SaaS is not dead-It’s compounding - #77

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🖨️ Executive Summary

Why the “SaaS‑pocalypse” is a market reset—not a demand collapse—and how operators can win with AI, usage‑based pricing, and outcome‑driven SaaS.

⁉️ What the heck is “SaaS‑pocalypse?”

“SaaS‑pocalypse” is the story being told by tech journalists and the stock market. It is real, but we believe it is an overcorrection.

• Valuations compressed.

• The IPO window is mostly shut.

• AI is eating the oxygen in board meetings

What actually happened in the markets?

• ServiceNow: fell about 7% in a single session, bringing its 2026 year‑to‑date loss to roughly 28% by early February.

• Salesforce: also dropped around 7% on the day, leaving it down nearly 26% in 2026 year‑to‑date.​

• Intuit: fell nearly 11% in that same window, with year‑to‑date losses exceeding 34%

But that’s a capital‑markets correction, not a customer‑demand collapse.

Global SaaS revenue is projected to grow from roughly $320–$380B in 2024 to about $880B–$1.5T by 2030–2034, implying mid‑teens to high‑teens annual growth.

Those are not “end of SaaS” numbers; they’re “this is still one of the best business models ever invented.

SaaS is not dead; it’s compounding.

On CNBC in early February 2026, Brad Gerstner said software is getting thrown into the “too‑hard bucket” because investors can’t yet predict how AI will reshape future cash flows – not because SaaS companies are missing numbers today

From a16z’s February 2026 “Death of Software. Nah.” essay, Marc Andreesen shares that:

📈 What the data actually shows:

• The global SaaS market is expected to 3–4x over the next decade, from the low hundreds of billions today to well over 1 Trillion.

• The US SaaS market alone is forecast to grow from about $140B in 2024 to ~$270B by 2030.

• Spend on AI‑native apps is exploding—up 75%+ year over year in recent SaaS management data—which means buyers are not leaving SaaS, they’re upgrading it.

☠️ So yes, there’s a shake‑out. But the “dead” narrative is a mismatch with the growth curves.

Aaron Levie, like other loud SaaS advocates, is biased—but in this case his argument is also the most logical one to me:

• AI coding will lead to 100X more software. That to me doesn't conclude that every customer wants to be responsible for owning and managing all of that software.

• AI Agents will be the biggest shift to enterprise software business models that we've ever seen… This provides a completely new growth vector for software companies in AI… it's clear that this will lead to a TAM increase in software.

• SaaS handles the core business workflow, and then the agents ride on top of that… we’ll have about 100 times more, maybe 1,000 times more, agents than we have people, so you’ll have way more users of that software system.

🏁 How To Win in SaaS

Why SaaS Still Wins
Buyers don’t wake up wanting “software”; they want more pipeline, lower churn, better margins, and fewer people doing repetitive work.

SaaS still wins because it bundles all the ugly stuff—implementation, upgrades, security, uptime—into a single outcome they can budget for.

Outcomes, not licenses
The teams that keep winning don’t lead with features or seat counts. They lead with a simple promise: “Here’s how we move your revenue, costs, or risk in the next 12 months.”

AI features are just the way that outcome gets cheaper, faster, and more defensible.

Usage over seats
Mike and I have been advocating for this for a long time. Budgets are shifting from “how many people log in” to “how much value did we create.”

That’s why usage‑ and consumption‑based pricing are spreading: customers only want to pay when the product actually does work for them. That doesn’t kill SaaS; it makes the best products harder to rip out.

A neck to strangle
When something breaks at 2 a.m., nobody wants a model on GitHub—they want a vendor, an SLA, and a human who will own the problem.

CIOs are consolidating onto fewer, bigger platforms and then layering AI and agents on top. They’d rather have one accountable SaaS provider than a dozen DIY failure modes

🏎️ AI and Agents Make SaaS More Valuable, Not Less

AI isn’t a knife to SaaS; it’s an engine inside it.

• Over 60% of SaaS businesses now offer AI‑powered features, with adoption rising each year.

• In one SaaS management index, 77.6% of IT leaders said they increased investment in SaaS apps specifically for AI features.

• Companies that embed AI into their SaaS products report higher retention, faster product development, and better customer satisfaction.

🏃 For what it’s worth,

Round Barn Labs moved from Asana to Notion b/c it was more AI-centric.

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🌲 Not Out of the Woods Yet

Some SaaS absolutely will get compressed or killed by AI—especially thin, single‑feature tools and anything that’s just a UI on top of generic workflows. AI agents will automate seats, collapse pricing in a few categories, and turn some apps into low‑margin pipes.

But at the same time, a smaller number of stronger SaaS platforms will win bigger: they’ll own the data layer, embed AI deeply, shift to usage‑ and outcome‑based pricing, and become the systems that agents and humans both run on.

🤓 What the “SaaS‑pocalypse” Really Is

So what is happening?

• Valuations normalized in 2022-2023

• In February of 2026, valuations took a hit due to uncertainty and fear of AI supplanting value

• Pricing models are shifting toward usage-based, hybrid, and value‑based structures.

• AI introduces uncertainty, so public markets are repricing risk while they figure out who the durable winners are.

But underneath, the fundamentals still look like this:

• SaaS revenue: growing double‑digits globally for the rest of the decade.

• AI: driving more spend into SaaS, not less, as buyers pay for intelligent, outcome‑driven features.

• Pricing: moving toward usage and hybrid models, which align vendor revenue with customer outcomes.

The ‘SaaS‑pocalypse’ is not SaaS going to zero; it’s SaaS growing up.

Multiples reset, pricing gets smarter, AI moves to the center, and customers double down on platforms that deliver real outcomes and give them a neck to strangle when things break.

By any serious forecast, SaaS is on track to more than triple over the next decade, not disappear.

🎯 Summary

SaaS isn’t dying—it’s evolving. The “SaaS‑pocalypse” is a narrative born from market jitters, not customer behavior.

As AI rewires how value is delivered, SaaS becomes the trusted layer powering the next generation of intelligent tools and agents. The multiples may have reset, but the model is compounding. For operators, founders, and marketers, this is not the end of SaaS. It’s the beginning of its next era.

You just have to play it right.

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