Introduction

In 2001, on a billboard, a new, flexible fighter jet symbolizing Salesforce shot down a traditional red biplane symbolizing Oracle, with the bold red title "The end of software."

Back then, Salesforce was growing rapidly, and "no software" was both a marketing gimmick and a clarion call for the SaaS revolution: software should provide services to users through the cloud 24/7.

Today, the once-new force has become the old representative: After Salesforce released its new quarterly financial report, its stock price plummeted nearly 20%. Workday's stock price also experienced its biggest one-day drop since 2016; UiPath's stock price dropped 34% after releasing its financial report; MongoDB's stock price dropped 25% after releasing its financial report.

The apparent reason is that each company's sales growth was below expectations, but everyone knows the real reason: The god of AI liquidation has finally appeared.

According to Sequoia Capital US estimates, GenAI generated approximately $3 billion in total revenue in the year after its emergence, excluding the revenue generated by technology giants and cloud service providers through AI. In contrast, SaaS took nearly 10 years to reach this level.

Comparison of AI and SaaS revenue growth rates, Source: Sequoia Capital US

As the SaaS industry cries out, Chris Paik, the founding partner of Pace Capital, recently wrote an article titled "The End of Software" that went viral on X, adding fuel to the fire.

The author believes: The software industry is really coming to an end. Now majoring in computer science is like choosing journalism in the late 1990s, entering the palace as a eunuch in 1912, or joining the Nationalist Party in 1949...

Just as the Internet era created a vast amount of free UGC, the AI era will soon create a vast amount of free software.

If you observe carefully, you will find that history does not repeat itself, but it can always be surprisingly similar. What can replace Vogue is not another fashion media, but countless internet celebrities; similarly, what can replace Salesforce is not another CRM company, but a series of tools that dynamically meet the same needs and pain points.

Which parts of the article are alarmist, and which are insights? What is the evolutionary direction of SaaS startups? Shidao has compiled and translated the article, and combined authoritative views, trying to provide some valuable thinking.

01 Software Everywhere for Free

First, the author invoked a precedent - the media industry.

Before the advent of the Internet, the media operated in a completely different way from today.

The cost of producing content was very high - you had to hire professionals to create, edit, and distribute content. To cover costs, the media had to make money. Of course, previous consumers were also willing to pay, such as subscribing to newspapers, magazines, buying books, paying for cable TV, and paying per view, etc. A typical representative is Buffett, who is known for his love of reading newspapers. After all, who can't love a predictable subscription business with local monopoly characteristics?

Until the advent of the Internet, at the beginning, the media saw it as a way to reach more audiences and reduce distribution costs. The result was unexpected, UGC flourished, and the Internet not only reduced distribution costs to zero, but also reduced content creation costs to zero.

When content production no longer requires a cost, it no longer needs to make money. This relaxation of economic constraints has triggered a Cambrian explosion - you can publish a photo of a coffee cup and get millions of views or no views at all, and the market clearing price is still met. This gave birth to a vast amount of content that cannot be reasonably consumed.

In this case, the market needs to use some products to attract people's attention and effectively guide consumers through marketing content - UGC platforms were born. As you can see, media companies have been completely impacted, and they have to