We Fixed It, You're Welcome - Is AI Replacing SaaS? - Microsoft

Starting point is 00:00:00 It's something else here now. Something new. From. Exclusively on Paramount Plus. It's the series Stephen King calls scary as hell. Everything here is impossible, but it's also real. Sci-fi Vision calls it the best show streaming right now. We're running out of time and we still don't know the rules.

Starting point is 00:00:19 Don't miss what the movie blog calls something you need to watch. Saving those children is how we all go home. From binge all episodes exclusively on Paramount Plus. All right, here's how this works. In each episode, we pick a company we all know that has something going on right now. Then we put ourselves in charge and see if we can fix it. You'll be hearing from Melissa and Operations, Chino on people in culture, and me on marketing. My name's Aaron. As always, a quick disclaimer, we are going into this somewhat cold and nothing we say should be construed as legal advice, financial advice, or anything that would get us in trouble. These are

Starting point is 00:01:08 our views and opinions. We're here to ask the kinds of questions everyone's thinking, have an engaging conversation and maybe come to some conclusions that we feel are worth exploring. By the end, if we fixed it, you're welcome. All trademarks, IP, and brand elements discussed are property of their respective owners. Welcome back to you. We fixed it. You're welcome. Before we fix what we're about to fix and then pat ourselves on the back, we want to thank you first, our listeners. Whether you're a fixaholic or just treating it for the first time, we appreciate you for getting the word out. We just launched in December of last year and our little podcast is about to hit 10,000 downloads. and we're on the charts.

Starting point is 00:01:45 So you must like what we're doing, which is what we're hearing, and we'll keep giving you more. In addition to your regular fearless fixers, Chino, Melissa, and myself, we have a financial expert who'll be joining us, and I can't wait to introduce him. But first, Melissa, TES up. What are we going to fix today? Well, today let's jump into another hot topic.

Starting point is 00:02:03 We don't seem to shy away from those. And that is, is AI killing SaaS? As we know it, what better company to focus on than Microsoft, who's known as a trailblazer in both SaaS and AI, making it an ideal focal point and subject for this discussion. The panelists, including our special guest panelists, look forward to talking about this, and we will work on how we would fix it.

Starting point is 00:02:28 So, Aaron, please introduce our special guest today. Yeah, let's meet our guests with the financial take on all this. We're joined by a venture capitalist and investor, Daron, Newark, of Cityside Ventures. Duran, will you take a minute to introduce yourself and let our listeners know who you are? Stuart, thank you for having me. My name is Duran York. I'm the CEO of Citiside Venture in Birmingham, Michigan. Created Citi's Side Venture six years ago, seven.

Starting point is 00:02:55 And we investing in early stage startup companies. We have about 75 companies in our portfolio, old tech base, scalable tech. Thanks, Duran. Great. Good to have you here. And I know you have a lot to say about AI and SaaS and business model disruption, not to get ahead of ourselves, but Melissa, tell us what we're going to get into. So just a little background for us in today's episode, we're diving into a topic that's

Starting point is 00:03:19 revolutionizing both technology and business, Microsoft at the intersection of SaaS and AI. Why Microsoft? Well, because it's not just a tech giant, it's a pioneer from dominating traditional software with Windows and Office to transforming into an innovation powerhouse. Microsoft has led in the shift to SaaS with Microsoft. 365 and is now redefining productivity with AI tools like copilot, its partnership with OpenAI and the Azure AI platform. So Microsoft's journey from software king to AI leader offers a blueprint for the future, but with innovation comes big challenges. How do businesses adapt? What happens to pricing models and workforce challenges and strategies? And how do we ensure AI drives value without leaving

Starting point is 00:04:08 gaps. So today, we're going to try to unpack some of these questions, offering insights for anyone ready to navigate this revolution, whether you're a tech enthusiast, business leader, startup leader, and this conversation is for you. So let's dive in. And who would like to start? I don't know. I can pick on someone, too. Pick on somebody. I'll pick on you. I'd love to know how you think AI will disrupt the SaaS business model, or will it enhance it? What's your thoughts? And what have you been hearing from, like, especially tech startups? Well, it's a great question. We actually, we're running out on podcast. We have an extra which is spending, it said to stop. Start over. We're losing your audio. Tell me that the

Starting point is 00:04:55 recording stops. It is stops. Should I keep going? No, keep going. But your audio is cutting in and out. Yeah, start over again. Okay. So we're doing a lot of investigating and researching today. I and we're running an episode next week about AI with one of the local experts. It's a great question what you brought. I have a different perspective about AI. If you look in the history of from the Internet to, you know, when the worldwide web had created, and then after that, we went from software, you have to buy software license to, you know, SaaS model, and then blockchain came to the market and everybody said,

Starting point is 00:05:35 Here is here goes the traditional data now everything going to be best in blockchain and blah blah blah and now the AI So I think before we even get to the end Sorry, I got to stop you your audio keeps cutting in and out and if there's a setting you can change But I don't want to I don't want to waste a good question Okay, I have a strong signal on my Wi-Fi, so I don't know what's going Can you hear me? Yeah Okay, so what I'm saying there's a lot of first we need to to understand that there's a lot of hype or on AI right now question how much of this hype

Starting point is 00:06:07 it's actual real and how much it's just the enthusiasm from the tech guys and the venture capital guys and jumping and everything and everything around the sun. First we need to defy artificial intelligence. It's actually an oxymoran statement because the moment you say artificial intelligence which is you pointed it's not real

Starting point is 00:06:25 it's artificial and defy intelligence. So some say intelligence, true intelligence is going to come only when it's going to be a free will involved so that the system will ever make their own choices without the human telling him how to make choices. So I think it's a lot of hype. I think it's going to impact a lot of areas in life, not in the speed that people think it is. I think it's going to be like anything else. After the hype, it's going to be kind of adoption, and then it's going to settle,

Starting point is 00:06:51 and then it's going to be part of every day's life. With this impact certain industry and the way that using AI, sure, is, again, I don't think it's a, it's a, It's a short process. I think it's going to be a long-term process. Two things missing in the AI world right now, according to our perspective. One, you remember what made the Internet, the Internet, as we know it, is when they invented the TCP IP protocol, the IP address. When this protocol came, the Internet become the Super Highway.

Starting point is 00:07:23 Not everybody had the IP address, and suddenly, boom, everything exploded. The same mechanism or the same principle of the same protocol, if you will, still not being invented for AI. The moment it will, it's going to settle everything together. And then the second thing is the regulators. We don't know how the regulator is going to get into it to do what degree. We already know that in the U.S., for example, they limited the use in medical decisions and other places.

Starting point is 00:07:50 So, you know, we need to look at different things. So is this going to kill SES? Yes, but not in the short run. It will take another cycle of about five plus years until it will introduce a new model. SAS still going to be the prime model right now. If I need to invest in technology that's going to be the results going to be five, six years down the road, I should take it in consideration, but I don't think it's an immediate thing. SAS actually being challenged not by AI, funny enough.

Starting point is 00:08:24 SES being channeled, in my opinion, by the model of the young generation that they was almost, like I want to pay as I use it, you know, instead of subscription. I think there's a bigger impact in Cess than AI in this point. And then remember that AI is still missing the false positive into it. So you don't know if what you get is real. You don't know if it's credible information. You know what it's coming from. So it's actually, I hear a lot of people that says we prefer to go to the traditional investigation process and information instead of using AI because it's more risky that we get something incredible in AI versus Google or something else. So to answer your question, a different way, it's going to impact SaaS, but it's not going to impact SAS the way

Starting point is 00:09:10 that tomorrow it's all going down the tube. It's going to take some time to replace SaaS models. In SAS models, it's funny, according to Forrester, 60% of the people that on SAS model one way another saying that they're not using more than 50% of what the subscription actually allow them. So they're saying, I don't want to pay for it. Microinsurance and micro benefits, this is the model of the future that I want to be in a system that I pay as I use it, not paying because I have a subscription to it. Yeah, I think you bring up some really good points because I do believe that AI tools won't necessarily replace traditional SaaS platforms, like you said.

Starting point is 00:09:52 but we'll complement them. And that's what really the tools are most likely trying to do right now, not replace but enhance functionality, making platforms smarter, more predictive and adaptive. And then that foundational infrastructure of SaaS remains essential. It's just how the usability and the tracking of that. So that would be something that we should also get into is like those pricing models, subscription models, like you said,

Starting point is 00:10:18 those are really important things. And I do think that obviously we've talked about AI and other, you know, in other podcasts, but in episodes. But the challenges that arise when integrating something into something traditional that already exist is really not just around the data silos, legacy system, you know, compatibility. Oh my gosh, I'm having Trump speaking today. But it's really about the resistance of change. And so Chino, like, that's a big thing is that, like, you see some of these more traditional teams and traditional customers and traditional companies resisting change. And Microsoft seems like they're trying to get ahead of that.

Starting point is 00:11:05 But tell me what your thoughts are from a people perspective. Yeah, I think Doran and you both, Melissa, bring up a really good point. Because when we look at, like, the word artificial intelligence, right? to me, AI is a tool. It should always be a tool. People are so afraid that AI is going to take our jobs. That is not going to happen. It's going to help enhance our jobs, right? And I think, you know, Microsoft is doing a really great job as they have in the past being those leaders, those visionaries, the pioneers, the set forward. But to your point, Doran, you know, when it comes to regulation, you know, certain sectors, right? When you look at SaaS as a whole, you know, it became very popular when there was. vertical SaaS, meaning that SaaS, you know, subscription as a service moved into niche markets, right? So vertical SaaS became really big. And so you have different products for different things.

Starting point is 00:11:58 And Microsoft is one that has become a catch-all. And so with AI, you know, if AI is a catch-all and we're not really sure what information is going where and what. And we can't really trust that. To your point, Melissa, is like, how do we get people to trust in the SaaS? that they're using, the AI that they're using as a tool, because if we're saying it might not give you all the information, how do we kind of fine-tune that? And so I think of looking at vertical AI, so niche-focused AI within SaaS will be really important.

Starting point is 00:12:32 So when it comes to the medical field, right, like I, you know, don't want to, you know, share, if I'm doing my taxes, I don't necessarily want like my sin number, you know, all of my data, my business, or whatever. whatever, to be there or, you know, there's other personal data as well because we don't really know and trust. And so I think what Microsoft will need to do is build a tool within their AI to help kind of the mundane tasks. So, you know, organization, setting things up, allowing people to realize kind of the other 50% of that service that they're not really

Starting point is 00:13:08 using will be helpful, right, so that it builds that trust to then continue to use and then we can get a little bit more niche focus, have more of a vertical AI within that space. So I think that will be really important moving forward for Microsoft. I do think AI within Microsoft and SaaS is going to be a tool. I don't think it's going to kill SAS. It's only going to enhance it like most things, but it's just how we use.

Starting point is 00:13:34 And I think it's going to take some time to figure out what that looks like. And I think any business, if you're going to move into the future, you need to start thinking about what that looks now. So you can get your customers, your clients, your base to learn how to use it in the way you need to so that it can get adopted. Yeah, and I think we're moving into what I'd consider the third phase of software development, right? Like, it started out. You'd go to a retail store. You'd buy software in a box.

Starting point is 00:14:02 Maybe early adopters would get it from a catalog or, you know, a mailing list or something and get a floppy disk. But most people have the experience of if you're of a certain generation, you go to the store and you pick up your, office or Photoshop or whatever it is. That's wave one. Wave two is, wait a minute, I can't buy the box edition and that's going to serve me for the next five years. I've got to pay this monthly subscription license fee, which would come to call SaaS. That was the next wave business model. But then this third wave of AI, it almost, you know, it has the potential to decouple the user from the software and go anywhere. You could, you can, you can. could argue iot also right like you know if you can use your product or your brand touchpoint

Starting point is 00:14:50 on a refrigerator or smart speaker you know that's kind of a bridge situation but now we're in the fact where you know if if Microsoft's creating these agents that can make decisions for you and carry from what application to the next or be almost headless where you you know you you access it where you want to is how do you even know you're interfacing with Microsoft anymore like what's what's the value that that brings and you know from one company for the next how do they play in that space and they're saying i think i think everyone's building the highway right now right they're building the tracks and laying down the foundation but do they know what they have with all this investment it's not just Microsoft that's a big player but do they know what they have or are they just building

Starting point is 00:15:35 for the future no it's not it's not only that it's very similar to what's happening with that with the eve market right now we in detroit in Michigan. So, you know, when Tesla took the electric vehicle market to a whole different level, everybody got in their mother got into it, GM and Ford and Crisis and Cali. I mean, they're all making a lot of EVs, but tend to realize the infrastructure is not there. The adoption is not there. You know, there's no charging station around the highway. There's a problem with the batteries. There's a problem with distance. The problem, so now everybody's scaling back and say, well, wait a minute. We need to rethink. So with AI, there's all.

Starting point is 00:16:13 also an element that the you know I believe in the next few years at least in the short run we're going to see AI as a utility which means that you you have a SaaS model if it's Salesforce or if it's something else they will implement AI as part of the of the offering to make it faster better so instead of using the mouse and click a button as I can talk to the system or if I need information instead of going and check 27 menus I can say hey Salesforce give me the sales report for last month and boom, it's going to happen. So it will start by implementing as a utility, but until AI going to be an independent entity that can really manage the world, we are 20 years away from it.

Starting point is 00:16:55 Until we're going to have the quantum computing become mainstream, it's not going to fly because it requires so much computer power. So our regular computer cannot handle it. So when you have supercomputter or quantum computer as a mainstream, and then it's an expedite the process. But You know, we went from AI as an application to an AI as a platform to a vertical AI, now as a Gentic AI, tomorrow it's going to be something else. We don't know yet. I don't think any of them are right and I think all of them are wrong. So it's like, you know, we don't know yet. We see some area that AI can be a big benefit for when you search for information, you do some research, you're looking for some stuff, it can help you sort through many things.

Starting point is 00:17:37 But the question again, right now we're using a lot of AI tools. in our due diligence process on companies, and we're running them in three different AI platforms simultaneously to see the gaps of information. And there is a gap. So, you know, it's a challenge. So we're not building the super highway. Now everybody gets excited to building the next shiny product

Starting point is 00:17:59 based on AI, but they all forget that the infrastructure is not there yet. So we'll end up with all those tools and all this great development that they have no way to go with it because there's no supercomputer that can run what you need. you need. So GM announced that they building their own AI engine internally in the company, but they're waiting for the supercomputers to, because they're not going to be able to process the amount of data they have in a company on a regular computer network. So it's like, it's insane. I'm putting up the integration challenges, because I do think that like the infrastructure that

Starting point is 00:18:32 we have is to your point, not what is going to be able to support that future of AI. I think that currently, to your point, there are ways in which AI can dramatically enhance, for example, operational efficiency. So you'll see there's that automation of repetitive tasks, reducing the human error. And I've seen that in businesses that I've worked in. And that is really great from a customer experience perspective because it accelerates response times. You're getting more consistent resolution to your issues. Like in customer support, for example, most of us are participating in a relationship, whether you want to or not, with AI power chatbots and virtual assistance to help handle common inquiries, also allowing for availability 24-7. But there's always a need for that, well, in today's world, that human assist to tackle more complex issues.

Starting point is 00:19:31 And I think, Erin, you kind of talked about this a little bit with the trust issue. and how to personalize the responses so it feels like something that you feel like this is somebody I can trust. And I think it's interesting and maybe Erin your thoughts on this, but like when you look at, for example, what these big SaaS companies are calling some of their AI integration. So for example, Microsoft has co-pilot, which is, you know, another, it's a leader. You know, you feel like, okay, safe with a pilot. Salesforce has Einstein, right? And, you know, I think Adobe is called Sensei or something like that. So, Aaron, what's your thoughts about how to brand this so that you can take the fear away from the customer base as well as, like, how do you, you know, integrate all

Starting point is 00:20:24 of the challenges that are, you know, for the long haul? Because this is something that everybody's hot on right now. Yeah, about seven or eight years ago, I wrote, I wrote a little treatise on a paper. I called it a bot. I didn't have a word for it. So I thought, you know, there's going to be a bot, which is like a digital self, right? Because once you're, and now with AI, you start feeding these applications and training them and saying speak the way I speak. It's going around maybe we're, you know, 10, 20 years from it. But it's getting to the point where you could maybe, let's spin the future story, have a digital kind of footprint or replicate, right?

Starting point is 00:21:02 who can think like you, make decisions like you, and then you can start to trust it to make purchases and set it on, you know, if it's your co-pilot, if it's someone that you've fed enough information, you can say, you know, from a business perspective, make business decisions for me and I'll stand behind what you do. If it's more from a consumer perspective, I love concerts, I love sitting in the front.

Starting point is 00:21:26 I just, you know, and my digital self bought me some concert tickets while I was sleeping and spent my money, I'd say thanks. So I think, you know, it's trust in familiarity, right? So the trust part comes with, do you know who I am? You know, as a professional, as an individual, can you reflect back with accuracy the kinds of decisions or kinds of, you know, thoughts, thoughts that I'd be having? And can you replicate that for me in areas that I can't do myself because it's tedious,

Starting point is 00:21:55 it's repetitive. It's, it bogs me down. That's where you would, I guess, create maybe a brand, preference or a loyalist preference from one company to another. But, but, you know, I'm curious, like, until we get to that point where there's a polished product to attach yourself to, and we're in this incubation phase or sticky phase, what's that like from a company perspective? Like, how do you keep momentum going? And I want to touch on two points that you mentioned, and also you too, Doran. So I think we're a lot closer to this stage, because Navidia, actually,

Starting point is 00:22:30 a few weeks ago. Shout out to Tunavidia who's been really pushing the game. Obviously that has been shaken up a little bit in the last coming weeks, but the CEO introduced a new supercomputer, I think it's like $3,000 that has the processing power to do that, right?

Starting point is 00:22:46 Again, if you think back to a Mac, 15, 20 years ago, they were huge, chunky, but they had the power, they were expensive. I think it was at a time where it was a little more consumer-friendly and like budget-friendly for a baby person.

Starting point is 00:23:02 And so I think we're a lot closer to it being used in the day-to-day. And I think, you know, looking at a background in terms of behavior, and again, went to school for psychology and, you know, understanding behavior and the wise. And, Erin, you bring up a really good point when it comes to the brand and understanding yourself. And so it's really important for Microsoft right now within their sat, like within SaaS, is to figure out. This is that testing.

Starting point is 00:23:31 This is that Q&A period where you're doing a lot of research to figure out what do your customers want. There's been thousands and thousands of inquiries, troubleshooting. Anytime there's a problem, there's a bot asking you something. You have the data, right? So using the power of AI and the power of even having humanized look at it and analyze that to figure out what does our team, what do our customers want here? because the second you figure that out, and again, it doesn't need to be, you know, you're thinking for me, to be honest, again, when you look at certain tools like Adobe where you talk about design, right, those people get paid for their designs, their intractual property.

Starting point is 00:24:15 I don't want AI necessarily to take exactly who I am, right? Because then it becomes into the system and then, okay, cool, how do I differentiate myself? How do I capitalize off of that? I'm just giving it to Microsoft who we're going to. Again, it's a billion-dollar company. But what I would love Microsoft to do is make my life easier in my day-to-day. So maybe that's, you know, defining things, summarizing certain notes, having access to it. It's really about from the beginning having little ways to kind of build that trust.

Starting point is 00:24:47 So you think about, you talk about purchasing power too there. Alexa, buy me, you know, restock my toilet paper. You know, it's going low. we've started seeing that. And I think Microsoft and other SaaS companies need to start thinking about, okay, what are ways that we can slowly bring in and build this trust? Because personally, I don't want AI to, you know, take all of my intellectual property and, you know, teach their machine and teach their robot.

Starting point is 00:25:18 But what I would love a robot to do is do those mundane tasks that I don't want to do. And so it's figuring out kind of what that middle ground is for their customer base. So that you can start adopting that and teaching your AI to kind of fine tin that. Again, once you have that, and again, maybe 15, 20 years, I might say, you know what, please duplicate me so I can be on an island somewhere and someone else can be me, right? That's fine, too. Right now in this incubation phase, I need someone just to do the mundane things for me. And I think that's what they need to focus on is what that common denominator is for everybody

Starting point is 00:25:55 and really lean into that. Well, Duran, what do customers want in this experimental phase? Do we want the comfort of an app and a software and a subscription, or are we ready to experiment and go along for the ride? Well, I think you need to break it down to two different, the answer of two different sides to them. One, as I'm pointing again to the utility element, that's what Chino is talking about, is utility.

Starting point is 00:26:19 So look at Zoom, for example, the tool everybody used 10 hours a day. you know, now you can click a button and they take summary of the conversation. So here I am, three months ago, stopped taking notes when I'm actually singing with people. I don't have to worry about missing anything. It's going to summarize everything for me, and I checked it periodically, and it's pretty accurate. So, you know, I don't have to worry about it. I finished the meeting. I don't have to spend another 15 minutes organizing my notes.

Starting point is 00:26:45 It saved me two hours a day, you know, by not doing it, right? So that's a utility. The other utility is that, you know, if I, when we get to a point, like if you ask Alexa, hey, Alexa, you know, I'm hungry. What should I eat? And she's going to suggest to you there's Chinese food, there's Mexican food? Well, that's kind of obvious, right? But when I get to the point I say, Alexa, I feel blues today.

Starting point is 00:27:10 I mean, I'm not really myself today. I'm a little bit of a down, my stomach, and I'm hungry. And Alexa, be able to say, hmm, you know, she should be able to recommend me something. based on understanding my communication. I'm saying, wow, this is the utility I want to have, right? So, you know, in many ways. So all the SaaS platform like Zoom or Salesforce are that they're going to implement the AI component in top of it

Starting point is 00:27:33 to eliminate unnecessary things, like you say, mundane things that you do like taking notes or customized reports or things that are too mundane to do, and AI is going to do it for you. From that level to what the customer wants, If you ask techies or young people or people that just like to play with technology, they will tell you I want to know how to write codes. You ask professionals like myself, I wanted to do stuff for me.

Starting point is 00:28:00 I don't need to understand. When I buy a car today, you don't open the hood to look at an engine. When is the last time you bought a car and he opened the hood and said, oh, show me the engine, explain to me how the engine is different than this one. You get to the car, you feel comfortable, you see the tech, you take a test drive, and you buy the car. I'm driving in Range Rover that I bought a year ago. I never opened the hood once. I don't care.

Starting point is 00:28:24 So most people don't care what's under the hood. They want the utility. They want them to do the work. So asking the customer what you want is could be a mistake in that regard. But any SaaS model out there from Microsoft to anybody else need to look. What are the mundane things that you ask me to do as a user that you can take AI away from me? And then at the day, you give me an hour, extra hour of whatever. Organize my file.

Starting point is 00:28:51 You know, organize my schedule. You know, I don't know. We tried somebody show me this thing when you go through your Google. Excuse me, using the Connolly, for example, to schedule meeting. Can I go say, hey, Colony, can you change Wednesday between hours three and four to do only 15 minutes? I can speak into it and boom, it's going to go do it for me instead of me going to click in a hundred times. So I think the utility element of AI is going to take over a lot of things in life. Is this going to replace the people or they're going to replace the existing system?

Starting point is 00:29:23 In the future, in the long-term future, yes, but not now. You know, the whole digital self and my digital twin and my AI twin and all the stuff, I think we have an issue with that because AI can actually create your identical twin with a twist. So which means it's not really you. it's you as you want people to see you. So is this real? So, you know, you have some issues here that you have to be careful about. But in manufacturing, in industry 4.0, taking the mundane task that people do, it's just going to replace some workforce, yes.

Starting point is 00:30:01 But not to the degree that it's going to impact the industry in a magnificent way. Not in a short run. In the long run. I actually would disagree with you, Doran. And I appreciate everything you're sharing and I agree up to the point of when you think it's going to take your, like, AI is not going to take our jobs. We, like the artificial intelligence is humans putting it out there, right? We know right now, AI is quite biased.

Starting point is 00:30:28 It doesn't have certain perspectives there. It can never duplicate me as a human because there's so much nuances to that. Maybe in 3,000 years, like literally 3,000. thousand years, I would think so, but as a human, there's something about the human experience that we can't touch with things that are untangible that make me, me, that make you, you. And so, again, when you look at SaaS as a subscription and with Microsoft and companies like that, yes, mundane task, utility, great. That's what you're, that's what people need right now. That's, you know, you want to start incorporating and building that trust? Sure. If I'm using Microsoft

Starting point is 00:31:06 and I'm saying, hey, people pay me as a consultant to help with their, kind of recruiting. And again, yes, I don't actually use Zoom summary notes because I'm often having confidential conversations where, again, I don't know where this is going. I don't want to share this person's personal information here. So it can't. There are things that are that I have to do as a human to move away from that to protect and from a regulation perspective, the people that I work with. And on top of that, I can't give AI everything. Again, you see it. so much, especially on LinkedIn, right? You can tell when it's an AI generated post. You can tell right now, and of course, it's getting smarter, but the problem is, if everybody's using the same

Starting point is 00:31:50 tech, and if everybody's learning from the same thing, and AI as a whole is giving us all the same information, the only way to stand out as in the market is to be an individual, to be human. So cool, we can all put our information, we can utilize it, but then AI will become this one singular entity. And so that's where we can never really replace us. I can't. It can learn from us, but it can never be me. It can never be you. And so I agree with the utilization piece, but I don't think that in the future. And again, at the end of the day, it's supposed to help us do our jobs better. If AI was to take me as a whole, then what? It's not helping me at all. then, you know, my clients just go to the AI, you know, businesses, Microsoft ceases to exist

Starting point is 00:32:39 because everyone's like, cool, I can create my own Microsoft then and build that. That's not going to happen. There's a reason, like, there are people who are programming AI that's a tool for us. AI is not us. So first of all, I want to correct something. I didn't say that AI will replace humans. I'm saying in some areas, especially in the industry, and I know it's an industry expert, that it will replace some workforce they do mundane job with the AI utility. It's not going to emulate people from the production line. It's just instead of 20 people, they're going to use 16. So it will impact in that regard.

Starting point is 00:33:14 And the second thing, I want to ask all of us to be very careful to make statement like, he never replaced human. We don't know. We don't know what it's going to do. Are you ever seen the movie Odyssey 2000 that, you know, when AI can get to a point that in some glitch in the system, it's going to take over and his own identity. We don't know.

Starting point is 00:33:36 That's the risk that we're taking with developing this cutting edge technology. So I wouldn't say, because I've seen it in my lifetime, and I'm a little bit older than you that people say on the beginning of the Internet, oh, that's going to go away. It's not going to replace, ha, ha, ha, ha. It did replace the entire system. So I don't know why it's going to look 20 years from now. The rate of development, as we experience right now,

Starting point is 00:33:59 it might happen quicker than we think. but not in the immediate future. I would have to disagree because AI, again, like this is like the theory of like the Matrix, and there's so many movies and books and things about this. AI cannot reproduce. AI is a robot.

Starting point is 00:34:15 I put water on said robot. The robot is dead. End of discussion, right? Like it's zeros and ones that we're programming at the end of the day. We are not zeros and one. We are made as humans. You can kind of take that into more spiritual,

Starting point is 00:34:30 theoretical, theoretical, biological, and many different ways. And so I agree that some jobs will become redundant. However, there will also be a thousand other jobs that built in terms of like AI prompt, DevOps, AI engineers, machine learning engineers and things of that nature where people can then learn and maybe not needing to go to school, do that and can kind of use AI to learn from that. But to say that AI will become people in the future, like that can never. happen because we are the people who are prompting and programming set AI. They're learning from us, but the biological data that makes humans humans, we're human.

Starting point is 00:35:14 They don't, AI doesn't have that. I can tell you that I experienced two weeks ago the Invasion Authority in Israel, which is putting a lot of money into turning Israel to an AI powerhouse. All the cybersecurity company is struggling right now with AI because they were not ready to AI threat to cybersecurity, so they're all developing different things. And one company in particular, Reddard mentioned the name. They build, some of the engineer build, they call it Mario, which is kind of the Mario brothers you see in the game.

Starting point is 00:35:43 Mario is the warrior inside the software that's supposed to combat threats. How it works right now is the threats coming in and there's people sitting behind the screen and they're doing some stuff trying to fight it. And they develop Mario, so they throw a threat to Mario. and Mario take his time and respond. And then he put another threat and he responds again. And he threw another threat and respond again. In a matter of two and a half months,

Starting point is 00:36:10 his knowledge-based in his capability went thousand percent. So right now, this is a month and a half running in Israel right now. No hacker was ever to beat Mario yet. I don't disagree that AI is not smart. No, no. The point in I'm trying to make is that when this big brain call the biggest language model that when AI get to a point that they're going to have enough to teach himself, we don't know where it's going to go from there.

Starting point is 00:36:37 They're not going to be, AI is not going to be human flesh and blood like humans, but the intelligence that we're talking about can get to a level and different dimension that we not even comprehend to see. I agree with that, but I would say, too, AI, like, again, the Internet's smarter than me. AI is smarter than me. That'll always be that. I can never be me. A.I.

Starting point is 00:36:59 I will never have the nuances of me as a human. And so, again, it can, you know, beat every hacker, which is fine. And again, what's the point of that AI? What's the end result? Why for the AIs? Just to gain information, are they using that in a malicious way? Are they just having it so we know that they can and to help people patch holes? Like, the Y is the human piece for the AI.

Starting point is 00:37:21 And that's kind of what it comes down to. And so going back into our topic with Microsoft, and SaaS and, you know, incorporating AI, again, AI will never be us as a human being. It will always be smarter. The internet's smarter than us. And so using that as a tool will be really helpful because at the end of the day, the people who need the tools are the humans. And so I do think that for any SaaS company, you do need to start incorporating, figuring out

Starting point is 00:37:50 what the utility basis is for your customer base to keep moving. Melissa, I want to take us back to the business case because if AI becomes another utility, right, and everyone's got, there's enough companies spending huge expenditures on this, right? 228 million, wait, 228 billion, sorry, this coming year. If we're just in the big three companies, it becomes a utility and everyone can produce images, everyone can produce videos, everyone can produce time-saving tools and all that. How do you create, how do you stick to what you can, what you do best as a business and that kind of evolving landscape if you're Microsoft, let's say. Well, it's, you know, I want to mention one thing that. I want to hear Melissa, I want to hear Melissa.

Starting point is 00:38:36 I'll go back to you. Oh, I got it. Well, I think to be able to ensure a smooth evolution, SaaS companies need to prioritize both the design, user-centric design and maintain a balance between that automation and human interaction. You know, I talked about human touch. We really need to understand and give comprehensive communication and transparency around that, tailored training and support, helping customers adapt to all of these new AI-driven features with transparency. And so the understanding of how AI is interacting with either with the SaaS or with, you know, the software, whatever they're asking for.

Starting point is 00:39:20 You know, monitoring that feedback and how it's performing is really important because, again, as we're looking to line up that journey to build trust, we really also want to make sure that we're integrating and innovating and refining the AI experience. And so Microsoft needs to exemplify this by integrating IA gradually and continuing to focus on that like it's doing in its partnerships with OpenAI, Azure co-pilot, while maintaining robust. customer experience channels. I think that's really important. I think the one thing that I know that we're trying to wrap this up, this is a hot topic, but we didn't really get to, which I think is really going to be important to, and this is probably from, you know, all of our perspectives is really shifting to the different type of models.

Starting point is 00:40:11 So like there was mentioned at the beginning about usage-based models that we talked about and whether that's going to be the way of the world. I mean, because it is interesting because a subscription means something to, you know, people versus, you know, as needed. I definitely, you know, have worked in businesses where we were a Google suite versus Microsoft world. And so I let my Microsoft subscription lapse, right? And so then I would get annoyed when someone would send me like a PowerPoint because I

Starting point is 00:40:43 couldn't open it. I'd be like, what? You know? So, again, I think that there's. there is a need to think about as the business is evolving. So as SAS is looking to incorporate all of these innovations, how do they, from a business perspective, stay on top of that too. So that's my answer. Aaron, I don't know if that helps. We're being asked to wrap it up. But before we do, we always have to ask ourselves if we fixed it. And I want to know, Duran is the big headline from Microsoft

Starting point is 00:41:15 recently, is SaaS is dead. That's the one that got all the attention. attention. Is SaaS dead? Is AI taking it over? Or do we create maybe a world where SaaS can coexist? Or do we fix the issue we set out to fix? I'm taking the statement of Microsoft CEO said SAS is dead is like telling somebody you have cancer and you have 10 years to live, which means I'm saying yes, SAS is dead, yes, but it's going to take 10 years. It's not like you're dead tomorrow. It's it will take SaaS out of the equation in some point in time, but it's going to be a while before you see it. What do you think, Gina?

Starting point is 00:41:53 I think SaaS is going to look different. Again, you can use AI as a tool, and if they can figure that out from, like, usability and all the other things that we talked about and building your teams around that, you know, you can see a resurgence in SaaS. You know, who knows, as Doran was saying earlier to, like, like blockchain and everything else that has come and gone, we might be saying, you know what, in 10, 15 years, everyone's kind of over AI and only uses it for this, right? We, again, don't know. So I think it's going to change the landscape of SAS. I don't think it's going to kill it necessarily.

Starting point is 00:42:30 How about you, Melissa? Is SAS dead? Or do we find a compelling reason to keep it around and have it coexist with AI as it continues to emerge? Yeah, necessarily. I think it just needs to evolve and level up. And I think that that means that you need to do what they're currently doing. And one of the things that, you know, really needs to happen is the infrastructure remains critical, but we need to use AI in a way that they don't fall behind, but they're evolving and making it more intuitive for everyone who needs it and understanding what the customer needs look like. And again, I think in the future, what do AI agents look like using these smart adaptive efficient tools and making them like personalize,

Starting point is 00:43:17 intuitive part of our everyday life that with transparency is going to be really important. The business model may need to change a bit. But again, I would say that's evolution, not necessarily killing it to extinction. How about you? I think I agree with what you're saying, what everyone's saying. I think as AI is more and more of a utility, it's which I guess it comes down to which company I trust more, which company knows me better, which brand do I identify with more? And unless Microsoft can create a compelling reason why Microsoft can continue to evolve in the age of AI versus Google versus meta versus everyone else, you know, how do they play in that space? And I know a lot of their own, a lot of companies, you know, you work with and startups and in that field are wrestling with that issue, maybe taking on a bite-sized piece of it or, you know, one one segment of, that challenge. Microsoft is, we're all watching because we're face to face with it. But I have a

Starting point is 00:44:17 feeling we're, you know, we're never going to buy the software in a box again. We're not going backward. So I like the conversation that we've had. And that takes us to the end of another episode. Thank you again to Duran York of Cityside Ventures. And Daron, if our listeners want to find out more about you, where can they go? Oh, to Cysidevc.com and find everything they need to find. Great. It's been a pleasure having you on. For the rest of us, you want to connect with our panelists about fixes for your own company and HR marketing operations, customer experience, and other critical areas, please reach out at we fixeditpod.com. We will see you next time.

Starting point is 00:44:52 This podcast is produced by Straightforward Media Group, All Rights Reserved. If you'd like to learn more about how a podcast can help your company establish authority and generate leads, please email us at Eric at straightforwardmg.com or go to straightforwardmg.com. or go to straightforwardmg.com for more information.

We Fixed It, You're Welcome - Is AI Replacing SaaS? - Microsoft

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