Quick Read November 30, 2025 · 1 min read
The End of SaaS?
AI-native startups still have an uphill battle against SaaS incumbents.
Enterprise AI Thinking Out Loud
SaaS incumbents still have advantages selling to larger enterprises:
(1) Deep integrations: siloed data systems, access control, etc will be difficult to successfully manage in-house. There’s likely still a long-tail of legacy tools that will be hard to displace
(2) Trust. Buyers are more likely to purchase from more established vendors. It’s easier to get funding for SalesForce than a new AI native vendor or in-house buildout. Early adopters will try new shiny tools, but this is a small subset of buyers
(3) ROI - outside vendors with comparative advantage can build and maintain AI systems at lower costs than in-house teams
Where in-house builds replace external vendors:
- Strong data management, few data silos, and fewer legacy tools
- Low regulation; so less incentive to offload risk and maintenance/reporting to outside entity
- Firms with innovation-focused cultures; leaders have long-term incentives to try new vendors even at high risk of failure (vs. short-term focus on AI projects because of hype)