Beyond SaaS — Building Startups in the Age of AI

An article we liked from Thought Leader Gigi Levy-Weiss of NFX:

What Comes Next Is Bigger Than SaaS Ever Was

We are no longer deploying software.

We are deploying intelligence.

That’s a conviction founders in Israel and Silicon Valley have been operating on for three years – and the rest of the world is only now catching up. AI doesn’t replace software. It replaces the need for it, because it directly does the work.

Yes, this means the old era of software is probably done. The days of building tools for humans to operate, with large teams of mostly human developers, are dated. But the bigger point isn’t what’s ending – it’s what’s beginning.

When intelligence becomes infrastructure, every industry gets rebuilt around autonomous execution. This is creating a massive opportunity.

Here’s how we see it, and what it means for you:

AI is Bigger Than SaaS Ever Was

The last time we saw a shift like this was the internet in the 1990s. Back then, everyone was debating the fate of “internet companies.” Today, no one uses that phrase. As Intel Chairman Andy Grove put it in 1999:

He was right. What was $200-250B of speculative market cap in the 1990s compounded into an infrastructure layer underpinning roughly one-fifth of world GDP by the 2010s. The internet stopped being an industry and became the foundation for everything else.

AI is the same. If the internet is the connector, AI is the doer. We now have an intelligence that works without human intervention – one that can underpin nearly every human activity, from gaming to drug development to running a small business.

This opportunity is vastly larger than SaaS ever was – it’s far more like the early internet.

Here’s a simple way to see why: the best SaaS platform charges $1,000 per person per year. The person using that software earns $100,000 a year. Software was always capturing the value of that tool – but now AI can capture the labor, too. That’s a 100x shift in what’s up for grabs at the individual level.

Now scale that up: SaaS competes for roughly $1 trillion in global software spend. Global labor is a $50-60 trillion market. AI isn’t a marginal expansion of the SaaS opportunity – it’s a completely different game, with stakes 50x larger. When you stop thinking about replacing software and start thinking about replacing work, the ceiling disappears.

And that’s the opportunity.

You Are Ahead of Your Customer

You are likely slightly ahead of your customer. That gap is both your advantage and your challenge.

The public still doesn’t really “get” this new autonomous world. There’s a reason so many AI labs name their products like…

Read the rest of this article at nfx.com...

Thanks for this article excerpt and its graphics to Gigi Levy-Weiss, Founding Partner at NFX.

Want to share your advice for startup entrepreneurs? Submit a Guest Post here.