Inferential

Software stocks just had their worst quarter since the Covid crash. IGV is down 22% from its highs.1 ServiceNow dropped 11% in a day — despite beating earnings for the ninth straight quarter.2 Microsoft shed $360 billion in market cap in 24 hours.2 The narrative explaining all of this: AI agents will kill SaaS. That narrative is mostly wrong. But it’s worth being precise about what’s actually happening, because the real story is more interesting. ...

I don’t know. That’s why I’m writing this. I’ve been building and investing in software long enough to have a healthy distrust of clean narratives. And right now, the AI-is-eating-software narrative is everywhere — delivered with the kind of confidence that usually means someone stopped asking hard questions. The claim goes like this: AI collapses the cost of building software, which destroys the moats, which kills margins, which ends SaaS as we know it. A solo founder can ship in weeks what used to take a team and a year. Why pay for a product when you can build your own? Why pay per seat when an agent just does the work? ...