The Prof G Pod with Scott Galloway
00:17:55 · Scott Galloway
But what you don't hear about is just a nightmare when you spend too much of your, you spend everything on tech because that's the future and tech was the future. But that doesn't mean it goes through Amazon and Cisco lost 90 plus percent of their value from 1999 to 2001. Can you imagine the mental strain? Oh, Amazon's going to the moon. I'm putting in all $100,000 in my 04/2001 k in Amazon and you wake up and it's worth $7,000 So, low cost index funds diversified across asset classes and across geographies. Appreciate the question.
00:18:28 · Scott Galloway
[00:18:28] S0: We'll be right back after a quick break. Support for the show comes from BetterHelp. You've heard me say before how useful talk therapy can be when working through a hard problem and that BetterHelp has been a great option for a lot of people. But at the end of the day, the best way to know if BetterHelp is a good fit for you is to check it out yourself. More than 6,000,000 people have used BetterHelp globally. The consistent feedback from real users makes it easy to see why many people continue to choose the platform. BetterHelp reports on average live therapy sessions rating 4.9 out of five based on over 1,700,000 client session reviews. BetterHelp therapists have at least three years and a thousand hours of hands on experience. They also hold all required education, training, and certifications across a range of mental health specialties. And they make it easy to get started. You just have to answer a few questions, then get matched with a therapist based on your needs. And you can switch therapists at any time if it's not the right fit. See the reviews, see what stands out, and see if BetterHelp is right for you. Visit betterhelp.com/propg. That's Better, h e l p, dot com slash Prop G.
00:19:37 · S3
[00:19:37] S3: Are you tired of hearing about business, tech, and finance from the Bros? We are the Tiger Sisters, a top business podcast with the Vox Media Podcast Network. Tiger Sisters releases every Monday, and we decode money, power, and love. And who doesn't love all those things? We are the Internet's Wall Street and Silicon Valley big sisters. Tune in every Monday for late night sister talk meets boardroom strategy. Check out Tiger Sisters on YouTube, Spotify, or wherever you get your podcasts. Welcome to the Tiger fam.
00:20:08 · Scott Galloway, Scott Galloway
[00:20:08] S0: Support for the show comes from Vanta. As AI adoption grows, so do your company's security risks and requirements. New frameworks, audits, and vendors keep rolling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch up when audit season comes around again. Vanta works differently. Their agentic trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across more than 400 integrations, Vanta collects evidence and monitors your controls year round. You can cut your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools like Claude or Cursor. They work around the clock from full program context, so nothing slips through the cracks. The numbers back it up. Vanta delivers a 526% ROI over three years and pays for itself in just three months. Over 16,000 fast growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/propg and get a thousand dollars off. That's vanta.com/propg for a thousand off. [00:21:19] S1: Welcome back. Question number three.
00:21:19 · Scott Galloway, Ruth, Scott Galloway
[00:21:19] S1: Welcome back. Question number three. [00:21:22] S4: Hi, Scott. This is Ruth from Auckland, New Zealand. I've got a question about who wins the enterprise layer and really a question about whether we should be discussing SaaSpocalypse again. With OpenAI's release of Dots which can interact with I think 4,000 applications, it's clearly going after the enterprise market. With these LLMs getting towards enterprise, what's this going to mean for the incumbents? Thinking about the S and P 500, who are the incumbent technology companies that are most at risk as the LLMs look to control or dominate an enterprise? Thanks. [00:21:58] S1: Well that's sort of the question in tech. So what Ruth is referring to, last week OpenAI launched DOTS, AI agents that run around the clock and can work on their own across more than 4,000 apps. OpenAI is piloting them inside companies for procurement, invoice processing, customer support and contracts. What is the SaaS apocalypse? And just a brief refresher, the term SaaS apocalypse, SaaS meaning software as a service, refers to a major stock sell off earlier this year that erased nearly 1,000,000,000,000 in software value by early February and perhaps as much as 2,000,000,000,000 in the weeks after. For context, Thomson Reuters fell 15%, LegalZoom nearly 20%, Salesforce, Adobe, and ServiceNow each fell 7%. [00:22:41] S0: I don't know
00:22:41 · Scott Galloway
[00:22:41] S1: if that's an apocalypse. But anyways, the thesis behind the SaaS apocalypse can be explained in three parts. The first is just, you know, replacement. AI agents can do the work directly so companies will stop paying for the software built to help humans do it. The second is seats. Software companies charge for seat, meaning a recurring fee for every employee who logs in. If a company has a thousand salespeople on Salesforce, it pays for a thousand seats. When a handful of AI agents can do that work, the company needs fewer seats and the vendor's revenue shrinks even if the customer never leaves. And the third is building versus buying. Coding agents have made software so cheap to create that customers can build their own, you know, CRM software or at least threaten to, which pushes prices down at renewal and thereby putting pressure on margins. So was the fear justified? So far the numbers say no. Stripe's index of 72,000 SaaS businesses shows year over year growth above 30% at or above its twenty twenty three highs. The stocks have recovered too. The main software ETF rose 17% in the third quarter of this year. Salesforce gained 46% and Workday gained 55% according to CNBC's Jim Kramer. So where it was justified, the fear was right about where the new money is going among companies increasing their tech budgets. The share spending at least 5% of that budget on AI went from about 12% to more than 60%. So kind of the tech budgets, if it's not a zero sum game and it isn't yet, the people are spending incremental money, but at some point that spending on AI tokens is going to eat into the amount of money they spend on software. What I think has happened is the numbers, if you if you just do the numbers, wouldn't think there's an exogenous meteor called AI. I think the reason the stocks have gone down is around terminal value. And that is the market values, the market basically takes the present value of cash flows. And there was a general feeling amongst SaaS that once you were integrated or embedded into a company's workflow, you were kind of kind of be there forever. And they'd look at churn rates and say churn rates are 10, meaning you got a meaning every dollar is kind of worth, you know, in new business is worth $9 because it's gonna be 10, it's gonna be in there for nine or ten years.