How AI Is Disrupting SaaS Companies

Over the last few months, I’ve had more uneasy conversations with SaaS founders than at any other point in the last decade. Not because growth is impossible. Not because demand disappeared. But because AI has introduced a level of uncertainty that feels new, fast, and personal.

One CEO put it bluntly on a recent SaasRise Mastermind call: “My confidence is a little off. I’m having odd conversations with managers and vendors and customers about if we’re going to get replaced soon.” That comment landed hard, because almost everyone on the call nodded.

AI isn’t just another feature wave. It’s forcing founders to rethink what their product is, why it exists, and how defensible it really is.

The confidence shock no one expected

What’s striking right now is how shaken even experienced CEOs feel. Many of these leaders have lived through cloud, mobile, social, and remote work shifts. This feels different.

Part of it is the speed. AI capabilities are improving monthly, sometimes weekly. Another part is the noise. As one founder said, “So many customers have read so much about AI. I come in and say, here’s our solution. They’re like, no wait, can’t you do all of this much more? And I say, no, that’s fantasy.”

For years, SaaS companies benefited from a dynamic where the product often exceeded customer expectations. Today, that’s flipped. Customers show up expecting magic. When reality falls short of the hype, trust erodes faster than before.

There’s also a quiet fear underneath all of this: if AI can write code, generate content, analyze data, and automate workflows, where does that leave traditional SaaS?

“Why don’t we just build this ourselves?”

One of the most disruptive shifts discussed on the call was how customers are thinking about build versus buy.

AI has dramatically lowered the perceived cost of building internal tools. Teams with even modest engineering resources are asking, “Why are we paying for this point solution when we could spin something up ourselves with AI?”

This is especially dangerous for narrow products. Point solutions are easier to replicate, easier to replace, and easier to rationalize away in a budget review. As one CEO put it, “Point solutions are a dime a dozen. They’re just coming out so quickly.”

Platforms, on the other hand, are aging better in this environment. When your product is deeply embedded, integrated across workflows, and hard to rip out, AI becomes an accelerant rather than a threat.

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The companies leaning in are moving fast

Not every story from the discussion was defensive. Some were aggressively optimistic.

One founder shared how their company went all-in on AI agents, systematically reviewing every user action and asking a simple question: does a human really need to do this? That mindset led to replacing manual steps with AI wherever possible. The result was tangible: roughly $1.5–2 million in new ARR generated in just a few months.

Their framing was clear and pragmatic: “We’re going through every single thing a user logs in and needs to do to get the job done, and then we’re questioning every single requirement.”

That kind of clarity matters. AI doesn’t win by being bolted on. It wins when it meaningfully removes friction.

Development speed has changed the competitive math

Nearly every founder on the call reported massive productivity gains in engineering once AI tools were mandated. Several saw close to 2x output in under a month.

One comment stuck with me: “We just started using Cursor, and some of the developers were at least two times more productive than they were before, and this is only in a month.” That’s not a long-term forecast. That’s immediate impact.

This cuts both ways. If you can rebuild major parts of your stack in weeks instead of years, so can your competitors. Software is becoming cheaper to create, which means competition increases and differentiation erodes faster.

And that flows directly into valuation.

Valuations, competition, and the uncomfortable truth

There was a sober acknowledgment on the call that SaaS multiples are under pressure. Not because AI directly slashes valuations, but because it indirectly changes revenue and margin dynamics.

When more competitors can enter a market faster, growth slows and margins compress. As one founder explained, “Multiples will only really be affected based on revenue and EBITDA changes, but the revenue and EBITDA changes will be caused by all the added competitors taking share from you.”

The important counterpoint is that not everything gets cheaper. Customer acquisition costs haven’t magically declined. Distribution, trust, brand, and go-to-market execution still matter deeply. In many ways, those moats are becoming more important as product advantages shrink.

The mindset shift that matters most

One of the strongest themes from the discussion wasn’t tactical. It was psychological.

Several founders emphasized that AI is a once-per-decade platform shift, on the order of the internet or mobile. How you choose to interpret it matters more than any single tool decision.

As one CEO said, “You can either use AI to make your business and yourself better, or you can be out-competed by it, because someone else is going to make their business and themselves better with it.”

That belief becomes self-fulfilling. Founders who treat AI as existential tend to freeze. Founders who treat it as leverage start experimenting, learning, and compounding.

The practical reality check

Amid all the hype, there was also grounding realism. AI is powerful, but it’s not magic. Much of the economy is still physical. Many workflows are messier than demos suggest. And plenty of AI promises don’t survive contact with real customers.

The founders who seemed most confident weren’t the ones chasing every new model release. They were the ones methodically asking where AI genuinely improves outcomes, where it doesn’t, and how to align it with a durable business model.

The takeaway wasn’t panic. It was responsibility.

AI is disrupting SaaS, yes. But disruption doesn’t automatically mean destruction. For founders willing to rethink assumptions, move faster, and build platforms instead of features, this moment may end up being one of the biggest opportunities of the next decade.

And for everyone else, the risk isn’t that AI replaces you overnight. It’s that someone else uses it better than you do.