Turing founder: why SaaS as we know it is over

This article summarizes an episode of 20VC’s video series featuring Jonathan Siddharth, founder and CEO of Turing.

Turing CEO and founder Jonathan Siddarth / Source: Turing

The time of Software-as-a-Service (SaaS) is ending. Jonathan Siddharth, founder of Turing, argues that generative AI is destroying the foundation of the SaaS business model. Siddharth speaks from experience, having led his AI company to profitability and US$350M Annual Recurring Revenue (ARR) with just US$225M raised.

He predicts companies are moving from buying pre-made apps to generating their own tools. This shift alters how software is built, sold, and used.

Three reasons SaaS will fail

New companies will not use old software plans. The SaaS business faces three threats:

• Build your own tools. Companies will use AI to instantly build their own software, so they won’t need to buy from other companies.
• Platforms will replace apps. AI from big companies will add the features of smaller apps, making those apps useless.
• The end of clicking. Talking to computers will replace the menus and buttons we use today, making current software useless.

Why pay for what you can build in minutes?
The main selling point of many SaaS companies was that they handled the complexity of coding so clients didn’t have to. AI removes that barrier, weakening the justification for monthly fees.

Siddharth states, “SaaS, as we know it, I think is over… I feel like quite a few SaaS apps were built at a time when software was relatively hard to build… now many of these AI applications are incredibly easy to build on top of these LLMs.”

Nowhere to hide from big tech
Even for SaaS companies that survive the change to custom-built tools, another threat is coming. The foundational platforms they build upon are beginning to eat their market share.

Siddharth warns, “The second risk is that you get sonic boomed by the foundation model companies… If the models get better and better there, it’s possible the model is all you need.”

The end of point-and-click
The final problem is the interface itself. The graphical user interface (GUI) was a necessity for a specific era of computing that is now ending.

“I feel like a lot of our software was designed to be used by humans… navigating a [GUI] and clicking around,” He says. “I think that’s going to go away… The [GUI] was designed for a world where humans were using a keyboard and a mouse.”

Technology Is worth less

As software becomes easy to get, the old ways to protect a business are disappearing. Technology itself is no longer the lasting advantage it once was.

• Code is no longer special. AI can write most code. This removes the technical problems that protected existing companies.
• Effort doesn’t matter. It is easy to build on top of AI, meaning years of engineering work can be copied almost instantly.

Established companies face a crisis

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