The traditional competitor for B2B tools was an Excel spreadsheet. In the AI era, it's a simple, version-controlled Markdown file within an IDE. If a SaaS offering for documentation or project management can't provide more value than this highly flexible, interoperable setup, it will lose.
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As AI makes it easy to generate 'good enough' software, a functional product is no longer a moat. The new advantage is creating an experience so delightful that users prefer it over a custom-built alternative. This makes design the primary driver of value, setting premium software apart from the infinitely generated.
In an AI-driven ecosystem, data and content need to be fluidly accessible to various systems and agents. Any SaaS platform that feels like a "walled garden," locking content away, will be rejected by power users. The winning platforms will prioritize open, interoperable access to user data.
Simply offering the latest model is no longer a competitive advantage. True value is created in the system built around the model—the system prompts, tools, and overall scaffolding. This 'harness' is what optimizes a model's performance for specific tasks and delivers a superior user experience.
While generic AIs in tools like Notion are powerful, they struggle to identify the 'source of truth' in an infinite sea of documents. A purpose-built PM tool has a smaller, defined information domain, making it more effective and reliable for specialized tasks.
The long-held belief that a complex codebase provides a durable competitive advantage is becoming obsolete due to AI. As software becomes easier to replicate, defensibility shifts away from the technology itself and back toward classic business moats like network effects, brand reputation, and deep industry integration.
AI is making core software functionality nearly free, creating an existential crisis for traditional SaaS companies. The old model of 90%+ gross margins is disappearing. The future will be dominated by a few large AI players with lower margins, alongside a strategic shift towards monetizing high-value services.
The ease of building applications on top of powerful LLMs will lead companies to create their own custom software instead of buying third-party SaaS products. This shift, combined with the risk of foundation models moving up the stack, signals the end of the traditional SaaS era.
Dylan Field is skeptical that disposable, AI-generated apps will replace complex SaaS products. Real business software must handle countless edge cases, scale with teams, and support shared workflows—a level of complexity and institutional knowledge that today's agents are far from mastering.
To avoid the customization vs. scalability trap, SaaS companies should build a flexible, standard product that users never outgrow, like Lego or Notion. The only areas for customization should be at the edges: building any data source connector (ingestion) or data destination (egress) a client needs.
Users exporting data to build their own spreadsheets isn't a product failure, but a signal they crave control. Products should provide building blocks for users to create bespoke solutions, flipping the traditional model of dictating every feature.
