Software is Eating Labor

Alex Rampell from a16z discusses how software is evolving to "eat labor," moving beyond simply digitizing filing cabinets to performing entire jobs end-to-end. He contrasts the $300 billion SaaS market with the $13 trillion U.S. labor market, arguing that the real opportunity lies in outcome-based software that directly replaces or augments human labor. Rampell illustrates this with examples across various industries, from customer support to optometry, highlighting how AI-driven solutions can handle tasks such as rebooking flights, sales, collections, and even compliance. He emphasizes that this shift is not just about cost reduction but also about addressing intermittent demand, demoralizing jobs, regulatory certainty, and language barriers, ultimately expanding the market for software solutions and enabling new business models.