ISSUE #262

A new SaaS Weekly Originals just dropped. Once a month, I write a long-form post covering a perspective, growth play, or analysis of an industry.

It seems like everyone and their blog is talking about AI right now.

AI this…AI that.

While I’m not one to toss a hat into the ring amongst “thought leaders,” I will champion a few perspectives.

Beneath the hype and hyperbole, there are two narratives that SaaS founders and operators should care about.

In this latest SaaS Weekly Orginal, we cover:

• Up and to the right: A review of SaaS Weekly stats

• Who’s reading what: The most clicked-on articles last month

• The main menu: How AI is impacting SaaS companies today

Let's dive in!

Ian at SaaS Weekly

RECAP: LAST MONTH’S GROWTH

MOST READ: INDUSTRY ROUNDUPS

🎯 Marketing | The PDF lead magnet is having a midlife crisis
After 20 years of flooding inboxes with e-books, SaaS marketers are pivoting to free mini-tools that actually solve problems. I guess marketers found the lost leader they’ve been looking for. (Link)

🔍 SEO | HubSpot's traffic takes a tumble
The posterchild of inbound marketing saw its blog traffic nosedive from 10M to 2.5M monthly visitors after Google's August core update. Turns out even the company that wrote the book on content marketing isn't immune to search's new "actually be useful" algorithm. (Link)

💰 VC | The crystal ball consensus is in for 2025
20 VCs are placing their bets on AI agents and task-specific models, while 74% of CXOs are ready to open their wallets wider. Hmm, looks like enterprise tech is getting its cake and eating it too this year. (Link)

🤝 Acquisitions | The SaaS shopping spree shows no signs of slowing
Five deals dropped and we’re only three weeks into the year! Cloud companies are keeping their M&A engines running hot, following an uptick in activity at the close of 2024:

• Datadog acquires Quickwit

• ServiceNow acquires Cuein

• Trade Desk acquires Sincerta

MOST READ: GROWTH PLAYS

The unfair advantages framework
Fundamentally, successful GTM strategies emerge from the intersection of two key questions: “where do customers naturally spend time,” and “what unique advantages can you leverage to reach them there?”

The 5-phase framework that grew Outreach from $0 to $230M ARR
As startups scale, the role of sales leadership evolves through distinct phases, each requiring different skills and focus areas. Outreach's 5-phase leadership framework shows how sales leadership must transform to match company growth stages.

The growth matrix: How to use it to guide your SaaS GTM strategy
Most B2B SaaS startups struggle to choose between competing growth opportunities. The Growth Matrix breaks these choices into four strategic buckets, helping founders make deliberate trade-offs instead of spreading resources too thin.

MAIN CONTENT: SAAS WEEKLY ORIGINALS

🦾 Perspective | 7 min read | Ian Ito at SaaS Weekly
How AI is impacting SaaS companies today

Narratives at play

Throughout 2024, the term “AI Agents” has entered the mainstream tech media. While the concept is not new, several narratives have (re)surfaced recently, emphasizing the impact Agentic AI will have on traditional SaaS models.

To put this into perspective, blogs and media outlets mentioning “AI Agents” (or some variation) in the title and “SaaS” (somewhere in the body) have skyrocketed in the past few months.

There are a lot of different perspectives being thrown around. Some views spell the end of the SaaS era, while others call for its evolution. However, two narratives shed light on what’s impactful to know today.

The important callout here is: how AI is indirectly impacting the traditional SaaS model today. Beyond the promise of tomorrow’s efficiency, we’re seeing 1) pricing models shift and 2) verticalization of SaaS layers, both of which follow the push for AI Agents.

Let’s dive into these two narratives in more detail.

Shift to Service-as-a-Software

What’s the scoop? The main argument here is that software applications will transition from “jobs-to-be-done” to a “jobs-done-for-you” model. Instead of having software enable you to complete a task, the software powered by AI Agents will perform the workflow for you.

Traditional SaaS models are often categorized into three layers, each serving a different function.

• Systems of Records (e.g, CRMs like Salesforce) 

• Middleware (e.g., Data Integrators like Mulesoft)

• Systems of Engagement (e.g., Applications like Outreach)

From data organization to orchestration and enablement, a user works across the stack to execute a specific job. However, with AI Agents, the software becomes the workforce to complete tasks from start to finish, manifesting a System of Work layer to the traditional stack.

Users no longer need to navigate complex menus and manage workflows. Instead, they now manage the workforce (software + task execution), most likely through a conversation interface instead of a complex item menu.

Why is this important today? The obvious promise here is efficiency (AI Agents are coming for your job). However, this framing of “paying for a service” has also sparked discussions on a new pricing model.

AI is creating a fundamental shift in the relationship between vendors and customers. Instead of a tax to perform a service, customers just pay for the completed service. (Why pay per seat or consumption when you can pay per “outcome.”)

And we’re already seeing some companies roll out this pricing model today.

The collapse of business applications

What’s the scoop? Back in December, Satya Nadella (CEO of Microsoft) outlined how AI Agents will transform SaaS/ Biz apps. Although he didn’t directly say the “Death of SaaS,” the internet conflated his remarks as such.

From a first principles perspective, Nadella explains that most SaaS apps are CRUD databases with abstracted layers of business logic that users interact with. (Think back to the three layers I listed above.)

In his view, AI Agents will consolidate (or “collapse) the different layers required to complete a task. So instead of having multiple vendors performing functions across the same data, you have one vendor that organizes, enables, and updates the data on behalf of the user – all powered by AI Agents.

Why is this important today? AI Agents are further catalyzing the verticalization of the SaaS stack.

For years, incumbents have acquired different software layers, stitching them together to build an integrated platform. As a result, point solutions have been facing competitive pressure as buyers consolidate their budgets. (Why buy from two vendors when you can just pay one.)

Now with AI Agents in the mix, workflow applications that sit on top of data layers will become obsolete.

Take Salesforce as an example. The company has been very public about its investment in AI, launching Agentforce which allows users to build, customize, and deploy AI Agents.

If you’re a Salesforce customer, you could replace point solutions that enable different workflows built on top of your CRM data. But if you’re a sales rep at Outreach, you might find it difficult to sell to modern GTM teams.

Although Salesforce’s strategy has been studied for years (by Ellison’s Gospel), other incumbents might start adopting a similar approach. HubSpot has already done so with its Breeze Agents.

SaaS companies announcing AI Agents

Since 2023, I’ve been monitoring traditional SaaS companies that have launched Generative AI/ Agentic AI features and products. After the release of ChatGPT at the end of 2022, SaaS companies were quick to ride the media wave of announcements.

Although the press frenzy tapered off going into 2024, I’m seeing a parallel between the “GenAI” and the “AI Agent” wave – a burst of activity at the start of the year.

Here’s a preview of the activity so far.

Developer Tools

• Postman launched an AI agent builder on its API platform to assist developers in creating and managing APIs more effectively.

• Pinecone launched an AI agent-building API to simplify the development of retrieval-augmented generation (RAG) applications.

• Cohere unveiled 'North,' an AI agent workspace designed to streamline AI integration for businesses.

Vertical Tools

• PipelinePRO introduced an AI-powered lead generation system to optimize sales processes.

• Waystar developed a generative AI tool aimed at assisting hospitals in combating insurance denials.

• Oracle introduced AI agents to transform supply chain workflows, enhancing efficiency and decision-making.

More to come on this analysis.