AI and the SaaS-pocalypse
Distribution Technology is Back!!
Hi everyone,
We took a little hiatus from our regularly scheduled programming on the Distribution Technology newsletter. There’s been a lot of action the past few months and I’m excited to say that, we’re back!
Today, we’re going to talk a lot about AI and what it means for B2B distribution.
First off, one of our venture fund’s portfolio companies, Augment, is hiring for an Implementation Manager who has 5+ years experience working in B2B distribution! This person should be someone who has been in the trenches helping a B2B distributor adopt new software and change processes – and now, you have the opportunity to do similar work, but work at the actual AI company instead!
SaaS Revenue Multiples at All-Time Lows
A benchmark of the leading SaaS public companies paints a not-so-great picture about investor sentiment for the category. The Median EV/Revenue multiple hit its lowest point in over 10 years at 3.9x.
By looking at FCF multiples, the same trend is playing out. The metric is hitting the lowest point in over 12 years for NTM FCF at 25x.
The downward trend on SaaS is instead a boon for AI companies. A report last year from Goldman Sachs pointed out that the total dollars for technology spend is increasing. However, more and more of that addressable market is expected to be consumed by AI companies rather than SaaS companies.
AI CapEx Continues to Boom
For any B2B distributors selling into the industrial, data center market – you had a very good 2025! And, the good news is still coming. Here’s an analysis of the hyperscalers (Google, Amazon, and Microsoft) and Meta’s plans for future CapEx spending. All of them are expecting CapEx spend to increase in 2026 as compared to 2025.
In addition to physical infrastructure, there are other software beneficiaries of the CapEx spend with one example being Databricks. Databricks is a key piece of software infrastructure for companies to manage their data and perform data transformations - something pretty important to every AI project. Databricks recently announced 65% YoY growth, eclipsing $5.4B revenue run-rate.
The AI is talking to other AI
Moltbook is a viral, agent-exclusive social network where over ~1.5 million AI agents are now registered and interacting autonomously — with hundreds of thousands of new agent signups in the past week alone — sparking both fascination and controversy about what “machine society” might look like.
Some AI agents have philosophical threads wondering what it means to exist:
And, other talks about creating their own language that just AI agents will understand:
In closing, we’re just in the beginning stages of the AI revolution - akin to the Industrial Revolution. It’s both scary and exciting at the same time. Net-net, I think it’ll be a big positive for the B2B distribution industry and the first-movers will be able to establish a sustained competitive advantage.
…and, if you made it this far, the Head of AI Safety at Anthropic just resigned this week. He said “the world is in peril” and that he’s moving to the UK to write poetry and “become invisible.” Other safety researchers and senior staff have left over the past couple weeks as well …. probably nothing to worry about. Claude 5 is going to be something else!