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.

The primary economic incentive driving AI development is not replacing software, but automating the vastly larger human labor market. This includes high-skill jobs like accountants, lawyers, and auditors, representing a multi-trillion dollar opportunity that dwarfs the SaaS industry and dictates where investment will flow.

When asked if AI commoditizes software, Bravo argues that durable moats aren't just code, which can be replicated. They are the deep understanding of customer processes and the ability to service them. This involves re-engineering organizations, not just deploying a product.

As AI and no-code tools make software easier to build, technological advantage is no longer a defensible moat. The most successful companies now win through unique distribution advantages, such as founder-led content or deep community building. Go-to-market strategy has surpassed product as the key differentiator.

SaaS companies serving SMBs in non-tech industries can create a new revenue stream by offering a managed service—using humans-in-the-loop but framed as an "AI boost"—to run marketing campaigns for them. This provides immense value and captures more of the customer's budget.

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.

Previously, building 'just a feature' was a flawed strategy. Now, an AI feature that replaces a human role (e.g., a receptionist) can command a high enough price to be a viable company wedge, even before it becomes a full product.

As AI makes it incredibly easy to build products, the market will be flooded with options. The critical, differentiating skill will no longer be technical execution but human judgment: deciding *what* should exist, which features matter, and the right distribution strategy. Synthesizing these elements is where future value lies.

Contrary to the belief that distribution is the new moat, the crucial differentiator in AI is talent. Building a truly exceptional AI product is incredibly nuanced and complex, requiring a rare skill set. The scarcity of people who can build off models in an intelligent, tasteful way is the real technological moat, not just access to data or customers.