May 2, 2026 | Read online
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The SaaSpocalypse
Is the industry I built my entire career on dying?
I've been sitting with that question for a few weeks now, and I finally put it out on LinkedIn this week. The response confirmed what I was afraid of. I'm not the only one thinking it.
Here's what triggered it.
I saw an article last week about how Thoma Bravo handed Medallia over to its lenders. They bought the company for $6.4 billion in 2021, loaded it with $3 billion in debt, and when the debt payments hit $300 million a year on a company earning $200 million, the math broke. $5.1 billion in equity, wiped out.
This is the second time in 18 months. Vista Equity did the same thing with Pluralsight in 2024. Same playbook. Bought at the peak, buried it in debt, and now it’s gone.
Bloomberg reported there's $46.9 billion in distressed software debt sitting on balance sheets right now. Morgan Stanley flagged that nearly 50% of outstanding software debt is rated B- or lower. They're literally calling it the "SaaSpocalypse."
I've spent the vast majority of my career in SaaS training teams at Salesforce, LinkedIn, Slack, Okta, Box, and hundreds of others. These were companies that defined the category. And I'm watching the model that built all of it come under serious pressure from every direction.
The debt is one problem. The layoffs are another. Every major SaaS company seems to be cutting staff. Companies are being told by their boards to do more with less, and AI is giving them the ability to actually do it (they think). If it does continue, then there’s an inherent death spiral. Fewer seats purchased, fewer people needed to manage those seats, fewer reps needed to sell them. It compounds.
And AI is replacing the per-seat model entirely. Most SaaS companies built their revenue on selling to the user. More people, more licenses, more revenue. AI agents replace seats. When a company can do the work of 10 people with one AI agent, they don't renew 10 licenses. The recurring revenue that the entire SaaS industry was built on stops recurring.
I can see this even in my own business. Now that I know what I can do with Claude Cowork, the likelihood of my ever hiring anybody again is extremely low. And the likelihood of my ever going through a traditional sales process with a rep again is even lower. I can build what I need, connect the tools I want, and run my business from one AI console. I don't need a demo. I don't need a 14-day trial. I don't need a rep walking me through features.
Now I know I’m only a Solopreneur/VSB, so I have a lot more flexibility and far less to worry about related to security and compliance. I can move fast and break things without much risk. However, remember how SaaS started? When it first hit the market, everyone thought it was good for SMBs who couldn't afford on-prem, then it moved upstream quickly. When Salesforce closed Statefarm for $150M, it broke the entire perception of the viability of the “cloud” in the ENT space.
The same thing is going to happen with AI, just a lot faster. This is what scares me.
However, I read another article last week from Citadel Securities that made me feel a little bit better.
Their argument is simple. The technology is moving fast, but adoption is not. The St. Louis Fed tracks how many people actually use AI daily for work, and that number is basically flat. Not spiking or even accelerating. People are experimenting, but most companies haven't fundamentally changed how they operate yet.
Citadel's point is that every major technology follows the same adoption curve. PCs, the internet, and electricity. People predicted mass unemployment every single time, and what actually happened is that the work changed. It didn't disappear. My counter to this is that none of those other technologies moved this fast, but I'm not an economist, so what do I know?
They also make an interesting point about computing costs that gave me the most hope. If everyone tries to automate at the same time, the demand for chips, data centers, and energy goes through the roof, which drives the cost of AI up. At some point, running an AI agent costs more than paying a person to do the work, and that creates a natural ceiling on how fast this all plays out.
The stat that surprised me most is that job postings for software engineers are up 11% year over year. If AI were actually replacing developers right now, you'd expect that number to be going the other direction. And new business applications are at record highs. People aren't sitting around waiting to be replaced. They're starting companies.
So where does that leave me?
I still think the per-seat SaaS model is in serious trouble. Medallia, Pluralsight, $46.9 billion in distressed software debt. That's real, and it's happening right now. But maybe the total meltdown scenario is moving slower than the headlines suggest.
The SaaS companies that make it through the next few years are the ones that stop acting like standalone products and start connecting into the AI platforms their customers are already living in.
Here's a real example. As most of you know, I use Otter.ai (Sponsor) for every meeting I take. It records, transcribes, and summarizes my calls. That's useful on its own. But recently, Otter built an MCP connector that plugs directly into Claude, the AI platform I run my entire business through. Now I don't have to leave Claude to pull up a meeting transcript, search for what a prospect said three weeks ago, or build a follow-up email from the notes. It's all right there inside the tool I'm already working in.
That's the pattern. The SaaS companies that survive aren't going to be the ones with the most features or the best standalone product. They're going to be the ones that become essential data sources and systems of record that plug into whatever AI platform their customer picks. Claude, ChatGPT, Gemini, whatever comes next.
The standalone SaaS application that lives in its own tab and charges per seat is the model that's dying. The SaaS company that has specialized data and knows how to connect it into AI workflows is the one that has a future.
If you're a sales rep in SaaS right now, pay attention. The ground is shifting underneath you. The question isn't whether it's going to change. It's how fast. And the reps who figure out how to sell outcomes instead of seats are going to own the next era.
#MakeItHappen
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