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On August 20, 2011, legendary venture capitalist Marc Andreessen published a blog post\u2014and an accompanying essay in The Wall Street Journal<\/em>\u2014that would become the sacred texts of the Silicon Valley bull run. Titled \u201cWhy Software Is Eating The World,\u201d he argued that the global economy was undergoing a \u201cdramatic and broad technological and economic shift\u201d and that software companies were poised to take over large swathes of the industry.<\/p>\n Fifteen years later, in February 2026, Andreessen\u2019s prophecy has been fulfilled in a manner that even the biggest bulls failed to predict. Software did indeed eat retail (Amazon), video (Netflix), music (Spotify), and telecommunications (Skype) just as Andreessen predicted, but the market got a $1 trillion shock in February because something was eating software itself. That something, of course, was artificial intelligence.<\/p>\n Morgan Stanley\u2019s software analysts, led by Keith Weiss, offered a \u201cgut check\u201d this week in a major research note, arguing that \u201cAI IS software\u201d but also that software is growing so all-consuming that it is indeed starting to eat work itself. Andreessen\u2019s a16z has a core strategy of investing across enterprise software, including cloud, security and software-as-a-service (SaaS), but the $1 trillion-plus selloff dubbed the \u201cSaaSpocalypse\u201d cuts to the very heart of that model. Andreessen looks like he was more right than he knew about software eating the world.<\/p>\n To understand the severity of the current shift, one must look back at the skepticism Andreessen was fighting in 2011. Following the trauma of the dot-com crash, he declared that the stock market \u201chated technology.\u201d While Apple was trading at a price-to-earnings ratio of just 15.2x amid immense profitability, investors constantly screamed \u201cBubble!\u201d<\/p>\n Andreessen claimed that companies like Amazon and Netflix were not merely speculative bets, but \u201creal, high-growth, high-margin, highly defensible businesses\u201d building a fully digitally wired global economy. He correctly identified that Borders was handing its keys to Amazon, that Netflix was eviscerating Blockbuster, and that \u201csoftware is also eating much of the value chain of industries\u2026 in the physical world,\u201d such as automobiles and agriculture.<\/p>\n For a decade and a half, he was right. The \u201ccreative destruction\u201d he invoked\u2014citing economist Joseph Schumpeter\u2014decimated legacy incumbents and minted trillions in value for software insurgents. However, the AI revolution of 2022 onward and the SaaSpocalypse of 2026 suggest that the cycle of creative destruction has arrived at the doorstep of the software industry itself. Morgan Stanley\u2019s Weiss wrote of a \u201cTrinity of Software Fears\u201d currently driving down stock multiples by 33% that cut to a fundamental questioning of the software business model.<\/p>\n While Andreessen saw software disrupting industries, Morgan Stanley sees AI disrupting labor itself. The analysts note that generative AI expands the capabilities of software to \u201ccontextually understand unstructured data,\u201d such as emails, PowerPoints, and verbal communications. This unstructured data represents over 80% of information in organizations today.<\/p>\n Previously, software required a human operator to input and manipulate this data. Now, Wall Street fears that software can do it all by itself. \u201cGenerative AI represents a continuing expansion of what types of work and business processes software can now effectively automate,\u201d Weiss wrote, revisiting his team\u2019s initial estimate that enterprise software\u2019s total addressable market could grow by $400 billion by 2028. Three risks put that in question, principal among them that \u201cas GenAI automates a broader swathe of work, the increasing productivity gains will result in a reduction in the number of employees necessary to execute those tasks.\u201d<\/p>\n If software allows a company to cut its staff by half, it also cuts the number of software subscriptions it needs by half. After software ate the world, then, it appeared to start eating the revenue of its creators by eating the jobs of its users.<\/p>\n Andreessen predicted in 2011 that \u201csoftware programming tools\u2026 make it easy to launch new global software-powered start-ups,\u201d viewing this as a boon for entrepreneurs. Today, however, investors are beginning to view this democratized ease of creation as a threat to established software giants.<\/p>\n One of the primary fears cited by Morgan Stanley is the rise of \u201cdo-it-yourself\u201d (DIY) software. This is colloquially known as \u201cvibe coding,\u201d where a user will ask the AI to code things in line with a certain vibe that they are going for. As AI code generation tools drastically lower the cost and skill required to write code, there is a growing fear that \u201ccompanies will choose to develop more software themselves\u201d rather than paying for expensive third-party vendors.<\/p>\n Furthermore, there is the looming threat of \u201cmodel providers\u201d\u2014the creators of frontier AI models\u2014rendering traditional applications obsolete. The fear is that an AI agent could act as an \u201cintelligent user interface,\u201d pulling together data and tools to automate workflows on the fly. In this scenario, the distinct \u201capp\u201d disappears, replaced by a single, omniscient model that serves as the operating system for the entire enterprise.<\/p>\n Like other analysts (and several rattled SaaS executives), Morgan Stanley argued that the market\u2019s reaction is overblown, echoing Andreessen\u2019s 2011 sentiment that investors were ignoring \u201cintrinsic value\u201d right in front of them. The bank suggested that the \u201cbear case arguments around GenAI appear to give too little credence to the ability of incumbent software vendors to participate in this innovation cycle.\u201d<\/p>\n Andreessen once warned that \u201cincumbent software companies like Oracle and Microsoft are increasingly threatened with irrelevance.\u201d In 2026, however, Morgan Stanley identified Microsoft, alongside Salesforce and ServiceNow, as the \u201cBest Athletes\u201d positioned to win. True, Salesforce is in \u201cthe eye of the storm\u201d in terms of workflows expected to be disrupted by GenAI. But Weiss said that incumbents such as Salesforce are successfully pivoting to become \u201cfast followers,\u201d integrating AI to solidify their moats rather than losing them. For example, Salesforce has seen its AI-related annual recurring revenue surge 114% year over year.<\/p>\n Zooming out, Morgan Stanley said it sees a \u201cpath of innovation that actually looks relatively familiar\u201d: a combination of improving productivity, better use of tools to automate functions and software value \u201cpredicated on labor displacement.\u201d The difference now is the rapid pace of innovation compared to prior cycles and better tools on the market. It looking closely at Amazon Web Services and the shift in the early 2010s toward cloud computing. Even with the 33% pullback for software\u2019s equity value\/sales multiple since October, the group is trading about 15% above the beginning of the cloud era.<\/p>\n In a sequel of sorts to Andreessen\u2019s famous essay, his own firm has released new thought leadership (as it does quite regularly). Steven Sinofsky of a16z dismissed the idea of the \u201cdeath of software\u201d earlier this month, arguing that \u201cAI changes what we build and who builds it, but not how much needs to be built. We need vastly more software, not less.\u201d He offered five predictions, including more software being made with new tools in a vastly more sophisticated way, but also an admission that \u201cit is absolutely true that some companies will not make it,\u201d and endless invention and reinvention is the way of capitalism. A look back at the Fortune 500 archives show that is undoubtedly the case.<\/p>\n In his 2011 essay, Andreessen concluded with optimism, calling the software revolution a \u201cprofoundly positive story for the American economy.\u201d He acknowledged challenges, specifically that \u201cmany workers in existing industries will be stranded on the wrong side of software-based disruption.\u201d <\/p>\n That is where things may be scarily different this time. Even if software finds a way to recover its multiple and continue its upward trajectory, analysts are increasingly seeing a future of growing GDP and productivity without nearly as much human labor involved. Michael Pearce of Oxford Economics recently joined a group including Bank of America Research and Goldman Sachs warning that the U.S. economy is nearing a point where it won\u2019t need to keep creating new jobs to keep increasing output.<\/p>\n Google DeepMind\u2019s Nobel-winning co-founder, Demis Hassabis, recently told Fortune<\/em> Editor-in-Chief Alyson Shontell that he was excited about the world of \u201cradical abundance,\u201d even a \u201crenaissance\u201d ahead, but there will be a 10- to 15-year shakeout until we get there. That could come as the economy figures out what to do with all the labor that software has eaten.<\/p>\n<\/div>\n #Marc #Andreessen #dire #software #prediction #years #agoIts #happening #imagined<\/p>\n","protected":false},"excerpt":{"rendered":" On August 20, 2011, legendary … <\/p>\n","protected":false},"author":1,"featured_media":21610,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[13008,13007,8358,8404,7895,13009,9736,13006,5133,893,4605,84],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/21609"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=21609"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/21609\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/21610"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=21609"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=21609"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=21609"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\nThe original prophecy<\/h2>\n
The \u2018do-it-yourself\u2019 threat<\/h2>\n
Will incumbents strike back?<\/h2>\n