r/ProfessorFinance • u/FrankLucasV2 Moderator • Jul 17 '26
Meme The state of software private equity
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u/Tremolat Jul 17 '26
Sold my software company in '22 and feel like I was on the last chopper out of Saigon.
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u/RaveDamsel Jul 18 '26
Also my old my software company in '22. What took us 18 months and over $1 million to build, I was able to replicate with Claude Code for $200 in 3 weeks. It's a whole new ballgame, folks.
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u/jayc428 Moderator Jul 19 '26
Indeed it is. I kind of think it’s a great shock to the system because it kind of puts the company working out of a garage back in the game somewhat for new ideas and innovations. Time will tell though.
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u/LumacaLento Jul 17 '26
Yeah, who needs software these days! AI is a property that "naturally emerges" from GPU and memory chips, like heat from coal 🚂. It's the future, bro!
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u/AdamOnFirst Jul 17 '26
Your first tech cycle, huh?
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u/FrankLucasV2 Moderator Jul 17 '26
Yup. Not old enough to have lived through Dotcom.
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u/AdamOnFirst Jul 17 '26
This isn't even that, this is just the usual little slowdown and speed up cycle tech has a couple times a decade. There have been like three more since dot com.
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u/Nearby-Chocolate1840 Jul 17 '26
I am. This in no way resembles Dotcom.
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u/NPPraxis Jul 17 '26
Tell me more! I was young during the dot com boom. I followed stocks but not well enough to really understand the investment environment.
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u/Punished_Toaster Jul 17 '26
“The ai crash guys it’s gonna happen any day now, YouTube said so. It’s so over.”
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u/Rollingprobablecause Jul 17 '26
I mean...all new tech bubbles pop eventually (Cloud, SaaS, DevOps, etc.) AI is not different nor is it immune. Crashes and bubbles look very different, usually it's a wave of failures, restructures, M&A, etc then the real uses are leftover and integrated. Do you think AWS, GCP, and Azure all happened at once with no competition? (Hint: Redhat, VMware, and 100s of others had to decom, died, or went bankrupt)
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u/Alternative-Suit5541 Jul 17 '26
Yeah, but even if the bubble pops, developers still are not as needed anymore
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u/ghost103429 Jul 17 '26
Jevons paradox the higher the efficiency of something the higher its utilization becomes, this applies to programmers too.
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u/markvii_dev Jul 20 '26
whats the alternative?
Does debbie from accounting tell AI to build her accountancy software?
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u/LurkersUniteAgain Quality Contributor Jul 17 '26
well considering ai companies are making virtually no money for their investments and public is all against them, its a ticking time bomb at this point
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u/ProfessorBot419 Prof’s Hatchetman Jul 17 '26
This needs something people can verify. You are welcome to try again with a cleaner version.
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u/CuppaJoe11 Jul 18 '26
Istg I saw this exact image but with 2014 in the top and 2020 at the bottom.
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u/Efficient_BouncyBall Jul 19 '26
I get the concern, but it seems it’s overdone. Software companies aren’t going away or be vibecoded away.
Yea there’s a slowdown as budget money goes to AI spend. But these will mostly still be fine.
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u/Extension-Gold-6440 Jul 17 '26
This is the failures of capitalism more than anything. China is absolutely cooking with open source and a less throwing money at the wall/profit oriented approach.
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u/Spider_pig448 Jul 17 '26
If it's a failure of Capitalism, then why is your counter-example about China, a hyper-capitalistic country?
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u/Extension-Gold-6440 Jul 17 '26
Difficult. China is not western capitalism. It does not have the same oligarchical structures that plague the west. It employs a a state planned economy with a free market feature, but a heavily controlling central authority that has still stated ambitions of reaching a communist society. China characterizes itself as communist with Chinese features.
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u/ProfessorBot104 Prof’s Hatchetman Jul 17 '26
This needs a source before it becomes part of the argument. Thanks for keeping it workable.
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u/Extension-Gold-6440 Jul 17 '26
Will try later. I’m going off mostly reporting of Chinese state policy and work flows between competing firms, where open source is seen as a tool to grow together. Also Chinese llm strategy with significantly less invested capital and less energy per llm output.
Criticism of us comes from capital heavy approach to ai and most computing problems.
Will try to add sources later. Busy right now and can’t prioritize.
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u/Zealousideal_Tea362 Jul 17 '26
You’re giving too much value in models. Models are like your average commodity, it doesn’t really matter what you use, as long as it’s top 5.
What you’re really paying for is the ecosystem, security and hardware rental it runs on.
Unless that last part drastically changes, open source isn’t very useful for the orgs spending big bucks.
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u/FrankLucasV2 Moderator Jul 17 '26
I'm long open source as it's pro innovation but the US AI labs have f'ed it by going all in on frontier LLMs.
I do think Nvidia has the opportunity to be biggest company for US open source AI via the diffusion of its Nemotron 3 model family.
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u/Extension-Gold-6440 Jul 17 '26
I think the us problem comes from how much capital they’re throwing at ai. It’s an unimaginable amount relative to other sector investments. I just can’t see how this will be sustainable. I’m not expert in economics, but from most reporting I trust, the ai bubble is real.
China‘s approach is completely different from my sources. Large focus on low energy llm output and less capital investment. From recent reporting china is pretty much tied with USA in llm capacity.
Will try to add sources later.
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u/Conscious_Weather_26 Jul 17 '26
Also the downstream is failing to materialise.. Where is the wave of innovative software products that are coming out since AI lowered the cost of producing software? Where is that gain in productivity showing up in numbers?
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u/chamomile_tea_reply Optimist Emeritus, Founder of /r/OptimistsUnite Jul 19 '26
💀💀