Mike Vernal Says AI Could Reshape Software Like 1990s Newspapers

Investor Mike Vernal said on X that the software industry may undergo a barbell-shaped shift similar to the newspaper industry in the 1990s. According to ChainCatcher, he argued that AI is driving software copying, migration, and integration costs toward zero, weakening traditional moats while reducing the importance of switching costs and network effects. Vernal said scale economies and brand are becoming more important, and he expects enterprise software to develop one AI-native system for each purchasing center. He added that small and medium-sized businesses are likely to prefer integrated systems, while mid-market point solutions may be consolidated or disappear. He also said venture-backed software companies should aim to build broadly, with the moat coming from the extreme cost of repeatedly building large amounts of software and reinvesting. Vernal added that a large number of small software businesses could emerge, similar to the Shopify ecosystem during the D2C era.