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SaaS in, SaaS out: Here’s what’s driving the SaaSpocalypse Dominic-Madori Davis 6:00 AM PST · March 1, 2026 One day not long ago, a founder texted his investor with an update: he was replacing his entire customer service team with Claude Code, an AI tool that can write and deploy software on its own. To Lex Zhao, an investor at One Way Ventures, the message indicated something bigger — the moment when companies like Salesforce stopped being the automatic default.
“The barriers to entry for creating software are so low now thanks to coding agents, that the build versus buy decision is shifting toward build in so many cases,” Zhao told TechCrunch.
The build versus buy shift is only part of the problem. The whole idea of using AI agents instead of people to perform work throws into question the SaaS business model itself. SaaS companies currently price their software per seat — meaning by how many employees log in to use it. “SaaS has long been regarded as one of the most attractive business models due to its highly predictable recurring revenue, immense scalability, and 70-90% gross margins,” Abdul Abdirahman, an investor at the venture firm F-Prime, told TechCrunch.
When one, or a handful, of AI agents can do that work — when employees simply ask their AI of choice to pull the data from the system — that per-seat model starts to break down.
The rapid pace of AI development also means that new tools, like Claude Code or OpenAI’s Codex, can replicate not just the core functions of SaaS products but also the add-on tools a SaaS vendor would sell to grow revenue from existing customers.
On top of that, customers now have the ultimate contract negotiation tool in their pockets: If they don’t like a SaaS vendor’s prices, they can, more easily than ever before, build their own alternative. “Even if they do not take the build route, this creates downward pressure on contracts that SaaS vendors can secure during renewals,” Abdirahman continued.
We saw this as early as late 2024, when Klarna announced that it had ditched Salesforce’s flagship CRM product in favor of its own homegrown AI system. The realization that a growing number of other companies can do the same is spooking public markets, where the stock prices of SaaS giants like Salesforce and Workday have been sliding. In early February, an investor sell-off wiped nearly $1 trillion in market value from software and services stocks, followed by another billion later in the month.
Techcrunch event Disrupt 2026: The tech ecosystem, all in one room Your next round. Your next hire. Your next breakout opportunity. Find it at TechCrunch Disrupt 2026, where 10,000+ founders, investors, and tech leaders gather for three days of 250+ tactical sessions, powerful introductions, and market-defining innovation. Register now to save up to $400. Save up to $300 or 30% to TechCrunch Founder Summit 1,000+ founders and investors come together at TechCrunch Founder Summit 2026 for a full day focused on growth, execution, and real-world scaling. Learn from founders and investors who have shaped the industry. Connect with peers navigating similar growth stages. Walk away with tactics you can apply immediately Offer ends March 13. San Francisco, CA | October 13-15, 2026 REGISTER NOW Experts are calling it the SaaSpocalypse , with one analyst dubbing it FOBO investing — or fear of becoming obsolete .
Yet the venture investors TechCrunch spoke with believe such fears are only temporary. “This isn’t the death of SaaS,” Aaron Holiday, a managing partner at 645 Ventures, told TechCrunch. Rather, it’s the beginning of an old snake shedding its skin, he said.
The public market pattern is best illustrated through Anthropic’s recent product launches. The company released Claude Code for cybersecurity, and related stocks dropped. It released legal tools in Claude Cowork AI, and the stock price of the iShares Expanded Tech-Software Sector ETF — a basket of publicly traded software companies that includes firms like LegalZoom and RELX — also dropped.
In some ways, this was expected, as SaaS companies had long been overvalued, investors said. It also doesn’t help that these companies did the bulk of their growing during the zero-interest-rate era, which has since ended. The cost of doing business rises when the cost of borrowing money increases.
Public market investors typically price SaaS companies by estimating future revenue. But there is no telling whether in one year or five years anyone will be using SaaS products to the extent they once did. That’s why every time a new advanced AI tool launches, SaaS stocks feel a tremor.
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