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points by mandevil 2 days ago | 0 comments

For a while (2018-2022) it was hot to buy up software companies that dominated a single niche and jack up prices. The bet was that since software is such a 0-1 business that they would have great moats and have strong pricing power. My father-in-law is blind and used to use JAWS until it got bought up by a private equity firm (Vispero) which tried to dominate the software accessibility market and jacked up the prices to annual subscriptions. He's a electrical engineer so he was comfortable switching to free software NVDA, but a lot of people paid up.

Now with LLM's that business model is in shambles and the finance side of it is less attractive with interest rates so high. I suspect that this is actually driving the software engineer hiring slow-down, because these companies were actually doing most of the employing of software engineers, much more than the big tech companies.

[–] dam_jackalopes 2 days ago

I'm not a SWE, (I'm a data engineer) but this jives with what I saw while looking for work. I'm not a particularly good DE, so I was out there for 18 months. There were still plenty of listings but not many of them were in "tech" companies in the traditional sense. Part of this was leaving a tech hub for what is very much not one, but the biggest issue that I found in landing work was that I was now competing for relatively boring $100k+ jobs with guys who were working $200k+ jobs in 2020 - 2023. The 3 - 6 "tech" orgs that used to employ these folks regionally just aren't really hiring that much.

[–] annzabelle 2 days ago

Yes. I got laid off from Capital One at 3 years of experience in 2025 and I found myself either competing with laid off Amazon employees with 4+ years of experience or applying to junior roles and competing with new grads.

I ended up sidestepping the whole market and now I make $75k NZD, so I'm not sure who won in the end.

[–] bradknowles 2 days ago

The best managers I’ve ever known were some guys who came over to Amazon from Capital One. They were deeply embedded into the EC2 infrastructure systems, including the team I was on — EC2-Chronos. We were responsible for managing all NTP time sync across all of Amazon and AWS, in every single region, availability zone, and datacenter. That includes the isolated and classified regions.

That was also one of the best teams of technical people I’ve ever known.

Sadly, there was also the Amazon and AWS S-Team leadership, who came up with things like RTO and mandatory co-location with your manager. They lost a lot of good people, and I think that was entirely intentional.

[–] hedgehog 2 days ago

As I understand it the situation is much worse than that, the existing debt is floating rate so in some situations can put previously sustainable companies into the red. This of course also affects their ability to refinance so it can spiral from there unless they take drastic measures (which still might not be enough).

[–] lokar 2 days ago

I think a lot is fixed, but for a fairly short term. So you have roll the debt over (at the new market rates) every 5 to 10 years.

[–] peezd 2 days ago

Yeah, it's rarely not fixed, and a lot was tied to the historic expectation of the investment being at most ~5-7 years.

Closely related, you can read about the PE Zombie funds that cover a lot of this debt.

[–] chollida1 2 days ago

> Yeah, it's rarely not fixed, and a lot was tied to the historic expectation of the investment being at most ~5-7 years.

You've got it reversed, the debt BDC's and PC firms write is usually floating rate based off SOFR. That' s why they do so well in rising rate environments.

Now they often borrow at fixed rates by issuing bonds or preferred shares that pay a fixed rate so falling rates has to opposite effect on them.

[–] lesuorac 2 days ago

I mean if your borrowers go bankrupt then its bad for you.

[–] hedgehog 2 days ago

My understanding is that almost all deals are built on floating rate debt, with some hedging. I don't work in PE though, maybe someone here knows the market in more detail.

[–] gadders 2 days ago

I was thinking we should have our own internal saas-pocalypse where I work, or at least threaten one to our vendors.

It used to be that vendors could tie their cost to the value they provide, but now their cost is more correlated to the token spend to reverse engineer and re-implement them (using appropriate clean room controls etc). If their cost goes to far above the AI-driven re-write, they're more likely to get jettisoned (absent some other moat not included purely in the technology).

I'm sure we can all think of products that charge a fair whack in license fees, but would not be massively difficult to re-implement (or at least for the subset of features actually used).

[–] mikepurvis 2 days ago

On some level, yes, though when I choose a saas product, what I'm really choosing is not a basket of features, but rather someone else to be worrying about scaling, monitoring, security patches, uptime, etc.

Like in theory your agents can build all that too, but all the ancillary bits benefit a lot from being spread across a pool of users with different time zones, release cycles, whatever.

[–] jopsen 2 days ago

Exactly, just because you can vibe code an HTML sanitizer or an operation system, doesn't mean that you should..

And its the same reason you'd rather have a SaaS vendor, than asking an agent why the cloud bill keeps climbing and then have to debate the impact of delete such and such VMs or databases that nobody knows what do :)

You also don't ask your agent to start from assembly.

Things you can get upfront as libraries or services are things you and your agent don't have to worry about.

I'm not even sure there is anything new here, just that we have a capability jump with LLMs, you'll probably prefer spending it on building features, not replacing vendors (unless they are crazy expensive).

[–] francisofascii 2 days ago

So I wonder if the more generic SAAS platforms (like Azure, AWS) that can offer scaling, monitoring, security patches, etc. will start to niche or industry specific Saas tools. Since the "basket of features" is not what is really needed.

[–] gadders 2 days ago

Yeah, and admittedly you need to pick your problem domain sensibly.

i.e. you wouldn't vibe code your general ledger, but I'd guess Confluence is pretty vulnerable.

[–] infamouscow 2 days ago

Many organizations just want to diffuse responsibility away from themselves and will gladly sign a contract to do so. Paying a vendor is infinitely more affordable than the risk of trying to bring a vendors' core competency in-house.

I think the SaaS-pocalypse is going to surface more from new AI-first SaaS companies entering the market and undercutting incumbents in a way that's difficult to compete with.

[–] tmpz22 2 days ago

At the same time we have to value domain experience when it is a cornerstone. Ive worked for "middleman" companies that at face value seem superfluous only to realize we handled relationships or bureaucracies much more effectively then our clients could and thereby provided concrete value well beyond our cost.

[–] toomuchtodo 2 days ago

Just use a vendor intelligence service to find out what others are paying to cram down what they're trying to charge you. Lots of competitors in this space, you provide them contract details, they provide a report on how and where to push.

[–] paimapi 2 days ago

2018-2022 was also when interest rates were at historical lows so companies were placing 'big bets' with less-but-not-negligible risks. Same was true for hiring too - remote work + lots of liquidity meant a massive hiring spree that we're now, with our 5x higher interest rates, very much in the comedown for (and which many leaders pin on 'AI-assisted work' and not on their really rash and stupid bets not panning out).

[–] viklove 2 days ago

> I suspect that this is actually driving the software engineer hiring slow-down

Are we in a slow-down anymore? Anecdotally I feel things were rough Dec '25 - June '26, but ever since August I've had more interview requests in my inbox than I can remember in my 10+ year career.