Forty Years of the Wrong Floor Plan
What factory electrification teaches us about $285 billion in vanishing enterprise software value
This week, we’re talking:
$2 trillion in SaaS value evaporated and Wall Street can’t decide if it’s the apocalypse or a generational buying opportunity 📉 💸 🎰
The Daylight Principle: if a foundation model can do what your product does, you’re standing on a trapdoor 🪤 ☀️
Sam Altman once called the Jasper CEO to give him a heads up that he was f****d — who’s getting that call next? 📞 💀
Kana emerges from stealth with $15M to build AI agents that actually do the marketing 🤖 📣
France bans Zoom and Teams as Europe draws a digital sovereignty line in the sand 🇫🇷 🚫 🇺🇸
Democrats are running on AI policy in 2026 — and the White House doesn’t have an answer 🗳️ 🤖
Modi tried to get Altman and Amodei to hold hands — it did not go well 🇮🇳 🤝❌
My Take:
In the 1880s, factory owners got access to an extraordinary new technology called electricity. They did what any rational operator would do. They pulled out the steam engine and installed an electric motor.
And then they changed almost nothing else.
The overhead shafts remained. The belts stayed strung across the ceiling. Every machine was still tethered to a central source of power. The factory floor plan still reflected the physical reality of steam: one large engine, distributing force mechanically across the building.
Electricity removed the constraint. Nobody noticed.
As the economic historian Paul David put it, managers simply “overlaid one technical system upon a preexisting stratum.”
And so productivity didn’t budge. For forty years.
Finally, in the 1920s, a new generation of managers had the obvious-in-hindsight breakthrough: put a small motor on each individual machine. Rip out the shafts and pulleys entirely. Redesign the factory floor around the actual sequence of work. Productivity exploded. The technology hadn’t changed. The willingness to abandon the old workflow had.
I keep thinking about those factory owners when I watch market coverage of the enterprise software selloff.
What the Repricing Actually Signals
Mainstream narratives have you missing the forest for the trees. The story you’re hearing: $285 billion in enterprise software value evaporated because the market is “spooked by AI.” That kind of repricing doesn’t come from fear. It comes from structural recognition.
The market caught up to something builders should have seen coming: in an agentic AI world, the value map gets redrawn. And a whole lot of enterprise software is standing on the wrong side of the line.
For decades, enterprise software has employed remarkable technology to preserve unremarkable workflows. And the thing is, the model made sense under the old constraints. Humans were the unit of work. Software existed to make human workflows marginally less painful. You charged per seat because humans sat in seats. You designed dashboards because humans needed to look at something. You built approval chains because humans needed to coordinate with other humans.
But agentic AI removes the bottleneck. And just like electricity eliminated the need for a central drive shaft, it eliminated the need for software organized around human steps. Agents don’t consume seats. They don’t need dashboards. Agents pursue outcomes. That single shift collapses the logic that propped up an entire generation of enterprise software companies.
The Daylight Principle
Here’s a diagnostic that cuts through the noise: how much daylight is there between what your product does and what a foundation model can do on its own?
If the answer is “not much,” you’re in trouble. Remember Jasper? They discovered the GPT-3.5 API early, turned it into marketing copy, and everybody thought it was magic. At least until OpenAI put ChatGPT in front of everyone for free. Sam Altman famously called the Jasper CEO to give him a heads up that he was f****d.
Harvey, the legal AI unicorn, is staring down the same barrel. Claude can now inhale every legal template, every NDA, every standard SaaS contract… most of which are open-sourced or publicly available anyway. Why pay hundreds of thousands of dollars for a wrapper when you can go straight to the model?
This is the question the market is asking about every enterprise software company right now. Not “do they have AI?” but “is there any daylight between what they do and what the model does natively?” If you’re just sprinting with an AI workflow on top of commodity capabilities, the model is on your heels.
Where Value Actually Lives
Infrastructure, for one. AI workloads don’t buy licenses — they generate compute cycles, API calls, and throughput. As agents scale, infrastructure vendors see rising consumption. That’s a structural tailwind, and it’s the exact inverse of the per-seat headwind hitting legacy SaaS.
Data, obviously. Agents are only as good as the data they consume. If you’re building the connective tissue between siloed data sources, or building a business that generates or captures proprietary data in its basic design, you’re in a good spot.
And the one most people miss: the human orchestration layer. Agentic systems are not a path to removing humans. They’re a fundamentally different way for humans and machines to work together. The human role shifts from executing steps to executing judgement and providing the signal that models can’t infer on their own. They become coaches, critics, and correctors of the AI system. Like: Why a recommendation was accepted. Which tradeoff mattered in that moment. What “good” looked like under imperfect conditions.
The enterprises that design governance and human oversight into their agentic systems — not bolt it on after the fact — will unlock extraordinary leverage. The ones that treat AI as a way to subtract headcount from an unchanged process will find themselves optimizing a factory floor that’s still organized around steam.
The Design Shift
If you’re building for the enterprise right now, starting with automation is the wrong place to begin. Bolting AI onto legacy pricing structures is exactly as doomed as bolting AI onto legacy workflows. Both are just preserving ordinary behavior with extraordinary technology.
And meanwhile, the cost of coordination is dropping faster than most organizations can metabolize. Individual contributors are discovering that work that once required entire teams and weeks can now be done solo in hours or minutes.
Factory owners in the 1880s had the most powerful technology of their generation. They used it to preserve a workflow designed for steam. It took forty years for someone to rethink the floor.
We don’t have forty years. The market just delivered that message plainly. The question that should keep every builder up at night is this: are you building for the world that’s coming or the one that’s going?
What I’m Reading:
Kana emerges from stealth with $15M to build flexible AI agents for marketers via TechCrunch 🤖 📣
Chavez and Vaidya emphasized the importance of the platform’s flexibility, arguing that the ability to deploy, tailor, and build new agents in real time would let marketers see results on their campaigns faster than they would with legacy systems.
For more, see:
France dumps Zoom and Teams as Europe seeks digital autonomy from the US 🇫🇷 🚫 🇺🇸
Around Europe, governments and institutions are seeking to reduce their use of digital services from U.S. Big Tech companies and turning to domestic or free alternatives. The push for “digital sovereignty” is gaining attention as the Trump administration strikes an increasingly belligerent posture toward the continent, highlighted by recent tensions over Greenland that intensified fears that Silicon Valley giants could be compelled to cut off access.
Democrats run on AI policy in 2026 campaigns by Ashley Gold via Axios 🗳️ 🤖
As AI's rapid advancements sound alarms even from within the ranks of AI companies, the Trump administration has embraced a very hands-off approach to the technology, and Congress has not passed major AI legislation… democrats runnings for office see an opportunity.
Modi’s AI summit turns awkward as tech leaders Sam Altman and Dario Amodei dodge contact via the AP 🇮🇳 🤝 ❌
If you’re confused about what’s happening here, might I again recommend you check out Empire of AI by Karen Hao? Review here:
