It seems that current advantages would compound with AI. I.e., if I am making a SaaS for Popsicle stick makers today, why I am disadvantaged with AI vs a new competitor in the space? I guess the hypothesis is the Popsicle stick maker will vibe code all of the software that they need instead. For that, we need significantly better AI than we have today - perhaps something like a 1000X improvement. Basically, this is a world in which non-technical grandparents can vibe code anything that they want. This means, it understands what you want without you being able to articulate it well in the first place.

I don't do tea leaves so I wouldn't commit to that, particularly because I think SAAS was oversold in general even before LLMs came out. But I think the idea that the industry as a whole will shrivel away just isn't feasible, even if there is a correction.

In many cases, it's not a downturn, just a return to reasonable valuations. Other sectors should follow

All of the hype surrounding AI will subside when a SaaS company eventually deploys a moltbot version of their software and the company is driven out of existence due to the chaos that ensues.

I've seen some bad some SaaS that management insists is an integration they need and no one else provides. I can easily see some vibe coded projects replace them.

They will magically realize this when their huge bonuses will be tied to something longer lasting than last quarter/year performance on some very narrow metric (which has nothing to do with sane stuff like adding long term value to some part of the company).

They are not stupid, far from it, most are (very) high functioning sociopaths. And out and up there its everybody for themselves first.

I dont even blame management. I believe most of them are well-aware that much of what is going on right now is pure hype.

However, they dont have a choice. The sentiment of shareholders is that they want their cash (yes it is their cash that managers re-invest on their behalf) to be invested in AI-related projects.

So...... you get what you get, and investors will get what they deserve. But they will still blame the management in the end ;)