Comment by hn_throwaway_99
5 hours ago
I think this is pretty spot on. It's already been mentioned a ton before how many of these "we're having layoffs to better utilize AI" stories are really just cover for axing lots of unprofitable projects that were birthed during the ZIRP/early pandemic era.
I think the additional wrinkle with AI is that it's having an impact, just not really in the way these execs are saying. Before ChatGPT, there was lots of speculative investment into SaaS-type products as companies looked for another hit. Now, though, I think there is a general sense that, except for AI, Internet tech (and lots of other tech) is fully mature. This huge amount of investment in "the next big tech" thing (again, ex-AI) is just over, and the transition happened pretty fast. Blockchain, NFTs, the metaverse, Alexa and other voice assistants, yada yada, were all ventures looking for something as big as, say, the rise of mobile, and they all failed and are getting killed basically simultaneously.
I think the scary thing going forward is that, over the past 25-30 years or so, tech provided a huge amount of the average wage growth, at least in the US. Even if AI doesn't result in huge employment reductions due to productivity gains, the number of high quality jobs in the AI space is just a lot smaller than, say, the overall Internet space. Lots of people have commented here how so many of these AI startups are just wrappers around the big models, and even previous hits are looking dicey now than the big model providers are pulling more stuff in house (and I say this as a previous Cursor subscriber who switched to Claude Code).
I'm curious what future batches of YCombinator will look like. Perhaps it's just a failure of my imagination, but it's really hard for me to think of a speculative tech startup that I think could be a big hit, and that's a huge change for me from, say, the 2005-2020 timeframe. Yeah, I can think of some AI ideas, but it's hard for me to think of things beyond "wrapper" projects on one hand and hugely capital intensive projects for training models on the other.
We've seen hackathons where attendees build a SaaS business in a weekend. More than just Startup Weekend validation and a shitty MVP. A pretty-much complete SaaS product. It's a step change.
But this means the market for SaaS products is going to get hit hugely. If you can vibecode up a specific service for your specific requirement in a few days, why bother buying a SaaS product?
And, of course, if you can build a me-too SaaS product that imitates a successful competitor over a weekend, and then price it at 10% of their price, that's going to hit business models.
I think the SaaS startup gravy train is definitely over and done.
Personally, my sense is that there's a lot left to do in batteries + motors + LLMs. The drones in Ukraine could be smarter. Robot companions that can hold a conversation. Voice interfaces for robots generally [0]. Unfortunately, the people making all the batteries, motors, and increasingly the LLMs, are in China. So those of us stuck with idiot governments protecting their fossil-fuel donors are going to miss out on it.
[0] the sketch of two scots in a voice-controlled lift still resonates, though. There's probably still work to do here.
The value in SaaS was never the code, it was the focus on the problem space, the execution, and the ops-included side.
AI makes code "free" as in "free puppy".
Right, there are dozens of open source versions of wikis/task trackers/CRMs/ERPs/whatevers. Just because you can vibecode your way to a bad version of a bunch of SaaS products shouldn't fundamentally change anything. Companies buy SaaS products to make running the thing someone else's problem. It's times like these where I wish we had a functional SEC; I really wonder how much market manipulation is going on.
Sometimes, but I think there are some SaaS products whose business model is really under threat. Look at PagerDuty. Their PE ratio is like 4.4. They have a lot of existing customers but virtually no pricing power now and I imagine getting new business for them is extremely difficult.
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Yeah, agreed, but it was at least part of the moat. Competitors can see the model, the approach to market, etc. They still had to code up a better product.
And part of the problem that the SaaS solves is that "I have this thing that I need to do. I can probably do it in software, but I don't know how. Can I buy that software?". Which is now becoming "Can I get an LLM to do it?" instead.
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The biggest limiting factor is user acquisition. Just because you can build a competitor in a weekend doesn't mean you can easily acquire a user base. it's dam hard to get users even if your product is twice as good and your giving it away for free!
The implied risk isn't more SaaS competitors, it's that B2B SaaS consumers will just code up their own product instead of going with a SaaS vendor.
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There's still enormous potential for technology solutions in the healthcare space. The population in every developed country is getting older and sicker. AI can help a little bit with building those solutions but there are no magic bullets: we still need lots of people grinding away on hard problems.
Perhaps this is too US-centric, but as someone who used to work in health fintech, I strongly disagree.
The US healthcare system is well and truly f'd, but I think 98% of these issue are government and society policy issues. If anything, I see so many companies trying to take advantage of the complete dysfunction in the US healthcare system to be yet another middlemen siphoning money from systemwide inefficiencies.
There's a lot more to healthcare than just fintech. I've been the field for decades and I've never seen such rapid progress before in areas like clinical and administrative interoperability, digital health, software as a medical device, telehealth, clinical decision support, cost transparency, etc. Despite the structural problems with incentives that create that make the financial side so dysfunctional, there has never been a better time to build.
> I think the scary thing going forward is that, over the past 25-30 years or so, tech provided a huge amount of the average wage growth, at least in the US.
This is the thing that keeps me up at night. Tech has allowed a very solid middle class lifestyle for a lot of people. I can't think of another good paying job where someone is self-taught, or went to a 12-month certificate program at their local community college and now has a very good career.
If those jobs disappear, or wage growth is non-existent, I don't know where the next generation will find those jobs.
Just one correction though: Your definition of middle class has to be super wide to call many tech jobs "solid middle class". It's not as if everyone ends up in the billionaire column, most definitions of middle class end with household income at $165k. Many in tech go over with one job. Once a family has two jobs and one is in tech, basically everyone counts as upper middle or above. With two tech jobs in a household, claiming middle class is often denying one's actual status.