Asset-light Software Businesses

Will Manidis and John Kennedy argue that software businesses are shifting from fixed costs to variable costs, producing asset-light companies that founders can build and fund with more control over their futures. They say the median bootstrapped B2B SaaS company spends around 90% of its annual recurring revenue on costs, including 25% on go-to-market and 24% on research and development. The authors contend that generative AI will accelerate this change by letting companies automate junior-level white-collar work, and they compare it to the internet's effect on content distribution. The article also states that Github Copilot has $100 million in average recurring revenue but loses around $20 per month per user.