Metadata
- Author: Samaipata
- Full Title:: AI Is Shaking Up the Software Market, for the Better
- Category:: 🗞️Articles
- URL:: https://www.samaipata.vc/post/ai-is-shaking-up-the-software-market-for-the-better?utm_source=substack&utm_medium=email
- Finished date:: 2024-11-20
Highlights
With AI, software tools can not only organize but execute tasks autonomously, becoming capable of completing entire job functions without human intervention. (View Highlight)
As a result, AI startups are making money at an unprecedented rate, far outpacing previous waves of SaaS companies. According to an analysis by Stripe, top AI companies are reaching millions of dollars in sales within their first year of operation. (View Highlight)
AI agents will significantly expand software’s total addressable markets by tapping into the largest budget of all: payroll. Labor and software are merging into one massive market. (View Highlight)
(Now, AI demands high computational power, turning software usage into a more utility-like paradigm where usage directly correlates with infrastructure and energy costs. As a result, software margins are likely to face downward pressure, as rising computational costs increase COGS (cost of goods sold) and software development becomes increasingly commoditized. (View Highlight)
Right now, software vendors often monetize through seat-based subscriptions, but as AI agents become capable of executing end-to-end tasks, there will be a shift to outcome-based pricing. This new model allows companies to capture more value by charging for the work completed, directly linking revenue to customer success. The ultimate form of value-based pricing! (View Highlight)