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Here is the latest Digital Storm Newsletter from Dr. Joerg STORM
1. SaaS Is Facing an Identity Crisis
The traditional Software-as-a-Service model is no longer enough. SaaS platforms were built to streamline manual workflows, but in an era dominated by artificial intelligence, these tools are starting to feel outdated. AI doesn’t just support work—it automates and optimizes it, eliminating the need for static user interfaces or step-by-step inputs. This change is threatening the foundations of SaaS, especially those focused on routine, repetitive tasks.
2. The AI Shift Is Happening Fast
There’s been a dramatic drop in SaaS valuations—many stocks have plunged by over 70% since their pandemic-era highs. This isn’t just market correction; it reflects a deeper shift in expectations. AI is introducing a level of intelligence and adaptability that old SaaS platforms can’t compete with. Instead of building rigid dashboards or templated workflows, users now expect software to think, learn, and act dynamically—something only AI-first tools can deliver.
3. The Rise of Agent-as-a-Service (AaaS)
The future of software lies in agents, not apps. AI agents are systems that don’t just respond to commands—they proactively handle tasks, make decisions, and collaborate across tools. This approach redefines the user experience from one of interaction to delegation. SaaS platforms must evolve into agent-driven systems where AI does the heavy lifting, especially for high-frequency, low-value tasks. These agents aren’t plug-ins—they are integral to the core product.
4. Platform Thinking Must Change
Winning in this new environment requires more than just embedding an LLM (Large Language Model) into your app. SaaS companies need to open their platforms for agent integration, allow custom workflows, and ensure secure, data-compliant interactions. Crucially, they must design infrastructure that’s flexible, allowing users and developers to innovate at the edge—creating their own agents, extensions, or automations tailored to their specific needs.
5. The Strategic Advantage of Vertical AI
Generic AI tools may capture early attention, but it’s the vertical-specific AI models—those tailored to industries like legal, healthcare, or finance—that will sustain long-term value. These models are built with domain knowledge, regulatory awareness, and curated datasets. Their depth creates defensibility that horizontal SaaS lacks. This means that future winners will likely be those who go deep rather than broad, becoming irreplaceable in their niches.
6. Implications for SaaS Founders and Investors
The AI pivot demands that SaaS companies move upmarket, shifting focus to complex workflows, strategic users, and high-value decisions. Founders must resist the temptation to chase generalist AI features and instead concentrate on integrated, intelligent systems that solve meaningful problems in specific domains. For investors, this means looking for companies with AI-native foundations, not those retrofitting old platforms with chatbot wrappers.
7. What Comes Next?
The market is entering an Agent-as-a-Service (AaaS) era. Companies that successfully turn their SaaS into adaptive, intelligent platforms will define the future of enterprise software. This will likely lead to a “winner-takes-most” scenario—only a few will master the agent + vertical + platform trifecta, but those who do will dominate their categories. As the pace of AI innovation accelerates, companies that fail to adapt will be quickly left behind.
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The AI Pivot: Why SaaS is Shaking, Paychecks Are Spiking, and Agents Are Eating the Web #116b
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