Okta, Inc.
AI is rebuilding every layer of software, and while the market punishes everyone wholesale, someone is quietly building the control tower for the age of agents.
Both previous pieces were essentially a setup for this one. I’d been describing how SaaS, over several decades, built its entire business logic on a single premise: every person using software pays for their spot. One license per employee. The seat-to-seat model, where access gets sold proportionally to headcount. For its time it was a near-perfect arrangement. Predictable ARR for vendors, legible budgets for buyers, a clear path to growth through hiring.
That model is now breaking down, because the nature of the user has fundamentally changed. An AI agent isn't a person and doesn't occupy a seat. It can do the work of ten analysts simultaneously without triggering a single additional license under the old logic. IDC projects that by 2028, the pure seat-based model will be obsolete and 70% of vendors will be forced to rethink their value proposition as AI agents displace manual labor. Forbes ran a headline in March 2026: "AI Is Killing The Seat License. Venture Capital Isn’t Ready For What’s Next."
We've watched a sweeping correction across software companies against this backdrop, regardless of their financial health or their capacity to integrate into the new technological axis. So in this piece I want to try to answer a few questions.
Which segment of the software industry is most insulated from this devaluation?
Why does the noise around Claude Mythos represent an opportunity and not a risk?
And finally, how do you get there first?
In “Equilibrium” I laid out the Caballero model and the three stable states of the IT ecosystem, arguing that we’re currently inside Region II, the AI deployment zone where returns on capital hold at a plateau. In “SaaS Armageddon” I broke down how that same AI is undermining the seat-based model of enterprise software, shifting value from human hours to machine time. But in both pieces I deliberately left one sector untouched. One that behaves in a fundamentally different way from the rest of software.
Cybersecurity.