I was super early at HubSpot, a first one hundred employee.
I watched the company go public. I used some of the gains from that IPO to put a down payment on my house. It was one of those rare moments where a long bet actually paid off in a tangible way.
A year ago, HubSpot was trading above $800 a share. Today it sits in the low $200s. That is a decline of more than 70 percent in roughly twelve months.
And it is not alone.
Across B2B SaaS, billions in market cap have evaporated. Multiples have compressed. Growth stocks have been punished. The easiest narrative is that SaaS is dead and AI finished the job.
I do not think that is what is happening.
What we are seeing feels much more like SaaS growing up.
The Easy Era Is Over
For fifteen years, SaaS was the growth story.
Recurring revenue. Expanding TAM slides. Capital that cost almost nothing. If you could show strong top-line growth, the market assumed operating leverage and margin discipline would eventually follow.
That environment no longer exists.
Capital has a cost again. Efficiency matters. Durable cash flow matters. Revenue quality matters. SaaS is no longer novel. It is standard operating procedure.
When something becomes standard, it stops commanding novelty premiums.
That does not mean businesses disappear. It means the market prices them like operating companies instead of miracles.
The Real Split: Features vs Systems
Underneath the sell-off, there is a structural divide forming.
On one side are thin workflow tools and point solutions. Smart products. Useful products. Often beautifully designed. But narrow in scope and frequently sitting as a UI layer over someone else’s infrastructure.
These are the companies under the most pressure right now.
When budgets tighten, they are easier to cut. When a larger platform adds adjacent functionality, they are easier to absorb. When switching costs are low, they are easier to replace.
I wrote previously about how categories collapse into features when “80 percent good enough” satisfies most of the market. That dynamic accelerates in tighter capital cycles. You can read more on that here:
When 80% Becomes Good Enough: How Categories Collapse into Features
That collapse is not theoretical. It is happening.
On the other side of the divide are systems of record.
Think about companies like Salesforce, SAP, Oracle, ServiceNow, Workday, ADP, Snowflake, and Microsoft.
Their valuations may be more sober. Their growth rates may normalize. But their role inside enterprises has not suddenly evaporated.
These companies hold the authoritative data. The financial systems. The payroll systems. The compliance frameworks. The customer records. The core workflows that companies cannot simply turn off.
I explored this more specifically in the context of CRM becoming infrastructure rather than just an application layer:
Is CRM Becoming Infrastructure?
That shift matters. Systems of record do not disappear when markets tighten. They become more embedded.
A Filter, Not a Funeral
The market is simply repricing risk.
It is discounting fragile revenue and low switching-cost tools. It is questioning narrow point solutions. It is asking harder questions about differentiation and durability.
At the same time, it is still assigning value to companies that sit at the center of enterprise data gravity, even if those valuations look very different from 2021.
SaaS is not dying.
The easy era is over, the novelty premium is gone, and the cost of capital is real again.
That does not invalidate the model. It normalizes it.
If you are building or operating in this market, the question is straightforward.
Are you a feature, or are you a system?
Is your product something that can be trimmed in a budgeting exercise, or is it something the business cannot function without?
Watching stocks retrace 60 or 70 percent in a year is not abstract when you have lived through the highs. I have. But this feels less like collapse and more like correction.
It feels like a filter, and this is only one half of the story.
In a follow-up piece, I want to unpack the second layer, the infrastructure shift happening underneath SaaS, particularly around AI and how the web itself is being rebuilt for machine clients. That shift will reshape which companies compound and which ones compress over the next decade.
This post is about the repricing; the next one will be about the rewiring.