Baker argues SaaS companies are repeating brick-and-mortar retailers' mistake by rejecting AI due to lower margins.
“Well, I think that application SaaS companies are making the exact same mistake that brick and mortar retailers did with e commerce.”
Baker argues SaaS companies are repeating brick-and-mortar retailers' mistake by rejecting lower-margin AI business.
“I think that application SaaS companies are making the exact same mistake that brick and mortar retailers did with e commerce.”
Baker notes AI companies generate cash earlier than SaaS despite lower margins due to fewer employees.
“The crazy thing is because of those efficiency gains, they're generating cash way earlier than SaaS companies did historically, but they're generating cash earlier, not because they have high gross margins, but because they have very few human employees.”
Baker says AI companies generate cash earlier than SaaS despite lower margins because they have very few human employees.
“And it's just tragic to watch all of these companies. Like you want to have an agent, It's never going to succeed.”
Baker cites analysis showing compute margins, quantity, and inference margins all rising simultaneously, driving lab acceleration.
“The amount of compute is going up and inference margins going up. And if you multiply those three, that's how you're getting this crazy acceleration into some of the labs plus open source,”