li>\n<li data-start=\"6870\" data-end=\"6897\">In control of valuable data<\/li>\n<li data-start=\"6900\" data-end=\"6956\">Well positioned to add AI features that increase revenue<\/li>\n<li data-start=\"6959\" data-end=\"7007\">Capable of shifting toward outcome-based pricing<\/li>\n<li data-start=\"7010\" data-end=\"7055\">Already profitable with strong free cash flow<\/li>\n<\/ul>\n<p data-start=\"7057\" data-end=\"7132\">Those companies may ultimately benefit from AI rather than be harmed by it.<\/p>\n<p data-start=\"7134\" data-end=\"7145\">Others may:<\/p>\n<ul>\n<li data-start=\"7149\" data-end=\"7186\">Sell simpler, easily replicated tools<\/li>\n<li data-start=\"7189\" data-end=\"7216\">Lack strong differentiation<\/li>\n<li data-start=\"7219\" data-end=\"7253\">Rely heavily on seat-based pricing<\/li>\n<li data-start=\"7256\" data-end=\"7308\">Have weak margins and heavy stock-based compensation<\/li>\n<li data-start=\"7311\" data-end=\"7359\">Face intense competition from AI-native startups<\/li>\n<\/ul>\n<p>Those may be value traps. The key for investors is whether a specific company can maintain \u2014 or expand \u2014 its long-term earning power in an AI-driven world.<\/p>\n<h4 data-start=\"7914\" data-end=\"7931\">Bottom Line<\/h4>\n<p data-start=\"7599\" data-end=\"7685\">This moment feels less like a temporary downturn and more like an industry transition. The market is not reacting to collapsing numbers today. It is reacting to uncertainty about what knowledge work looks like five years from now.<\/p>\n<p data-start=\"7599\" data-end=\"7685\">Think of retail during the rise of e-commerce: some companies adapted and thrived, some stagnated and some disappeared.\u00a0Software may be entering a similar transition phase.<\/p>\n<p data-start=\"7860\" data-end=\"7907\">That creates volatility \u2014 but also opportunity.<\/p>\n<p data-start=\"8078\" data-end=\"8163\">Terminal value \u2014 the long-term earning power of these businesses \u2014 is being repriced.<\/p>\n<p data-start=\"8211\" data-end=\"8369\">For investors willing to do careful, company-by-company analysis, this environment may offer selective opportunity. The winners will likely be the firms that:<\/p>\n<ul>\n<li data-start=\"8373\" data-end=\"8395\">Own critical workflows<\/li>\n<li data-start=\"8398\" data-end=\"8419\">Control valuable data<\/li>\n<li data-start=\"8422\" data-end=\"8445\">Embrace AI aggressively<\/li>\n<li data-start=\"8448\" data-end=\"8482\">Shift toward outcome-based pricing<\/li>\n<li data-start=\"8485\" data-end=\"8519\">Show real profitability discipline<\/li>\n<\/ul>\n<p data-start=\"8521\" data-end=\"8570\">For everyone else, the adjustment may be painful. And yes \u2014 things may get weird. But weird does not automatically mean uninvestable.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"mt-3 w-full empty:hidden\">\n<div class=\"text-center\">\n<h3>Transcript<\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n<p><strong>Cold Open<\/strong><\/p>\n<p>Jared Sleeper: The idea of software companies\u2019 value lying in being a scapegoat\u2014essentially, for when things go wrong\u2014is kind of funny and dystopian, I think, in many ways.<\/p>\n<p>Joe Weisenthal: Yeah. I mean, I think it\u2019s a real fear, right? And the way I think about it is: there are two arguments against software right now. One is, the world is going to stay the same, but software is just going to get a lot cheaper over time now that it\u2019s cheaper to build. And I don\u2019t think anyone would argue that it hasn\u2019t gotten dramatically cheaper to build, for reasons we laid out in our deck\u2014and we can talk through it more. We don\u2019t buy that argument.<\/p>\n<p>Jared: I don\u2019t buy that argument. But the second is: the world\u2019s about to get really weird, and the way that knowledge work happens is going to change. And if we think out three or four or five years\u2014who knows if there will even be customer support reps, or sales reps, or software engineers? And I think that\u2019s what\u2019s causing the hit to share prices lately.<\/p>\n<p><strong>Software Economics Fundamentals<\/strong><\/p>\n<p>Joe: Hello and welcome to another episode of the Odd Lots podcast. I\u2019m Joe Weisenthal.<\/p>\n<p>Tracy Alloway: And I\u2019m Tracy Alloway.<\/p>\n<p>Joe: Tracy, we\u2019re recording this February 11th, and IGV\u2014the software ETF\u2014is down another 3% today. It has been ugly in software. Everyone\u2019s throwing around the term \u201cSaaSpocalypse.\u201d<\/p>\n<p>Tracy: I mean, the great thing about SaaS is there are a lot of things that rhyme with it\u2014lots of puns. \u201cSaaS crash.\u201d<\/p>\n<p>Joe: Yeah, exactly. \u201cSaaS is trash.\u201d Whatever. But I\u2019m looking at the share price of Salesforce \u2014 in particular, because I always think of Salesforce as sort of emblematic. The poster child.<\/p>\n<p>Tracy: Yeah.<\/p>\n<p>Joe: Poster child of a software company that I\u2019m not really sure what they do.<\/p>\n<p>Tracy: But yeah, it\u2019s ugly. It\u2019s basically been cut in half, hasn\u2019t it, since its peak in early 2025?<\/p>\n<p>Joe: Right now it\u2019s 184.84.\u00a0<\/p>\n<p>Tracy: That&#8217;s your fault.<\/p>\n<p>Joe: That\u2019s right. Because earlier in the year\u2014after we got back from Christmas vacation or Christmas break\u2014I\u2019d seen everyone playing around with cloud code, and I had to do it. We did an episode, and so people were like, \u201cOh, if Joe Weisenthal can figure out cloud code, there must not be any value to any of these companies at all.\u201d<\/p>\n<p>Tracy: You know, you mentioned Salesforce\u2014that\u2019s far from the ugly one. I\u2019m looking at Atlassian, which makes a lot of workforce productivity stuff\u2014<\/p>\n<p>Joe: Yeah, like Slack competitors and stuff.<\/p>\n<p>Tracy: That was a $450 stock back in 2021. That\u2019s an $86 stock. So yeah, it\u2019s ugly. And yeah, as you said, everyone is realizing that if any old fool can write software, maybe these companies don\u2019t have much value.<\/p>\n<p>Joe: I mean, I will just say: it\u2019s not just software right now. We\u2019re seeing this rolling series of concerns where every time AI does something\u2014or creates some new product\u2014it hits a particular industry. So on Monday it was the insurance industry, insurance brokers. And today\u2014Wednesday, February 11th\u2014I think it hit some of the broker firms, stock broker firms. And all you have to do is just say \u201cAI\u201d plus \u201cindustry,\u201d and there\u2019s a lot of anxiety.<\/p>\n<p>But there\u2019s something that doesn\u2019t make sense to me, or the thing I\u2019m wrapping my head around: sure, any of us could easily write some software, but writing software is a cost center for these companies, right? Like, if you\u2019re Salesforce and you can trivially reduce the cost of building software, that should also benefit you.<\/p>\n<p>And there\u2019s a lot more to a software company than just code generation, because there are all kinds of network effects and linkages. A software company is clearly more than just code. So the fact that code can be generated a lot cheaper does not scream to me, \u201cOh, these companies are worth less than they used to.\u201d<\/p>\n<p>Tracy: Sure. But at the same time, their pricing is based on that assumption, right? Like there is no competitor for what they\u2019re doing. And suddenly you might have an in-house editor.<\/p>\n<p>Joe: Absolutely. But it\u2019s like\u2014network effects. And do companies want to start building their own payroll software?<\/p>\n<p>Anyway, I have a lot of questions about this selloff. And to your point\u2014no, no, no\u2014this is you doing penance first for causing the selloff.<\/p>\n<p>All right, let\u2019s talk to someone who might actually be able to answer some of these questions for us. We\u2019re going to be speaking to someone who\u2019s been in the software space\u2014an investor in the software space\u2014for a long time, and who recently put out a great deck really diving into the SaaSpocalypse, and what kinds of companies are thriving, and what kinds of companies were struggling even before everyone started talking about AI code generation and all that.<\/p>\n<p>We\u2019re going to be speaking with Jared Sleeper. He is a partner at Avenir, which does growth investing in private companies. Jared, thanks for coming on.<\/p>\n<p>Jared Sleeper: Yeah, my pleasure. Excited to be here.<\/p>\n<p>Joe: Why are we talking to you? Just, you know, for our listeners\u2014apparently this is your first time on a podcast, which is crazy\u2014but give us a little bit about your background investing in software and understanding the space.<\/p>\n<p><strong>Guest Introduction: Jared Sleeper<\/strong><\/p>\n<p>Jared: Yeah, my pleasure. I think one thing that makes me a little bit different in the investor world is that I\u2019ve spent time investing in early-stage startups, public companies, and everything in between.<\/p>\n<p>I spent a chunk of my career at an early-stage venture fund in Boston called Matrix Partners, working with an OG SaaS investor named David Scott. And then I was also at Coatue, where I ran public software. So I have this experience across the spectrum\u2014from ground-floor startups to looking at the big public companies, which I\u2019ve done for the last ten years.<\/p>\n<p>Tracy: Perfect guest. So give us a sense\u2014give us some color on the mood in software at the moment. Are people, like, hunkering down in their bunkers? How bad is it?<\/p>\n<p>Jared: Yeah, I get texted constantly from folks on the buy side\u2014just retrenching. \u201cI can\u2019t believe this is happening. Can it go lower?\u201d I keep saying, \u201cThis is the hundredth time I\u2019ve bought the dip.\u201d<\/p>\n<p>You know, you use \u201cSaaSpocalypse\u201d\u2014like, \u201cSaaS atrophy.\u201d Guys, it\u2019s definitely one of those moments.<\/p>\n<p>And we were talking about this a little bit earlier before starting, but one of the things about software that\u2019s really fascinating is: there are very few folks, even on the buy side, who really understand how software works. It\u2019s one of those Rorschach-test kinds of sectors where no one\u2019s logged into Salesforce and clicked around\u2014much less been a Salesforce admin and understood the full complexity.<\/p>\n<p>And so when there\u2019s panic, there\u2019s not a lot of support for the stocks, and people get scared very easily.<\/p>\n<p>Joe: Explain what this means. So, for example, in a lot of companies: you\u2019re saying the people who invest or trade these stocks, they just know them as financial tables, basically?<\/p>\n<p>Jared: Yeah. They have some idea of their financials and some idea of their customer base, etc., but they don\u2019t have a great intuition for the product\u2014unlike, say, people who use Instagram and therefore might have a feel for Meta, for example.<\/p>\n<p>If you\u2019re an investor in Lululemon, you have a pretty solid conception of what that business is. You can go into the store.<\/p>\n<p>Joe: Exactly.<\/p>\n<p>Jared: You can buy the product, try it yourself. If you\u2019re an investor in Veeva\u2014which makes CRM software for pharmaceutical reps\u2014I bet there are almost no investors in Veeva who have ever been inside the product even once, much less used it day to day and understood how it works.<\/p>\n<p><strong>Historical Software Development Model<\/strong><\/p>\n<p>Joe: Got it. So I\u2019m going to go way back in time and start at the beginning. Why is it that software like this\u2014payment management systems, whatever\u2014why were they historically not developed in-house? How did we get this model where we have these huge software companies that today have been really integral to a lot of businesses?<\/p>\n<p>Jared: Yeah, it\u2019s a great question. Back in the very early days of software\u2014like in the \u201970s or \u201980s\u2014there was a lot done in-house. And we\u2019ve seen a very clear shift over time toward using third-party software.<\/p>\n<p>And what it comes down to is: software was expensive to build and maintain, and there\u2019s this need for an ecosystem of integrations around it, which are also expensive to build and maintain.<\/p>\n<p>So if you look at a software company, you can afford to have one, two, three thousand engineers plus partnership teams, etc., all working to build the perfect piece of software for a given application.<\/p>\n<p>And what\u2019s striking\u2014and this will come up a lot more in this conversation\u2014is: they\u2019re not selling it for that much money, right?<\/p>\n<p>A lot of software companies report a stat, which is the share of our customers that pay us more than $100,000 a year\u2014and $100,000 a year is less than half of the fully loaded cost of a software engineer.<\/p>\n<p>So the software model was: build a product that can be applied to thousands of customers, it\u2019s the same product for every customer, and then sell it to them for way cheaper than they could ever hope to build it themselves\u2014even less than the cost of one employee.<\/p>\n<p>Tracy: We could\u2014I&#8217;d love to talk long-term software history, even before SaaS and the startups and stuff like that. But like: a lot of the big companies we think of in software, especially pre-Salesforce\u2014whether it\u2019s SAP, Oracle, Microsoft\u2014don\u2019t they have, like, a bunch of third-party companies whose job is just to help install it for you? Like \u201cSAP install.\u201d And that\u2019s a totally separate company because it\u2019s so big and unwieldy and complex that you can\u2019t just install it yourself, or it has to be customized, or whatever.<\/p>\n<p><strong>Enterprise Software Complexity<\/strong><\/p>\n<p>Jared: One hundred percent. And there are two parts to that which I think are important.<\/p>\n<p>One is the integrations into your existing systems. A lot of big old companies have old databases, old applications, and it\u2019s important for everything to be stitched together. So you need software engineers and consultants to go in, understand those existing systems, and link them up to the new systems.<\/p>\n<p>But the other one\u2014which is probably bigger\u2014is people management and change management. Any software system is a combination of the code and all of the individual users who have learned how to use it.<\/p>\n<p>If you\u2019re trying to change out your CRM at a company, that means training every single sales rep on how to use the new CRM, and getting it right. And if they get it wrong, then you lose deals that quarter.<\/p>\n<p>And so one of the tropes in investing is: if you see a company that\u2019s doing an ERP transition\u2014ERP stands for enterprise resource planning; it\u2019s that core software for accounting, supply chain, etc.\u2014that company is probably going to miss its earnings over the next one or two quarters, because those transitions are so painful.<\/p>\n<p>So yes, there\u2019s a big consulting complex around it that does its best to parachute in the talent that\u2019s required to make those transitions smooth.<\/p>\n<p>Joe: And that tells you something about what makes software so sticky\u2014or at least historically. It\u2019s third-party agents all the way down, I feel.<\/p>\n<p>But actually, on this note: we hear the integration point brought up a lot. And I think the very first episode we did on cloud code, we talked about it as well. But if you have something like cloud code where you can just give it permissions to make changes to your computer\u2014does some of that integration expertise start to go away? Because presumably we\u2019re going to get AI that, at some point\u2014given how fast it\u2019s developing\u2014will be able to plug itself into various systems.<\/p>\n<p><strong>What Software Companies Actually Sell<\/strong><\/p>\n<p>Jared: Yeah, one hundred percent. I think the challenge of writing the code for the integrations is going away.<\/p>\n<p>That\u2019s not the bulk of the challenge for the majority of integrations. It\u2019s about really deeply understanding the prior system and how it maps to the new system.<\/p>\n<p>And the reality is: within most organizations, that\u2019s a human problem. It\u2019s, \u201cHey, this column says status 2004. What does that mean? How does that map to the new system that we\u2019re building?\u201d So I have to go talk to someone and understand it.<\/p>\n<p>So there are certain types of integrations where I think they\u2019re effectively solved problems now\u2014you can write in the chat, in the cloud code, and get a perfectly written piece of software to make it happen. And then there are others that are fundamentally human problems because the data doesn\u2019t exist in digital space.<\/p>\n<p>Tracy: Let\u2019s talk more about that, because it really is extraordinary\u2014the degree to which\u2026 I don\u2019t know, it\u2019s working code. I don\u2019t know if it\u2019s high-quality code, but certainly these models can generate working code. It blows my mind whenever I use it.<\/p>\n<p>But talk to us a little bit more\u2014like, from the perspective of various software vendors. I\u2019m sure there\u2019s a range in what they\u2019re selling. How much is it code versus how much is it other stuff? And which ones are more exposed to pure code generation?<\/p>\n<p>Jared: Yeah, it\u2019s a great question. And you\u2019re one hundred percent right\u2014it\u2019s producing working code. Frankly, it has been for the last year or so. I built my first Lovable app that was working in production about a year ago, and it\u2019s even intensified in the last three months.<\/p>\n<p>I think when people buy software, there\u2019s a set of things they\u2019re buying.<\/p>\n<p>One thing that\u2019s important for everyone to understand is: open-source software has been a thing, and there have been free, open-source versions of almost any software you could buy for basically all of recorded history.<\/p>\n<p>There are actually public companies that built their businesses by packaging that open-source software, adding a few custom features, and then layering support on top of it. Because when a company is reliant on an open-source database\u2014or a company like Elastic with Elasticsearch, which is an infrastructure tool\u2014and it breaks, they need someone to call: both for security reasons and because it can be very complex and technical, and they need to quickly understand it. So that has been a big part of the story historically: the need to have support.<\/p>\n<p>Another thing you sell as a software vendor is what I call \u201cherd familiarity,\u201d which means everyone on Earth knows how to use your software, which simplifies training and onboarding.<\/p>\n<p>I\u2019ll give a few examples, because I\u2019m sure it\u2019s a new term for listeners since I made it up. Zoom is a great business. Microsoft has been giving away a free version of the product forever in Teams. Why do people use Zoom? Because in certain industries, almost everyone knows how to use Zoom. They have their Zoom set up, they have their virtual background chosen. They\u2019re not going to fumble around for the first minute or two on the call. And that\u2019s well worth the $20 a month for a Zoom plan.<\/p>\n<p>But that applies to lots of other areas, too. Think about Microsoft Excel. You might be able to use Google Sheets to do the same thing, but do you really want to retrain every person who comes in on Google Sheets shortcuts versus Excel shortcuts? It\u2019s not a good use of time, especially when the software is already so cheap.<\/p>\n<p>So that\u2019s another plank in what people are buying when they buy software: standardization and the knowledge that they\u2019ll be able to hire employees who already know how to use it.<\/p>\n<p>And then there are things like brand\u2014again, the ecosystem that comes around it. So it really is more than just the raw code.<\/p>\n<p><strong>The Scapegoat Value Proposition<\/strong><\/p>\n<p>Tracy: We\u2019ve been joking about this, but the idea of software companies\u2019 value lying in being a scapegoat for when things go wrong is kind of funny and dystopian, I think.<\/p>\n<p>Jared: Yeah. I mean, it\u2019s a real fear, right? And the way I think about it is: there are two arguments against software right now.<\/p>\n<p>One is the world is going to stay the same, but software is going to get a lot cheaper over time now that it\u2019s cheaper to build. And I don\u2019t think anyone would argue it hasn\u2019t gotten dramatically cheaper to build, for reasons we laid out in our deck\u2014and we can talk through it more. We don\u2019t buy that argument.<\/p>\n<p>But the second is the world\u2019s about to get really weird, and the way that knowledge work happens is going to change. And if we think out three or four or five years, who knows if there will even be customer support reps, or sales reps, or software engineers?<\/p>\n<p>And I think that\u2019s what\u2019s causing the hit to share prices lately: this terminal value concern.<\/p>\n<p><strong>Terminal Value Concerns vs Current Performance<\/strong><\/p>\n<p>Joe: Yeah, it was interesting. One of the companies that\u2019s sort of been caught up in this\u2014would you say \u201ccatastrophe\u201d?\u2014I read through their conference call and their CEO was like: not only do we not see red light\u2014do we not even see yellow light\u2014we actually see a lot of green lights. Which I think is really interesting because it fits with this idea of: this year could be fine, next year could be fine, and then the year after that could be zero. Or at least that\u2019s the anxiety\u2014that there\u2019s this terminal value cliff.<\/p>\n<p>Jared: Yeah, I think it\u2019s really helpful. This is our second iteration of the deck, and so we forced ourselves to recenter on what actually happened since the last deck.<\/p>\n<p>There\u2019s a very clear pattern in software. Over the last five years: the pandemic. People freaked out at the beginning, but it rapidly became clear it was an accelerant for SaaS as everyone tried to digitize their companies. So you had a spike in growth rate and net retention. It peaked at just over 40% in 2021 for the median software company\u2014really nice annualized growth.<\/p>\n<p>Then there was a hangover. That slowed down. And we wrote 18 months ago that it reflected the sector maturing. Adoption slowed because most folks had adopted the software they needed under the pressure of the pandemic.<\/p>\n<p>So for the last few years after that, we saw degradation in growth rates across the sector. By the beginning of last year, the median company was growing 18% instead of 40%. So you saw a pretty significant drawdown.<\/p>\n<p>What\u2019s fascinating is: if you look at the actual financial performance of the companies in the last year, it\u2019s been pretty good. That growth rate has held\u2014it was 18% again in Q3. Net retention has also been consistent at about 110%. That\u2019s revenue from existing customers compared to revenue from those customers the prior year. So there\u2019s not a churn issue developing, or a lack of expansion within the customer base.<\/p>\n<p>And a lot of companies are actually accelerating growth, or guiding to accelerating growth. We have a chart showing the number of those companies has increased each quarter over the last three successive quarters.<\/p>\n<p>So there\u2019s a lot going on right now with terminal value. But it\u2019s very hard to argue this is something happening today and showing up in the numbers.<\/p>\n<p>Tracy: The thing is, investors are sharp, right? They\u2019re constantly looking.<\/p>\n<p>Joe: Yeah. I mean, look at Chegg. It went down very quickly in the aftermath of ChatGPT coming out, and that was completely correct. Investors were ahead of that. And of course, for the first few quarters, Chegg management had their heads in the sand. But then it became clear it really was existential to their business.<\/p>\n<p>Tracy: That\u2019s a fun chart. I thought I was looking at a typo because\u2014wow. Chegg was nearly a $100 stock in February 2021. It is now a $0.01 stock.<\/p>\n<p>Joe: That\u2019s right. And you have to give markets credit: the second ChatGPT came out, people were like, \u201cThis company\u2019s in big trouble.\u201d They didn\u2019t wait for it to hit the financial results. So there is signal in what people think.<\/p>\n<p><strong>Data and Context in the AI Era<\/strong><\/p>\n<p>Tracy: I have a bunch more questions, but just briefly: where does data actually fit into all of this? Because the other thing we hear about AI is maybe the models don\u2019t matter that much, but it\u2019s the actual data you have access to.<\/p>\n<p>And I imagine the customers themselves\u2014the SaaS customers\u2014they have their own data. Do the SaaS companies have their own data as well? Can they build off that?<\/p>\n<p>Jared: Yeah, it\u2019s a great question. And we\u2019re here at one of the world\u2019s biggest data companies, so very apt.<\/p>\n<p>Full disclosure: data definitely becomes more valuable in this world.<\/p>\n<p>If you think about a stylized AI model, it could have PhD-level intelligence in a domain. But if you hired a PhD into your company and sat her down on her first day, she wouldn\u2019t be very useful, right? She would have to understand how the organization functions, where things live, \u201cDo I trust this chart or that chart?\u201d \u201cI need access to the Google Drive.\u201d \u201cI need access to Slack.\u201d She needs time to read up.<\/p>\n<p>So what we call this is \u201ccontext.\u201d It\u2019s all the extra information an AI needs to get something done, no matter how intelligent it is.<\/p>\n<p>And we wrote about this in the deck, but there\u2019s a real question of who becomes that system of context.<\/p>\n<p>And you\u2019re right: a lot of software companies do sit on a pool of very important data. Take Salesforce. CRM is where you track records of every customer you have, every prospect in your pipeline, all your historic interactions with them, notes from sales reps, the status of their account, their customer support requests. It\u2019s an incredibly complex piece of software for a large enterprise.<\/p>\n<p>And obviously, if you\u2019re an AI agent working within a company, you\u2019d need access to that to get almost anything done. But you need more than what\u2019s there. You don\u2019t know what happened at the sales dinner last night unless the rep took really detailed notes\u2014and I can tell you: one common learning in software is they do not take very detailed notes.<\/p>\n<p>Joe: So you had a salesperson, right?<\/p>\n<p>Jared: Yeah, exactly. People assume software management teams know exactly what\u2019s going on, but they\u2019re looking through really messy Salesforce data and doing their very best.<\/p>\n<p>Tracy: And now I\u2019m imagining a sales agent being like, \u201cThe Cabernet was exquisite at last night\u2019s party,\u201d and putting in all these irrelevant diary entries.<\/p>\n<p>Jared: Exactly. But a lot of that context lives in human brains. A sales rep meets someone at dinner, gets to know their kids, figures out what sports team they root for, and they\u2019re not automatically pumping all of that into the CRM.<\/p>\n<p>So there\u2019s this race to collect the information that an AI agent would need in order to actually take proactive action. And the software companies have a position there. But there\u2019s also a set of AI-native startups coming in\u2014building actual agents\u2014who are doing their own work to collect that context.<\/p>\n<p>And that\u2019s one of the battles we highlighted in our deck: whoever wins that has a chance to be a really valuable company.<\/p>\n<p>Joe: You know what I think about\u2014and I think you talk about this in your deck\u2014when I think about software, I have this spectrum in mind. On the one hand, Salesforce.com is a platform, and there are third-party developers that build on top of Salesforce. And then I think about something niche\u2014like a company that makes point-of-sale software for dentists\u2019 offices.<\/p>\n<p>They went around giving free payment terminals, joined Y Combinator, signed up 10,000 dentists\u2019 offices, and then those offices pay them, like, $20 a month forever for access to the software.<\/p>\n<p>Well\u2014no\u2014I\u2019m just making it up. But things like that. Is there a side of the spectrum that\u2019s more at risk here? Is that spectrum a legitimate way to think about the industry, or is there a threat everywhere you look?<\/p>\n<p>Jared Sleeper: Yeah, it\u2019s a great question. I mean, certainly in the \u201cworld gets really weird\u201d scenario, it\u2019s not clear there\u2019s anywhere immune from threats. But it\u2019s important to think through what it looks like.<\/p>\n<p>I think what\u2019s most at threat is companies that serve enterprises with very customized software already, or software that takes a very heavy implementation. And the reason is: if anyone is going to take advantage of this wave of technology to really advance and replace a core system of software, it\u2019s going to be the enterprises that have the resources and the customization needs.<\/p>\n<p>If you think about SMBs\u2014my dad runs our family\u2019s grocery store. It\u2019s been in the family for 100 years. And he just changed his point-of-sale system for the first time in a few decades, and it was a really messy process. Took a long time.<\/p>\n<p>We love grocery. We love independent grocery. And he\u2019s certainly not going to sit down and vibe-code himself a point-of-sale system and put the store on it. I can guarantee you that. Nor will any dentist.<\/p>\n<p>There\u2019s a chance that someone comes along with a cheaper version, but I don\u2019t think that\u2019s something he\u2019s going to switch to anytime soon. He\u2019s not going to want to go through that pain for another few decades to come.<\/p>\n<p>So it really is kind of company by company.<\/p>\n<p>I\u2019m doing this exercise right now on X where every day I look at a different software company and think hard about: what will it look like for this company?<\/p>\n<p>And it\u2019s really interesting when you press. I\u2019ll give you an example: DocuSign, which I think to most investors would seem like an incredibly simple, easy piece of software. It\u2019s e-signature software\u2014we\u2019ve all experienced it.<\/p>\n<p>DocuSign has more employees today than OpenAI and Anthropic combined, which is a crazy stat and probably reflects that labor is inefficiently allocated across the market. But when you actually double-click into what DocuSign does, there are ways in which it\u2019s very complicated.<\/p>\n<p>Understanding signature regulations in every country around the world\u2014what does it take for a signature to be legally valid? Most of its signatures are done as an API, so folks are integrating it into their own applications.<\/p>\n<p>And there\u2019s a benefit to using DocuSign, which is the brand. People have been giving away free e-signature software for a very long time. But if you\u2019re a company of a certain esteem, you want to make sure your customers trust what they\u2019re signing. If they\u2019re getting a contract from you, you\u2019d rather say \u201cDocuSign\u201d than \u201cXYZ Sign\u201d that someone vibe-coded.<\/p>\n<p>So I think it\u2019s really important to look company by company. It\u2019s definitely a stock-picker\u2019s market, where there are some that are either relatively immune or have a chance to benefit, and there are others that could be in real trouble.<\/p>\n<p>Joe: So is the bull case\u2014or at least the non\u2013sudden-death case for software\u2014this idea that if you have a software company producing something like DocuSign, you\u2019re able to sign documents digitally and track them and share them and all of that\u2026 you can build more quickly and efficiently off that base model and provide new versions, new customizations for customers?<\/p>\n<p>So I could do \u201cDocuSign for dentists,\u201d just to stick with that example. I don\u2019t know what specific needs dentists would have\u2014maybe marking up teeth or something. And then I can do \u201cDocuSign for doctors\u201d and \u201cDocuSign for sales agents\u201d or whatever, and just keep going?<\/p>\n<p>Jared: Yeah, I think that\u2019s right. I actually kind of think of it as three cases: there\u2019s the \u201csoftware gets wiped out\u201d case, there\u2019s the \u201cnot much happens to software\u201d case, and then there\u2019s the bull case where the software companies capture a lot of value.<\/p>\n<p>I think it\u2019s a little different than them adding a lot of features and functionality. Frankly, I think a lot of software products today are pretty mature. There are a thousand engineers working on them for ten years, and they\u2019ve built\u2014not all, but most\u2014of the things you\u2019d want to build with today\u2019s technology.<\/p>\n<p>But with agents, there are ways to automate a big chunk of the work.<\/p>\n<p>One software company that\u2019s done this very well is Intercom. Intercom sells customer support software\u2014it\u2019s those little widgets in the bottom right-hand corner of websites. They were the creators of that. They had a nice business, but then they got very aggressive about building out an AI product called Fin, which answers customer support queries on its own.<\/p>\n<p>And they\u2019ve mentioned that it\u2019s almost $100 million of\u2014now on a base that was, you know, like $300 million a year or something like that. And so they\u2019ve really accelerated their business by building an AI-native tool that actually solves the work, not just exists as a tool that humans use.<\/p>\n<p>So yeah, I think that\u2019s the mega bull case.<\/p>\n<p>I think about it almost like the transition from brick-and-mortar retail to e-commerce, where you have a brand new way of doing business and you have a bunch of legacy companies. Some of them will probably just exist as they always have. Others can benefit from the change and add new business lines.<\/p>\n<p>You look at Walmart\u2019s share price\u2014it\u2019s done amazingly well at incorporating e-commerce into its business. And then there are going to be some that are like Sears, and go away.<\/p>\n<p>Joe: That\u2019s funny\u2014Sears reminds me of my dad. He loved Sears because he always said the parking lot was empty when he went to the shopping mall, so he always went through Sears anyway.<\/p>\n<p>In that world, though\u2014so I understand the cost argument: it brings down the cost of code. Maybe you have fewer employees or whatever. But where does growth actually come from in that world? How are you expanding your customer base?<\/p>\n<p>Jared: Yeah, you\u2019re really going to them and saying: we\u2019re replacing human labor, and there\u2019s a different pricing paradigm now.<\/p>\n<p>You used to think of us as something you paid\u2014$20, $30, $40, $50 per seat per month\u2014as a tool for your employees, almost as if your employees are artisans and they\u2019re getting a toolkit to work with.<\/p>\n<p>And now we\u2019re just selling you an employee\u2014or the results of an employee.<\/p>\n<p>So we will sell you customer support tickets getting closed out for $0.50 or a dollar per ticket. And you can do the math of what it would cost you for the human to do that, or what it would cost you for AI to do that. And we\u2019ll be cheaper\u2014but we\u2019re also dramatically increasing what you pay us because we\u2019re cutting into a completely different stream.<\/p>\n<p>And that\u2019s what I think it looks like. We see a lot of exciting examples in the startup space of companies getting much, much higher pricing. And this is a totally new pricing model for software.<\/p>\n<p>Tracy: If you just recorded another episode and the guest teased at that\u2014but talk to us about it. So it\u2019s results-based pricing?<\/p>\n<p>Jared: Yeah. It\u2019s results-based pricing. There are a lot of questions about how it will ultimately shake out.<\/p>\n<p>Fundamentally, what these companies are doing is they are reselling intelligence. The core model vendors\u2014OpenAI, Anthropic, Google\u2014have created a way to get elastic intelligence. And if you have the right data and you can put the right harness around it, you can now sell that to your customers.<\/p>\n<p>What\u2019s an open question is: how do you price that relative to the intelligence?<\/p>\n<p>I was talking to someone this morning who said they think 50% gross margins on intelligence are about right, but we see a lot of variance in how startups are doing it today. Some are getting 80% gross margins on top of the model vendors. Others are getting 20%.<\/p>\n<p>But what\u2019s absolutely true in any case is: if you\u2019re able to do that, you get much, much higher pricing in total dollars than you did before\u2014orders of magnitude in some cases.<\/p>\n<p>Joe: But just to be clear: it can\u2019t be priced so high that the company using the software to produce these outcomes isn\u2019t saving money, right? That\u2019s the balancing act.<\/p>\n<p>Jared: One hundred percent. But think about where software pricing already was.<\/p>\n<p>Think about Salesforce at the elite tier\u2014$80, $90, $100 per user per month. So for round numbers, say $1,000 per user per year\u2014for sales reps who could be making, on average, $250,000 to $300,000 per year.<\/p>\n<p>If you have a technology that can come in and replace a sales rep, you can charge $50,000, still give the customer a 5x ROI, and then you\u2019ve effectively\u2014your take rate on that revenue is much higher.<\/p>\n<p>And so that\u2019s an exciting opportunity. That has people excited in startup land, for sure. If you talk to folks in Silicon Valley, they are foaming at the mouth about the opportunity to really expand tech spend in this way.<\/p>\n<p>And that\u2019s also the opportunity for the software companies that get it right.<\/p>\n<p>Tracy: There must be another risk, too\u2014if you can resell intelligence at, say, an 80% gross margin, then for the model makers themselves they\u2019re like, \u201cWhy do we want to be the dumb intelligence?\u201d Like, \u201cWe don\u2019t want to be the dumb pipe.\u201d<\/p>\n<p>We saw that in the cloud era: Azure, Google Cloud, Amazon\u2014they didn\u2019t want to just be commodity cloud. They started building features, they wanted to differentiate themselves.<\/p>\n<p>So it must be a risk for the companies reselling intelligence that it\u2019s so lucrative. How are you thinking about the core model makers themselves, and how they\u2019re thinking about expanding into some of these fields rather than just piping in intelligence?<\/p>\n<p>Jared: Look, like in any situation, they\u2019re going to have to make decisions.<\/p>\n<p>Amazon built AWS\u2014they had to decide: where are we going to press, and where are we not? Are we going to sell database software, or are we going to let other vendors do that on top of us? And they made those decisions as they went.<\/p>\n<p>What\u2019s really interesting is: if you look at the foundation model vendors, they have been racing toward the application layer.<\/p>\n<p>Both Cloud Code and Co-Work and OpenAI Codex are applications that people download and use. And I think that reflects an understanding that there is value in getting users used to using your application. Otherwise, you risk being an API that\u2019s commoditized\u2014people switch back and forth between you, and the application vendor has control.<\/p>\n<p>So one of the advantages that software has is this network effect\u2014comfort\u2014software as a security blanket for management.<\/p>\n<p>Joe: Right. But at the same time, people are getting really comfortable with AI\u2014telling it everything. And I keep thinking: if part of the sales pitch for software is that sense of comfort, but then AI is rapidly becoming the thing you talk to for everything\u2026 does it eventually become a portal for doing all these different things?<\/p>\n<p>Jared: It\u2019s a really interesting question. And this is where there\u2019s probably the biggest disparity between how enterprise buyers think and how humans think.<\/p>\n<p>I\u2019m sure you guys have seen Claude Bot and the rise of these open-source agents that people deploy for themselves\u2014giving it access to everything, their whole computer, etc.<\/p>\n<p>Joe: That\u2019s Joe. No, I didn\u2019t install Claude.<\/p>\n<p>Tracy: Oh, you didn\u2019t?<\/p>\n<p>Joe: I didn\u2019t install Claude.<\/p>\n<p>Tracy: I\u2019m getting mine set up. Wait\u2014the one with a hammer next to it. I\u2019m really curious. Why not?<\/p>\n<p>Joe: Because of this.<\/p>\n<p>Joe: And it just seemed like a potential waste of tokens and stuff. And then it turned out that for a while, on \u201cmy book\u201d\u2014which was the social media for\u2026 like, all the APIs were available in a public-facing database that anyone could go read. So it was like a completely open system that had to get fixed.<\/p>\n<p>Jared: And enterprises really do worry about this stuff, and they worry about it for good reason.<\/p>\n<p>Another really interesting example is: there are a bunch of startups that help you record Zoom calls and transcribe them. All of those Zoom calls then become legally discoverable because they\u2019re transcribed somewhere.<\/p>\n<p>So you have VCs in Silicon Valley who will refuse to use them, and you have other firms that are all-in\u2014recording everything that happens across the board so they can upload that into AI as context.<\/p>\n<p>Tracy: I think that\u2019s a really great point. And one thing that makes me wonder is: companies that are willing to skirt the rules, play fast and loose, will be moving much faster over the next two or three years.<\/p>\n<p>And one reason big incumbents struggle is because they actually do have to care about this stuff. They have things to protect. They don\u2019t want to be sued. They can\u2019t handle a major breach. And startups are able to move faster.<\/p>\n<p>Given that: every time software stocks sell off, people say, \u201cOh, they might go bargain hunting\u2014what\u2019s cheap, what baby is being thrown out with the bathwater?\u201d<\/p>\n<p>And someone\u2014always\u2014says: \u201cYes, they look cheap, but have you considered stock-based compensation?\u201d And it turns out these companies are not nearly as profitable once you factor that in.<\/p>\n<p>There was a very interesting note from Barclays\u2014I think it was Barclays\u2014that said: European investors are always asking about SBC; American investors only ask when there\u2019s a crisis. I think that tells you something about the difference between Europeans and Americans. I thought that was a fascinating sociological observation.<\/p>\n<p>But tell us: how should we think about the cost side? Because again, if code generation is a cost base, presumably these software companies don\u2019t need as many employees either, and they could pare back.<\/p>\n<p>So talk to us about how we\u2019re thinking about costs inside the software company.<\/p>\n<p>Jared: Great question. And yeah, certainly theoretically true. But aside from Elon cutting 80% of Twitter\/X\u2019s headcount, we really haven\u2019t seen any companies take the pill and realize the benefits of that.<\/p>\n<p>The SBC debate has been going on for a long time. I\u2019ve had it ad nauseam over the course of my career. It\u2019s a real expense. You\u2019re issuing your employees stock. They value it like cash. Many of them auto-sell it the day it vests.<\/p>\n<p>And I think the problem it creates for software companies is: management teams are addicted to reporting non-GAAP, which excludes the impact of SBC.<\/p>\n<p>So if you\u2019re an entrepreneur who founded the software business\u2014technical, hasn\u2019t really cared that much about the financial side\u2014you\u2019re a product person, you may think you\u2019ve been doing a good job being profitable because your CFO is telling you, \u201cWe\u2019re at a 25% non-GAAP operating margin.\u201d That\u2019s pretty good\u2014when the reality is you\u2019re running break-even. Which is a very common state of affairs.<\/p>\n<p>We looked at the whole universe, and the median public software company has a 5% GAAP net income margin\u2014which is not enough to value companies on.<\/p>\n<p>So it creates this dynamic where, yes, there\u2019s this terminal value concern\u2014which is by far the most important thing\u2014but there\u2019s also no floor.<\/p>\n<p>I was looking at the earnings report from Freshworks, which is a mid-market seller of customer support and IT management software. It trades at one-and-a-half times EV to sales. If it ran at even a 10% GAAP margin, it\u2019d be trading at 15 times earnings\u2014which is a pretty attractive place to be. You could get some value investors, maybe some European investors, interested in buying it there.<\/p>\n<p>But it doesn\u2019t have material GAAP earnings. And on their earnings call there was no real sense of trajectory toward that.<\/p>\n<p>Tracy: And you see the share price now\u2014it\u2019s down over 16%.<\/p>\n<p>Jared: Exactly. And the top-line results were actually pretty good. So there\u2019s a real issue here on the financial side as well.<\/p>\n<p>It\u2019s incredibly disappointing to me that management teams\u2014having embraced this as a way to cut costs themselves\u2014I expect they will. Yeah.<\/p>\n<p>****<\/p>\n<p>Jared Sleeper: One of the advantages that software has is this network effect\u2014comfort\u2014software as a security blanket for management.<\/p>\n<p>Host: Right. But at the same time, people are getting really comfortable with AI\u2014telling it everything. And I keep thinking: if part of the sales pitch for software is this sense of comfort, but then AI is rapidly becoming the thing you talk to for everything\u2026 does it eventually just become a portal for doing all these different things?<\/p>\n<p>Jared: It\u2019s a really interesting question. And this is where there\u2019s probably the biggest disparity between how enterprise buyers think and how humans think.<\/p>\n<p>I\u2019m sure you guys have seen Claude Bot and the rise of these open-source agents that people are deploying for themselves\u2014giving them access to everything, their whole computer, etc.<\/p>\n<p>Host (Joe, likely): That\u2019s Joe. Yeah\u2014no, I didn\u2019t install Claude.<\/p>\n<p>Host (Tracy, likely): Oh, you didn\u2019t know? I\u2019m getting mine set up. Wait\u2014the one with a hammer next to it. I\u2019m really curious: why not?<\/p>\n<p>Host (Joe, likely): Because of this.<\/p>\n<p>Host (Tracy, likely): Yeah, because of that.<\/p>\n<p>Host (Joe, likely): And it just seemed like a potential waste of tokens and stuff. And then it turned out that for a while on \u201cmy book\u201d\u2014which was the social media for\u2026 like, all the APIs were available in a public-facing database that anyone could go read. And so it was like a completely open system that had to get fixed.<\/p>\n<p>Jared: And enterprises really do worry about this stuff, and they worry about it for good reason.<\/p>\n<p>Another really interesting example: there are a bunch of startups that help you record Zoom calls and transcribe them. All of those Zoom calls then become legally discoverable because they\u2019re transcribed somewhere.<\/p>\n<p>So you have VCs in Silicon Valley who will refuse to use them, and you have other firms that are all-in\u2014recording everything that happens across the board so that they can upload that into AI as context.<\/p>\n<p>Host: I think it\u2019s a really great point. And one of the things that makes me wonder is: companies that are willing to skirt the rules, or play fast and loose, will be moving much faster over the next two or three years.<\/p>\n<p>And one of the reasons big incumbents struggle is because they actually do have to care about this stuff. They have things to protect. They don\u2019t want to be sued. They can\u2019t handle a major breach. And startups are able to just move faster.<\/p>\n<p>Given that, every time software stocks sell off with this, people say, \u201cOh, they might go bargain hunting.\u201d They say: what\u2019s cheap, and what baby is being thrown out with the bathwater?<\/p>\n<p>And then someone\u2014always\u2014people say: \u201cYes, they look cheap, but have you considered stock-based compensation?\u201d And it turns out these companies are not nearly as profitable once you factor that in.<\/p>\n<p>It was a very interesting note from Barclays\u2014I think it was Barclays\u2014and it said: European investors are always asking about SBC; American investors only ask when there\u2019s a crisis. I think that tells you something about the difference between Europeans and Americans. I thought that was a fascinating sociological observation.<\/p>\n<p>But tell us: how should we think about the costs? Because again, if code generation is a cost base, presumably these software companies don\u2019t need as many employees either, and they could pare back.<\/p>\n<p>So talk to us about how we\u2019re thinking about the costs inside the software company.<\/p>\n<p>Jared: Great question. And yeah, certainly theoretically true.<\/p>\n<p>But aside from Elon cutting 80% of Twitter\/X\u2019s headcount, we really haven\u2019t seen any companies take the pill and realize the benefits of that.<\/p>\n<p>The SBC debate has been going on for a long time. I\u2019ve had it ad nauseam over the course of my career. It\u2019s a real expense. You\u2019re issuing your employees stock. They value it like cash. Many of them auto-sell it the day it vests.<\/p>\n<p>And I think the problem that it creates for software companies is: management teams are addicted to reporting non-GAAP, which excludes the impact of SBC.<\/p>\n<p>So if you\u2019re an entrepreneur who founded the software business\u2014technical, hasn\u2019t really ever cared that much about the financial side\u2014you\u2019re a product person, you may think you\u2019ve been doing a good job of being a profitable company because your CFO is telling you, \u201cWell, we\u2019re at a 25% non-GAAP operating margin.\u201d That\u2019s pretty good\u2014when the reality is you\u2019re running breakeven.<\/p>\n<p>Which is a very common state of affairs. We looked at the whole universe, and the median public software company has a 5% GAAP net income margin, which is not enough to value the companies on.<\/p>\n<p>So it creates this dynamic where, yes, there\u2019s this terminal value concern\u2014which is by far the most important thing\u2014but there\u2019s also no floor.<\/p>\n<p>I was looking at the earnings report from Freshworks, which is a mid-market seller of customer support and IT management software. It trades at one-and-a-half times EV to sales.<\/p>\n<p>If it ran at even a 10% GAAP margin, it\u2019d be trading at 15 times earnings, which is a pretty attractive place to be. You could get some value investors, maybe some European investors, interested in buying it there.<\/p>\n<p>But it doesn\u2019t have material GAAP earnings. And on their earnings call there was no real sense of trajectory towards that.<\/p>\n<p>Host: And you see the share price now\u2014it\u2019s down over 16%.<\/p>\n<p>Jared: Exactly. And the top-line results were actually pretty good. And so there\u2019s a real issue here on the financial side as well.<\/p>\n<p>It\u2019s incredibly disappointing to me that management teams, having embraced this as a way to cut costs themselves\u2026 I expect they will.<\/p>\n<p>Host: Yeah. Talk to us about this specifically: do companies need\u2014are we going to see big layoffs across the SaaS space in the near term? And what do you think is the time frame for that?<\/p>\n<p>Jared: Great question. I think we will. I think we\u2019ve seen that management teams respond to price signals.<\/p>\n<p>If you look at the history of the sector, it was in 2023 when there was a round of layoffs, and companies showed margin\u2014and then they\u2019ve kind of resisted it for the last two years.<\/p>\n<p>The thing about it is: layoffs can help you move faster, right? I think if you look within any company today, unfortunately there is this spectrum of employees and how fast they\u2019ve adopted AI\u2014whether they\u2019re still doing things the old way, or they\u2019re on Cloud Code \/ Cloud Co-work and changing the way that they work.<\/p>\n<p>And the employees who are on the lower end are actually slowing you down as a company. They\u2019re not even zero marginal product\u2014they\u2019re negative marginal product. There\u2019s just been such a change in how you work, especially in software development.<\/p>\n<p>So I think management teams are going to realize there are two benefits to layoffs. In addition to the obvious pain of it and the human cost\u2014which I never forget to discuss\u2014one is saving money and showing shareholders you\u2019re financially disciplined, probably seeing your share price stabilize, especially if you\u2019re trading at some very low multiple.<\/p>\n<p>And the second is moving faster.<\/p>\n<p>And also, almost as importantly, being able to pay your top-performing employees. The war for talent in Silicon Valley has never been more intense.<\/p>\n<p>I was talking to a private company we invested in, and they\u2019re losing employees left and right to these high-growth AI companies who can afford to pay huge comp packages in both equity and stock. And you want to keep your good people. You don\u2019t want these AI companies to pluck away all your best people and leave you with folks who are relative Luddites.<\/p>\n<p>So I do think we\u2019ll see this. It\u2019s very sad that it will have to happen, but it\u2019s the obvious path forward for the sector. And I think if done right, it accelerates innovation.<\/p>\n<p>Host: I have a tangential question on that note. Whenever we talk about technological disruption, people bring out examples like: remember when actuaries\u2014remember when Excel\u2014was basically actual people sitting with papers in front of them doing the math. Those people didn\u2019t disappear when Excel got created, but they started doing new things.<\/p>\n<p>I imagine a lot of people are very interested right now in alternative careers for basic, commoditized coders. What do you think it actually looks like? I feel like you might have some insight here.<\/p>\n<p>Jared: The alternative? Well, I think there are two ways to answer the question. There\u2019s: what do you do if you want to stay a coder, and then there\u2019s: what are the careers that are going to still exist over time?<\/p>\n<p>If you think about what\u2019s happening to coding, it reminds me a lot of civil engineering. It\u2019s kind of a funky example, but civil engineers used to work pen-and-paper doing calculus\u2014will this bridge hold up or not? That\u2019s been obsolete for a very long time. All those calculations are done by a computer.<\/p>\n<p>They\u2019re kind of clicking and moving. They go on site, they collect some data, they talk to stakeholders, and they\u2019re effectively project-managing this computer that can do the physics part of their job for them. It\u2019s important they understand the physics in case something looks strange, but they\u2019re not doing much physics.<\/p>\n<p>That\u2019s clearly where software engineering is heading in the near term. In a lot of companies, it\u2019s already there.<\/p>\n<p>And these companies are still hiring software engineers because that job is valuable. In fact, each individual software engineer is way more productive than they were before.<\/p>\n<p>And there\u2019s happily elastic demand for software\u2014we\u2019re still undersupplied with software in the world. So there\u2019s quite a bit of room to add those.<\/p>\n<p>So I\u2019m not necessarily bearish on demand for software engineers, at least for the next three to five years. Beyond that\u2014if things get weird\u2014hard to tell.<\/p>\n<p>But for people more broadly, I think the best advice is adaptability: constantly trying and testing these tools, making sure you\u2019re staying at the cutting edge, and being aware of what\u2019s human.<\/p>\n<p>In my work in venture investing, there\u2019s a lot of data that comes out of human relationships that an AI wouldn\u2019t have access to. I can\u2019t call a friend at another fund and ask how a company\u2019s doing\u2014not yet at least. You have to make some friends first.<\/p>\n<p>Host: They\u2019re talking to each other on what\u2014Book?<\/p>\n<p>Host (Joe\/Tracy banter): Right, they\u2019re talking on their book. So maybe if there\u2019s an AI agent from Sequoia and an AI agent from Andreessen\u2026<\/p>\n<p>Jared: It\u2019s intriguing for about five minutes.<\/p>\n<p>Host: Yeah. It was evocative, but\u2014also there was that Wired article about the guy who infiltrated as a bot and pretended to be a writer. It was pretty obvious. They were like, \u201cOh, are we? Let\u2019s create a new language just for us.\u201d Like they\u2019re not making new languages, right?<\/p>\n<p>Jared: But yeah, I think the rough mental model is: if there was any effort to outsource your job to India, that\u2019s risk\u2014because that tells you the job can be done by someone who\u2019s not physically present in a space.<\/p>\n<p>And if you like working on problems in isolation, not socially with other people\u2014grinding out math problems or little coding assignments\u2014that\u2019s probably also a pretty tough place to be.<\/p>\n<p>Host: Yeah. It\u2019s going to be a more social world. This is something we\u2019ve touched on before, which makes me kind of sad: the edge in the AI world becomes sociability, right?<\/p>\n<p>And to some extent, we talked about this in the context of\u2026 look, Max, I know you love it, Joe, I do not\u2014can I say\u2014<\/p>\n<p>Two little observations from my time vibe-coding in 2026 that are interesting.<\/p>\n<p>One: I have zero technical background, and I\u2019ve been surprised by the speed with which I can build intuitions about when it\u2019s going off the rails\u2014like when it\u2019s doing something that doesn\u2019t seem right.<\/p>\n<p>Like, I joked that vibe-coding is just typing \u201cMake it better,\u201d pressing enter over and over again, and then hitting yes when it offers to do something you actually should do. But you can start to build an intuition fairly quickly for when something doesn\u2019t make sense.<\/p>\n<p>And the other thing\u2014this relates to trusting the AI\u2014I\u2019m having a lot of documents get annotated, and I do that through the cloud API, which runs up the bills a little bit.<\/p>\n<p>One API run was going to cost like [amount unclear]. And I was like, \u201cIs this a good thing?\u201d And I stupidly ask it a lot: \u201cIs this a good thing?\u201d It\u2019s like, \u201cWell, when you\u2019re done, you\u2019re going to have this annotated asset that no one else has done and that will be very\u2014\u201d But it was sort of useless what I did.<\/p>\n<p>So you shouldn\u2019t always\u2014like it\u2019s selling yourself. So I was like, \u201cOh yeah, here\u2019s the API, Joe. Run this\u2014annotate all these documents.\u201d It wasn\u2019t actually a good use of my time. So you can\u2019t really always\u2026 they\u2019re just going to sell\u2014<\/p>\n<p>There\u2019s one other set of sectors I\u2019m interested in. You see companies like Moody\u2019s or Fair Isaac\u2026 [unclear phrase] global\u2026 index.<\/p>\n<p>And they\u2019re selling off too. And it\u2019s not like\u2014this is another area where, you know, fund managers for a long time, unless things get really weird, are going to benchmark themselves off the S&amp;P 500 for a long time. Or lenders are going to be using the FICO score for a very long time, etc.<\/p>\n<p>Intuitively, this would strike me as a very hard thing for AI to replace.<\/p>\n<p>Jared: I share your intuition. I can\u2019t say I fully understand the sell-off in these companies. I wonder if there are parts of their businesses that are more services or consulting.<\/p>\n<p>Often there are combinations where\u2014like, I don\u2019t think anyone suspects the S&amp;P 500 is going to be displaced as an index. Yeah\u2014maybe.<\/p>\n<p>But look, we\u2019re in a world where folks are very happy to shoot first and ask questions later once AI risk comes out.<\/p>\n<p>Host: Actually, going back to your hedge fund time: how much is it just the nature of hedge fund traders right now, where there\u2019s very little stomach to take downside risk and appear to look stupid for missing it, holding the bag?<\/p>\n<p>How much do you think that\u2019s contributing to some of these moves?<\/p>\n<p>Jared: It\u2019s a great question. I won\u2019t speak to my firm, because I think \u201ctiger cubs\u201d like it are a fairly small share of the overall market in dollars.<\/p>\n<p>But if you look at trading volumes, the pod shops\u2014Citadel, Balyasny, Millennium\u2014are a very large share of the volume. And yeah, those people can\u2019t afford drawdowns.<\/p>\n<p>And the scary thing about this for them is: because it\u2019s not fundamental\u2014because the companies aren\u2019t struggling themselves\u2014they have no idea when it will stop.<\/p>\n<p>So you\u2019re left predicting this thing, and you\u2019re like: \u201cWell, I bet my career that people are going to feel better about software companies in three to six months than they do right now.\u201d<\/p>\n<p>And you\u2019re one OpenAI model release or Anthropic model release away from more fear.<\/p>\n<p>So I do think there\u2019s a lot of short-termism right now. And again, come back to the SBC point: there\u2019s also no valuation support\u2014no real valuation support.<\/p>\n<p>In normal times, if companies were like this, they\u2019d be buying back stock, shrinking the share count, issuing dividends.<\/p>\n<p>I have a friend who works at a mutual fund where there are a lot of dividend funds that would love to buy dividend-paying companies growing 10% to 15%\u2014like a lot of software companies\u2014but they\u2019re not. And so you\u2019ve kind of lost the ability to put an actual floor underneath valuations as a result.<\/p>\n<p>Host: Jared Sleeper, thank you so much for coming on and explaining how software works.<\/p>\n<p>Jared: My pleasure. That was super fun. Thanks, Tracy.<\/p>\n<p>Host (Joe): I thought that was really interesting. I\u2019m fascinated by this idea that in the short term, most of these businesses are doing fine. In the long term, they might go to zero. But also in the short term, they\u2019re not really doing fine because they\u2019re not making much money. I guess that makes sense that they\u2019re all selling off right now.<\/p>\n<p>Host: Yeah. I keep thinking this is probably a stretch, but I keep thinking back to that book Bullshit Jobs, remember? The argument there is a lot of jobs exist not because people are doing anything specific, but because they provide some sort of social value.<\/p>\n<p>So for instance, you have a person who is essentially the designated scapegoat for senior management.<\/p>\n<p>And I keep thinking business is basically an ecosystem of different players. So it might be that in the new AI world, the role of software companies changes\u2014their social role changes. And I don\u2019t know what the price or valuation looks like on that.<\/p>\n<p>It still feels like to me\u2026 I know, I know, I have no idea how businesses are going to buy software in the future.<\/p>\n<p>I did think that was really helpful. I really don\u2019t know anything about how the software business works generally, so I found that very helpful.<\/p>\n<p>One other interesting thing: even high-end software is not that much money, right? If you have a salesperson making $250,000, what is $1,000 a year from Salesforce to do their job?<\/p>\n<p>And also, given that free and open-source software has existed for a long time\u2014still, you want to pay an implementer, a company that manages the transition, getting from here to there. That really changes the nature of software buying.<\/p>\n<p>Does it feel like you have to get it to\u2014this is weird territory\u2014but maybe things are good? I think things probably are going to get really weird.<\/p>\n<p>Host: Yeah, I think that\u2019s a pretty good bet. Like, if you bet on weirdness\u2014there is a weirdness index. Someone should build that weirdness index. That would be a pretty good investment.<\/p>\n<p>Shall we leave it there?<\/p>\n<p>Let\u2019s leave it there. This has been another episode of the Odd Lots podcast. I\u2019m Tracy Alloway. You can follow me @tracyalloway.<\/p>\n<p>And I\u2019m Joe Weisenthal. You can follow me @thestalwart.<\/p>\n<p>Follow our guest Jared Sleeper\u2014he\u2019s @JaredSleeper. Follow our producers Carmen Rodriguez @carmenarmen, Dashiel Bennett @dashbot, and Cale Brooks @calebrooks.<\/p>\n<p>For more Odd Lots content, you can check out our daily newsletter. You can find that at bloomberg.com\/oddlots.<\/p>\n<p>And if you want to chat with fellow listeners about all of these topics, including AI, check out our Discord: discord.gg\/oddlots.<\/p>\n<p>And if you enjoyed this conversation, then please like or leave a comment on the video. Or better yet, subscribe.<\/p>\n<p>Thanks for watching.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Jared Sleeper on Which Software Companies Will Survive the SaaSpocalypse By Joe Weisenthal and Tracy Alloway, Odd Lots, Bloomberg Podcasts The start of the year has been an absolutely brutal one for software companies. There&#8217;s a big fear that the rise of AI and advanced coding models will pull the rug out from this industry. 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