Good News: AI Will Eat Application Software

• SaaS ETFs down 30%, Salesforce/Adobe/Intuit/ServiceNow off 25-30% since Jan 2026.
• Bears are wrong: code was never the moat — moats were always elsewhere.
• Seven Helmer moats re-rated: process power and proprietary data strengthen; switching costs weaken.
  • Harvey’s embedded workflow knowledge can’t be replicated by raw intelligence.
  • Bloomberg, Abridge, VLex: proprietary data compounds with better AI.
• Network effects strengthen — Salesforce, Figma, Harvey, Hebbia exhibit same dynamics.
• Counterpositioning creates new winners: Decagon per-conversation vs. Zendesk per-seat.
  • Same Netflix-vs-Blockbuster pattern — incumbents can’t match without destroying margins.
• “World is still short software” — cheaper code expands TAM, doesn’t shrink it.
  • Previously uneconomical segments become viable; “too hard” categories now feasible.
• Losers: thin wrappers around commodity LLM calls with no data or workflow moat.

Alex Immerman and Santiago Rodriguez (a16z Growth) · 2026-03-02 · Read on a16z.com