Mostly Growth

SaaS Is Back… but AI Is Changing the Business Model

Mar 18, 2026
They debate Sequoia’s thesis that companies should sell outcomes, not tools. They weigh which industries are most exposed and where bundled AI-plus-service models could win. They explore AI’s impact on consulting, accounting, support, law, and dev shops. They discuss moats, niche specialization, profitability shifts, and how valuation might change for service-led businesses.
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INSIGHT

Go After People‑Intensive Knowledge Work

  • Best targets are people‑intensive, knowledge work tasks done on computers that rely on specialized expertise.
  • Personal data/privacy is a barrier: firms may need new client engagement letters to run data through LLMs.
ADVICE

Productize Repetitive Work But Keep Humans For Judgment

  • Keep humans in client-facing roles while productizing repeatable work under the hood.
  • Use AI to eliminate junior grunt tasks so senior staff focus on relationship and judgment that customers value.
INSIGHT

AI Improves Utilization And Margins

  • AI raises utilization and scales capacity, converting bench time into margin gains for services firms.
  • Firms can boost utilization (e.g., 78% to 88%), reduce hires, and improve bonuses and margins.
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