# What's ACTUALLY Happening in SaaS Right Now Channel: Rob Walling Video: https://www.youtube.com/watch?v=rvAUupZ_Pdc Duration: 9 min Language: English Words: 1737 Transcript page: https://viewrankai.com/tools/youtube-transcript/rvAUupZ_Pdc --- [0:00] Supposedly, AI is going to be the death of SaaS. But, is that what's really happening? Cuz from where I'm sitting, the real story looks a lot different. We're seeing reports that AI-native companies are struggling with massive churn. An MIT study just found that 95% of organizations are getting zero return when they invest in generative AI. And I just saw this firsthand. I run Tiny Seed, an accelerator for B2B SaaS companies. We just reviewed hundreds of applications for our latest batch, and the number of AI-powered apps was [0:29] staggering. You know how many we funded? Three. And the reason we rejected all the others is the single most important lesson for any SaaS founder today. In this video, I want to talk about what I'm actually seeing happening in the world of SaaS, why I don't think AI will ever kill SaaS, and where I think the biggest opportunities are for ambitious bootstrapped founders [music] today. In terms of what I'm seeing across the B2B SaaS landscape, there's a mix of things [0:54] as AI penetrates into this industry. Obviously, current founders who have real SaaS applications with real positioning, real customers, a real moat, integrating AI into their apps is something they should absolutely be doing if it makes sense. You should also be integrating AI into the operations of your company. But, beyond that, a lot of the new apps, I mean a lot of the new apps that I'm seeing, and whether I'm seeing these on social media, applying to Tiny Seed, part of MicroConf, they're these thin SaaS layers over AI. Some people call these wrappers. That term has now become, I guess, a little bit contro- -versial. So, I don't [1:30] necessarily need to use it here. But, the idea here is that if AI is doing 80 or 90% of the work in your application, it's really easy to either copy it or for someone to just do it without your application. If If your SaaS code is not taking a bunch of steps and doing workflow-type things and saving a lot of time for someone, there's not going to be much of a reason for them to buy your product. When you don't have any kind of moat, and as AI progresses every week, every month, every quarter, it's slowly going to just eat away at what you are able to do in your SaaS app. So, if you [2:07] have no moat, the odds of you being overcome by either just 20 other competitors that kind of crop up cuz they build it in a weekend, or the LLMs themselves, the AI providers, them just winding up doing what your app does, the odds are really high that's going to happen. Another thing I see with a lot [2:25] of the AI apps coming out is high churn. And there's a couple reasons for this. I think there are a lot of promises that apps make. You can make a promise in a headline that this is going to save you 100 hours a month, that it's going to write incredible copy better than any copywriter you've had, etc., etc., right? You can make all these promises, but if you make these promises and you don't live up to them, people will churn. That's one of the reasons SaaS is so tough. Another reason there's high churn is a lot of the AI SaaS that I see [2:52] are they're solving a one-time problem. And so, if you only need to solve this problem once, once a quarter, once every 6 months, it's probably not a great idea for a SaaS app. So, when you have 8 or 10% churn, God forbid 15 or 20% churn, this it's not a real business. It's on fire. And even if you're growing really quickly and you made 10 grand this month and 20 grand next month, these are not [3:12] great SaaS businesses in the long run. The last thing I'm seeing before I talk more about why I believe AI won't kill SaaS are cool ideas, but poor execution. This falls a little bit into the bucket of broken promises, but there are a lot of interesting vertical SaaS that I see trying to have AI do the all-in-one thing. I see a lot of this in, let's say, legal or in government, where there's these big documents, reams of text, no one really wants to read them, [3:37] and they want AI to do the work for you. And that's a great idea. It It's a really good idea. But, the execution on these to date has been really mixed, and more often than not, the risk or the hallucinations or the liability is just a bit too much. Now, that's not to say there are not amazing AI SaaS apps being launched. I'm invested in several of them, actually. So, it it does exist, but the vast majority of the apps I see are falling into one of the traps, the pitfalls, that I've mentioned here, and I believe a huge number, the majority, maybe two-thirds majority, 70%, won't [4:12] exist in a year or two. But, beyond that, you're probably wondering why don't I think AI will kill SaaS? We've seen this shift before. We've seen programming languages get better. We've seen visual builders where you can build your own app get better. We've seen no-code come around. And with all of these movements, there was someone saying, "We don't need developers anymore." But, the thing is, I believe we will always need some element of expertise, some human element in software production. Product will always matter. And there's going to be a need for someone to build it. Because just because people can create tools doesn't mean they will. How many dentists are [4:50] whipping up their own dental practice management software using no-code or using AI? They're not. It doesn't make sense. Zapier and Make didn't kill SaaS. No-code didn't kill SaaS. They either augmented it or they took a piece of the SaaS market, right? 10%, 20% of the usage. Even if AI gets dramatically better, it's not going to eliminate the need for the structured interfaces, the clear workflows that we build in SaaS, because businesses optimize for predictability, and usability, and security, not just customization. And if you're running a SaaS today and you're thinking, "Well, AI is going to kill me," why not take your SaaS and add AI to it? Make it SaaS plus AI. That's [5:29] going to be more powerful. So many SaaS businesses succeed because they solve complex, industry-specific problems, where they have to deal with compliance, security, data governance, and first-class integrations. AI is good at fetching information and automating simple workflows, but nowhere in the near term is it going to replace the domain knowledge and the structured [5:49] processes that SaaS companies provide. But, that doesn't mean AI is not going to have an impact on SaaS. So, like no-code, I believe AI will result in the need for fewer broader SaaS products, because people can build nice custom versions for the small utilities or something they want to be extremely tailored to them. Will that kill SaaS? No. Will it maybe take out 5, 10, 15% of the SaaS market? It might. People might want to build their own and host it and update it and maintain it over years and years. That's going to be one of the problems, right? It's not just about building. I also think that there are [6:27] going to be changes to user interfaces, especially with agentic AI, that there's probably going to be more API and MCP interactions, and perhaps a bit less UI interactions in a lot of SaaS apps. The best SaaS companies will integrate AI deeply into their products, making them smarter, faster, and more efficient. Before I dive into where I think bootstrappers should focus their time, attention, and energy, MicroConf Connect is our virtual hallway track, and it's full of vetted founders who are sharing advice, support, and real talk. There's a channel for everything, and likely a post from someone who's had the same struggle as you. Need to figure out [7:02] pricing? We're here to talk about it. Trying to do LinkedIn outreach and getting crickets? We're talking about that, too. You want feedback on your new feature or landing page? Feedback requests is our most active channel. We also have live virtual roundtables, Q&A sessions, and about once a quarter, I do an ask-me-anything. Get all the details [7:19] at microconf.com/connect. To wrap us up, I want to talk about where bootstrappers should focus their time and energy. First thing is to use AI to bolster your business. So, this is in sales and marketing. There's a lot to say here, so I'm obviously not going to do it in this video, but there are so many ways that you can use AI in your internal operations, as well as in growth, sales, and marketing. I actually just did a talk about some of elements of this, about using it internally, at MicroConf Europe here a few weeks ago in Istanbul. Another thing you should be thinking about is when it makes sense [7:52] integrate AI into your product as a feature. Don't just implement AI because you think you need to. You actually want to think about what end results you can get for your customers. The next thing you should focus on are business fundamentals, like solving an actual pain point, doing it well, finding new customers, keeping them from churning. AI on its own isn't magic. This is why we didn't invest in the vast majority of the AI-powered companies that applied to Tiny Seed this fall. On their own, they didn't have a moat, and they [8:21] fundamentally were not great businesses. And adding AI to a fundamentally not great business doesn't really change much. AI is moving fast and will certainly continue to move fast. And that often makes founders feel like they're behind because they aren't sure where to focus their energy. In this next video, I break down the only five ways that I've seen AI be useful in SaaS. I think most founders should focus on category number two. If you found this video helpful, please give it a like, and make sure you subscribe to the [8:48] channel. I'll see you next time. --- About this transcript Read from YouTube's own caption track and laid out by ViewRank AI (https://viewrankai.com). ViewRank AI finds the videos already beating a creator's own average on Instagram, TikTok and YouTube Shorts, transcribes them from the audio itself in more than 60 languages, and turns what worked into new ideas and scripts. 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