Buckle up: SaaS Business Models are About to Experience their First Disruption

The $400 billion SaaS industry is about to encounter its first existential threat. An industry of this size is pretty much the definition of an immovable object, and it's about to encounter an irresistible force. The train is rolling, fireworks on the way.

Which companies will survive - or thrive - in the unstoppable era of AI disruption?

Someone recently posted on the Hubspot subreddit r/hubspot that their favorite secret "hack" for using Hubspot was the new Claude Cowork connector that allowed them to issue queries and kickoff tasks in Hubspot (like creating new automations) without directly visiting the Hubspot UI in person at all. That's simply stunning. That transforms these major SaaS apps into mere databases with six-figure price tags.

Our current SaaS CRM, Hubspot (but feel free to insert any other leading CRM), for all its enormous feature-set and equally labyrinthine user interface, is currently deploying its co-pilot agents.

But the fact that folks on Reddit are happy to bypass the UI entirely in favor of Claude agents tells me that Hubspot risks turning into little more than a massive contacts database for these agents to interact with. Is that role worth the $40,000 - $100,000 per year the average company pays to Hubspot? Probably not. How will that play out?

Microsoft is concerned as well

It's not just folks on Reddit. Satya Nadella, Microsoft CEO, feels the same way, including the admission that nobody, including him, logs into Dynamics CRM any more - they just CoPilot to query it. This is a guy whose company drives billions in SaaS revenue with products like Dynamics ERP and CRM. Mr. Nadella may want to scale back the rhetoric, as no software stock has lost more value than Microsoft, deleting $450 billion in value in the last few months since AI Cowork and Agents have become more prevalent.

We see lots of articles written now about how major SaaS companies will adapt to the AI era. Salesforce. Microsoft. Workday. Netsuite. ServiceNow. Sorry, don't agree - it's going to take a f***-ton more than adding AI co-pilots in the sidebar for these companies to keep up with a completely new way of interacting with electronic agents and data.

Sandcastles in a Tsunami

Such advice reminds me of the period 1994-1999 when consultants were telling traditional retailers they needed to launch their first websites to counter Amazon in the dot-com race. This finger-in-the-dyke, evolutionary thinking is like building sandcastles during a tsunami.

How'd that turn out for you, Toys-R-Us, Kmart, Sears, Circuit City, Bed Bath and Beyond?

To stay grounded, I like to keep in mind that all software kinda sucks, and always has. We tolerate it because it's been the best available option up until now.

Software is just the latest evolution for getting work done, having graduated from typewriters and filing cabinets not too long ago, and before that chisels and tablets.

Nobody uses software because they like to. What they want to do is accomplish their work, and SaaS software is currently the lowest-friction path to let them do that.

An intelligent AI layer that can interface with humans and understand human expression will obscure the complexity, eliminate learning curves, and remove manual steps.

Resourceful agents that can reason and think will remove complexity and greatly improve productivity. We are rapidly accelerating toward this agentic AI future and it's so plainly better.

While pen and paper took 1,000 years to get to its pinnacle of efficiency and adoption, this AI revolution is going to do it in under a decade.

And this effect scales exponentially the more complex the business process, creating even more whitespace advantages for agentic AI.

How AI Disrupts the SaaS Business Model

The key difference threatening to disrupt traditional SaaS directly targets the ways SaaS currently creates and delivers business value: rather than waiting for the SaaS to push its latest release, AI can continuously write new software on-demand, as-needed, to accomplish or optimize the task at hand.

That is staggering. Software that writes itself. Let's compare old with what's coming.

The traditional SaaS Value Chain

The current SaaS value chain focuses on regular delivery of new features to address new challenges, delivering value to the customer that earns additional profit for the SaaS company.

That takes the form of Product Roadmaps, Vision Teams, Customer Success, and a boatload of other business processes that SaaS companies spend billions on every year in order to maintain their market share.

That's all coming to an end, and when it does, it's going to feel more like a light switching off than a gradual darkening.

Here's how AI accomplishes the same thing, and you can readily see what's different:

Rented AI writes software that you own. Who needs subscription SaaS any more?

Whoa. One of the core shifts with SaaS was going from "buying" a license to "renting" a SaaS Subscription. This made sense to customers - why hire developers to create software when you could rent it for far less, and get updates for free?

AI completely disrupts this value proposition. There's no more release schedule, no more "Product Roadmap", no more "Release Notes". The whole middle process layer is simply...gone.

On top of that, AI produces license-free assets (at least for now) that you can own and operate with no added fees.

And the software can even be self-improving. An AI agent can be tasked to monitor usage, and the moment a new requirement is observed, deploy a separate AI agent to modify the software, or create new software to address it. The cost is a fraction of before because you've cut out numerous middle-men and -women: product managers, business analysts, software architects, process architects, developers, and QA testers.

You've also cut out major swaths of time, and time is money.

I'll give you a real-world example we just experienced: when my marketing team commissions a new LinkedIn Lead campaign, there's a ton of work to be done on the back end to script how those leads make their way to my CRM and how they're filtered, routed, and processed. That's all SaaS-enabled, but it's still manual work.

Even with the most expensive CRM on the planet, there's still a ton of back-end setup work to ensure the APIs are interfacing properly, that all of the datapoints the LinkedIn lead object contains find a suitable home in our CRM's contact database.

We recently deployed - and can now do the same thing - with a "reasoning" AI agent from Claude Cowork, and it accomplished the same thing by rewriting the API on the fly, testing it, fixing a bug, then restructuring the CRM's Contact data model, and then updating workflows to take advantage of the new fields LinkedIn is offering. All while I simply watch, sipping coffee. (Watching not required, however!)

Take that a step further. Imagine agents that could modify the CRM application itself in real time to suit our needs, with agents that detect and prioritize the "need" automatically.

SaaS 2.0?

This is just getting started, folks. It's no wonder SaaS investors are getting jittery. Joe Reis posted a great article on Substack explaining the opportunity.

Software stocks have taken a beating over the last month (Jan 2026) as investors grow concerned that AI threatens to put certain SaaS vendors out of business.

The downturn is remarkable for analysts in the tech sector who have seen top SaaS companies grow revenues by 20% or more each year, year after year.

Is this signaling the end of SaaS, or the beginning of SaaS in a new wrapper - SaaS 2.0 perhaps? Where the UI, featureset, and data models are continuously fluid, adapting directly to observed user behavior and shifting priorities?

What do you think?