AI is killing B2B SaaS

Wow, the tails on the lowercase letter 't' throughout that article are distracting.

I am kind of hoping that AI will kill the startup grab for money TBH. Too many wannabe CEOs I've met in the past 2 decades have gotten rich thanks to a lucky pitch without a clear path to a viable product. At least 6 of those I know did so at the expense of developers that accepted equity over cash...and the developers wasted a ton of time and 2 even were briefly homeless as a result...and none of them live in California.

Hopefully wannabe senior leadership will try and take advantage of AI without taking advantage of developers, because most of us just want to write code and build something great.

Can't wait for the "AI Is supercharging SAAS" article when the stocks go up, and another "SAAS IS DEAD" when they go down again

It kills low hanging fruit SaaS that was always just some minor piece of functionality wrapped in a subscription model usually based on 99% open source and 1% actual contribution.

I was reading through the article and waiting for the key info to drop, but nope. It never did. It seemed like marketing fluff. If anything, vibe coding may eliminate some of the B2C SaaSes, but not B2B. If you think an enterprise is going to vibe code a B2B offering that they pay millions for, you're out of your mind.

Here's my general mantra regarding AI: NEVER take suggestions about AI from people who have a vested interest in it. CEOs of companies that train and offer LLMs, Authors of Books about LLMs and AI in general, etc.

This may come off as an unpopular opinion, but this is how I felt after listening to Steve Yegge recently. He has a new book about Vibe coding and he goes on in the interview/podcast to say that the best programmers he knows in the world (the ones better than him and maybe even the top world class programmers), would be equivalent to those of interns in an year, if they don't start vibe coding or use AI. I respect the guy, but damn, this is just peak delusion. He didn't even say it as a hyperbole, he meant it.

According to popular CEOs of companies training LLMs, 2024 was supposed to be the year that would eliminate the need for Junior and mid-level engineers. 2025 happened. Now, we are in 2026.

So yeah, I'm never taking advice about AI from these people ever again.

Reminds me of the story of when the Surgeon General (in the US) reported that smoking causes cancer.

People stopped smoking immediately, and cigarette sales tanked. The cigarette companies laughed (with all the phlegm in their throats and lungs) and sales came back 1-2 weeks later.

I suspect in a few months or a year companies with vibe-coded replacements for SaS products will find they need to go back: But, just like how many less people smoke today than in the past, the writing is clearly on the wall. At some point someone will figure out how to replace SaS with AI; it's just going to take a lot longer than many think.

Not sure about that, however agents in low code tools are certainly taking over old school integrations.

This was the same hype around NoCode a few years ago. Thing is people for software as a service and internal teams dont want to do the service part. A common thread among all of the vibe coded stuff I hear is that nobody talks about the next requirement which was handled. Frankly UIs are learnable and after a few tries everybody gets used to it. The extra polish is totally not worth it. Eventually every SaaS on the non-critical business path gets ripped out with one of the platform players such as SAP, SalesForce etc which are infinitely customizable. Salesforce even has its own language in which customers write their apps.

The system of record bit is quite correct and imo the only durable advantage. But that doesnt explain why Klaviyo shoyld worry. In fact marketing workflows are some of the most important systems of record directly tied to business earnings.

The assumtpion that in SaaS you build once and everybody uses it is false. There are always customizations or features that need to be built for big contracts. Its the small players that are okay with out of the box SaaS since they lack the budget to pay for a customization. Ironically, these teams will get hurt the most should they choose to go down the vibe code everything path. Here infra capex is far lower than payroll and owning too much software (vibe coded or not) will simply steal time from business development.

Honestly, the market just panicked and caused a temporary correction thats all. Then we all got busy and wrote a bunch of thought leadership crap on top.

In reality AI is the best thing to happen to SaaS companies since it reduces RnD time and expenses, allows even small players to bid for large contracts without overloading existing dev capacity and also makes it possible to put devs in front of customers since now there's no need to sit down and code. AI is also the best thing to happen to engineering since it now allows for product management to be folded into the existing craft.

AI, as do most things, help the big players get bigger. If someone is automating small parts of the b2b layer they get dropped, but it’s harder to drop an automation that companies are used to. I don’t see how AI is changing that, companies spent a lot of time and money to set up the automation because it’s needed and because they can write a potential replacement cheaply doesn’t mean they are going to rip away something that works and is reliable.

I predict the fallout from this is companies being nickel & dimed to death by a million smaller subscriptions (rather than just cutting a huge check to Workday, ServiceNow, SAP, Oracle or similar). There is such a glut of AI ISV startups that are filling highly specific niches, and some are quite good, but they're all usually in the $10-50/mo/user. Gets to be big numbers pretty quickly in a large enterprise.

With a new agentic-lashup tearing across the internet every week, pointing the way to "gradient descent" software development, any purchasing manager worth their salt is going to ask some serious questions about their enormous SaaS bill before committing to another expensive long term contract. It follows that valuations must decline. Even if only because risks to moats have increased, but also because it makes sense to negotiate hard on pricing when there's fear in your counterparty.

It's this generation's "build vs buy." I imagine it will play out the same way, like a revolving door. Customers churn because they can "build it themselves," then a year later when they're sick of maintaining a mess of code for some internal system instead of delivering value to their own customers, they come back. A blip.

This feels like it started out being written by a human

but around the point "2. Security, authentication, and robustness" the LLM took over and finished it...

I would assume one major thing here is that many orgs only need a small subset of functionality from what most products provide. Many times, that small subset of functionality is only "good enough" in and of itself, but the org is paying the premium for the entire suite of whatever it is. This makes realizing that an LLM can get them to MVP and beyond much easier.

Charging hundreds of thousands if not millions per year for very basic functionality is what is "killing" b2b SaaS.

Well it definitely killed mine so I can't say this is not true

Sure, vibe coding has impacted user's expectations. They know you can ship a new update easier and faster than before - and you actually can.

But, not sure which successful SaaS companies just stopped shipping any updates to the product, never talked to their customers and never added any new features to win over major new accounts - and still managed to survive and thrive?

And the author actually confirms this:

> AI isn’t killing B2B SaaS. It’s killing B2B SaaS that refuses to evolve.

I can see three forms of competition here:

- A company vibe codes their own app to replace a SaaS. Great when they only wanted a small chunk of the functionality. - Startups benefitting from AI coding are copying mature SaaS companies and competing on price. - Mature SaaS companies are branching out into each others domains. Notion is doing email. Canva is doing an office suite.

The real story isn't that some enterprise mega corp is going to vibe-code their own Workday.

The real story is that SOME startups made up of one person (or small number of engineers) will do it, and create pricing pressures against Workday, or DocuSign, or other B2B SaaS.

How corporate incentives are aligned will also define the trajectory. The person who is going to take the call whether to go for vibe coded tool or external vendor has to have enough incentive to put this neck on the line.

Imagine this, you are VP of finance. You know you can get a nice tax calculator built quickly using vibe coding, but will you put your neck on the line and say, let's replace the existing vendor and use my vibe coded tool. You might fired if you send a wrong tax report to your auditor.

Let's take another example - VP of sales wants performance report and visuazliation of the sales team. He has 200 BDRs. The daily sales standup depends on this report, team gets yelled at or praised basis this. Now, will this VP be willing to put his neck on the line and say - let's use my vibe coded report and discard the existing SaaS. Even if such a report feels trivial, it is vital for functioning the sales team and hence, it needs to be reliable.

I think vibe coding will work at prototype level - the trust gap is very huge right now to even consider it for internal tools.

And, until vibe coded tools are stress tested enough this trust gap will not be fulfilled. Think about this, why some of the biggest companies in the world still run on softwares built in 2000s.

Anybody who says this doesn't understand build vs buy, and why companies buy in the first place, or they'll selling AI.

there is no saas downturn caused by AI. wall street is just starting to say hang on a minute, why is this SaaS stock trading at a price to earnings ratio of 300?

then the sell-off is attributed to AI because it is far easier to say to shareholders hey we know our company lost half its value but thats actually a good thing because we need to pivot to AI and we're going to spend all our free cash flow on AI software and our stock should totally be trading at 300x earnings again in a few weeks. if you can last another few months as CEO and the fed cuts rates you'll be able to ride it out

of course, the tide is going out on a few dogs. I don't think adobe will become dominant again

you see the same trend with mass-layoffs being blamed on AI. easy way to sell bad news to the shareholders

in 2026, AI and JE are the two reasons for absolutely everything

here's the secret saas can vibe code features too on top of their paid well developed and secured api. they can get off their ass and vibe code a mcp wrapper, so user can use the ai tooling they pay for to interact with their saas. and they'd be called visionary hero of the agentic revolution.

but they don't want to. and they will be replaced, as it's good and well.

It is obvious.

A middle 100-500 heads firm don't need enterprise level SaaS, a vibe coded website will suit them better.

Fundamentally, those workflow/orchestration SaaS needs to answer the question why people should pay you premium while only getting 80% where they want to be.

People have been debating what "real" development is for as long as there have been computers. "That's not real software development, you're not even controlling which registers you use!" "How can you say that's real code when you aren't even managing your own memory!" "That doesn't look like C, must not be code!" and on and on.

At the level of the old adage about whether the horse-drawn buggy-makers are in the buggy business or the transportation business, it's all telling the computer what to do in the context of providing a customized tool that you or others might use. So in this context, a customized Excel spreadsheet counts. And so does a vibe-coded app.

And of course, wringing our hands about what it looks like now totally ignores the fact that it's not going to be like this for more than a year or two at most.

How long until a user can reasonably say to Claude or similar, "I need Bob here to track production at my factory. Lay out a set of tools to do that, and make sure they're layered with help and tutorials so Bob can learn on the job because he doesn't know anything. Don't let him make any mistakes."

That's probably not coming next year, but certainly it's not ten years away.

I wouldn't see it positive that we just need to rethink and offer platforms. As this platforms already exist Azure, AWS, GCP

I think people here need to accept that software is becoming electricity, you get charged when you use it and by how much. You don't pay for a box shaped electricity or purple color electricity, it is just electricity.

For the most part, you can replicate any B2B SaaS product in a spreadsheet. The same reasons why spreadsheets didn't kill B2B SaaS apply to "in house vibe coded SaaS replacements." The original in house apps are (and continue to be) spreadsheets.

Something notable for SaaS which this article doesn't mention is that in some cases the reason to buy rather than make yourself is due to needing to handle a bunch of different regulations which LLMs don't threaten (barring businesses which would rather have lawsuits than pay for a SaaS).

The reason for divergence is actually much simpler. NASDAQ 100 includes data center builders, Morgan Stanley software index doesn't. Stock market is going down across the board if you exclude data center construction.

Previously on HN:

https://news.ycombinator.com/item?id=46268452

> build once, sell the same thing again ad infinitum, and don’t suffer any marginal costs on more sales.

Unless you consider customer acquisition cost. Not considering cost of sales is one of the big mistakes software developer entrepreneurs make.

Remember when businesses ran on cobbled together access databases and vb? It was easier than building something ny prompting an llm.I made a good living just rewriting those things for them when they fell apart.

Build infra heavy saas. Somehow can get through. Llm will get better only, and people start copying every sucessfull platforms.

Slight tangent: what’s the deal with the weird ligatures on that page in the headings?

Maybe things will finally go full circle and people/companies will restart self-hosting their infrastructure instead of farming out everything.

Be a System of Record, not just a Wrapper™ is excellent advice.

The trick is to build stuff that is hard to vibe code

AI isn't killing B2B SaaS. It's killing the service economy. Perhaps, the correct term, technically, is just shrinking it to very very small fraction.

AI is killing this. Millennials are killing that. Gen Z certainly must be killing another thing. And Yarn? It was killing NPM. This nonsense type of title really was made for a world where nuance doesn’t exist.

B2B SaaS is projected to grow over the next decade, not shrink. Just use the LLMs and you’ll be reminded of the value provided by the company selling non-core but important tools for your business.

"The SaaS model was built on a simple premise: we build it once, you pay forever."

I've never seen a SaaS product that fits this description. There are always things to do. Libraries to upgrade, performance bottlenecks to diddle around with, an endless stream of nonsense feature requests from people at the customer who never actually use the product, fun experiments your developers want to try out, and so on.

The hard part in SaaS is to delete code, and that's what you should do, at least some of the time. Either through simplifications, or just outright erasing functionality that very few if any of your customers rely on.

What you should not do is let your customers grow the liability that is code in your production environment, unless your entire product set is designed to handle things like this, e.g. the business models of Salesforce and SAP.

I wouldn't say that AI is killing B2B SaaS, let's analyze the situation: AI is shifting the boundaries of the Build VS Buy decision.

If software is cheaper... building it seems a much better option but... ...the fact that software is cheaper means that SaaS companies will be able to be more competitive with price, offering more features, integrating them much better with the newest agentic tools and frameworks that are getting released.

Sure, the market will adjust, some will be pushed away, others will find businesses that weren't possible before... but we're far away (I hope) from the AGI revolution, don't forget to see this crysis as an opportunity too.

I don't think AI is killing B2B SaaS so much as companies are finally reckoning with the immense costs of SaaS in a markably different environment than when SaaS exploded in popularity, and AI offers an off-ramp to some. Let's break it down camp-by-camp to show you what I mean:

1) The must-haves. These are your email and communication systems, the things you absolutely have to have up and available at all times to do business. While previously self-hosted (Exchange/Sendmail, IRC/Skype/Jabber, CallManager/UCS), the immense costs and complexities of managing systems ultimately built on archaic, monolithic, and otherwise difficult-to-scale technologies meant that SaaS made sense from a cost and a technical perspective. Let's face it, the fact nobody really hosts their own e-mail anymore in favor of Proton/Microsoft/Google/et al shows that self-hosting is the exception here, not the norm - and they're not going anywhere regardless of how bad the economy gets. These are the "housing stock" of business, and there's plenty of cheap stock always available to setup shop in without the need for technical talent.

2) The juggernauts. The, "we can do this ourselves, but the pain will be so immense that we really don't want to". This is the area where early SaaS solutions cornered and exploded in growth (O365, ServiceNow, Google Workspaces), because managing these things yourself - while feasible, even preferable - was just too cheap to pass up having someone else wrangle on your behalf with a reasonable SLA, freeing up your tech talent for all the other stuff. The problem is that once-focused products have become huge behemoths of complex features that most customers neither need nor use on a regular basis, at least after the initial pricey integration. Add in the ease of maintainability and scalability brought by containers or microservices, along with the availability and reliability of public cloud infrastructure, and suddenly there's more businesses re-evaluating their relationships with these products in the face of ever-rising prices. With AI tooling making data exfiltration and integration easier than ever from these sorts of products, I expect businesses to start consolidating into a single source of truth instead of using dozens of specific product suites - but not toppling any outright.

3) The nice-to-haves. The Figmas, the HubSpots, the myriad of niche-function-high-cost SaaS companies out there making up the bulk of the market. Those whose products lack self-hosted alternatives risk having vibe-coded alternatives be "good enough" for an Enterprise looking to slash costs without regard to long-term support or quality; those who compete with self-hosted alternatives are almost certainly cooked, to varying degrees. If AI tooling can crank out content similar in quality to Figma and the company has tech talent to refine it for long-term use, why bother paying for Figma? If AI tooling can crank out a CRUD UI for users that just executes standard REST API calls behind the scenes, then why bother paying for fancy frontends? While it's technically interesting and novel at how these startups solved issues around scaling, or databases, or tenancy, the reality is that a lot of these niche products or services could be handled in-house with a container manager, a Postgres instance, and a mid-level IT person to poke it when things go pear-shaped. The higher per-seat prices of a lot of these services make them ripe for replacement in businesses comfortable with leveraging AI for building solutions, and I expect that number to grow as the tools become more widely available and IT-friendly in terms of security.

Ultimately, the core promise of SaaS to business customers was all the functionality with none of the costs of self-hosting support. Nowadays, many of them have evolved into solutions that are more expensive than self-hosted options, and businesses that have shifted IT into public clouds or container-based systems have realized they can do the same thing for less themselves, at the cost of some UI/UX niceties in the process. Now that we (IT) can crank out integrations with local LLMs with little to no cost, we're finally able to merge datasets into singular pools or services - and I'm not talking about Snowflake or its "big data" ilk so much as just finally getting everything into Salesforce or ServiceNow without having to bring in consultants.

The must-haves and many of the juggernauts will remain - for now. It's the niche players that need to watch their moats.

Maybe the new SaaS is to build vibe coding (aka conversation) into whatever you’re offering.

Vibe coded SaaS is a SaaTA. Throw away.

no. High interest rates and a cautionary view of future economic growth are killing B2B SaaS. Money is no longer free, and so there is a bigger push for cost-cutting rather than growing your buisness with free money.

That’s cool. I’m building a mob programmer.

A link shortener is such an easy thing to code, it's essentially one database table with a redirect. To add to that, there are many open source libraries to implement link shortening, including analytics and stuff. Even then Bitly and Rebrandly have customers (from their website) like Toyota, Cisco, Oracle, Monday.com, New York Times, etc.

Are these companies unable to build a link shortener? It's also so easy to migrate off shortener service. If they can and still choose to use these shortening services, there must be other reason. And that reason is that they simply don't want to. This has nothing to do with AI.

I run a software company and one of the reasons customers say they want to migrate from their homegrown spreadsheet is because the guy who built it left. A freaking spreadsheet!

Such blog posts and probably many comments here are the perfect answer to "Tell me you don't run a real business without telling me you don't run a real business"

Until Claude Code comes with indemnity insurance for HIPAA / GDPR / etc… B2B SaaS is here to stay. You want me to convince my auditor that the vibe-coded in house software handles PII correctly?

Making the audit someone else’s problem is 90% of the ‘buy’ value in ‘build vs buy’

I know this is petty but I stopped reading when I saw the “c-t” ligature in the article headings. Obnoxious and pretentious.