What are the key takeaways from this Odd Lots episode?

Key insights include: **Software moat beyond code:** When evaluating SaaS vulnerability, assess three distinct value layers: herd familiarity (universal user training like Zoom or Excel), ecosystem integrations, and brand trust. Pure code generation by AI threatens only one layer. Companies like DocuSign retain value through legal compliance expertise across every country and API brand credibility that vibe-coded alternatives cannot replicate.; **Outcome-based pricing shift:** SaaS companies transitioning from per-seat pricing (roughly $1,000 per user annually) to results-based models can capture dramatically higher revenue. A tool replacing a $250,000 sales rep priced at $50,000 delivers a 5x ROI to customers while increasing the vendor's take rate approximately 50-fold, fundamentally restructuring software economics.; **SMB versus enterprise AI risk:** Enterprise software with heavy customization and complex implementations faces the highest near-term disruption risk because large organizations have resources to act. SMB-focused software serving dentists, grocery stores, or similar operators carries lower displacement risk since those owners will not rebuild core systems themselves regardless of AI capability improvements.

What did Jared Sleeper discuss on Odd Lots?

Jared Sleeper, partner at Avenir growth fund, analyzes the SaaS sector selloff driven by AI code generation fears. He examines which software companies face existential risk versus which can survive by leveraging data advantages, network effects, and shifting toward outcome-based pricing models replacing per-seat revenue structures. Key topics include: **Software moat beyond code:** When evaluating SaaS vulnerability, assess three distinct value layers: herd familiarity (universal user training like Zoom or Excel), ecosystem integrations, and brand trust. Pure code generation by AI threatens only one layer. Companies like DocuSign retain value through legal compliance expertise across every country and API brand credibility that vibe-coded alternatives cannot replicate.; **Outcome-based pricing shift:** SaaS companies transitioning from per-seat pricing (roughly $1,000 per user annually) to results-based models can capture dramatically higher revenue. A tool replacing a $250,000 sales rep priced at $50,000 delivers a 5x ROI to customers while increasing the vendor's take rate approximately 50-fold, fundamentally restructuring software economics..

How long is this episode of Odd Lots?

This episode is 49 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Odd Lots

Jared Sleeper on Which Software Companies Will Survive the "SaaSpocalypse"

February 19, 2026

49 min episode · 2 min read

Jared Sleeper

Episode

49 min

Read time

2 min

Topics

Productivity, Health & Wellness, Relationships

AI-Generated Summary

Published Feb 19, 2026

Key Takeaways

✓Software moat beyond code: When evaluating SaaS vulnerability, assess three distinct value layers: herd familiarity (universal user training like Zoom or Excel), ecosystem integrations, and brand trust. Pure code generation by AI threatens only one layer. Companies like DocuSign retain value through legal compliance expertise across every country and API brand credibility that vibe-coded alternatives cannot replicate.
✓Outcome-based pricing shift: SaaS companies transitioning from per-seat pricing (roughly $1,000 per user annually) to results-based models can capture dramatically higher revenue. A tool replacing a $250,000 sales rep priced at $50,000 delivers a 5x ROI to customers while increasing the vendor's take rate approximately 50-fold, fundamentally restructuring software economics.
✓SMB versus enterprise AI risk: Enterprise software with heavy customization and complex implementations faces the highest near-term disruption risk because large organizations have resources to act. SMB-focused software serving dentists, grocery stores, or similar operators carries lower displacement risk since those owners will not rebuild core systems themselves regardless of AI capability improvements.
✓Financial floor problem: The median public software company runs at only 5% GAAP net income margin due to stock-based compensation excluded from non-GAAP reporting. Without material GAAP earnings, there is no valuation floor during selloffs. Companies like Freshworks trading at 1.5x EV/sales would attract value investors at 15x earnings if they reported even 10% GAAP margins.
✓Context data as competitive moat: AI agents require organizational context — customer histories, internal data, process knowledge — to function effectively regardless of model intelligence. SaaS companies like Salesforce holding CRM records, interaction logs, and pipeline data occupy a structural position as the system of context that any enterprise AI deployment must access to operate.

What It Covers

Jared Sleeper, partner at Avenir growth fund, analyzes the SaaS sector selloff driven by AI code generation fears. He examines which software companies face existential risk versus which can survive by leveraging data advantages, network effects, and shifting toward outcome-based pricing models replacing per-seat revenue structures.

Key Questions Answered

•Software moat beyond code: When evaluating SaaS vulnerability, assess three distinct value layers: herd familiarity (universal user training like Zoom or Excel), ecosystem integrations, and brand trust. Pure code generation by AI threatens only one layer. Companies like DocuSign retain value through legal compliance expertise across every country and API brand credibility that vibe-coded alternatives cannot replicate.
•Outcome-based pricing shift: SaaS companies transitioning from per-seat pricing (roughly $1,000 per user annually) to results-based models can capture dramatically higher revenue. A tool replacing a $250,000 sales rep priced at $50,000 delivers a 5x ROI to customers while increasing the vendor's take rate approximately 50-fold, fundamentally restructuring software economics.
•SMB versus enterprise AI risk: Enterprise software with heavy customization and complex implementations faces the highest near-term disruption risk because large organizations have resources to act. SMB-focused software serving dentists, grocery stores, or similar operators carries lower displacement risk since those owners will not rebuild core systems themselves regardless of AI capability improvements.
•Financial floor problem: The median public software company runs at only 5% GAAP net income margin due to stock-based compensation excluded from non-GAAP reporting. Without material GAAP earnings, there is no valuation floor during selloffs. Companies like Freshworks trading at 1.5x EV/sales would attract value investors at 15x earnings if they reported even 10% GAAP margins.
•Context data as competitive moat: AI agents require organizational context — customer histories, internal data, process knowledge — to function effectively regardless of model intelligence. SaaS companies like Salesforce holding CRM records, interaction logs, and pipeline data occupy a structural position as the system of context that any enterprise AI deployment must access to operate.

Notable Moment

Sleeper reveals that DocuSign employs more people than OpenAI and Anthropic combined — a counterintuitive data point illustrating how deceptively complex seemingly simple software businesses are, and why surface-level AI disruption narratives often miss the operational depth embedded inside mature SaaS companies.

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Episode Transcript

UKG. Their HR, pay, and workforce management tools help business leaders empower their people. Because when work works, everything works. Learn more at ukg.com/work. Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called generated assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high r and d spend, small cap stocks with improving operating margins, or the S and P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on public, you just type in a prompt and their AI screens thousands of stocks and build a one of a kind index. You can even back test it against the S and P 500, then you can invest in a few clicks. Go to public.com/market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com/market. And paid for by Public Holdings, brokered services by Public Investing member FINRA SIPC, advisory services by Public Advisors, SEC registered adviser, crypto services by Xero Hash. Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com/disclosures. Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances from banking to payments to credit cards all in one place with Chase's digital tools, plus access online resources designed to help your business thrive. Learn more at chase.com/business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank, NA, member FDIC. Copyright 2,026. JPMorgan Chase and Company. Bloomberg Audio Studios. Podcasts, radio, news. Hello, and welcome to another episode of the Odd Lots podcast. I'm Joe Wasenthal. And I'm Tracy Alloway. Tracy, we're recording this February 11 in IGV, the software ETF, down another 3% today. It has been ugly in software. Everyone's throwing around the term SaaS pocalypse. SaaS pocalypse. I mean, the great thing about SaaS is there are a lot of things that, like, rhyme with it. There's a lot of homonyms. So you can you can make all those puns. Yeah. Exactly. SaaS is trash. Whatever. But I'm looking at the share price of Salesforce Oh, yeah. In particular because I always think of Salesforce as sort of, like, emblematic. The poster child. Yeah. Poster child of, like, a software company that I'm not really sure what they do. But, yeah, it's it's just ugly. It's basically been cut in half, hasn't it, since its peak, like, in early twenty twenty five. Right now, it's $1.84 84. And it's all your fault, Joe. It's …

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