Garrick van Buren

The SaaSpocalypse wasn’t caused by AI, but it will be perpetuated by AI.

The narrative is: AI arrived. Revenue stalled. Therefore customers are buying fewer seats because they’re implementing AI.

$300B in market value evaporates.

The narrative has reached the capital markets too. Last quarter, Blue Owl investors requested return of $5.4 billion across two private credit funds, redemption rates of 40.7% and 21.9% respectively. KKR, Apollo, BlackRock followed by invoking their 5%/quarter withdrawal gates. Blue Owl attributed the pressure to “heightened market concerns around AI-related disruption to software companies.”

It’s a vivid and compelling narrative serving everyone involved and is mostly wrong.

Businesses across industries stopped growing headcount three years ago. Here’s the seasonally adjusted, non-farm job openings & hires against interest rates since 2000.

Narrative fallacy (Taleb): the mind’s compulsion to construct causal stories from loosely related events. Strongest under uncertainty, when a vivid explanation is unavailable and the actual cause is diffuse and banal.

Post hoc ergo propter hoc: e.g. “after this, therefore because of this.” It is the fallacy underlying most financial news narratives (“stocks rose on news that…”), most earnings call explanations, and apparently most SaaSpocalypse postmortems.

The non-farm hire rate peaked in early 2022 at the top of the post-COVID snap-back. Then it has steadily, continuously, fallen for three years. In February 2026 it sat at 3.1, nearing the lows of the 2008 financial crisis. This decline was well underway before Claude Code existed (Feb 2025) and before Klarna made headlines ditching Salesforce (Sep 2024).

Recently Fast Company posited SaaSpocalypse a myth, arguing enterprise software is so engrained in thei too deeply to be replaced by general-purpose agents.

The question is not whether AI can replace Salesforce with a homegrown solution because it’s too operationally ensconced.

The question is whether the companies running Salesforce are growing their human sales force and purchasing more seat licenses. The JOLTS data suggests they’re not – and haven’t for nearly 4 years.

Seat-based SaaS revenue is a function of customer headcount. When your customers stop hiring, they also stop buying the follow-on tools and amenities supporting the new employees. Office chairs, laptops, Office365 licenses, etc.

Unfortunately it’s seats that are ensconced. Seats are in the revenue forecast, in the sales quotas, in the board expectations, in the investor guidance. The entire operating system of a enterprise SaaS business is calibrated to a number the company does not control and never did: its customers’ hiring plans.

When hiring grew reliably through the 2010s, this tension was invisible. Seat expansion looked like product-market fit. It was, in part, just a rising labor market expressing itself through software licenses.

Headcount go up?

Many SaaS companies are now pivoting to outcome-based or consumption-based pricing (this was all my 2025 client work). Both models realign pricing with customers’ economics rather than their headcount. A dollar of ARR anchored to customer economics is more durable than a dollar of ARR anchored to a seat count in a contracting labor market. ARR still matters.

This is not a new.

Probably have been this way all along.

The headcount shrinkage has already happened.

Tech layoffs tracked by layoffs.fyi peaked at 264,000 in 2023, then decelerated: 153,000 in 2024, 124,000 in 2025, 41,000 so far in 2026. The acute phase is largely over. As you can see from the graph above, hiring has not rebounded across sectors. What remains is structurally lower hiring floor, because the companies doing the laying off stopped backfilling. Low-fire, low-hire, and no new seat licenses.

Suggesting the Saaspocalypse isn’t today, or in 2026, it’s forward-looking. Not because the SaaS companies have poor fundamentals or shrinking margins, but because their customers, and the US economy overall, stopped growing jobs.

My bet is not that “AI will disrupt SaaS”. My bet, is “companies will get smaller”.

Fewer employees than yesterday.

Quarter after quarter.

Moving forward, yes, some part we can blame on the productivity enhancements of AI. Hell, I’m planning to leverage AI in my business as much as I can ahead of hiring a person.

But, $300B in market value in 2025? No. AI is not that good yet.

The B2B zeitgeist is asserting trust is at an all-time low.

Buyers don’t trust vendors.
Buyers don’t trust marketing.
Buyers don’t trust new anything.

I think it’s a convenient misdiagnosis benefiting everyone.

The “trust crisis” puts the burden on sellers — just build more credibility, just produce more case studies, nurture longer, be more transparent.

An entire colony of sales trainers, advisors, and marketing consultants has organized itself around helping sellers navigate this dearth of buyer trust. If you just get your approach every more perfect, the deals will close.

It reminds me of the résumé optimizers promising jobseekers more interviews if they just tweak the formatting, strengthen the action verbs, optimize for keywords. All seller-side technique applied to a buyer-side disengagement. The hiring side isn’t. No amount of résumé polish changes the fact there’s a hiring freeze even though the job description is still up.

Exact same dynamic.

The buying side just isn’t.

The majority of deals I’ve lost over the past two years haven’t been lost to a competitor. They haven’t been lost on price or credibility. They’ve been lost to: “Nah, we’ve decided not to do this at all.”

Maintaining the status quo isn’t saying “I don’t trust you”, it’s saying “We don’t actually have capacity for this” or “Turns out, we don’t think doing this will be worth it.”

For one company I talked with, it wasn’t lack of budget, nor credibility concerns on my part. It was lack of strategic alignment within their departmental leadership.

A professional services firm wants 30% growth this year but is too busy delivering (awesome!) to draw a strategic roadmap to the goal. No board politics. No bureaucratic layers. The leadership is the decision-maker.

That’s not a trust gap. It’s lack of strategic bandwidth.

Working in the business vs. Working in the business

“Uncertainty” and “Volatility” are often the next scapegoats.

Yes, conditions might change dramatically in the next 90 days. This has been true for the past 5 years, 10 years, 25 years, but every year prior. I had a project back in 2018 around trying to navigate geopolitical uncertainty. CNN’s 24-hour headline news has existed since 1980 and every new headline is terrifying. But at a 12-18 months horizon, it quickly becomes irrelevant noise.

In 2025, U.S. business investment grew nearly 6%, heavily concentrated in data centers and IT infrastructure. According to Harvard economist Jason Furman, excluding those categories, GDP grew at 0.1% annualized in the first half of 2025. Not a typo. Zero point one percent.

“Our economy might just be three AI data centers in a trench coat.” – Rusty Foster

It looks that way because no one else is doing anything.

For, it’s not that AI responses are highly trustworthy. Claude, Gemini, ChatGPT all have warnings about their lack of trustworthiness (“Claude is AI and can make mistakes. Please double-check responses.“). If trust were actually the concern, AI — the least proven, most hallucination-prone, lowest-quality-output category in B2B — would be the last thing getting funded. Instead it’s the first. An MIT study of 300 generative AI initiatives found 95% delivered zero measurable return on $30-40 billion in investment.

Last year, each of my engagements was three weeks from initial call to kickoff. The difference wasn’t trustworthiness. It was whether leadership had a specific, unavoidable, urgent, project. No amount of effort on my part could manufacture it if they didn’t.

• GDP growth of 0.1% outside data centers.
• 86% of B2B buying journeys stalling before a decision.
• Buying committees doubling in size.
• 95% of AI initiatives delivering zero return.

None of this is a trust problem.
All of it is a leadership problem.

In 2025, a record 234 CEOs were swapped out — up 16% year-over-year. Tenures less than 36 months increased 79% year-over-year. A CEO who knows they have 30 months before the board reconsiders them isn’t going to invest in a bold 36 month bet.

Thus the strategic vacuum perpetuates itself.

LLMs will become small enough and cheap enough and most computers powerful enough that they’ll be readily and easily embedded into most software. General purpose LLM providers – OpenAI, Anthropic, etc – will largely exist as research organizations. On a day-to-day basis we’ll interact with LLMs more, but they’ll be run & maintained by the same companies that maintain the software wrapped around the LLMs. LLMs will be invisible,

[In collaboration with Ivan Stegic]

“Context is that which is scarce” – Tyler Cowen

Product companies have an allegiance to the product. 

Service companies have an allegiance to the customer.

Both are legitimate vows. 

Both, unexamined, become traps.

The coastline paradox — the more accurately you measure the coastline, the longer it grows — is the most precise metaphor for this trap.

The closer you get to matching your offering to your customer’s precise shape, the more shape there is to trace. It never bottoms out. Their coastline is infinite.

Too often product leaders are hesitant to even lower their elevation claiming ‘it doesn’t scale’ – despite the competitive advantage waiting in the details.

The customer faces the same question from the other side. 

Before choosing a vendor, someone at the customer has to decide:

Do we want to invest our competitive advantage in this JobToBeDone?

• If yes – let’s get a tailored-fit solution to start and consider building out an internal team.
• If no, we’ll adapt to the undifferentiated product and focus time, energy, and budget elsewhere.

The customer who chooses a product company isn’t settling. They’re making a deliberate choice not to compete on CRM, project management, email clients, calendaring, document management, accounting, or hosting. The customer choosing a service company is betting a custom solution will serve them better. Both are allegiances to a strategic outcome for their organization.

Let’s imagine a customer’s organization as terrain as dramatic as mountainsides and fjords. 

A product company operates at elevation, let’s call it satellite view; coastlines are visible, yet smallest inlets untraced. The higher the elevation, the more customers fit, but only in the most abstract manner. Despite the abstraction, the edges of the product are firm, which makes on-the-ground implementation awkward. Accommodations within the organization will need to be made and the pricing reflects the mismatch. 

A service company descends, and gets closer to the customer’s actual shape from the beginning. The promise: we will tailor to you, as perfectly as your budget will support. Higher price, because every engagement, every organization is unique, and little can be repurposed elsewhere.. 

The trap isn’t in which model is chosen, it’s in unexamined drift away.

Product companies don’t decide to become service companies. They inadvertently drift there, one big logo at a time. First, the product gets built for one prestigious customer’s inlets. Eighteen months later it perfectly fits this one customer and everyone else with increasing awkwardness..The portfolio quietly churns.

Service companies fall into the mirror image. The stated allegiance is to the customer — but the actual allegiance, in practice, is to the ongoing relationship. They seem identical until the desired outcome is achieved. Then they diverge.

Allegiance to the relationship says: Stay, find more to do, trace more coastline.

Allegiance to the outcome says: You’re done. Leave.

Consultant: noun, someone who comes in to fix a problem but ends up becoming part of it.

The service company’s trap is confusing being needed with being effective.

There’s a third allegiance, and it’s the one worth keeping: allegiance to the outcome.

For the product company, it’s answering every anchor customer request with a simple question: Does this serve the outcome we promised the portfolio, or just this one? 

For the service company, it holds the line against indefinite engagement. The practitioner who leaves when the work is done is being faithful to the outcome, not disloyal to the relationship.

Both take discipline.

The competitive advantage for a product company lives in controlled descent, going just a little deeper into the customers’ shape than the competitors; dedicated Customer Success, dedicated account executives, custom onboarding, custom implementation. Deliberately priced. 

The danger is reactive descent, subletting office space from the customer.