Investing in the SaaSpocalypse with Heller House's Marcelo Lima

In this episode of Yet Another Value Podcast, host Andrew Walker speaks with Marcelo Lima of Heller House Capital about the "SaaSpocalypse". Marcelo shares his perspective from years of following software companies, arguing that fears around AI disrupting SaaS are overblown. They examine whether AI tools threaten incumbents like Salesforce or instead strengthen them through faster product development. The discussion covers valuation compression, enterprise software moats, customer behavior shifts, and the role of AI as infrastructure. Andrew also raises concerns about disruption risks, insider signals, and workforce changes, leading to a debate on whether this moment represents risk or opportunity.

Marcelo's memos on software

Memo 1: https://mailchi.mp/hellerhs/opportunities-in-software

Memo 2: https://mailchi.mp/hellerhs/opportunities-in-software-part-ii

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[00:00:00] Introduction and SaaS apocalypse topic

[00:02:24] Disclaimer and setup discussion

[00:03:26] SaaS selloff and market reaction

[00:07:58] AI disruption concerns raised

[00:10:09] Valuation compression and risk pricing

[00:14:24] Salesforce adoption timing shifts

[00:16:09] Incumbents’ advantage and feedback loops

[00:20:57] Headless software and interface changes

[00:22:29] Backend value versus frontend control

[00:27:02] Historical analogy with Slack usage

[00:29:22] Insider buying skepticism discussion

[00:34:36] Power law dynamics in SaaS

[00:35:53] Company earnings and AI impact

[00:36:36] Adobe Lightroom AI example

[00:40:11] Bloomberg replacement with AI tools

[00:42:25] AI tooling limitations and costs

[00:46:02] Bugs and reliability challenges

[00:47:24] Preferred SaaS companies discussed

[00:51:28] Stock compensation and dilution concerns

[00:55:59] AI productivity and hiring dynamics

[00:56:27] Opposing view on engineer demand

[00:59:16] AI increasing work intensity

[01:00:23] Enterprise software reliability moat

[01:04:49] AI as infrastructure layer

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Production and editing by The Podcast Consultant - https://thepodcastconsultant.com/