MC.57: The New SaaS Driven By AI

Sequoia's latest essay on AI suggests companies will focus on selling work results rather than just software. How does this impact builders and the SaaS industry?

Author

Samuel ROY
October 10, 2024

Hey everyone,

I've read Sequoia Capital's latest essay on AI. Their whole focus is on reasoning and how it will fuel a new wave of companies providing agentic services.

They see a transition from classic SaaS to "Service-as-a-Software", expanding their $350B software market to the multi-trillion-dollar services industry.

Massive.

The new SaaS is about selling outcomes, not seats basically selling work done instead of tools.

The challenge is in building “cognitive architectures” - AI systems thinking and solving tasks like human would.

They cite some companies:

What does this mean for us, builders?

  1. Think verticals: There's a big opportunity in targeting specific industries and workflows.

  2. Focus on outcomes: Don't just build a tool, build a solution that delivers measurable results.

  3. Mimic human thought: Invest time in developing custom cognitive architectures for your specific use case.

  4. Start high-touch: Unlike traditional SaaS, many of these companies are going top-down with high-trust delivery models.

  5. Expand markets: Look for ways your AI solution can make previously expensive services accessible to a wider audience.

This feels like a new cloud computing moment, maybe with even bigger potential. Dozens of billion-dollar companies could emerge in this new SaaS landscape.

I made slides from their essay, including their diagrams. Download them below or check them out on LinkedIn.

Generative AI's Act o1 The Agentic Reasoning Era Begins5.07 MB • PDF File

Cheers,

Sam

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