AI vs. software companies

[patience_and_focus]

15 minutes ago, nsx5200 said:

This is the same problem that teams have when deciding to off-shore development: spend time to formalized requirements/prompts, or spend time to do the actual design/development, with the hidden "requirements" communicated via human interactions(meetings/chats/"culture"/philosophy).  With the off-shore teams, it's difficult to communicate culture and philosophy, so the end-product tend not to mesh as nicely.  AI is an extreme form of off-shoring, with even fewer channels for communicating "culture"/philosophy correctly.  I'm pretty sure this thread will explode if we start going down the rabbit holes of horror off-shore stories.

 

If vibe coding works as marketed, then product managers would be writing the requirements for AI to code, but it seems like the reality is that people w/ formal training in software engineering is still needed to write those requirements for AI coding right now.

Yes, that is a good analogy. However, despite what you correctly point out w.r.t churn during offshore software development, if offshoring was completely worthless then it would have been dead by now, but it is not dead. So there are probably some benefits, maybe not productivity but cost?

[nsx5200]

57 minutes ago, patience_and_focus said:

Yes, that is a good analogy. However, despite what you correctly point out w.r.t churn during offshore software development, if offshoring was completely worthless then it would have been dead by now, but it is not dead. So there are probably some benefits, maybe not productivity but cost?

It's a trade-off.  Quality/time/money, pick two(Project Management Triangle).  It seems like AI coding more or less still obeys that.

 

For throw-away codes/short-lived codes, AI/vibe coding is probably fine.  For longer living code, stability and proper design becomes more important.  Like any tools and problems, things work better when they're matched up properly.

[frommi]

10 hours ago, patience_and_focus said:

Do you feel like the reason for that has more to do with things like cross functional decision making, waiting on feedback (internal or external) to plan next steps that then bleed over to the next sprint, infra blockers (simple things like granting iam permissions but requires signoff), etc?

Sometimes. Getting distracted by details or try out things that are bound to fail also add to that list.

[beerbaron]

8 hours ago, frommi said:

Sometimes. Getting distracted by details or try out things that are bound to fail also add to that list.

Exactly, the cost of software execution went down. However, there is now additional need for upfront weeding out the ideas as those failed trys will go nowhere and put strain on other areas of organization. Example, sales do not have infinite bandwidth to sell new stuff. If new features are not sold and implemented without customer knowing... Why are you doing it.

 

Lots of waste because people want to skip the very essential task of thinking and debating the why and the how.

 

My recommendation to clients i meet that want to start with ai is usually. Identify an operation that is Major pain point within your business and implement POC WITH MEASURES of success before implementation.

[Castanza]

22 minutes ago, beerbaron said:

Exactly, the cost of software execution went down. However, there is now additional need for upfront weeding out the ideas as those failed trys will go nowhere and put strain on other areas of organization. Example, sales do not have infinite bandwidth to sell new stuff. If new features are not sold and implemented without customer knowing... Why are you doing it.

 

Lots of waste because people want to skip the very essential task of thinking and debating the why and the how.

 

My recommendation to clients i meet that want to start with ai is usually. Identify an operation that is Major pain point within your business and implement POC WITH MEASURES of success before implementation.

 

Yup, it's a known fact that too many business decisions creates a lot of drag on underlying performance. I mentioned in another thread, but good operators are going to be more and more important. Just because something can be done, doesn't mean it should be done. This whole AI boom has primarily been pitched from the engineer's perspective (we can do all these things!) but it's hardly been analyzed from the functional business perspective. 

 

General Magic (spin off of Apple in the 90's) had amazing ideas, top tier talent and almost no guardrails on development. It ended with products that were ground breaking. But they were too complicated, had too many features, lacked focus, missed deliverable dates because of complexity etc. There are already dozens of stories coming out of how companies aren't really sure how to effectively use tokens and "ration" them for productivity. Burnings a lot of tokens on rabbit trail ideas that ultimately don't pan out sounds expensive. IMO all AI is really doing is pulling forward the product development cycle while simultaneously increasing the complexity of sound business decisions. I come back to the book Thinking, Fast and Slow by Daniel Kahneman....there is a balance to be had and right now we are all gas.

[Milu]

I think we are getting close to the point where I might hold my nose and buy one or two SAAS stocks. CRM is almost worth a shot at this price. If they can execute well stock could be a bargain, if they don’t then I think the product is sticky enough at large enterprises to stop it from falling down completely. 

[Cod Liver Oil]

Is MSFT a SaaS company? It is trading like one.

[frommi]

It is the largest component of IGV and i believe the whole ETF is shorted regardless of whats in it or at what valuation the stocks are, to buy more semi stocks. That trade will implode sooner or later.

[yesman182]

52 minutes ago, Milu said:

I think we are getting close to the point where I might hold my nose and buy one or two SAAS stocks. CRM is almost worth a shot at this price. If they can execute well stock could be a bargain, if they don’t then I think the product is sticky enough at large enterprises to stop it from falling down completely. 

I think their headless strategy makes sense. I have never used Slack and I don't have AI agents, but I buy the argument that Slack is a great place for co workers to work and manage AI agents and work. I watched a video on CNBC with a ADBE executive yesterday and he said ADBE would be moving towards more headless offerings.  

[thowed]

I've got CSU and NOW for this - fairly confident now there will be winners and losers in software wrt AI.  But bearishness persists.

[Milu]

23 minutes ago, yesman182 said:

I think their headless strategy makes sense. I have never used Slack and I don't have AI agents, but I buy the argument that Slack is a great place for co workers to work and manage AI agents and work. I watched a video on CNBC with a ADBE executive yesterday and he said ADBE would be moving towards more headless offerings.  

The challenge I have with buying Salesforce though is that the only thing I like about it now is that it is so hated by the market and seems like decent value. Everything else such as the leadership, capital allocation skills, constant insider sales of stock historically, large SBC (although that is same for most SAAS businesses). I live in Salesforce every day due to my job configuring it for clients and I can see the sticky nature of it, I just don't really like or trust the leadership that much. 

[Intelligent_Investor]

The market has lost its damn mind with AI...Adobe tanked because AI was gonna replace them due to all their customers going and using AI and then analysts found most Adobe customers don't use AI features, so the stock went down even more because now it's not an AI stock...

[Sweet]

48 minutes ago, Intelligent_Investor said:

The market has lost its damn mind with AI...Adobe tanked because AI was gonna replace them due to all their customers going and using AI and then analysts found most Adobe customers don't use AI features, so the stock went down even more because now it's not an AI stock...

Lol!

[scorpioncapital]

11 hours ago, frommi said:

It is the largest component of IGV and i believe the whole ETF is shorted regardless of whats in it or at what valuation the stocks are, to buy more semi stocks. That trade will implode sooner or later.

 

I noticed several days last month and this month that the semis go down while the saas and hyperscalers go up..it seems already the market sees the see-saw nature of this dynamic. 

[Spekulatius]

12 hours ago, Cod Liver Oil said:

Is MSFT a SaaS company? It is trading like one.

Probably 60% of their revenue and profits are SaaS. The shares would be way lower if it were their sole business.

[Longnose]

I recently listened to a podcast that perfectly captured where we are today: we are currently in the "command line" era of AI. 

Everything is in its infancy and exploratory phase. The technology relies on us forcing static prompts into isolated models, doing the heavy lifting of copy-pasting and workflow coordination ourselves. But the truly interesting phase is going to happen when the infrastructure layer—the chips, power, cooling, and data centers—finally stabilizes.

Once these physical bottlenecks clear, the market value will inevitably migrate upward, splitting into a few distinct waves:

1. The Agentic Orchestration Plane: Autonomous software layers that act as the hands and feet for AI, plugging directly into the deep, messy, legacy systems that actually run global enterprises.

2. Proprietary Data Fabrics: High-performance retrieval-augmented generation (RAG) networks that monetize proprietary, domain-specific data context rather than raw, commoditized computing power.

3. Verticalized AI-Native SaaS: Hyper-specialized software giants scaling up usage and adoption within their own niche verticals, moving from seat-based licenses to full task automation.

There is a investment arbitrage sitting in the market right now. Because Wall Street is looking at this through a clouded window, it is pricing many SaaS giants like dying, low-margin utilities. The market is completely blind to how early this cycle is, and is missing the impending transition of these software platforms profitable, consumption based autonomous execution engines.

 

While the hardware grid is heavily priced in, the data, orchestration, and security layers quite attractive as everyone is chasing the capex in semi's and datacenters.

[Longnose]

On 6/18/2026 at 8:32 AM, yesman182 said:

I think their headless strategy makes sense. I have never used Slack and I don't have AI agents, but I buy the argument that Slack is a great place for co workers to work and manage AI agents and work. I watched a video on CNBC with a ADBE executive yesterday and he said ADBE would be moving towards more headless offerings.  

 

Funny that i have a very large % ADBE position but don't pay for them. Funny enough.  I integrated my AI agent with a MCP for GIMP this week. So now i can tell my agent to edit stuff and It opens GIMP on my computer and starts editing the image there. Instead of just "attempting to regenerate a new image" with nano banana or whatever. 

 

Im 100% confident this is underway with ADBE to where they will make a MCP that is callable via API's to paying customers that charges on a token system that will enable your AI generated image to get cleaned up at the pixel level using their software suite. 

 

There will always be cheap chumps like me using GIMP. But ADBE will remain and it will become standard and more robust within all enterprises.  the freemium offerings are just to ensure that new rising generation of workers continue to stay in and close to the ADBE ecosystem.