AI Generated Apps vs SaaS: Which Moats Still Work in 2026

0:00What I'm going to talk about today is the rate the rise of AI generated apps and what it means for SaaS. And I know there's quite a few people who are here who are asking themselves the same question. You have a SaaS, whether it's small, whether it's medium-sized, whether it's already pretty large, and you're like, "What is it going to be the impact of the basically generated apps on what we do?" So, first let's talk about who I am. As was mentioned, I'm the creator of DN Simple. I've been

0:24running that now for 16 years. I'm also a software developer, and it turns out it's actually a lot longer than that. So, I don't even want to talk about that. But, I do want to talk about why you might want to trust me. So, as you can see here, I have a business that

0:36I've been running for quite a long time. I'm the CEO of that. We've had competitors from all over the place, from the biggest companies like Google, Microsoft, and Amazon, all the way down to the smallest new competitors that are trying to do things to eat our lunch. I'm also starting another business at the same time. So, I'm doing this from the other side as an independent who's also trying to use generative AI to do things. So, I'm both the enemy and the friend. So, why you shouldn't trust me though is because I don't have a crystal ball. I cannot see the future. I have no idea what these companies are going to

1:06do. All right? So, they could enter and as we've seen, the pace has been incredible how fast this stuff has been happening. So, what I tell you now might or might not work in the near future, but I have some fairly high confidence. So, first let's talk about state of the art. So, fact, generative AI makes building software easier than ever before. Coding assistants are helping non-engineers build software, and dark factories are starting to build software with little human involvement. That's happening right now, and it's happening at breakneck speed. So, that's the state of the art. It's happening, it's coming, it's already out there. You have to be

1:40ready for it. A lot of the previous SaaS motes that would have worked before aren't going to work in the same way. But, I want to take a look at them real quick. I have four SaaS motes that some of you or all of you have probably heard about. The first is network effects. So, that means that the more people that can use your software together and connect together, the more value they get out of it. The second is proprietary data and knowledge. That means the data and knowledge that you have inside your systems is where the value is. The third is deep workflow integration. So, that's

2:09your software works with other software and other systems to be able to make things work smoother and better for your customers. And finally, one of the previous SaaS moats was high switching cost. Once you've invested time to put your data and energy into a SaaS, it's kind of hard to leave. lot of SaaS's capitalize on that to keep you from

2:27leaving. But not all those are defensible in this new environment. So, for example, features used to be something that would set SaaS apart. They would build features that nobody else had. Uh they would do the high switching clock costs and they'd have the integration. Those aren't defensible anymore. Especially the feature side because it takes less and less time to put out features for software. So, that's why you're you're good If you haven't seen it yet or if you haven't experienced yet inside your SaaS, you will probably start building and releasing features faster than you had before once you start adopting the generative AI tools for software

3:00development. But high switching costs are no longer there because you can use those same tools to help guide you and even execute leaving one provider to go to another provider. Same with integrations. So, this one I'm a little sketchy on. I'm not 100% sure because integrations are still really difficult because change is happening at a breakneck speed also at the places where you integrate with. So, now you have to deal with that as well. But generally, I don't think those are defensible anymore. So, what moats are still viable? So, the first one that I want to talk about is is is collaboration. So, this is one of the

3:34areas where you should probably focus. So, software where value grows as human collaboration or agent collaboration grows is where there is more value. Why is that? Because it's that network effect. The network effect is still real. Interconnected systems are something that's that somebody that's generating an app for their own use or inside of their business, they're not looking for network effects. They they don't need network effects because they're trying to solve one single problem. But as a SaaS, you do need to look for network effects in places where

4:03collaboration helps. The second and thing I want to talk about is regulated environments. So I I've spoken to a lot of SaaS founders over the years here at MicroConf, and I know a lot of you are niched into regulated environment areas, whether those are things that require HIPAA compliance, whether those things that are required very specific knowledge about some industry around safety, uh things like that. That's actually a really good space to continue working in. Why? Because generated apps are going to be really hard to live in these regulated environments because they're going to be done in a way that's sort of chaotic and random. And regulation and

4:35randomness do not go well together. So this is the second area where I'd say if you're building a SaaS and you're looking for a niche, keep that keep your mind open to that. Hey, Rob Walling here. If you're watching this and thinking, I wish I could be in the room for talks like this, you can and you should. So much of the magic at our events happens in the hallway track. That's where you connect with two to 300 like-minded founders who are trying to solve many of the same problems you are. I hope you'll join us at our next event. Head to microconf.com/events to grab your ticket. Our next one is in

5:08Iceland in September of 2026, and then we'll be in Austin in April of 2027. The third thing I want to talk about, which isn't really an environment, is operational excellence. Uh so when I talk about this, I talk about about it from the from the engineering side of operational excellence. As more code is produced by generative AI, the quality of that code will

5:32necessarily go down. It's inevitable. There will not be as high quality code. So more code will be produced. Pressure is going to shift from the development of the code to the operations of those codes. So the better that you can be inside of your organization with operational excellence, especially technical excellence, the better chance you will have inside of your SaaS company to survive because frankly, people are going to be using these one-off apps and a lot of them are going to suck really, really bad. They're going to do the job, but they're going to be worse and they're going to break more often than anything that they've

6:05ever used before. So, they're going to be looking for cases where operational excellence is still in place. Another thing that I want to talk about and this is the final one is I want to talk about internet infrastructure. So, um CapEx is still a moat. So, that's capital expenditures. It's still if you if it costs money to do what you do, so in other words, money that not everybody else has to invest, you have a moat still. So, I'll take DNsimple as an example. We work in a world where DNS has a very specific design that requires servers all over the world. That's a CapEx expense that we have to to do in

6:38order to make it work at the scale that we work at. And even at a small scale, because your customers are any anywhere in the world, it's a it's basically a factor that restricts people from entering into our space. So, the areas of internet infrastructure, which is going to be necessary and that's hosting. Uh I've met folks here who do small hosting businesses, they're very specialized. All of the areas around uh around all kinds of internet infrastructure, IP address management, things like that, those are still areas that are super open. And if you need to have operational excellence as well, so

7:07those two moats work well together. So, those are the four things I want to talk about. I have to keep this short. I want to give you a few key takeaways. So, there's likely going to be a bifurcation of SaaS products. Some products will survive and others will die. It's essentially business as usual. This happens all the time. That's not going to change. Not every SaaS is going to be successful, but some will be very successful. Founders that execute success that effectively execute over and over again, those are the ones going to be able to succeed. So, a lot of this comes back to you being able to execute

7:38successfully. Um wide coded apps, they're going to be built. Uh they're going to but for non-collaborative, non-regulated, non-infrastructure projects, um if one person or a very small group of individuals do the work, then they'll probably use in-house software eventually to do that thing. But as you get the other network effects, that's there's going to be more likelihood that they're going to use SaaS. So, what I want to leave you with is SaaS is not going to die. Don't worry, there's been a lot of stuff and I'll show you a

8:07few articles in a second about that. It's not going to die. Um it's going to change, all right? Uh SaaS existed before humans needed graphic tools operate software generated AI removes the need for those tools, therefore AI becomes the application layer, SaaS becomes the infrastructure. This is a quote from an article. Um and so that's the robot overlords point of view. Um and I like this one. We'll see niche software being used and produced, but who's going to make the software? It seems like it'll still be the same firms. So, a lot of you have already built and invested time to make SaaS software. You're going to be okay. The

8:39economics are going to change. Uh the cost of creating code is going to drop, but the cost of creating good systems is going to increase. And the cost of appearing in front of buyers at the right moment is also going to increase. So, these are factors that you need to think about. Where can I read more? So, this QR code leads to a page where I put up four articles uh from Forbes, Fortune, uh Bain, which is a report they did in 2025, and also a link to Anthropic's analysis, yearly analysis of

9:05economic impact uh of Anthropic's work. Uh so, have a look at that. Um and then finally, I want to close out with this QR code. This QR code will get you a special link to a DNSimple page where I'm going to give you a free domain. No strings attached. You got to come in to DNSimple, try it out. If you're If you're already a customer, you can use it as well. It's good for a .com, a .ai, or a .io domain. So, all of you here today have access to this code. Uh feel free to give it a try at your own

9:33discretion. And I am done with my talk. If I have 1 minute left, if we have time for questions, I think I could probably do one question. How do you think outcome-based pricing affects these changes that we're seeing in SaaS? Sorry, what kind of pricing? Outcome-based as opposed to per seat or usage. Um well, I mean, there's there's no doubt that the way that tokens cost is going to have an impact on how at least that functionality is going to change inside of our SaaS application. So, I think if you have the ability to introduce outcome pricing, uh you may as well start experimenting with it because

10:09there's clearly evidence that it's going to it's going to be used. Like you look at how Anthropic and Open AI are billing for this stuff. But, don't forget that Anthropic also charges you a subscription fee. So, it's both. They can work together. You just have to figure out where the right points are to use each one of those. So, that's my

10:26take on it. Thank you. Thank you. [applause] I've been running MicroConf for more than a decade, and the thing I hear from attendees more than anything else is I wish I'd come sooner. Not because of any single talk or tactic, but because they finally found their people. Founders who get it. Founders who are building the same way they are. At our events, it's not just about the talks. In Portland, we organized waterfall hikes, food tours, happy hours, real time with other founders outside the sessions. And those relationships don't end when the event does. They turn into the people you text when something breaks or when something

11:01finally works. If you've been thinking about coming, I hope you'll join us in Iceland and Austin. Get your tickets at microconf.com/events. If you got something out of that talk, make sure you hit subscribe. We're putting out more of these every week. And that wasn't the only great talk from Portland. Go watch this one next.