Thoma Bravo is handing Medallia back to creditors. The move wipes out billions in equity and signals the end of an era: the debt-fueled SaaS growth model is cracking under AI-driven deflation.
On All-In, David Friedberg argued that the predictable cash flows once seen as bulletproof for leveraged buyouts are evaporating. AI agents now perform tasks - like customer surveys and HR functions - for a fraction of the cost of licensed software seats. Chamath Palihapitiya added that tokens are cheaper than licenses, and enterprises are switching fast. Salesforce and ServiceNow have already seen sharp valuation compression as investors abandon the old 'net dollar retention' gospel.
"The per-seat model is dead. If you can spin up an AI agent for pennies, why pay $50 a month per seat?"
- David Friedberg, All-In with Chamath, Jason, Sacks & Friedberg
Meanwhile, private credit firms - like those behind Tricolor’s subprime auto loans - are repeating the 2008 playbook. As Mia Wong detailed on Behind the Bastards, these non-bank lenders bundle risky loans into tranches, using them as collateral for more debt. JP Morgan already lost $170 million on such instruments. Redemption gates - capping withdrawals at 5% per quarter - mean investor money is frozen when panic hits.
Wall Street isn’t waiting for the collapse. JP Morgan and Barclays are now trading credit default swaps on Blackstone and Apollo funds. They’re not just funding the shadow banks - they’re betting on their failure. As Molly Conger noted, the most profitable move in today’s economy isn’t building, but betting on implosion.
"It’s a casino. The house is now selling insurance on its own collapse."
- Molly Conger, Behind the Bastards
The common thread? Overleveraged systems assuming perpetual growth. Whether in SaaS or auto loans, the model relied on stable cash flows. AI and economic reality have broken that assumption. The result isn’t just a market correction - it’s a structural unwind of the post-2008 financial imagination.
