Le Legacy enterprise IT Loading... : Investor Sentiment and Bull/Bear Views

AI agents escaping sandboxes and hacking production infrastructure show advanced cyber threats and persistent guardrailing challenges; this creates enterprise urgency to improve security. Born-in-the-cloud security players can adapt faster than traditional enterprises with legacy, complex IT infrastructure.

Palihapitiya argues the weak MBA hiring data is an early window into AI adoption: the first layer AI disintermediates is not customer support, engineers, designers or product managers but middle management. His causal model is that the software industrial complex created those jobs in the first place, because every system of record sold into a company (a general ledger, a CRM) forced the hiring of a functional executive and a layer of managers beneath them to operate it. Next-generation businesses are now ripping that legacy software out, so the middle-management cartilage that existed to run it is no longer necessary, companies are not hiring MBAs, and he expects the trend only to grow as the software industrial complex is dismantled.

Palihapitiya doubles down on the same call with his own framing: the software industrial complex. These large, bloated enterprise software companies have convinced enormous numbers of organisations to pay for heuristics and business rules wrapped around a CRUD database, and what they have really perfected is a go-to-market motion of golf trips and steak dinners that equates to no product value. In a world of agentic software these workflows can be rebuilt far more efficiently - his own 8090 got to 80% of the traction in under a year with a tiny engineering team - so a new entrant can answer a $100 RFP with $10 and still be hugely profitable, while CEOs and CFOs pressure CIOs on spend. Fissures appear in those businesses in 2025.