Tools built with AI have terrible retention

I've read sometime ago that if you love what you do and do it with all your might - you'll be ok. I found myself repeating these words this february, when 285 billion dollars dissapeared from software stocks in 48 hours and everyone started writing that SaaS is dead.

I run a SaaS company, so I wanted to checked what are the real numbers, and here is the funny part - software spending is not falling, at least yet, actually it grew ~15% this year, to 1.4 trillion dollars. People did not stop paying for software. Also if you would be looking fro mthis perspective, AI native tools grew almost ~100% and traditional SaaS only 8%. Small companies actually cut traditional SaaS spending, so the pie is bigger, but the pieces changed places. That crash in february was not revenue collapsing, it was investors repricing the future in the stock markets and that's a big difference, and most posts you read mix these two up.

Now - another thing which makes me more and more crazy - the vibe coding part. F** real orjsut a bubble? Personally I think both, and I trully believe everyones asking the wrong question.

AI and vibe coding are not only changing the world, this is a new skill coming into our and our childrens lifes, like writing and reading once did. This is my personal opinion appeared while running :D but, look, my favourite quote I repeat too often now - "we all know how to write, but only a fraction of us are writers", and this might be exactly the case with AI and coding. Soon everyone will know how to build software, but only a fraction will build businesses. And this is fine.

The numbers say the same thing by the way. Tools built with AI have terrible retention - median net revenue retention of 48%, and cheap ones under 50 dollars a month are at 32%. Easy to build means easy to replace. And 76% of AI use cases are still bought, not built. Because building was never tech hard part. Maintaining it, securing it, answering the customer when a supplier changes their file format at 11pm - that is the business, and that's the hard part that AI will never change, at least until the buyer is still a human and not an AI.

I use AI every day and I'll be honest with you - I know some parts of it make me dummer, and I accept that. But other parts make you better. The speed, the thinking out of the box, and even the competition. If you never felt you are competing with someone - well, deffinetelly you are now.

So no, SaaS is not dying. If your product is a thin tool anyone can rebuild in a weekend, you were always in trouble, AI just made it obvious. If your product holds real data, real workflow, real industry knowledge - you are fine. Maybe better than fine, because the noise around you is getting cheaper and worse, and the real thing stands out more than ever.

Anyway, thanks for reading and for following me on my PUBlish account. Cheers!

A special thanks to Renata Janulynienė for the great photo.