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Today on the AI Daily Brief, is Software Dead before that in the headlines? Why? I think no one wins and everyone loses after the whole dust up around Anthropic's new Super bowl ad, the AI Daily Brief is a daily podcast and video about the most important news and discussions in AI. Alright friends, quick announcements before we dive in. First of all, thank you to today's sponsors, Optimizely, Robots and Pencils, Blitzy and Super Intelligent. To get an ad free version of the show go to patreon.com aidailybrief or you can subscribe on Apple Podcasts. If you are interested in sponsoring the show, send us a Note@ SponsorsAidailyBrief.AI and lastly, one more chance, one more request for you to fill out the January AI Usage Pulse Survey. Again, this is a survey we're doing to try to figure out what models were most used, what use cases were most prevalent, where people got the most value, and generally put some real numbers and real experience around how we're all using AI. You can find it at aidailybriefai and it'll be closing at the end of the day on Friday. Thanks to everyone who has participated. Can't wait to share what we've learned now. One last note. I will fully admit that today's headlines is a not really a headline, it's just about the it's just about the super bowl story and B is way, way more ranty than my normal There is a lot more op ed than I normally put into this show. I unfortunately think that the impact of anthropic super bowl ads, if anything at all, is likely to be quite negative for the industry. But hey, there's plenty of critique to go around. Now, I will not blame you at all if you decide to skip over that, because who cares. I certainly think the is software dead Conversation is the much more pertinent one going forward. So however you decide to consume this episode, I appreciate it. And let's dive in. Trigger Warning if you work at either Anthropic or OpenAI, you are probably not going to like the beginning of this episode. Yesterday, Anthropic absolutely took over the AI conversation when they dropped their first ever set of super bowl commercials. The commercials do not talk about the basically magic wand we now have in our pockets. They don't talk about all the things you can do. They don't talk about all the value that AI could be bringing to people's lives. Instead, all four commercials in the campaign are focused entirely on OpenAI's planned, forthcoming ads. In one version, a user asks how to get along better with his mom. The AI, portrayed as a middle aged female counselor, delivers some generic advice. Then the AI pivots hard into an ad for a mature dating site. Another version of the ad opens on a scrawny teenager struggling to do pull ups in the park, copying one of the shots from last year's Sora commercials. In this one, the AI is depicted as a muscle bound dude. It tells the teenager that it's achievable to get a six pack quickly and offers to build a workout plan. Once the AI learns of the user's diminutive height, however, it offers a sale on a pair of insoles that, quote, make short king stand tall. The ads each feature an opening title splashed across the entirety of the screen. Betrayal, Violation, Treachery, Deception. They all close on the tagline Ads are coming, but not to Claude. So OpenAI shrugged it off laughing, saying hey, those were funny, but we're going to do what we're going to do, right? Or they employed their God given right to say nothing and to not have to comment on every single thing that happens, right? No they did not. Instead they decided to bite back and bite back hard. CMO Kate Rauch writes, those ads are funny. Here's what's not funny. Calling ads a betrayal when your business model is selling paid subscriptions to companies. ChatGPT has more free users in Texas than Claude has globally. Real betrayal isn't ads, it's control. Anthropic thinks powerful AI should be tightly controlled in small rooms in San Francisco and Davos, that it's too dangerous for you, that the future should be built somewhere else by someone who is smarter. We don't believe that. Sam Altman wrote more than 400 words in response on Twitter saying, I wonder why Anthropic would go for something so clearly dishonest. I guess it's on brand for Anthropic Doublespeak to use a deceptive ad to critique theoretically deceptive ads that aren't real. He also dropped the same line around more people in Texas using free ChatGPT than total people using Claude in the US. He even went so far as to call Anthropic an authoritarian company. Now it does sound like OpenAI will also have a Super bowl ad, so we'll see how that goes. But a couple quick thoughts about all of this. So first of all, let's talk about the response. The short of it is this isn't how a market leader responds. There's a famous line in Mad Men where one of Don Draper's employees says, I feel bad for you. Draper looks at him deadpan and says, I don't think about you at all. That's the energy when you're the market leader or you make it playful when they're clearly trying to make it serious. What you don't do, I don't think is ratchet it up to claims of authoritarianism or at least you don't before you take a night to sleep on it. But to be honest, in this particular case, I got more beef with Anthropic. This move is so out of character for them and, and so wrong headed in so many ways that I'm actually trying to rack my brain to figure out if there's something that I'm missing. First of all, what I will say is the ads are funny. And I actually think that if you look back at the history of super bowl ads and I've actually done this numbers crunching before, cause I made one a few years back, something like 90% of the top rated ads every year are humor. They're not serious, they're not uplifting, they're not tear jerkers. There are very, very few companies who, who can pull off that sort of highfalutin ad in the super bowl setting. It's the one time of year that people actually want to be advertised to, but they want to be entertained. So I am sympathetic to wanting to do a funny ad. Here's where things go off the rails though. I don't think anyone's going to really get the context expecting that. Users know that OpenAI has said that they're going to do ads in ChatGPT is just not realistic. It would be one thing if ads had already premiered in ChatGPT and everyone was complaining about them. But the entire basis for Anthropic's campaign is a critique of something that doesn't exist yet. It's a pain that people aren't feeling yet. I think that's going to significantly diminish the impact. Second, and this is where I start to move from having critique of strategy to being actively annoyed. My strong guess is that a pretty big chunk of people who like these ads are going to like it because it confirms their suspicion that AI is just the latest way that tech billionaires have come up with to control your life and take your money. I think that Anthropic is with this ad not primarily taking down a competitor, but feeding into a critique of the industry as a whole. I think that these ads make things worse, not better. In a US that is already more skeptical than basically any other country in the world of AI. Now, as I've said before, people are allowed to be skeptical of AI and the technology industry has made the bed that we now all lie in. But there is a tidal wave coming to shore and the net impact of people being annoyed at AI is just another tech thing, is that they're not paying attention to it and they're not being prepared for it. And I think in that we are doing them a massive disservice. Finally, this is just the opposite of the brand vibe that Anthropic has spent three years building. It's petty, small, doesn't tell any of the stories that have made Claude such an insurgency recently. And ultimately I just kind of think it's sad. It's not gonna stop me from using Claude code for 24 hours a day, but I think when you take all this together, it is a big L for the entire industry. Now the funny thing is, for as much as we're talking about these Anthropic super bowl ads, they actually weren't the biggest impact Anthropic had on the world this week. That came when a Claude code plugin wiped billions of dollars off of the global markets. So for there we will end our headlines and move on over into the main episode. Most marketing teams aren't short on ideas, but what they are short on is time. And that's exactly what Optimizely Opal gives you back with AI agents that handle real marketing workflows. 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If you want to truly take advantage of how AI and agents can not only enhance productivity but but actually fundamentally change outcomes in measurable ways in your business this year, go to be super A.I. welcome back to the AI Daily Brief. One of the things that happens pretty frequently on this show is that I will start clocking a theme that I think is having some amount of narrative resonance either in conversations on Twitter X or starting to break into the mainstream media, but which I don't think demands a full deep dive yet. Sometimes those themes dissipate, but sometimes they lurk and grow until they can no longer be ignored. That is absolutely what has happened with today's theme, where concerns about AI disruption have turned into a full on market panic as software sells off. Now the basis for this won't surprise any listeners of this show. We have been tracking ever since coming back from the holidays the extent to which people are embracing that a fundamental inflection point on the capability set of AI around coding has shifted the world that we live in. What's important to note is that this belief set has not been constrained to AI early adopters. It has started to find its way into other circles, particularly business and financial circles. A couple of weeks ago the narrative really started to find its way into Wall Street. SaaS companies in particular began sliding and things have now reached a full on fever pitch with Bloomberg and the Wall Street Journal publishing dozens of articles so far this week to give a sense of what's happening. Salesforce is down 21% on the year, Snowflake is down 23%, HubSpot is down 36% and AppLovin is down 37%. In each case, the fiercest sell off happened over the past few days, giving a sense that this narrative is only accelerating. Jeffrey Fafuza, who works at the equity trading desk at Jefferies, said, we call it the SaaS apocalypse, an apocalypse for software as a service stocks. He added that the trading flow he's seeing across his desk is very much get me out style selling. And what's important to note is that it appears, at least at first glance, that many of those racing for the exits have a genuine belief that something meaningfully changed over the past month. Michael Roark, the chief market strategist at Jones Trading, said, I don't think it's an overreaction. For two years we've been talking about how AI is going to change the world and that it is a multi generational technology. In the past few weeks we've seen signs of it in practice. It's also important to note that this isn't a broad based tech sell off. Apple, for example, is up 2% so far this year and 12% from a local low two weeks ago. The iPhone stock seems blissfully unaware of the disruption going on around it, even as Apple fails to put forward a meaningful AI strategy. At the same time, it is notable that we've had a dozen AI related sell offs since the release of ChatGPT in late 2022. They basically ping pong between a narrative that the technology is overhyped or that it's wildly disruptive and some portion of big tech is failing to keep up in the AI race. This is the first time we've seen the market try to price in broad based disruption that could kill off an entire sector. And while the focus has mostly been on SaaS, another example showed the market's concerns about AI disruption. Last week we of course talked about the new test model of Google's Genie 3, where you can generate entire interactive worlds. Gaming stocks plunge on that news, with game engine creator Unity seeing 35% wiped off their stock price since Genie 3 came out. Last Thursday, Grand Theft automaker Take Two Interactive saw a 39% drop, which was severe enough for CEO Strauss Zelnick to issue a statement, basically that genie is exciting, but there's way more that goes into game development than just world creation. He might be right, but that hasn't made investors any less scared. Private markets are also taking an absolute pounding, according to Apollo Global Management Co president John Zeto. Bloomberg reported for the first time on comments that Zito made during the fall. He argued that tariffs, inflation and high interest rates are all minor concerns, commenting the real risk is Is software dead now? Apollo already made their move last year, slashing exposure to software in their private credit funds from 20% to 10% and actively short some names. The broader question is whether the entire business model of software still makes sense in the AI era. Isaac Kim, a partner at VC firm Lightspeed who previously worked in tech private equity, commented, technology, private equity in its current form is dead. He added that buying software firms has a clear formula. The burn rate starts high, but margins increase and leverage increases as the business matures. This model, Kim continued, assumes the underlying product remains relevant long enough for financial engineering to work. AI has changed that assumption. Casey Smith on X called this the great SaaS meltdown. Software stock woes, he argues, are deepening and the old playbook is broken. One he says high growth, low profitability is dead. The market has stopped rewarding growth at all costs. If your SaaS isn't printing cash or showing a clear path to profit by 2026, investors are out. 2. The AI question Mark AI is a double edged sword for software on growth durability. Can these companies stay relevant or will AI agents replace their core functions? On profitability, inference costs are massive and traditional high margins are getting squeezed. Finally, there's the seat crisis. Why pay for 100 seats when AI lets 10 people do the same work? The per user pricing model is facing an existential crisis. The bottom line, he writes, the era of easy SaaS gains is over. Durability and efficiency are the new kings. And this is where we were heading into a couple of days ago when the final domino fell in a way that tipped this conversation into overdrive and made this particular show inevitable. Believe it or not, the catalyst for the latest market meltdown was a Claude Cowork legal plugin, the Wall Street Journal wrote, Data Provider Stocks Tumble on AI Competition Fears Run Layer's Andy Berman wrote, There are hundreds of verticals like these, and plugins will disrupt each of them one by one. Secure access to tools like Cowork is going to change how every company operates. Oh, and rip billable hours. And so this is where things are basically markets are freaked as the sand in which they stand upon shifts under their feet Once again, we have come a long way from Marc Andreessen's essay about why software is eating the world that was published all the way back in 2011. Since Andreessen wrote that post, software and SaaS in particular has been one of the easiest long term bets on Wall Street. You just park your money there and inevitably over time it goes up. But it's pretty undeniable that AI is changing the nature of how software gets built. Tons of people are experiencing this. CNBC anchor Deirdre Bosa tweeted yesterday, woke up this morning and said for fun, let's try to recreate Monday.com with Claude Cowork. It won't work or anything, but we can just show our audience that it's plausible. One hour later, I literally have my own Monday.com that's plugged into my calendar and Gmail and serviced a kid's birthday that was not anywhere on my radar and I need to get a gift for can imagine the next step being order gift and have it delivered by Sunday. Now she adds, to be clear, me being able to vibe code a personal tool is not going to disrupt the software trade, but someone who does know what they're doing very well might. The thing is, I'm not so sure people are convinced of that. It may be in fact that Deirdre Being able to vibe code a personal tool is exactly what disrupts the software trade. YC founder Chris Pisarski writes, I don't think people are taking this seriously enough. One of our AES just got off a demo with a prospect who is building internal sales and go to market workflows with Replit to replace a SaaS tool they are currently paying for. The Replit agent told him to use our API. So he reached out. He showed us a demo of one of the apps he built. Pull a list of everyone who attended a specific event, enrich each person, run web search on people with only a username head to priority. He was non technical. Seeing this trend more and more over the last two months and certainly if you listen to this show you hear a lot of stories like this. Hell, my head of sales got annoyed a couple of weeks ago that our website still had information from previous iterations and instead of asking our engineering team if he could go work with our previous designer and webflow specialist to change things, Homie just Claude coded an entire replacement and frankly, it kicks the slats out of our old website. So does this mean software is dead? One of the key counterpoints is kicked up by PromptWatch's Klaus. He writes, SaaS is dead. Says someone who's never stepped foot in a company with more than seven people. The point being, of course, that many of these stories of disruption are from the absolute most enfranchised, nimble, highly technically literate and fast moving types of companies, and that the dynamics inside bigger companies are very, very different. James Blunt expanded the thought. He writes, large enterprises don't run on apps. They run on decades of layered systems, ERP mainframes, custom services, data warehouses, compliance controls and fragile integrations nobody dares touch without a 12 month change plan. AI agents don't just plug in and replace that. He cautions that there's a difference between markets and the actual lived reality of enterprises. Stocks, he says, can move on expectations. Enterprise architecture moves on risk tolerance. Those timelines are very different. In an interview a couple of days ago, Nvidia CEO Jensen Huang spoke about this, saying that the market is just plain wrong. The notion, he said, that AI is somehow going to replace software companies is the most illogical thing in the world. And time will prove it.