Atlassian’s results surprised Wall Street, but it shouldn’t be a surprise. The simple heuristic for the future of software is that when there are 100X more agents than people, which parts of software will grow because agents are doing more work that the underlying software is tied to. If the world generates more code, generates more leads, reviews more contracts, processes more invoices, creates more designs, transacts with more payments, and so on, what are the underlying systems that are managing that work? That will give you a hint as to what happens next. These agents still need guardrails, security, compliance, workflows to be tied to, data stored, and so on. Those parts of the system of record ecosystem will only go up over time in a world of 100X more untrusted (and trusted) agents used in your workflows.

If you read this and don’t understand why it’s happening it’s an opportunity to reset your understanding of how the real world works. The real world will need a ton of help actually getting agents going in the enterprise. Companies have legacy tech stacks they need to modernize, data in tons of fragmented tools, knowledge that isn’t captured or digitized, and change management needed to actually utilize agents effectively. And they have to do all this while still running their business day-to-day, unlike startups. This is why there is so much opportunity for companies (software or services) to actually deploy agents in specific domains and workflows. This remains a big opportunity for both existing services providers but also tons of new startups as well. Every new technology wave produces a new era of consulting firms that can deliver on that technology. It’s also why the FDE model is going to be alive and well for a long time because companies will want to have their vendor actually help drive the change management and implementation for their new workflows. The people aren’t going away. Far from it.

The more I think about what’s happening to SAAS right now, the more I realize that the situation is slowly becoming more and more attractive. Everyone seems to think that AI coding agents can work to replace existing incumbents and the days for SAAS as a growth industry are coming to the end. While I’m sure some simple consumer facing applications could be disrupted, I don’t see that happening in the enterprise space to the same degree. Enterprise level applications are built on trust, technical support, confidence in utility value and a continuous path towards higher capability. These things can’t be built, they are EARNED. Companies like $NOW have earned their marketshare through investment in its platform and people. In this new AI driven world, it’s more likely we see them use AI to speed up their development cycle and build even stronger walls to defend their marketshare and possibly even take marketshare. I’m using it right now ;). While I’m in no rush to jump in at the moment as the market has put all SAAS in a penalty box, there will come a point where the opportunity will be too good to pass up for this generation compounder.