Dear founder,
Last week, I did a recap of 2024. Now that we're starting a new year, let's look ahead at the opportunities and challenges facing the software business world in 2025.
I want to share my insights into the SaaS and software engineering landscape, exploring emerging trends and patterns—and most importantly, how to leverage them, whether you're looking for business opportunities or just trying to stay ahead of the curve.
🎧 Listen to this on my podcast.
The Rise of Agentic AI: Beyond Pizza Orders
The biggest impact on how we build and run businesses in 2025 will come from agentic AI. Yes, it's a buzzword, and everyone's talking about AI agents. While it might not feel like a revolutionary shift from what's already out there—especially if you're a software developer used to AI coding assistants—I believe we're about to see a major leap in these systems' capabilities.
When people discuss agentic AI, they often use trivial examples like ordering flights or pizzas. These examples remind me of the first Bitcoin pizza purchase, which recently crossed the $100,000 mark, making it a half-million-dollar pizza in retrospect. Just as that pizza example undersold Bitcoin's potential, reducing AI agents to simple task automation misses their transformative power.
Let me share a more compelling example I recently encountered on the TED Talks Daily podcast. They discussed AI's application in biotech, specifically AlphaFold's protein folding simulations for drug discovery. Currently, pharmaceutical companies employ teams of researchers who might spend years studying a single protein's properties. The podcast revealed that AI can accomplish the same task in minutes.
This isn't just about speed—it's about scale. When you can replace years of human research with minutes of computation, and then parallel process thousands of these tasks simultaneously across GPU clusters, the implications become staggering. Those 23 drug researchers aren't just being assisted by AI; their entire workflow is being transformed. The AI systems never sleep, work thousands of times faster, and continuously self-optimize through tight feedback loops.
The Shift from Generic to Individual
This computational power enables a fundamental shift in approach. Instead of developing generic drugs for broad populations, we could soon see hyper-individualized medicine. Imagine AI agents designing treatments specifically tailored to an individual's biochemistry and illness, running thousands of simulations in parallel for millions of people simultaneously. The pharmacy of the future might not stock generic medications but rather synthesize personalized treatments on demand.
Impact on Software Development
This transformation isn't limited to biotech. As a developer, I've already seen how AI has changed coding. Tools like Cursor and GitHub Copilot have eliminated the need to manually translate mental models into code line by line. That era is gone, and it's never coming back—we'll never again write code without AI assistance.
What's particularly exciting is the decreasing size of capable language models. We're moving from cloud-dependent solutions to local processing. When AI first hit the scene, we all relied on OpenAI's API and ChatGPT. Now, with tools like llama.cpp and Ollama, you can run sophisticated models locally on your own hardware. This shift toward edge computing brings greater privacy, data security, and independence from cloud platforms.
The Future of SaaS
For SaaS providers, this means a fundamental shift in customer expectations. You're no longer just providing tools that facilitate human work—you're expected to provide intelligent agents that complete entire workflows. A bug tracking system won't just identify issues; it will resolve them. The pressure to expand from point solutions to comprehensive workflow automation will be intense.
This shift is already happening. Recently, my friend Tyler Tringas shared how he built an entire SaaS product in four hours using AI. What a capable founder/developer can do today, anyone will be able to do next year. The barrier to entry for creating software products is disappearing.
The Human Element: Your Competitive Edge
Counterintuitively, as automation increases, the human element becomes more crucial. In a world where AI can spin up a competing product in hours, trust and human connection become key differentiators. I've seen founders succeed by building in public, sharing their journey, and maintaining genuine relationships with their customers.
Your About page, your public presence, your authentic voice—these become competitive advantages. When customers can choose between dozens of functionally identical products, they'll choose the one with a real, relatable human behind it. As the software world becomes increasingly automated, being visibly human might be your strongest defense against commoditization.
Of course, this too might change if AI agents start handling software acquisition, with automated systems negotiating prices and features while customizing solutions in the background. But for now, human relationships remain crucial to business success.
Whether we embrace it or not, AI will permeate every aspect of software businesses in 2025. Our customers' expectations will be shaped by the best AI-powered experiences out there. The question isn't whether to adapt, but how to do so while maintaining the human touch that makes our businesses unique.
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