"History doesn't repeat itself, but it sure does rhyme," asserts Andrew Miklas, General Partner at Y Combinator, in a recent video, drawing a compelling parallel between the rise of cloud computing and the current artificial intelligence revolution in enterprise software. This insight posits that AI presents a generational opportunity for new startups to unseat established giants, much like Salesforce and ServiceNow did two decades ago.
Miklas, speaking from Y Combinator's vantage point as a leading startup accelerator, articulated a compelling vision for the future of enterprise software, emphasizing the disruptive potential of AI-native solutions. He highlighted how past innovators capitalized on a paradigm shift.
Salesforce, building the first cloud-native CRM, and ServiceNow, with its cloud-native ITSM system, emerged about 25 years ago to dominate their respective markets. These companies, now generating over $10 billion in annual revenue with market caps exceeding $200 billion, did not merely iterate on existing software. Their founders realized that Software-as-a-Service "offered a way to build a 10 times better product." This was not just about delivery model; it enabled continuous updates, lower upfront costs, and greater accessibility, fundamentally enhancing user experience and operational efficiency. Crucially, they also understood that "the incumbents would struggle to adapt to the new world of cloud computing, giving them the edge they needed to go up against them and win." Legacy systems were too deeply entrenched, making a pivot to cloud both costly and technologically challenging. This strategic foresight allowed them to capitalize on a fundamental shift in technology delivery.
Today, artificial intelligence offers an equally profound inflection point. The next generation of enterprise software will transcend mere data recording.
Tomorrow’s enterprise systems "won't just be the system of record for work done by humans." Instead, they will be active participants in the work itself, with "AI embedded deeply and thoughtfully throughout," designed to help employees "work faster and more accurately." This means AI will not be a peripheral feature but a core, intelligent layer that automates routine tasks, provides proactive insights, and assists in complex decision-making across various business functions. Miklas suggests thinking of this as a conceptual "Cursor for sales, HR, and accounting," envisioning AI-powered assistants deeply integrated into core business functions, proactively aiding tasks rather than just documenting them. The shift is from systems that track what happened to systems that actively help make things happen.
Just as with cloud adoption, today's incumbents face a similar, formidable challenge. Their existing product suites, often built on older architectures, are difficult to re-engineer from the ground up to be truly AI-native. Integrating AI as a core, rather than an add-on, demands a fundamental rethink of product design, data infrastructure, and user interaction. This inertia, coupled with the need to maintain existing revenue streams and satisfy current customers, makes radical transformation a complex and slow process for established players. This inherent difficulty for incumbents creates a critical window for agile startups, providing them the time needed to win by building from the ground up with AI as a foundational layer. The race is on for new entrants to capture market share by delivering inherently smarter, more efficient enterprise solutions.
