A lot has been said about the software selloff in the last few weeks. This is an attempt to distill all of that into a framework to predict which companies are vulnerable and which are not.
Very convincing framework. It was interesting to hear Jared Sleeper make the case on Odd Lots that Docusign’s shockingly high head count comes from hidden operational and legal/regulatory complexity that can’t be vibe coded. Trust is also a scale network effect.
I really like the ADP example. I used to work for them in IT audit and compliance. One issue and concern is that there is more to software than just writing some code. The security and compliance aspect and the integrity of the company is a factor that will make some tools unmarketable to smart businesses. The risk is the unsophisticated businesses that uses a poorly implemented third-part tool - the risk is not something people talk about. Vibe coding and letting AI agent run autonomously does not have the foundation safety nets in place. It's going to be a mess and the bad actors are just waiting.
Very convincing framework. It was interesting to hear Jared Sleeper make the case on Odd Lots that Docusign’s shockingly high head count comes from hidden operational and legal/regulatory complexity that can’t be vibe coded. Trust is also a scale network effect.
Interesting - I need to dig more into the Docusign example
I really like the ADP example. I used to work for them in IT audit and compliance. One issue and concern is that there is more to software than just writing some code. The security and compliance aspect and the integrity of the company is a factor that will make some tools unmarketable to smart businesses. The risk is the unsophisticated businesses that uses a poorly implemented third-part tool - the risk is not something people talk about. Vibe coding and letting AI agent run autonomously does not have the foundation safety nets in place. It's going to be a mess and the bad actors are just waiting.
Absolutely. SaaS is the not the code but the business wrapped around it. In most cases the moats that turned them into great businesses still apply.