On Aug. 20, 2011, legendary venture capitalist Marc Andreessen published a blog post—and an accompanying essay in the Wall Street Journal—that would become the sacred texts of the Silicon Valley bull run. Titled “Why Software Is Eating the World,” he argued that the global economy was undergoing a “dramatic and broad technological and economic shift” and that software companies were poised to take over large swaths of the industry.
Fifteen years later, in February 2026, Andreessen’s prophecy has been fulfilled in a manner that even the biggest bulls failed to predict. Software did indeed eat retail (Amazon), video (Netflix), music (Spotify), and telecommunications (Skype) just as Andreessen predicted, but the market got a $1 trillion shock in February because something was eating software itself. That something, of course, was artificial intelligence.
Morgan Stanley’s software analysts, led by Keith Weiss, offered a “gut check” this week in a major research note, arguing that “AI is software” but also that software is growing so all-consuming that it is indeed starting to eat work itself. Andreessen’s a16z has a core strategy of investing across enterprise software, including cloud, security, and software-as-a-service (SaaS), but the $1-trillion-plus selloff dubbed the “SaaSpocalypse” cuts to the very heart of that model. Andreessen looks like he was more right than he knew about software eating the world.
The original prophecy
To understand the severity of the current shift, one must look back at the skepticism Andreessen was fighting in 2011. Following the trauma of the dotcom crash, he declared that the stock market “hated technology.” While Apple was trading at a price-to-earnings ratio of just 15.2x amid immense profitability, investors constantly screamed, “Bubble!”
Andreessen claimed that companies like Amazon and Netflix were not merely speculative bets, but “real, high-growth, high-margin, highly defensible businesses” building a fully digitally wired global economy. He correctly identified that Borders was handing its keys to Amazon, that Netflix was eviscerating Blockbuster, and that “software is also eating much of the value chain of industries … in the physical world,” such as automobiles and agriculture.
For a decade and a half, he was right. The “creative destruction” he invoked—citing economist Joseph Schumpeter—decimated legacy incumbents and minted trillions in value for software insurgents. However, the AI revolution of 2022 and the SaaSpocalypse of 2026 suggest that the cycle of creative destruction has arrived at the doorstep of the software industry itself. Morgan Stanley’s Weiss wrote of a “trinity of software fears” currently driving down stock multiples by 33% that cut to a fundamental questioning of the software business model.
While Andreessen saw software disrupting industries, Morgan Stanley sees AI disrupting labor itself. The analysts note that generative AI expands the capabilities of software to “contextually understand unstructured data,” such as emails, PowerPoints, and verbal communications. This unstructured data represents over 80% of information in organizations today.
Previously, software required a human operator to input and manipulate this data. Now, Wall Street fears that software can do it all by itself. “Generative AI represents a continuing expansion of what types of work and business processes software can now effectively automate,” Weiss wrote, revisiting his team’s initial estimate that enterprise software’s total addressable market could grow by $400 billion by 2028. Three risks put that in question, principal among them that “as gen AI automates a broader swath of work, the increasing productivity gains will result in a reduction in the number of employees necessary to execute those tasks.”
If software allows a company to cut its staff by half, it also cuts the number of software subscriptions it needs by half. After software ate the world, then, it appeared to start eating the revenue of its creators by eating the jobs of its users.
The ‘do it yourself’ threat
Andreessen predicted in 2011 that “software programming tools … make it easy to launch new global software-powered startups,” viewing this as a boon for entrepreneurs. Today, however, investors are beginning to view this democratized ease of creation as a threat to established software giants.
One of the primary fears cited by Morgan Stanley is the rise of “do it yourself” software. This is colloquially known as “vibe coding,” where a user will ask the AI to code things in line with a cert