2024-06-02

The End of Software (Opinion)

This post made some news on Twitter in the past days, i will try to summarize it and give my own take: https://x.com/cpaik/status/1796633683908005988

History tends to rhyme, if you listen. Before the internet, media was expensive to create. (pay people to make content, edit etc.) -> It was expensive to create -> It had to make money because it took money to be made -> Consumers needed to pay. Today and in the future: Cost of creating content is going towards zero -> User generated content is flourishing -> doesn't cost anything to create -> it doesn't have to make money. Another interesting point is that all companies like TikTok with user generated content are completely flanking normal “media” companies which have a higher COGS. Investing in media has been a losing value proposition since these platforms shifted their control to distribution.

Software is expensive to create, until now -> LLMs will at some point be so efficient to create software -> the cost will go to zero -> the same thing as with media will happen.

  • Vogue wasn’t replaced by another fashion media company, it was replaced by 10,000 influencers
  • Salesforce will not be replaced by another monolithic CRM. It will be replaced by a constellation of things that dynamically serve the same intent and pain points. Software companies will be replaced the same way media companies were, giving rise to a new set of platforms that control distribution.

    • SaaS, ARR, magic numbers–these are all shorthand to understand the old model of business building in software, one where the expense associated with creating software was a moat. The invisible hand has been stayed in software for a long time, but LLMs will usher in its swift, familiar corrective force.

    1

    Some of my opinions

  • LLMs won’t replace developers
  • A lot of average software in the world will make great software even better so the gap will be wider. Yes, GPT can write single webpages, but not an IOS or Stripe.
  • Building an easy “app” will now be a hobby, small business, or just for everybody.
  • Software doesn’t make products. Products don’t make business. And building is half the battle, distribution the other.
  • It's not as free as it sounds, even though this blog post might look like it's free, it will still cost me and the server provider something.
  • Content is B2C while software is B2B, business will still want to use a Salesforce instead of a "constellation of things that dynamically serve the same intent and pain points." they want to have control and security of their data, support and not a million little vendors. At the end, it will make software more valuable, not less.
  • Jevons Paradox: (example) When steam engines became more efficient, the use of coal surged because the cost per output decreased, leading to greater industrial activity. The same could happen in software
    • 1

    The moat won't be the money anymore, more people will be able to create software and more easily. The gap between average software and good software will be wider than ever. You still need to be the architect of your company as is said "Software doesn’t make products. Products don’t make business." the LLMs and so on can be your builders. It's more about quality and creativity than ever before. Most of the credits go to the twitter comments under the twitter post.

    Thanks,

    Finn