The BLAST Playbook
The $500B-1T in annual software investments should reallocate to BLAST: assets that monetize boredom, loneliness, and scarcity.
A growing consensus is forming: software investing is in a horrible position.
The software VC model is getting squeezed from both ends:
AI tools like Cursor and Devin have made software fast and cheap to build, meaning great builders don't need to take external capital.
Any software product is easily copied, so software ARR is less defensible by the day.
The implication? The $500B-1T+ annual software investing machine now lacks investable companies. Over the next 3-5 years, software funds will underperform relative to their peers, and many traditional VCs will eventually close shop.
Two big questions remain:
Where should capital be deployed instead?
What should a founder build today?
Spoiler alert: The answers don’t match.
Where To Deploy Capital: BLAST
Smart capital already sees the problem. But what assets are able to scalably absorb hundreds of billions of dollars?
Introducing BLAST: the Boredom, Loneliness, and Scarcity Thesis:
Boredom → People still need distractions (see: TikTok addiction, memecoin speculation).
Loneliness → People still want to feel special and seen (e.g. social communities).
Scarcity → People will pay more for things that others can’t have (e.g. Birkins, natural resources).
But while there's potential to profit in these sectors, it's difficult to deploy hundreds of billions of dollars into incumbents while achieving outsized returns. Capital needs a way to access BLAST assets at scale, in novel investments.
The ultimate BLAST investment is an entirely new city or country. Land is inherently scarce, particularly oceanfront property. New city development opens the door to building luxury housing, but also luxury services. Elite private schools, exclusive gyms, and high-end detox clinics absorb capital while entertaining residents and fostering community.
Key questions:
Where should these cities be built? Possibilities include land near existing cities, expensive oceanfront locations, or cheap land in the middle-of-nowhere.
What makes them unique? These cities could be friendly to choice industries.
What productive assets within them can absorb venture-scale capital?
Software Founders: Castles Without Moats
Thin AI wrappers should not be raising venture at all. Raising a $10M Series A with $5M ARR is a bad deal for the founder because it constrains optionality, forcing the founder to shoot for a billion dollar exit instead of pulling as much cash as possible during the (likely limited) shelf life of their product.
Making commitments to keep growing in today’s software environment is too risky, because as Chris Paik puts it, the "end of software" is near. The new playbook:
Use AI tooling to quickly and cheaply build projects that spit out cash immediately.
Forget about long-term defensibility, and as a result, don't take venture capital.
Move onto the next project.
Many founders are avoiding these "castles without moats." But moats only matter when building is hard and expensive. If software takes days and <$10K to launch, you have so many shots on goal that your probability of succeeding is much higher, so smaller projects become positive EV.
This arbitrage only exists for so long, because soon, AI agents themselves will be the ones rapidly spitting out new cash-generating software projects.
The closest thing to a "moat" for software built today: The fact that there are so many ideas available, it’s easier for competitors to build something new than copy you. (At least at first.)
Alternatively, if you insist on raising venture, you need to go full moonshot. That means pursuing ideas that are so outlandish that they seem irrational, projects demanding massive capital, breakthrough research, or other forms of strong defensibility.
SaaS wasn't contrarian enough anyway. The next wave will be weirder, riskier, and hopefully more interesting.