The SaaS-pocalypse is here.
It isn't just a headline. It is a math problem presenting a real risk to startups.
If your revenue model relies on renting a login for $100/month so a human can work 10% faster, you are chasing a dying model.
Here is the reality check.
📉 The Market Signal
Nick Evans (Polar Capital) beat 99% of peers last year. How? He dumped his software stocks.
He sold Salesforce, Adobe, and HubSpot. His thesis? "Application software faces an existential threat". If AI writes code for free, clients will build internal tools rather than rent yours.
These incumbents aren't disappearing overnight. But stagnant growth will crush the valuations of SaaS startups that fail to adapt.
📉 The VC Signal
The private markets are already moving. PitchBook’s latest note warns VCs explicitly: "The error of the 2025 vintage will be over-indexing on wrappers."
Smart capital has stopped funding "workflow software" and started funding "automated labor."
💰 The Economic Shift
PitchBook calls this the shift from SaaS (Software as a Service) to SaS (Service as Software).
The Old Math (SaaS):
- Charge $1,200/year/seat.
- Sell to IT budgets.
- Value: "Efficiency" (You are betting on bloat)
The New Math (SaS):
- Charge $10,000/year/outcome.
- Sell to Payroll budgets.
- Value: "Replacement"
The 2021 playbook will kill your startup in 2026. Here is your new roadmap:
1️⃣ Kill the Dashboard
PitchBook is explicit: "Do not build a dashboard".
Time-in-app is now a churn signal. If a human has to log in and click buttons, you have failed. You must build "invisible workers".
2️⃣ Attack the Payroll Budget
IT budgets are tapped. The opportunity is the "Labor TAM".
Do not pitch a faster paralegal. Pitch a digital one that costs 10% of the salary and works 24/7.
3️⃣ Own the Data, Not the UI
Your interface is no longer a moat.
Benedict Evans argues that software is just "stored process." But AI generates process on the fly. This means your customer's engineering team can rebuild your "process" in a weekend.
The only moat left is proprietary data. If you are just a "thin wrapper" without your own System of Record, you are temporary.
🛑 Stop building tools for humans.
👉 Start building agents that do the work.
Why? Because tools are a cost center. Agents are a replacement for labor.
In 2026, you don't get paid for the software you ship. You get paid for the payroll you save.
This sounds dystopian. We are talking about real jobs. But as a founder, you do not choose the macro environment; you only choose how to navigate it.
The labor market is undergoing a painful correction. You cannot stop it by running an inefficient business. Your role as a founder is to build a company that survives and thrives throughout the transition.
Sources & Further Reading
- PitchBook: Q1 2026 Analyst Note: SaaS is Dead, Long Live SaS
- Bloomberg: Fund Beating 99% of Peers Sees Few Software Firms Surviving AI
- Bloomberg: Traders Dump Software Stocks as AI Fears Take Hold
- Stratechery: An Interview with Benedict Evans About AI and Software
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