Enterprise Software

“But what I've learned is like on the business side, They also don't like it if you don't charge them because they don't know how much it's going to cost one day. They want to know how much it's going to cost one day. You can't sell to a 500 person company and …”

“There's no, you can't take Jason's agent out to a steak dinner to get him to buy your product. It just has to be better.”

“As long as they can demonstrate a path to margin expansion over the course of the next few years, while still growing at these unprecedented levels with very healthy balance sheets, I worry less about gross margins like we did five years ago in traditional ent…”

“So the upside to Vibecode your own payroll or CRM is not particularly high. The downside is essentially unlimited. You know, obviously there's all kinds of sort of compliance implications of not getting things like payroll right. So most enterprise software to…”

“Now, if you need something a bit more integrated and it, and it's a far more technical solution, what I'd highly recommend is do it for a month or two months, charge them for it, and then use that, that fee that you charge them for and credit it back to them i…”

“We'll all get some cost savings out of it and some efficiency gains that will get competed away in price because we're all doing it. And at the end of the day, as long as you don't screw it up, this doesn't change the competitive dynamics. Very much.”

“There's a moment right now to go sell You know, big software again. Right. And to go sell platforms and it's because of this moment. And so I think people need to be studying kind of the 15 years ago models of like how people build this and the ecosystems arou…”

“Which I would even argue and say Replit lovable are not at that level yet, right, for that complexity of software.”

“If you are establishing a 10 year relationship with a vendor in your mind, You want someone that you trust is going to operate well into the future.”

“You're not the right person to see all of those problems. You're also not the right person to get everybody to use this. And so there's just this kind of huge gap between we give everyone a tool that can make stuff, and therefore everyone is going to make new …”

“Slack had a network effect in that One team would use it, and then someone was working with that team, so they would use Slack, and then their team would use it, and then they, so it would kind of spread organically. There were very, very few pieces of enterpr…”

“You never go to a customer. I don't care what you're selling. Okay. I don't care if it's enterprise software. I don't care if it's widgets. I don't care what it is. You never go to a customer and say, give me a percentage of your stuff. You go to a customer an…”

“This is like the great fallacy of enterprise software that you can just sell to the users, and it's like it only ever worked for Slack and one other company. Maybe Notion, but even Notion has capped out.”

“One of the big problems, right, in enterprise software, in a lot of B to B software, is it starts out clean and elegant. There's a bunch of businesses who love the product, and they start serving more customers, and they have more requirements, and they have m…”

“There's this wild underestimation about, like, you could vibe code your way into enterprise software.”

“The universal truth for enterprise software is the most difficult thing to do that happens to be the dumbest is to attempt to just compete head on with an existing category. And by head on, I mean, not just the same category, but doing it the same way. The big…”

“Well, certainly network effects outside of a company are extremely difficult for a bunch of clients and security reasons. But the biggest network effect in enterprise software is inside of a company.”

“So what was happening prior to sort of, you know, you can say, like, The current AI native revolution that we are going through is, it was more visibility. Then came the little bit of analytics, right? Like, you know, people were analyzing, there were dashboar…”

“Right now the narrative seems to be like software is, you know, kaput... But I think that a lot of software will do just fine, or actually even amazing.”

“Agents are different than normal software in that normal enterprise software. You can deploy it, put it on some server and let it run for like five years. And as long as you never touch it just works. Agents don't really work that way. The core thing that you'…”

“I think that the product bar for enterprise is astronomically higher than it used to be, where like you a hundred percent have to be constantly innovating and creating the best product for the end user.”

“Enterprise software sales cycle is like, 18 months if you're lucky. You know, this is always a problem. The enterprise sales cycle is shorter than the venture backed startup funding cycle. Longer, longer, rather longer. Like it takes you longer to get an enter…”

“So I know people aren't going to tear out SAP and replace it with X, Y, Z. Maybe in five, in like three, five, 10 years, yes, that whole estate will look radically different. And all those jobs will have changed, but it will take, you know, two, three, four, f…”

“30% of the private equity industry over the past decade has been devoted to enterprise software.”

“I personally expect the returns from private equity in the ground to be disastrous. Because so much of exposure is to enterprise software, and this does not mean that enterprise software companies are going out of business. Far from it. It means that the prosp…”

“Where again, you were normally constrained by the number of people on these platforms, but now the headless user can be, you know, a hundred or a thousand X the scale of those human users.”

“The biggest issue for 2027 is agent fabric. People are under discussing this. They're all talking about evals and this crap. This is what really matters in the enterprise is agent fabric.”

“The time is clearly over where you design software, where the dump software, where the, that requires the intelligence to sit in front of the computer.”

“So if you think about companies that do something that span multiple departments or are a serious system of record, That is very hard to replicate. They're safe, and they'll, they'll be a part of the future. If you're serving one function, and what you do is n…”

“No one's going to pay a hundred million dollars just for the technology that you can buy off the shelf. They need to understand how they can map this to the needs that they have.”

“If you have a hundred or a thousand times more agents than people, then your software has to be built for agents, and then what is the way that those agents are going to interact with your system? It's going to be through an API or a CLI.”

“Humans have been a bottleneck In tapping the past 25 years of software capabilities.”

“In the AI world is you are not displacing spend. You're not displacing vendor, actually. All you are doing is telling them that we have built something which will allow you to either make your AI work investment Or AI is gonna may help you in either reduce you…”

“Everybody is now saying, let's build first instead of buying first.”

“What I found with my last company is sometimes it was like the junior person who's like day to day deep in the weeds. We did really well with, and then actually when we like skipped one or two levels and went to the top, they also really loved what we were doi…”

“One of our theses is like fintech is probably going to be like the last area that is somewhat maybe disrupted by AI. I think what you'll see is you'll see a collapse in like domestic fintech and enterprise software.”

“There are a number of applications that, you know, on paper sound really interesting, like, oh, yeah, I could just rebuild Slack or you could rebuild Salesforce or could rebuild, you know, X, Y, and Z. I think, you know, the, It's not just the product, it's th…”

“Again, companies are slow. Workflows are slow. Even if the technology is there, it's gonna take, you know, probably years to get there”

“The software's forward, twelve-month P has compressed from 33.1 to 23.2 X. Multiple contraction of 30%, and the valuations are now approaching the twenty-twenty-two levels.”

“No companies wanted to standardize a single vendor. It's really not as scalable, right?”

“There's this whole debate, like, within the software, especially enterprise software world, like, yeah, do you build from the ground up in completely AI native apps, or are these kind of incumbents going to be able to add on AI? I don't think they will, and we…”

“Sometimes it's very, very hard to sell products to people that eliminate their jobs.”

“Multiple trillions of dollars for sure. Whether it's tens or twenties, I don't know the answer. But it is vastly larger than the enterprise software space. That much I can tell you. Both TAMs are very large. Services TAM is much larger today than software TAM.”

“That's a huge one by the time to value, I think is an underrated, underappreciated concept just in general, like less value, but in less time, you know, a lot of times beats massive value in a very long time because you don't get there.”

“For most enterprise software products over time, the rule of thumb that I've learned is that if you have delivered value to 25 customers, you have a very strong product market fit.”

“To build a world-class best of breed product in each of these, it takes time. It takes about two years. Like by the time you say, okay, let's build this thing and you mature it enough that you can sell to our enterprise customer base. It's normally a two year …”

“The defensibility theorem emerges at scale, right? In other words, if you, I do believe what's true in most enterprise businesses, once you become the anointed winner, once a market coalesces and there's two or three people at that point in time, you know, It'…”

“The other kind of journey is I think when there's a new area of technology that's a vacuum, and then people have no idea what to buy, but they're trying to buy something... It's sort of a race. To what becomes the industry standard. And the way to win there is…”

“As you know, Alex, like this technology can work, you know, maybe five times out of 10, seven times, nine times out of 10. But in business, you know, you need that predictability and that assurance that it's not going to mess with your brand. It's not going to…”

“So it was DIY all over the place. And there's a lot of failure in that. You know, it was, it, at first it was like, oh, so cool. Look at what it can do. But again, that repeatability, that trust, that security, the data access, all the things we've talked abou…”

“So that goes along with our thesis of convergence of software, that software will converge ultimately given a long enough period of time. All of your software will be provided by one software provider. I believe one AI provider also.”

“And the reason why this is so important to understand is because the whole business model of software has to change. It has to change.”

“So this is why, this is just lays the foundation for why we're going to see just a massive upgrade cycle in the enterprise.”

“I think it makes a lot of sense for them to push into application layer, and I think they will. In terms of what applications, I mean, generally they'll probably start with applications where it's more consumer prosumer-y because there's, it's just more self-c…”

“15 customers that are referenceable is sort of a magic number for inflecting on growth. So the challenge with those companies is as much, they're very hard to sell those products. It's a lot of missionary selling early on, and so you can't really scale your sa…”

“Because that's not what software ever was. It was never a technology barrier. It was always a business knowledge barrier.”

“There's two things that you can't have at the same time. You can have a fast decision time, or you can have very high stickiness. You can't have both, because enterprises are very aware of the risk of the vendor looking, and so the more critical you are to an …”

“Historically, China's just not been able to build software, at least for, like, the prosumer enterprise market, which is kind of my world. They've just never really been able to do that, and so I think that, you know, their ability to compete at, like, a softw…”

“Like I can build lots of things, but if I'm gonna like scale something to an enterprise level, I'm not gonna do it vibe coding. Because there's a lot of other things that are required on the, in different parts of that system to make it robust, to make it so i…”

“And then enterprise, I think will just become closer to pure usage because basically a scaling fee that grows with your headcount is kind of like incentive disaligned with like most CFOs.”