But eventually people will catch up you can basically create a working product alone with the help of AI.

My prediction is that this will lead to a margin free-fall for many software products where the main moat is the software itself. And a lot of SaaS companies will also become redundant when the AI can code up a tailored solution in an hour for free.

I think so too. But in the meantime there is a quiet goldrush for people who spot niches where they can extract decent (or a lot) of value right now, and for long enough to be worthwhile. If they can get scale enough that thinner margins makes for a worthwhile business when the market catches up, great. If they can't, then we stay lean we might make off with decent ROI.

But that is also a reason to be cautious of chasing capital and think hard about whether you can spend it sensibly fast enough to improve your own ROI...

E.g. I have a project right now where I won't consider taking VC cash because I don't think I can spend it fast enough to buy me enough additional leverage to make enough additional money to compensate for the dilution and the other usual shenanigans before I expect margins will be squeezed out of the niche in question. It also means I don't think the opportunity will ever scale above a certain level, but that's fine - it'll be a quick attempt at grabbing what profit I can.

Also, while we of course shouldn't diminish the potential moat created by understanding the product in favour of only value the tech, we need to also consider that AI's are a levelling factor there too. Claude knows (I've verified what it's said) more about the niche I'm vaguely talking about than I do - it knows pricing, it knows positioning/marketing, it knows conventions and requirements of the niche, and while I'm sure I could have found all of it myself starting from scratch too it shortcircuited an enormous amount of effort to get an infodump that let me know precisely what to look for to verify it. A lot of tech companies will find the institutional knowledge they thought would shore up their moat is worth a lot less than they thought.

This is mostly correct IMO.

SaaS is extremely vulnerable, companies will be able to modify open source tools to do exactly what they need, and agents will make managing those services easier. This will lead to downward pressure on SaaS prices, and cause them to become more like cloud data management platforms that they let customers build on top of rather than one-size-fits-all apps.

I predict that the commercial market for a lot of software will evaporate as people find that getting AI to whip up a custom solution that fits their unique problem space like a glove is actually cheaper and simpler than trying to make COTS software do the job. We're not quite here yet, but maybe in a few years.

You are discounting sales, marketing, and branding. Take drop shipping for example: anyone can do this, but the successful ones are those that know how to brand and market the product well.

Not to mention having the right mindset for startups and building a business.

The code and product is maybe only 20% of the story.

Perhaps for extremely basic products. Most non-engineers can barely write and untangle their messy thoughts and you think they can just build a spec for an AI to build a product? Hopefully I'm wrong, but I doubt it.