Everything software and SAAS is suddenly toxic.
The release of Anthropic's new AI tool called Claude Plugins raised the stakes. It demonstrated that a large portion of software could be obsolete.
It's a new phase in AI. We're through the creative phase, now it's the creative-destruction phase.
The company released 11 open-source plugins that were built and used by its teams. Here is how they describe them:
- Productivity — Manage tasks, calendars, daily workflows, and personal context
- Enterprise search — Find information across your company's tools and docs
- Plugin Create/Customize — Create and customize new plugins from scratch
- Sales — Research prospects, prep deals, and follow your sales process
- Finance — Analyze financials, build models, and track key metrics
- Data — Query, visualize, and interpret datasets
- Legal — Review documents, flag risks, and track compliance
- Marketing — Draft content, plan campaigns, and manage launches
- Customer support — Triage issues, draft responses, and surface solutions
- Product management — Write specs, prioritize roadmaps, and track progress
- Biology research — Search literature, analyze results, and plan experiments
Here is how Scotiabank describes it in a note today:
In our view, the release of Cowork several weeks ago and yesterday’s follow-up plugins launch raises questions related to the future of some SaaS businesses, specifically the disruption of simple, single- purpose software offerings, and pricing uncertainty for seat-based models.
At the moment, everything is getting tossed out. An example is Thomson-Reuters, which was already being battered before it cratered yesterday. The company is famous for news but makes most of its money on the legal side, which is specifically what one of the plug-ins targets.
The whole shift has flipped the entire paradigm. For years the theme in markets was 'software eats the world' and now it's 'AI eats software'.
The analysts are already talking about differentiating between the software stocks that will be disrupted versus the ones that have some type of moat via proprietary data or network effects. In my experience, everything gets tossed and the whole indstustry gets washed out before bottom fishing makes sense. I'm sure there will be exceptions but there is a lot of froth here. This was one of the most-highly valued industries with sky-high multiples. With disruption coming, those multiples need to contract in a big way.
The one possible casualty that's adjacent is banking or wealth managers. Much of software is held by private equity at lofty valuations and there will be some pain there.
Meanwhile, money continues to rotate into things that won't be disrupted and are cheap. Here are shares of DOW, the chemical company, on a three-day rip.
