Predictions for the Future of Software
(5 Minute Read) People can build more with less. What does this mean for the world of software?
👋🏼 I’m Alek, a repeat founder. I’ve built and sold one company so far. I share what I’ve learned from building companies in 5-minute reads every week.
Predictions for the Future of Software
Over the last two years, I’ve created an AI meeting assistant. There are big companies out there that have built the same thing. These companies have big teams and vast resources. I’ve built an AI meeting assistant that works better for me, all on my own.
With AI at our backs, other people can do this too. What does that mean for the future of software?
How AI is changing software development
Over the last two years, AI has become a powerful tool in software development. Now, AI helps me:
Learn new things
Execute tasks
Identify and fix problems
Before, you needed large teams to build software. You would hire specialists for web development. You would hire backend engineers. You would hire experts in building desktop apps. Now, with little prior knowledge, I have built all this on my own.
What this means for the future of software.
It used to take a large team and lots of investment to build software. It takes less now.
Let's play out the chess moves. What does this mean for the world of software?
More self-employment and changes to fundraising
As it gets easier to make software, more people will succeed. More people will build things in parallel to their full-time jobs. More people will earn income from these side hustles. More people will quit their jobs to work on their side hustles full-time. More people will seek part-time work or fundraise.
Part-time work
Side hustles will not immediately replace salaries. Entrepreneurs need time to grow their businesses. Only with time will their new business surpass their old income. In the interim, part-time work will cover the difference.
What does this mean for the future?
Services that connect people to part-time work will do well.
Focus on building a strong network so you can always find work.
Fundraising
People can make more software on their own. Large teams aren’t required for early versions. Early-stage software companies don’t need to fund large teams. Early-stage software companies will fundraise less.
Fundraising supply and demand will shift to fit two molds.
The Scaling Startup. These companies will already have proven demand. Investors will expect low-risk payoffs. Payoffs will be mild to moderate.
Big Risk, Big Reward. These companies are solving multifaceted, complicated problems. These companies require large teams to solve the problem. Investors will tolerate high-risk payoffs. Payoffs will be large if they happen.
What does this mean for the future?
More than ever, founders need to show their ideas have traction to raise money.
Ideas that do not fit these molds will have a hard time finding investors. Consider other sources of income until you’re ready to scale.
Ideas that do not fit these molds will have a hard time retaining investors. Investors will see other options that are paying off sooner or bigger. They will wish they had invested in those options. They will want to turn your company into something “more like that.” They will try to move you into one of the two molds.
More competition will lower prices.
As making software gets easier, more people will do it. The result? More software solutions will exist. These solutions compete to solve important problems. Software providers used a moat to protect their high prices… recreating their software was complex and expensive. It is getting cheaper with every advancement in AI. Their moats are drying up.
The first domino to fall will be low-complexity apps. The prices of low-complexity apps will come down.
High-complexity software will take longer to change. High-complexity software stitches together many low-complexity solutions. Customers can do this too. I used an all-in-one solution to build my first startup. I relied on this one platform to handle a lot. For my new startup, I am using many specialized solutions. One for user management. One for analytics. One for subscriptions. More people will switch to low-complexity software as they get cheaper. High-complexity software will need to lower prices to stay competitive.
What does this mean for the future?
Creators of low-complexity software will look for short-term profits and exit opportunities.
Short-term profits. There will always be short-term opportunities. People stumble on unmet demand all the time. Profit while you can. But be ready for new competition at any time. New competition will come faster than it ever has. New competition will drive down profits.
Exit opportunities. There will be opportunities for big payouts when large companies try to adapt.
Creators of high-complexity software will lower prices or adapt.
Lower prices. To maintain profit margins, they will need to cut costs. They can cut costs by leveraging AI or reducing headcount.
Adapt. High-complexity software will need to find niches. Solving many problems for a small niche will protect prices.
Conclusion: How AI is Changing the Future of Software
AI is making it easier than ever to create software. Here’s what that means for the future:
More people can make apps. Thanks to AI, people don’t need big teams to make apps. Now, one person can build a lot on their own. More people can make apps as side projects and turn them into businesses.
Different ways to get money. Before, making an app took a lot of time, people, and money. Now, people can build more with fewer resources. There is less of a need for early stage fundraising. Investors will look for apps that solve big problems.
More choices. Lower prices. Because more people can make software, there will be more choices. Apps that are easy to make will get cheaper. Complex apps will find niches or lower prices in the long run.
AI is changing how software is built and sold. More people can create software, and prices will come down.
#Entrepreneurship #SelfEmployment #Startups #Bootstrapping #Founders
By sharing my experiences, I hope to provide insight and advice to entrepreneurs facing similar challenges. Please leave a comment or email me with any questions.
Totally agree on the uptick of solopreneurship / move away from venture funding for businesses that don’t need it. I think also you see multipreneurship continue to grow, as people who know how to build and sell software in this new world can do this for multiple small businesses at the same time (like you’ve experimented with)
I’m still skeptical that non-enterprise saas companies will drop their prices. I feel like saas pricing has monotonically increased (in nominal terms) for like 15 years. I don’t have any data on this though. My hunch would be that they get more complex on pricing, offering higher paid tiers with new AI features and dropping minimums with less complex / worse offerings.