Baker challenges the notion of truly recurring revenue, noting software was only 7-10% of IT spend in 2008-09.
“A lot of people are baselining off what happened in 'eight, 'nine. And I think that is dangerous because in 'eight, 'nine software was seven to 10 of IT spend.”
Baker references Robert Smith's claim that software is better than first lien debt.
“Robert Smith is the CEO of Vista Equity Partners, brilliant man. And he famously said software is better than first lien debt.”
Baker notes software is now 30% of IT spend, or 50% including cloud, versus 7-10% in 2008-09.
“And today it's roughly 30% excluding spending on the big cloud hyperscale infrastructures and service companies like Azure, Amazon web services, and Google GCP.”
Baker argues software at 30% of IT spend today versus 7-10% in 2008-09 means it will get cut.
“And I think that is dangerous because in 'eight, 'nine software was seven to 10 of IT spend. And today it's roughly 30% excluding spending on the big cloud hyperscale infrastructures”
Baker reports small businesses are cutting software bills 30-50% in an hour by simply asking vendors.
“In the last two days, lots of friends have come to me and said, Hey, I told my brother, my sister, my mom, my dad, my uncle, my aunt, my friend who has a small business, that story, they did the same thing and they cut their software bill 30 to 50% in an hour.”
Baker recounts how a dentist cut her software bill in half in one hour by threatening to switch vendors.
“He said, tell Gavin exactly what you just told me. And his sister is a dentist and obviously she's grappling with how to run her practice.”
Baker recounts a dentist cutting her software bill in half in one hour with zero pushback.
“In one hour, she cut her software bill in half. One hour, she said there was zero pushback. And I've been telling people this story.”
Baker reports a dentist cut her software bill in half in one hour with zero pushback.
“In one hour, she cut her software bill in half. One hour, she said there was zero pushback.”
Baker argues AI is now eating software, extending Andreessen's famous thesis.
“Marc Andreessen wrote this op ed, whatever it was, ten years ago about how software is eating the world. Now AI is eating software.”
Baker argues Google was first cloud provider to embrace rather than compete with third-party infrastructure software.
“B, there's a lot of money to be made just in providing these primitives. Let's stop trying to compete with these independent infrastructure software providers right on top of the cloud.”