Draven McConville, SaaS founder and investor, warns of AI disruption to traditional software business models
SaaS, maybe more than any industry, is racing to embrace artificial intelligence. But according to Draven McConville, founder of recently-acquired field service management platform Klipboard and investor, Artificial Intelligence (AI) could fundamentally change the traditional SaaS business model.
“AI and AI-assisted development tools are going to fundamentally disrupt the SaaS industry,” he says. “The barrier to entry for creating software is dropping dramatically, which means we’re going to see increased competition and pressure on traditional SaaS business models.”
He speaks from direct experience. “At Klipboard, we saw firsthand how AI is transforming software development when we implemented GitHub Copilot into our workflow. Immediately, the speed at which our developers could ship new features increased dramatically. Tasks that previously took weeks were being completed in days. It was a wake-up call. If our development efficiency could improve this much with just one AI tool, imagine what’s coming next.”
The pace of change has been relentless and AI-enabled code editors like Cursor and Windsurf are only adding fuel to the wind of change sweeping the industry.
McConville, who recently oversaw Klipboard’s acquisition by Kerridge Commercial Systems (KCS), believes this disruption will force SaaS companies to refocus on fundamentals. “When anyone can build a decent product using AI tools, your competitive advantage has to come from somewhere else. Strong brand identity and rock-solid business fundamentals will become more important than ever.”
Beyond Features and Functions
The entrepreneur, known for his customer-centric approach, suggests that SaaS companies will need to shift their focus from feature sets to relationship building. “We’re entering an era where features alone won’t differentiate you. AI will make it easier than ever to copy features and functionality. The companies that survive will be those that have built strong relationships with their customers and truly understand their needs.”
Valuation Impact
McConville also warns of the potential impact on SaaS valuations. “As AI lowers the technical barriers, we’re likely to see downward pressure on valuations for pure-play SaaS companies. Investors will be looking more closely at customer relationships, brand strength, and market understanding rather than just technical capabilities.”
Adapting to Change
Despite these challenges, there remain opportunities for companies willing to adapt. “This disruption doesn’t mean the end of SaaS, but it does mean evolution. Companies that can combine AI capabilities with deep industry knowledge and strong customer relationships will thrive.”
For SaaS founders navigating this changing landscape, Draven offers detailed recommendations based on his experience building and selling Klipboard.
Build Strong, Defensible Brands
“Your brand isn’t just your logo or website. It’s the sum of every interaction customers have with your company. At Klipboard, we built our brand around transparency and hands-on customer support. I regularly joined sales calls without revealing I was the CEO because I wanted to understand our customers firsthand. That kind of authentic brand building can’t be replicated by AI.”
Develop Deep Customer Relationships
“People buy from people. I’ve seen technically inferior products succeed because they had strong customer relationships. We didn’t just sell software at Klipboard. We became trusted advisors to our customers. As AI makes it easier to build features, these relationships become your moat, as Buffet would say. Get to know your customers’ businesses so well that you can anticipate their needs before they do.”
Understand Industry-Specific Needs
“Don’t chase trendy features just because your competitors have them. Our industry was still getting comfortable with IoT while others were rushing to add AI. Really understand your market’s readiness and actual needs. Sometimes the best technology isn’t the latest — it’s the one your customers will actually use.”
Create Value Beyond Basic Functionality
“As AI makes it easier to replicate basic functionality, you need to deliver value in ways that can’t be easily copied. This might mean building specialized workflows for specific industries, offering unique insights based on your data, adding integrations with third party platforms, or providing high-touch customer success services. And don’t forget the value of a beautifully executed user experience — that’s value that goes beyond feature lists.”
Maintain Solid Business Fundamentals
“Don’t lose sight of basic business principles. Strong fundamentals will separate sustainable businesses from those just chasing trends. As software is commoditized, your business model and execution matter more than ever.”
Looking ahead, he believes these fundamentals will become even more crucial.
“AI will commoditize many aspects of software development, but it can’t replicate genuine understanding of customer needs or replace solid business execution. The SaaS companies that thrive in this new era will be those that build their competitive advantage on these human elements rather than just technical capabilities.”
