So is AI truly disrupting every category in SaaS and business software? We’ll see.
It’s clearly radically disrupted many categories at least on one level — it’s created 1000s of new competitors. Fueled in part by billions and billions of venture capital flowing into AI. And 1000s of entrepreneurs excited to use AI to remake existing categories.
It was interesting to see Elias Torres, co-founder of Drift, a new AI for Customer Success startup (congrats!!) be described by Sequoia as having no competitors:
No competitors? Maybe. I don’t know if Gainsight, ChurnZero, Vitally, etc. would agree.
But from a VC perspective, there likely is no prominent AI-native, AI-first Customer Success platform.
And I see this just everywhere. This week I was at a board meeting of a SaaStr Fund portfolio company crossing $100m ARR. The corporate VC on the board asked, “You’re #1 in your market. So what’s your approach going to be versus the 100 AI-native competitors?”
It’s not necessarily bad to have 100s of new competitors, almost overnight. But it can be stressful 🙂 It will push everyone to do better, and do more. Today is the era of Hyperfunctional SaaS.
But it’s amazing how even sleepy industries that had few competitors and almost no VC interest pre-AI now have blossomed into some of the most competitive of all:
- When I led the seed round in Algolia, a search API, in 2014, it had basically one competitor and search was out of fashion. No one understood why we were making this investment. Now search is one of the hottest things in the AI world.
- When I led the first VC round in Talkdesk in 2014, no one wanted to invest in a call center. See also Gorgias in 2018 in ecommerce contact center was an area of zero interest to most. Today, there are hundreds of voice agents and AI call center agents, and Talkdesk is an AI-first leader.
- When I co-led the first VC round in Salesloft in 2015, no one wanted to invest in sales tools. And in the end, it seemed like a race between 2 leaders, Salesloft and Outreach. Fast forward to today, and 100s of AI tools just for SDRs now exist. 100s and 100s. And everyone seemingly wants to invest in AI sales tools.
- Legal was literally a “No Invest” space pre-AI when I was the first investor in Logikcull. Now, every VC is scrambling to build AI tools for lawyers. Even though they are incredibly hard to sell to.
There are so many other examples. CRM seemed like a “done” category. Now there are dozens of AI-first CRM start-ups. Customer Success was seen as a “done” category as well.
AI has lead to an explosion of creativity, of functionality, and of automation. It’s wonderful, and it truly is just getting going.
It’s also lead to an explosion of competition in SaaS like I’ve never seen before in my career. In some ways, it’s almost better to be investing in categories that it’s less obvious AI can disrupt 😉
Step up, or step aside. Your NRR may carry you for a while. But they’re coming for you.
(image from here)
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Jason Lemkin, Khareem Sudlow
