If you work in SaaS right now, your inbox is full of people telling you the world is ending.
In early February about 300 billion dollars was wiped out from public SaaS stocks valuations.
Yesterday, Block (the parent company of Square, Cash App, Afterpay and others) fired roughly 50% of their 10k+ staff.
So yes, a lot is going to change.
But I think the most important thing to understand is this: the game isn't changing.
The fundamentals of how businesses are built, how money is made, and how competitive advantages are protected have not changed.
What AI is doing is reshuffling the deck on how you execute against those fundamentals — faster and more aggressively than anything we've seen since the internet.
This mini series is about navigating that shift without losing sight of what actually matters.
The impact of this change will be massive, however we are all still playing the same game.
- Find a successful arbitrage
- Focus on improving Acquisition, User Value, Monetization
- Build Defensibility via the 7 Powers
AI's Impact Will Be Larger Than the Internet
Marc Andreessen — who founded Netscape, started A16Z, and sits on the board of Meta — says AI's impact will dwarf the internet. When he says that, it's worth taking seriously.
But "take it seriously" doesn't mean panic. It means understanding what is actually changing — and what isn't.
All Business is Arbitrage. This Doesn't Change
Making money is simple, not easy. All business is arbitrage of some form.
Your company:
- Takes some inputs
- Does something to them
- Sells the output for (hopefully) more than they cost.
In the software world, we find a problem, hire a development team, load them up with caffeine and snacks, and sell recurring subscriptions until we're profitable.
All Arbitrages Shrink With Time
Arbitrages don't last forever.
If there's a way to spend a dollar and get $2–10 back, people find out. The early winners grow big, people notice.
Blogs get written, consultants show up, courses get created, and the ROI compresses.
Building SaaS around important, nuanced problems has been one of the great arbitrages of the last decade.
A Brief History of Arbitrages
Big companies are built when they find these arbitrages, but they don't last forever.
2013–2016: Facebook Ads — CPMs were dirt cheap. Early e-commerce and app companies scaled massively on $0.01–0.05 clicks.
2014–2018: Content SEO / Programmatic SEO — Google was still rewarding volume. Companies like NerdWallet and HubSpot built massive moats by publishing at scale.
2015–2019: Instagram Influencers — Before disclosure rules tightened, micro-influencers drove extraordinary ROAS.
2016–2020: YouTube Ads — Severely underpriced relative to attention.
2017–2021: Podcast Ads — CPMs were low, audiences were highly engaged.
2018–2022: TikTok / Organic Short Video — Massive organic reach in the early algorithm.
2019–2022: Product-Led Growth / Freemium — Slack, Figma, Notion used free tiers to bypass sales cycles.
2022–2024: AI Content + SEO — Short window where AI-generated content ranked before Google's helpful content updates.
2023–present: AI Agents / Workflow Automation — Still early. Building internal tooling and customer-facing AI features is cheap relative to the leverage.
Rules of the Game Are Not Changing. How You Play it Is.
The playbook has always been the same three steps:
- Find an arbitrage
- Get profitable distribution
- Build defensibility to protect it
A useful analogy: when the forward pass was introduced to American football, it changed how the game was played — but not what it takes to win.
AI is the forward pass. The scoreboard is still the scoreboard.
The Short Term Goals: Acquisition, User Value, Monetization
On a week-to-week basis, everything that matters in a software company roughly maps to one of three buckets:
- Acquisition - How do you find users at a sustainable cost?
- User Value - How do you build something they want so they stay around?
- Monetization - How do you capture enough value to fuel the other 2 with profit left over?
Do all three well and you can build real enterprise value.
AI will change how you execute on all three. It will not change their importance, or how they depend on each other.
The Long Term Goals: Defensibility via the 7 Powers
The best definition of "strategy" is how you're going to protect the arbitrage that you have created.
The only real book on strategy is the 7 Powers Framework by Hamilton Helmer.
The core idea is that there are 7 ways of protecting the arbitrage you have from getting competed away. AI will impact some of these massively and some less so.
What's Next
In Part 2, we cover how this changes how you act in the short term to generate profit across Acquisition, User Value, and Monetization.
Originally published on Subscription Index.
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