My guess is that SaaS will be around, but it's going to look really different.
Say there's a company that sells you a subscription to an issue tracker. At first, it looks just like any other web-based issue tracker. But, although you won't realize it at first, it's hosted on a Linux VM with a development environment on it. Each customer's app gets built from source.
Then, when you want something changed, you send a message to support. And they just bounce it to a coding agent that edits the source code and rebuilds it.
The sort of customization that enterprises used to pay big bucks for is going to get dramatically cheaper.
(There are technical issues making this safe, but I think they'll be solved.)
Maybe I'm a luddite, but this seems far fetched, to me. I just don't see a path for LLMs to make all kinds of changes to a codebase from non-technical people, correctly. Yes, LLMs can do amazing things, but they still don't have a mental model of what a thing is doing and make all sorts of weird decisions that are not what you want.
I believe LLMs are going to make the bar for a SaaS you would pay for, as a company, higher.
The risk for SaaS isn't that customers will build their own but that the barrier to entry for competitors is lower.
The Chorleywood process created mega bakeries that displaced regular bakeries because they changed the economics. AI is doing the same and fundamentally changing the economics of production. What used to take years and huge teams to build can be built by much smaller teams much faster.
SaaS isn't going to sublimate straight into consumer built tools but the boiling point for competition has gotten a lot lower.
I don’t agree. I think businesses including SaaS are not primarily their tech, but are mostly composed of other functions: sales, marketing, customer success, product management, strategy etc. The value is actually more in these other components than in the code.
This went straight from medieval guilds to the 1920s, but actual bread mass production started in the Victorian era, and people did have a big negative reaction to that. They adulterated bread in ways that poisoned consumers during that period, which was a tad unpopular.
I completely agree that people are vastly undervaluing convenience, reliability and SaaS being essentially a great way to make something “someone else’s problem”.
The count argument would be that building with AI will potentially give you infinite customizability, which is especially attractive if you’ve ever hit a brick wall using a line-of-business SaaS product. It works great until you hit that wall.
But again, I think this counter argument oversells the value of customization. Most users-would-be-builders would happily build a monstrosity that doesn’t even serve themselves well, if you let them. Building good workflows (and therefore good SaaS products) is not nearly as easy or straightforward as it seems.
I believe customization isn't as highly valued by regular people. Sure, when they've hit a wall as you say. But if enough people were hitting that wall the SaaS would've removed it.
What is not outsourced to India or nowadays, Portugal for Europeans/Switzerland?
Working in Switzerland and first Paris, it's always amusing to see the circle of outsourcing and the overall regression of skills and critical thinking in enterprise.
Or the myth that startups have some of the greatest people we working for them, meanwhile, I was a click away to be able to take over the whole Saas platform of an industrial leader, with a few 100b at stake. And their security response team was inexistant.
This is one of the best articles I've seen come across HN lately. You presented a well structured argument, and one I strongly believe in.
I had a conversation with someone the other day, trying to convince them how easy it would be to solve a problem they had by creating a quick program with Claude. They were so computer averse, so used to thinking that coding was some impossible task, that they refused to even try or let me show them.
SaaS isn't dead at all. In fact, I think we may have just entered the golden age
All these arguments ignore that the bread you buy today is not always the bread you’ll get years from now.
Don’t we all know the cycle by now?
1. Company pours money and resources to create good product
2. Good product gets customers and those customers use word of mouth to get product viral and even more customers
3. Eventually the company has to make a profit and in that pursuit, they make the product worse by adding ads, adding paywalls, forcing login or subscription service, dark patterns
I’ve seen it happen with so many products I used that I only use open-source now. And if the feature is small, I just build it myself. In your bread example, open-source is the ultimate cookbook and chefs who understand that cookbook can out cook the best chefs out there.
I might imagine that even this cycle could change, if the resources necessary to support step 1 and step 2 are much lower. Which might mean step 3 isn’t as necessity driven.
Of course, it’s possible other things can drive step 3.
And frontier models are already a study in unusual levels of resources dedicated to step 1.
Unlike most articles that butcher an analogy so badly that you wish they could have just described the concept plainly, this one uses the analogy really well. It carries it from start to finish without overstretching it.
This line captures the essence of the article and is going to stick with me forever:
> SaaS is the bread, not the bread machine.
And yes, SaaS companies that understand that they sell convenience and accountability will be the ones that survive this AI rush. New ones could emerge too.
I would disagree, but before let me acknowledge how well written article is and bread analogy is spot on.
However, author complete discounted open source and ability to spin up open source software that will replicate almost 1:1 what SaaS offers without a pay-to-access requirement.
Why spend thousands on integration with SaaS that you can take open source, vibe code missing features and start using? You say maintenance, but I'd argue that owning your data is more important that costs of maintenance.
Like bread, when you learn and have ability to choose healthier product you never go back to store brought.
No. You should know that most software are developed for business. Free or too cheap is not good for business use. When I earn money or save money by a software, i can pay it to get full support.
Good article. Appreciate the bread (machine) analogy.
One thing to add: software maintenance costs. The build has never been the bottleneck.
The notion that most companies will suddenly institute developers to build all kinds of software inhouse and maintain it is silly. Most companies are not google et al, even in 2026.
The insurance industry built almost everything custom in the 70s and 80s, simply because that was the only option. The more software became commercially available elsewhere the more this effort was pruned back.
Another thing: knowing what to build — another big bottleneck. Most people cannot articulate what they want and even fewer can articulate it at a level that would enable them to build durable software, even with AI. Case in point: the majority of AI-built stuff you see are point solutions or small productivity items, etc. “Systems thinking”, as some people call it, is hard, even for most software engineers.
Yes, you can “rebuild” tools you’ve previously purchased as SaaS but at some point you gotto use your brain to come up with something new. Systems thinking on blank-page challenges is even harder…
Great article. This last year I've been travelling around and have met 2 people running very lucrative vibe coding agencies. They vibe code websites and apps on behalf of people for whom writing prompts is too much mental overhead.
The threat to SaaS is moreso consolidation than AI. Since people value convenience more than anything, having more functionality in one service rather than multiple services will win. For example GitHub integrating more and more code scanning/security functionality rather than having a separate service like Snyk for that.
Convenience is often more important than the traditional price vs quality tradeoff. Water is free. The convenience of bottled water is worth a lot. Apple's "it just works" was marketing gold that recognised the importance of convenience relative to price and performance (something many, many 'computer enthusiasts' never understood).
SaaS will survive. We pay a lot for convenience. You'll never go wrong appealing to laziness ;)
> "the sound of scared SAAS companies screeching in the distance"
Naw, I can see I think the case being made - a lot of people still do things they don't need to, well after they don't need to do them, so SAAS may have a place for a while
I think for the rest of us though, SAAS may want to "pivot" to something else...
Say there's a company that sells you a subscription to an issue tracker. At first, it looks just like any other web-based issue tracker. But, although you won't realize it at first, it's hosted on a Linux VM with a development environment on it. Each customer's app gets built from source.
Then, when you want something changed, you send a message to support. And they just bounce it to a coding agent that edits the source code and rebuilds it.
The sort of customization that enterprises used to pay big bucks for is going to get dramatically cheaper.
(There are technical issues making this safe, but I think they'll be solved.)
I believe LLMs are going to make the bar for a SaaS you would pay for, as a company, higher.
The Chorleywood process created mega bakeries that displaced regular bakeries because they changed the economics. AI is doing the same and fundamentally changing the economics of production. What used to take years and huge teams to build can be built by much smaller teams much faster.
SaaS isn't going to sublimate straight into consumer built tools but the boiling point for competition has gotten a lot lower.
That drove consumers to some curious brands: https://en.wikipedia.org/wiki/Aerated_Bread_Company
Consumers paying attention to how products impact them. No kiddin’.
The count argument would be that building with AI will potentially give you infinite customizability, which is especially attractive if you’ve ever hit a brick wall using a line-of-business SaaS product. It works great until you hit that wall.
But again, I think this counter argument oversells the value of customization. Most users-would-be-builders would happily build a monstrosity that doesn’t even serve themselves well, if you let them. Building good workflows (and therefore good SaaS products) is not nearly as easy or straightforward as it seems.
Working in Switzerland and first Paris, it's always amusing to see the circle of outsourcing and the overall regression of skills and critical thinking in enterprise.
Or the myth that startups have some of the greatest people we working for them, meanwhile, I was a click away to be able to take over the whole Saas platform of an industrial leader, with a few 100b at stake. And their security response team was inexistant.
I had a conversation with someone the other day, trying to convince them how easy it would be to solve a problem they had by creating a quick program with Claude. They were so computer averse, so used to thinking that coding was some impossible task, that they refused to even try or let me show them.
SaaS isn't dead at all. In fact, I think we may have just entered the golden age
Don’t we all know the cycle by now?
1. Company pours money and resources to create good product
2. Good product gets customers and those customers use word of mouth to get product viral and even more customers
3. Eventually the company has to make a profit and in that pursuit, they make the product worse by adding ads, adding paywalls, forcing login or subscription service, dark patterns
I’ve seen it happen with so many products I used that I only use open-source now. And if the feature is small, I just build it myself. In your bread example, open-source is the ultimate cookbook and chefs who understand that cookbook can out cook the best chefs out there.
Of course, it’s possible other things can drive step 3.
And frontier models are already a study in unusual levels of resources dedicated to step 1.
I have relatives who share sourdough starter yeast and make their own bread.
This line captures the essence of the article and is going to stick with me forever:
> SaaS is the bread, not the bread machine.
And yes, SaaS companies that understand that they sell convenience and accountability will be the ones that survive this AI rush. New ones could emerge too.
One thing to add: software maintenance costs. The build has never been the bottleneck.
The notion that most companies will suddenly institute developers to build all kinds of software inhouse and maintain it is silly. Most companies are not google et al, even in 2026.
The insurance industry built almost everything custom in the 70s and 80s, simply because that was the only option. The more software became commercially available elsewhere the more this effort was pruned back.
Another thing: knowing what to build — another big bottleneck. Most people cannot articulate what they want and even fewer can articulate it at a level that would enable them to build durable software, even with AI. Case in point: the majority of AI-built stuff you see are point solutions or small productivity items, etc. “Systems thinking”, as some people call it, is hard, even for most software engineers.
Yes, you can “rebuild” tools you’ve previously purchased as SaaS but at some point you gotto use your brain to come up with something new. Systems thinking on blank-page challenges is even harder…
SaaS will survive. We pay a lot for convenience. You'll never go wrong appealing to laziness ;)
The math has changed for sure, but there is still a large open space in the convenience vs cost equation.
Naw, I can see I think the case being made - a lot of people still do things they don't need to, well after they don't need to do them, so SAAS may have a place for a while
I think for the rest of us though, SAAS may want to "pivot" to something else...
Saas isn't doomed, but it is going to be Commoditized. so you win on price, volume, execution, and cannot simply sell user seats to scale.