Enterprise Application Software (SaaS) — what the besties said

Where they stand now

Chamath predicts that the 'software industrial complex'—bloated legacy enterprise software companies built around CRUD databases and expensive go-to-market motions—will face severe disruption in 2025 as next-gen AI companies rebuild workflows at an order of magnitude lower cost.

E209 · Jan 4, 20251 take ↓

Friedberg

Bearish

Friedberg reiterates his bear case on vertical SaaS, arguing per-seat pricing models are being challenged and pricing compressed as companies build in-house AI tools that replace traditional business software.

E209 · Jan 4, 20251 take ↓

GGuests

Bearish

Gavin Baker argues that 2025 will be the year of AI agents, and enterprise application software companies—which lack their own models and compute—will be severely disrupted as AI replaces white-collar workers rather than just making them more efficient.

E209 · Jan 4, 20251 take ↓

The discussion

All three hosts are firmly bearish on enterprise application software (SaaS) with high conviction, reflecting a rare unanimity of view. The core shared thesis is that AI-driven disruption will severely pressure legacy enterprise software companies in 2025, as AI agents and in-house AI tools begin replacing the white-collar workflows these products were built to support. Gavin Baker and Chamath focus on structural vulnerabilities at the company level—Baker highlighting that enterprise software firms lack their own models and compute, while Chamath emphasizes bloated cost structures, expensive go-to-market motions, and a lack of genuine product value that will be undercut by next-generation AI competitors building at a fraction of the cost. Friedberg zeroes in on the commercial model itself, arguing that per-seat pricing is being directly eroded as customers increasingly build AI-powered in-house alternatives, compressing pricing across vertical SaaS.

How they got there

Chamath1 take since Jan 4, 2025

BearishE209Jan 4, 2025unverified · not scored⚑

Chamath predicts that the 'software industrial complex'—bloated legacy enterprise software companies built around CRUD databases and expensive go-to-market motions—will face severe disruption in 2025 as next-gen AI companies rebuild workflows at an order of magnitude lower cost.

I think the software industrial complex... these are these large bloated, in many cases, enterprise software companies... along with that, what they have perfected really is a go-to-market and sales motion... None of those things equate to”1:26:19

Friedberg1 take since Jan 4, 2025

BearishE209Jan 4, 2025⚑

Friedberg reiterates his bear case on vertical SaaS, arguing per-seat pricing models are being challenged and pricing compressed as companies build in-house AI tools that replace traditional business software.

I'm probably just going to triple underline vertical SaaS again. Per-seat pricing model being challenged, pricing being compressed as companies explore in-house tools built with AI that replaces these kind of traditional business practices.”1:28:16

GGuests1 take since Jan 4, 2025

BearishE209Jan 4, 2025⚑

Gavin Baker argues that 2025 will be the year of AI agents, and enterprise application software companies—which lack their own models and compute—will be severely disrupted as AI replaces white-collar workers rather than just making them more efficient.

2025 is going to be, I think, the year of agents... enterprise application software, I think, is going to be in a lot of pain. And some of these companies are talking a big game about agents, but at the end of the day, they don't have”1:23:39

iAbout these quotes

Quotes are machine-transcribed from the episode audio — use the Listen links to verify any take against the source, or the ⚑ link to report a problem. Takes marked unverified, low-conviction, or commentary-only never move stances, the index, or the funds.