Brad Lightcap, Chief Operating Officer of artificial intelligence research lab OpenAI, has stated that the recent sharp decline in software company stocks—dubbed the "software apocalypse"—may have been an overreaction. Speaking on the "Uncapped" podcast released on Wednesday, Lightcap asserted that legacy software companies are moving with significant speed to incorporate AI into their offerings.
Lightcap, who joined OpenAI as CFO in 2018 before becoming COO in 2022, based his assessment on OpenAI's direct experience working with these firms. He observed them actively rethinking entire customer journeys and exploring how AI can help them serve new markets.
Established Players "Moving as Quickly as Any Startup"
"A is: All of these companies are kind of as motivated and moving as quickly as any startup," Lightcap said. "B is: They've got amazing customer relationships." He expressed that he would be concerned if this segment, which includes giants like Salesforce, Microsoft, and Oracle, were "asleep" in the face of AI innovation.
"You've got everyone trying to run at the same speed, and I think that's exciting," Lightcap added. He suggested a contrarian investment view: "I would say if you're kind of long AI, and long startups, then it might even make sense, maybe, as a contrarian opinion, to be long legacy software, too."
Context of the "Software Apocalypse" Sell-Off
Lightcap's comments follow a brutal sell-off of software stocks that began in early February. The downturn was triggered by investor fears following the release of Anthropic's new AI tool, which can perform various clerical tasks in the legal industry. This sparked concerns that companies could use AI to build their own tools internally, bypassing traditional software vendors.
As a result, shares of firms including Salesforce, Snowflake, and Microsoft are down between 24% to 30% so far in 2024.
Industry Leaders Echo Bullish Stance on Legacy Software
Other technology executives have similarly pushed back against the narrative that AI renders legacy software obsolete. Dan Rogers, CEO of work-management company Asana—which was hit hard in the sell-off—argued that AI agents increase the need for coordination software.
"With AI and AI agents, the coordination problem doesn't go away. It actually expands exponentially," Rogers told Business Insider. He stated that systems like Asana's are essential for humans and thousands of AI agents to work together effectively.
At a February event, Nvidia CEO Jensen Huang dismissed the sell-off's logic. "There's this notion that the tool industry is in decline and will be replaced by AI," Huang said, explaining that AI will use existing software tools rather than reinvent them. He called the idea "the most illogical thing in the world, and time will prove itself."
Analyst Perspective on Cost Savings
Not all commentary has been uniformly bullish on disruption. In a separate February podcast, Anish Acharya, a general partner at venture firm Andreessen Horowitz, downplayed the potential cost savings from using AI to rebuild core business software. He estimated that using AI to create tools for enterprise resource planning (ERP) or payroll would only save about 10% of costs.
"You have this innovation bazooka with these models. Why would you point it at rebuilding payroll or ERP or CRM," Acharya questioned.