Where will the software industry be in 2 or 5 years, or next quarter? Nobody really knows. Founders, investors, and AI experts aren’t sure about what will happen in 3 months, let alone a few years.
So how do you make bets as a SaaS/AI founder right now if there is so much uncertainty and opportunity at the same time?
The VC-funded AI cool kids are raising hundreds of millions at crazy valuations, not knowing if OpenAI or Anthropic will eat them or help them next month. They don’t know what capital markets will look like in a few years when they try to exit.
VCs know this too. Bet it all, and we’ll see what happens. Big wins with low odds.
But what if you are a bootstrapped or lightly funded founder with $1M-$20M in ARR? VC funding isn’t the game you’re playing, but what is?
1) Should you go all in on AI for development, AI features, and agentic virtual workers?
AI is here and moving fast, but very few dev teams are agent-only, and even fewer have shipped agents that do work on the platform customers will pay for.
I see smaller side bets that work great – new side products built with AI agents, new agents that customers can play with and improve. Many customers aren’t ready for even more features in your app, let alone new AI features or software agents on their org chart.
I see prudent founder bets to rewrite the platform, with developers setting up the right harnesses and testing. You can modernize your platform and be more AI-ready for a fraction of the rewrite costs of just 3 years ago. This can work in the right situations.
I don’t see any founders (or devs) with their head in the sand on AI development. Not changing your product dev approach is not an option.
2) Should you go all in on AI-first messaging when you have AI features and agents?
This one depends on your market. Many industries resist AI messaging across the board. Fast-moving industries also have different segments where some want AI and others don’t.
All-in AI side bets like an AI-first side product are very common right now. I have seen many pull back from “we are now AI first!” messaging that was ahead of their customers and pipeline right now.
SaaS with or plus AI is the most common message, even when you don’t say AI. “Now you can do this…” without saying AI is very common.
3) Should you sell your company now or later?
Many founders talk to M&A bankers and PE investors to see where the market is for their particular company. Will another shoe drop in SaaS next year? Should I bail out now?
A few are moving faster to sell now, especially founders with $ 7M-$10M+ ARR, solid retention, and steady growth.
The converse to selling sooner is investing now to grow faster, get more AI-savvy, and be in a better place in 1 to 2 years to sell or be profitable. This is the most common bet.
Shoot bullets before cannonballs, Jim Collins used to say. Small bets before big bets.
But be ready to bet bigger. The game is changing.
#practicalfounders
