Important points
- Public trust in educational institutions is undermined by a perceived lack of accountability.
- The Epstein case highlighted the lack of investigations into powerful people.
- The hypocrisy of elites undermines society’s trust.
- Media surveillance influences public perceptions of accountability.
- The software sector experienced a significant decline in value.
- SaaS companies are facing challenges from the bespoke software trend.
- Advances in AI introduce uncertainty into software evaluation.
- The decline in software companies’ stock prices is linked to the uncertainty caused by AI.
- The SaaS market is not dead, but it faces significant challenges.
- High-cost SaaS products are at risk of being replaced by bespoke solutions.
- As AI-powered solutions emerge, SaaS companies may become obsolete.
- Investors are adjusting valuations in recognition of future uncertainty.
Guest introduction
Brad Gerstner is the founder and CEO of Altimeter Capital, a Silicon Valley technology investment firm that manages more than $15 billion across public equity and venture capital portfolios. He previously served as a founding principal at General Catalyst and co-founded three Internet search companies. The last of those companies was sold to Google in 2012. Altimeter has driven big wins, including the major Snowflake IPO and early investments in MongoDB and Zillow.
Collapse of trust in institutions
The circumstances surrounding Epstein’s death and the lack of accountability for those in power have eroded trust in the organization.
— Brad Gerstner
- The Epstein case illustrates the erosion of public trust in elites and institutions.
This is why no one trusts institutions, powerful elites, or garbage.
— Brad Gerstner
- Suspicions have been raised because there have been no charges against those involved.
Epstein’s death has raised suspicions and suggests a lack of investigation into the powerful people involved.
— Brad Gerstner
- Perceived failures in accountability are a matter of serious concern.
To me, this seems like the type of thing that undermines trust in institutions.
— Brad Gerstner
- To understand these implications, knowledge of the Epstein scandal is essential.
hypocrisy of those in power
- Trust is undermined when public figures engage in unethical behavior when preaching to others.
The level of hypocrisy that the very people doing the worst acts are preaching to others.
— Brad Gerstner
- This disconnect between public persona and private behavior is important.
- The actions of influential individuals influence social trust.
This is why we lack trust.
— Brad Gerstner
- It is essential to understand the broader impact of public figures’ actions.
- The hypocrisy of elites is contributing to the erosion of public trust.
The very people who are doing the worst are preaching to others.
— Brad Gerstner
Media oversight and accountability
- The New York Times did not report on Epstein’s ties to Silicon Valley.
If you’re writing about Silicon Valley, it’s Reed who introduced Epstein to Peter Thiel.
— Brad Gerstner
- This oversight affects the public’s perception of the responsibilities of elites.
It’s hard not to touch on that as the root of Epstein’s involvement in Silicon Valley.
— Brad Gerstner
- The role of the media in shaping public perception is important.
- Understanding the implications of media coverage of accountability is critical.
- A lack of reporting on the connections of influential figures has raised concerns.
Mark Zuckerberg planned that famous dinner.
— Brad Gerstner
Decline of the software sector
- The value of the software sector has fallen significantly.
On Tuesday, the S&P wiped out $300 million in value in the software and data stocks category.
— Brad Gerstner
- Various factors contribute to these declines.
- Understanding the market trends affecting software stocks is essential.
- This decline is related to the perception that software is becoming more bespoke.
SaaS continues to be negatively impacted by this concept of software being tailor-made.
— Brad Gerstner
- SaaS companies’ performance is influenced by industry trends.
- Knowledge of the SaaS market is essential to understanding these trends.
The impact of AI on software evaluation
- Many software companies are experiencing stock price declines due to the uncertainty caused by AI.
It’s not because profits are going down, it’s down because we’re discounting future uncertainty.
— Brad Gerstner
- Advances in AI create uncertainty in future cash flows.
Free cash flow multiple increased from 30x to 15x.
— Brad Gerstner
- Understanding the impact of AI on market perception is critical.
- Falling valuations are associated with less durable cash flows.
I don’t know what will happen in 7 years.
— Brad Gerstner
- Knowledge of financial metrics and investor confidence is essential.
SaaS product challenges
- Predictions that all SaaS is dead are exaggerated.
For SaaS products that charge high fees, I don’t think that exists.
— Brad Gerstner
- High-cost SaaS products face major challenges.
You are being targeted for…something more tailored.
— Brad Gerstner
- Understanding the current landscape of SaaS products is critical.
- The challenge with SaaS products is related to the pricing model.
- The future of SaaS comes with both challenges and misconceptions.
- Knowledge of SaaS market dynamics is essential.
The future of SaaS in an AI-driven world
- SaaS companies can be an older layer of the stack.
The risk for SaaS companies is becoming an older layer of the stack.
— Brad Gerstner
- New AI-driven solutions are likely to emerge on top of the existing stack.
A new layer is built on top of that, and added value is created there.
— Brad Gerstner
- Understanding how technology stacks evolve is critical.
- The role of AI in reimagining software solutions is critical.
- SaaS companies must adapt to stay relevant.
- Knowledge of the evolution of the technology stack is essential.
