Is AI Really a Threat to SaaS Companies?

Luca Ferrari says AI is not a reason large SaaS companies are finished. Lower costs will hurt them on the margin, and easier writing of software does not mean they are screwed. Buying software has been reasonably cheap for a long time.

Historical software valuations were absurdly high because they did not match reasonable expectations of free cash flow over the long run. Justifying them meant betting a buyer would later pay the same multiple after growth of 50 percent, often by treating 12 percent organic growth as if it would last 15 years. Organic growth almost never rises and typically falls. AI gave people an excuse to doubt the assumptions and be more cautious, and the reset prices were broadly reasonable, within plus or minus 20 percent.

His company owns WeTransfer. Five great new graduates spending three months in a garage could probably build a product 80 percent as good, and a hundred teams have already made clones. For scale companies worth at least a billion dollars, copying the product was already negligible next to winning significant market share, even five or 10 years ago. Maybe 20 good engineers were enough, and replicating Salesforce is not rocket science. Digital products mostly win through first-mover advantage and a brand people already know.