Reports declaring 'SaaS is dead' miss the bigger picture, according to veteran investor Bob Morse. While AI has indeed slashed software production costs and sparked new competition, this doesn't spell decline for the industry. Instead, Financial Engines demonstrated how technology can unlock massive demand—growing from startup to $169 billion in assets under management before selling for $3 billion in 2018.

Morse points to the Jevons Paradox—the economic principle where efficiency gains drive higher consumption rather than lower costs. More efficient coal engines in 1860s Britain accelerated coal usage, just as modern data centers exploded despite Moore's Law predictions of reduced space needs. His firm acquired bankrupt Exodus Communications assets for $200 million in 2004, later selling the merged business for $3.2 billion as demand surged.

Today's business software market totals roughly $0.5 trillion annually, while the U.S. pays approximately $10 trillion to knowledge workers. Companies currently spend just 5% of knowledge worker costs on supporting software tools. AI changes this equation by enabling vendors to sell outcomes directly rather than just productivity tools.

The real opportunity isn't software's demise but its evolution into delivering knowledge work itself. Millions of businesses lacking access to strategists, analysts, or advisors will soon gain affordable digital alternatives, expanding the total addressable market dramatically.