Joe Schmidt

AI Summary

→ WHAT IT COVERS a16z partner Joe Schmidt argues that Workday — a 20-year-old HR platform with 97% gross dollar retention — faces its first genuine displacement threat from AI-native competitors. The same platform shift logic that let Workday unseat PeopleSoft in 2005 now applies against Workday itself, across HR, CRM, and ITSM categories. → KEY INSIGHTS - **Platform shift timing:** Enterprise software incumbents get displaced during technology transitions, not between them. Workday beat PeopleSoft by rebuilding for cloud in 2005. AI now creates the same window — the first moment a CHRO or CIO can be shown a fundamentally different system architecture, not just a point solution layered on top of existing infrastructure. - **Brownfield over Greenfield:** Startups like Gusto pursue Greenfield customers not yet locked into enterprise platforms. The AI-era opportunity is Brownfield — targeting existing Workday customers who have 97% retention not from satisfaction but from switching costs. Enterprises report willingness to replace Workday if a feature-equivalent, AI-native alternative existed and could be deployed in 30–60 days. - **Deployment compression as unlock:** Legacy enterprise HR implementations take 12-plus months and significant consulting spend. AI-native coding and migration tooling can compress deployment to 30–60 days. This timeline reduction is the structural prerequisite for rip-and-replace to become viable — without it, switching costs remain prohibitive regardless of product quality or pricing advantages. - **AI revenue skepticism:** Workday reports $400M AI ARR growing triple digits, but Schmidt characterizes this as procurement innovation rather than genuine product transformation. Flex credits still require $25,000 licensing fees plus consultants to build anything. No agentic experiences are actually deployed inside customer Workday instances — enterprises are spending AI budgets without receiving AI-native functionality. - **Agent permissioning as next battleground:** As companies deploy more AI agents, those agents need role-based permissions and tracking tied to HR data — the same data Workday holds. CIOs are already asking how to manage agent permissioning at scale. An AI-native HR system becomes the identity and permissions layer for the entire agentic enterprise, expanding its strategic value well beyond payroll and benefits. → NOTABLE MOMENT Schmidt reveals he logged into Workday only three times in the past year despite being an a16z employee, and spent six and a half minutes locating his own compensation data. He used this personal experience as evidence that the core user experience has not meaningfully changed since 2005. 💼 SPONSORS None detected 🏷️ Enterprise Software, AI Disruption, HR Technology, SaaS Displacement, Agentic AI