AI
‘AI is the pin’: Zoho founder says SaaS model was doomed
Mumbai/IBNS: Zoho founder and Chief Scientist Sridhar Vembu has said that artificial intelligence is the “pin that is popping the inflated balloon” of Software-as-a-Service (SaaS) companies, a disruption he claimed to have anticipated well before the current AI boom.
Vembu said he had earlier warned that the SaaS industry’s heavy dependence on sales and marketing over core engineering and product development made many companies inherently vulnerable.
“An industry that spends vastly more on sales and marketing than on engineering and product development was always vulnerable,” Vembu said.
Responding to a user on X who remarked that SaaS companies were “continuing to get murdered,” Vembu argued that both venture capital and stock market exuberance had sustained a fundamentally flawed business model for far too long.
“The venture capital bubble and then the stock market bubble funded a fundamentally flawed, unsustainable model for too long. AI is the pin that is popping this inflated balloon,” he said.
The stock market is becoming very negative about the prospects of SaaS companies in the AI-assisted Code era. Well before the AI revolution, I have said SaaS industry is ripe for consolidation. An industry that spends vastly more on sales and marketing than on engineering and… https://t.co/JHhodD4VPo
— Sridhar Vembu (@svembu) February 4, 2026
In a note of introspection, the Zoho founder added that the company’s ability to survive and thrive in the AI-driven landscape would depend on how effectively it adapts to the changing environment.
“I always ask our employees to calmly contemplate our death. When we accept that possibility, we become more fearless and that is when we can calmly chart our course,” Vembu said.
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