How far will an AI-driven market correction spread beyond the most exposed companies?

Severin Hacker · May 19, 2025

Public markets are crudely bifurcating companies into 'AI winner' or 'AI loser', and Duolingo was mistakenly placed in the loser bucket before being reclassified

AI actually gives Duolingo tailwinds, as he has outlined

Scope: his only comment on public market pricing

23:56 20VC: Duolingo Co-Founder on Why $3M is Harder than $100M to Raise | Why You Should Always Take Tier 1 VCs Even at Worse Terms | Why Europe Can't Win Unless the US Screws Up | How AI Impacts the Future of Work and Education with Severin Hacker

Miles Clements · Mar 9, 2026

The software valuation reset reflects a legitimate repricing of future cash flows and terminal value, but has become an over-rotation

People are valuing future cash flows and terminal value differently, which isn't wrong in itself, but the move has gone too far

Scope: repricing itself is not wrong

44:21 20VC: Inside Accel's $4BN Growth Investing Machine | Cursor is Dead is Total BS: Here is Why | What Missing Rippling and ElevenLabs Taught Us | Are $2BN-$10BN IPOs Dead | Why Now is a Great Time to be Thoma Bravo with Miles Clements

Harry Stebbings · Mar 16, 2026

Atlassian is being massively oversold by the public market while Monday, though both are down ~75%, is roughly correctly priced.

Applying Gokul's eight-moat test, Atlassian holds materially more structural moats than Monday.

14:42 20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram

Aaron Levie · Apr 20, 2026

Software companies trading at three times cash flow is aggressively low and an overexaggeration; the market is currently bucketing the sector indiscriminately and will separate winners from losers over the next year or two

Agents will help some parts of software and pressure others; some companies must fully pivot while others can ride the wave, so the pendulum needs to find equilibrium

Scope: also concedes software has at times been aggressively overvalued relative to terminal value

38:40 20VC: Everyone is Wrong; We Will Have More Developers in Five Years | Why Frontier Labs Will Be Way More Valuable Than They Are Today | Are SaaS Companies Cooked: Which Thrive & Which Die with Aaron Levie, Founder at Box

Harry Stebbings · Jul 13, 2026

The public markets have treated Wix brutally, and the Wix buyback has been a disaster

Wix has $2.8B market cap against $2.1B revenue plus Base44 at over $150M ARR growing fast, and the market still won't give them credit

Scope: Harry brackets whether the market treatment is justified

0:28 20VC: Wix's Founder on What Wall St Gets Wrong About AI and Wix | Will Base44 Win the Vibe Coding Wars | The Truth About the Economics of Vibe-Coding | The Buyback Disaster: Lessons Learned with Avishai Abrahami

Lucas Swisher · Feb 23, 2026

Public SaaS is selling off because investors are, for the first time, questioning the terminal value of SaaS

SaaS was priced like an insurance annuity with perpetual revenue and profit pools; recent coding models from Anthropic, OpenAI and others have called that permanence into question, and once terminal value is in doubt the leniency investors extended on stock-based comp and GAAP vs non-GAAP earnings disappears too

Scope: driven especially by coding model releases in the last six months

4:57 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Harry Stebbings · Mar 2, 2026

The SaaSpocalypse is real, and monday.com is among the companies hit hardest by it

Close to $1.3B in revenue but only a $3.9B public market valuation

0:35 20VC: Monday.com CEO on Is SaaS Dead: Will Everything Be Vibe Coded | Will Systems of Record Become Valueless Databases in an Agentic World | Will LLMs Own the Value in the Application Layer with Eran Zinman

Harry Stebbings · Mar 7, 2026

Unlike 2008, today there is a fundamental technology inflection point that could render the incumbent set relatively redundant

16:35 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Oren Zeev · Feb 2, 2026

Public markets are applying a blanket discount to software companies because they cannot yet discern which incumbents AI will hurt and which it will help

The market is right that some software incumbents will be disrupted, but hasn't separated winners from losers, so SaaS multiples are lower than they've been in 10-12 years

7:50 20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Lucas Swisher · Feb 23, 2026

It is currently extremely hard to tell which discounted software companies are mispriced, and won't be knowable for the next three to nine months

Both bull and bear arguments are available for any given company (a design tool could integrate AI and create more value, or be replaced by generating designs in ChatGPT), and reported earnings are retroactive so you can only see into the past while things change fast

Scope: next three to nine months

6:16 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Avishai Abrahami · Jul 13, 2026

SaaS multiples have collapsed because the market doesn't know how to calculate the danger AI poses to SaaS companies

Investors can't price the AI risk, so they mark everything down; in some cases he agrees with the fear, in others he doesn't

Scope: he agrees with the market's assessment in some cases and disagrees in others

7:00 20VC: Wix's Founder on What Wall St Gets Wrong About AI and Wix | Will Base44 Win the Vibe Coding Wars | The Truth About the Economics of Vibe-Coding | The Buyback Disaster: Lessons Learned with Avishai Abrahami

Sebastian Siemiatkowski · Feb 16, 2026

Incumbent enterprise software companies won't disappear, but their revenue multiples could compress toward utility-like levels of one to two times sales

Customers stick with tools they've used for a long time, so the disruption shows up in valuation rather than in businesses vanishing; historical 20-30x price-to-sales has already fallen to 5-10x and utilities trade at 1-2x

Scope: uses price-to-sales because some are unprofitable; not overnight — customers are sticky

6:25 20VC: SaaS is Dead: Why Systems of Record Will Die in an Agentic World | What Revenue Multiple Will Software Companies Trade At? | From 7,000 to 3,000: We Need Less People Than Ever with Sebastian Siemiatkowski

Adam Foroughi · Apr 27, 2026 · hedged

The de-rating of enterprise SaaS is fair, and it probably isn't finished yet

Rapid product delivery from frontier LLM companies makes traditional enterprise SaaS terminal value dicey, so investors sell; falling stock then makes stock-based comp an extreme share of value, risking talent loss and a downward spiral

Scope: "I'm not a trader of businesses"; concerns the coming years

59:08 20VC: Applovin: $160BN Market Cap, $5.48BN Revenue, $10M EBITDA Per Head | Why the Best Do Not Need Mentorship | Why Founders Should Not Angel Invest | Why Kindness in Business Will Slow You Down with Adam Foroughi

Nikesh Arora · Jun 22, 2026

The market selloff in SaaS reflects a real coming reimagination of workflows — software will move from having no opinion to expressing an opinion and doing repetitive work for humans — but those AI applications have not been created yet

Only the SaaS versions exist today; the AI-native application layer that does the task and reimagines workflow is still to come

50:38 20VC: Nikesh Arora on the Frontier Model Problem: Breadth vs Depth | The Future of Token Costs | Memory Becoming the Moat | Where Value Accrues: Infra, Models, or Apps? | Why Enterprise AI is Not Ready & Systems of Record vs Systems of Intelligence

Harry Stebbings · Aug 23, 2023

Rather than a wave of down rounds, there will be a messy middle of last-generation, non-AI companies that simply bust while great and brand-new companies keep raising at good prices

Companies tinkering along in the murkiness that aren't AI or hot will slip through the cracks rather than get repriced

17:34 20VC: NEW FORMAT: Mega Funds Will Come Back, Why Markups Have Corrupted VC, Why RIFs Should Always Be An Embarrassment To SaaS Founders and Why Pitching is BS and Fake with Jason Lemkin and Rick Zullo

Beezer Clarkson · Oct 18, 2023

AI has shifted what customers want enough that previously strong software companies now look out of date and can no longer compete on product

AI-intelligent software changed what buyers are looking for, so customers stopped buying the same way

28:11 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Jerry Murdock · Aug 22, 2026

The core danger to PE firms with challenged portfolios is leverage: a rapid financial dislocation that drops EBITDA and raises churn would trigger effective margin calls on the debt

In 2001 TPG survived a terrible fund but Forstmann Little's telecom exposure ended the firm; today's PE portfolios are all levered up

Scope: Firms have time to act now, before any dislocation

44:12 20VC: The AI Bubble Will Burst: Half the Neoclouds Will Die | China: Should We Ban Chip Exports & Be Fearful of Chinese Open-Source | Mag7: Who Dies and Who Thrives: Why Meta is Meh and Microsoft is Mega

Jerry Murdock · Aug 22, 2026

Global public markets are critically important to what happens in the tech sector; a market dislocation is the trigger that would break levered assets

PE firms have enough EBITDA and know their survival is at stake, so they can devise strategies as long as the market stays up — but levered assets deflating is unmanageable

45:05 20VC: The AI Bubble Will Burst: Half the Neoclouds Will Die | China: Should We Ban Chip Exports & Be Fearful of Chinese Open-Source | Mag7: Who Dies and Who Thrives: Why Meta is Meh and Microsoft is Mega

Gili Raanan · Mar 28, 2026 · hedged

A multiple is simply the market's anticipation of a company's future growth rate, so compressed software multiples reflect expected growth decline rather than a permanent repricing

If those companies keep growing at an incredible pace regardless of the market, the multiples will rebound

28:59 Multiples are only growth expectations so they rebound if growth holds

Michael Eisenberg · Jun 19, 2024

Most public software companies growing only 10-20% is evidence for the peak SaaS thesis

17:17 Slow public saas growth is evidence of peak saas

Harry Stebbings · Aug 3, 2026 · hedged

The South Korean market crash reflects a realization that everything was overinflated rather than any demand-side signal, since nothing in open or closed models questions demand

Markets can't keep ripping indefinitely and there is no destabilizing factor suggesting demand is being questioned

59:59 Valuation overinflation not weakening demand drives the selloff

Jerry Murdock · Feb 28, 2026

The public market reaction to recent AI security news is not panic selling but a cautious pause, with buyers sitting on the sidelines waiting for more information about winners and losers

If it were genuine panic the stocks would be down far more than they are; investors who aren't technologists don't feel they have enough information to step back in

14:47 Current pullback is a cautious pause not panic

Jerry Murdock · Feb 28, 2026

In the 2000 crash the damage did not stay contained to the bubble segment — the dot-com collapse became a tsunami that took out all software companies, including those that thought they were insulated

Insight knew dot-coms were unsustainable (not enough commerce, not enough people on dial-up, not enough fiber in the ground) and assumed they'd be fine because they didn't do dot-com investments, but the contagion took everyone down for years

15:50 Contagion spreads to all software not just the bubble

Jerry Murdock · Aug 22, 2026

A dislocation would ultimately benefit hyperscalers because competitors get wiped out and assets become cheap to acquire

They have enough ongoing consistent business to absorb the shock while others cannot

10:21 Hyperscalers absorb the shock and buy distressed assets