Great write up John! You taught me a couple new moats.
Founders need to be way more thoughtful about what and how they build. Moat building is existential now vs just a few years ago when all u needed was a big funding round.
Really exciting times and I think we are going to enter an era of really great software. Anything short of world class won't make it...exciting for the consumer!
Great point about a big funding round being a false moat, Carl. Raising lots of money isn't an actual strategy. Hopefully that's the end of SaaS companies bragging about their $80M Series B and then proceeding to march into obscurity. And yes, excited to see what comes next!
John, great piece and you've nailed all four levers. As an electrical engineer with 30+ years in technology and digital transformation, the architecture layer point really resonates. The Base 44 ad that aired during the Super Bowl kinda pissed me off if I'm being honest. It reminded me of big pharma commercials that encourage patients to ask their doctor about prescribing a specific drug to them. Clearly the pharma company's priority is getting their drug adopted, not necessarily the patient's best health outcome. Similarly, Base 44 celebrated how easily anyone can build the experience layer while completely ignoring what's underneath. Obviously, their priority is gaining a foothold in your organization, not necessarily doing right by it. And sure, if you've ever been frustrated by your IT department's reluctance to give you what you need, that ad must have been music to your ears. But for any organization with shadow IT policies and data governance requirements, it should be a very real wake-up call. I wonder how many people jumped on Base 44 the Monday after the Super Bowl and started vibe coding apps? In my hands-on experience with tools like Base 44 and Lovable, they're genuinely impressive for prototyping, but the back-end data models they generate are rarely well-architected unless the person prompting them has enough software engineering expertise to guide the design intentionally. That's the catch: you still need domain expertise to know what to ask for in the first place. These platforms will get there eventually, but for now the architecture layer remains a meaningful moat, and to your point, smart software companies should be doubling down on it.
Thanks for adding that depth, Greg. The back-end looks like it's both a moat and an angle of attack for new entrants like Base 44 and Lovable. What I've heard from others is that the businesses behind these "experience layer" tools understand the shortcomings you describe, and will work their way into becoming a "system of record" over time, replacing the very moat that incumbents enjoy. How they would do this exactly and how feasible that is, I won't make any claims to. But it seems like the battle has definitely shifted from "who has the best way to create experiences" (AI tools have essentially won) to "who has the best back end to run AI". Andlet's not forget that incumbents have an opportunity to build an AI-driven experience layer too, which could effectively push Lovable and Base 44 out of contention!
Great write up John! You taught me a couple new moats.
Founders need to be way more thoughtful about what and how they build. Moat building is existential now vs just a few years ago when all u needed was a big funding round.
Really exciting times and I think we are going to enter an era of really great software. Anything short of world class won't make it...exciting for the consumer!
Great point about a big funding round being a false moat, Carl. Raising lots of money isn't an actual strategy. Hopefully that's the end of SaaS companies bragging about their $80M Series B and then proceeding to march into obscurity. And yes, excited to see what comes next!
John, great piece and you've nailed all four levers. As an electrical engineer with 30+ years in technology and digital transformation, the architecture layer point really resonates. The Base 44 ad that aired during the Super Bowl kinda pissed me off if I'm being honest. It reminded me of big pharma commercials that encourage patients to ask their doctor about prescribing a specific drug to them. Clearly the pharma company's priority is getting their drug adopted, not necessarily the patient's best health outcome. Similarly, Base 44 celebrated how easily anyone can build the experience layer while completely ignoring what's underneath. Obviously, their priority is gaining a foothold in your organization, not necessarily doing right by it. And sure, if you've ever been frustrated by your IT department's reluctance to give you what you need, that ad must have been music to your ears. But for any organization with shadow IT policies and data governance requirements, it should be a very real wake-up call. I wonder how many people jumped on Base 44 the Monday after the Super Bowl and started vibe coding apps? In my hands-on experience with tools like Base 44 and Lovable, they're genuinely impressive for prototyping, but the back-end data models they generate are rarely well-architected unless the person prompting them has enough software engineering expertise to guide the design intentionally. That's the catch: you still need domain expertise to know what to ask for in the first place. These platforms will get there eventually, but for now the architecture layer remains a meaningful moat, and to your point, smart software companies should be doubling down on it.
Thanks for adding that depth, Greg. The back-end looks like it's both a moat and an angle of attack for new entrants like Base 44 and Lovable. What I've heard from others is that the businesses behind these "experience layer" tools understand the shortcomings you describe, and will work their way into becoming a "system of record" over time, replacing the very moat that incumbents enjoy. How they would do this exactly and how feasible that is, I won't make any claims to. But it seems like the battle has definitely shifted from "who has the best way to create experiences" (AI tools have essentially won) to "who has the best back end to run AI". Andlet's not forget that incumbents have an opportunity to build an AI-driven experience layer too, which could effectively push Lovable and Base 44 out of contention!