Exclusive: Why Gainsight Is Going All-In On AI Services Over SaaS
CEO Chuck Ganapathi tells Upstarts why he's betting the company on AI-native services, and how other software makers can follow suit.
When venture capitalist Jake Saper posted about a tech CEO with hundreds of millions in revenue who was pivoting his software business — despite hundreds of millions in revenue — to services earlier this month, it immediately caught our attention.
Saper, a general partner at Emergence Capital, has beaten the drum about this shift for more than a year. At Upstarts, we raised our hand: When this CEO will unmask themselves, let’s talk.
Today, we can yank off that mask. The mysterious guinea pig is Gainsight, the retention-focused software business owned by Vista since late 2020.
And the CEO behind the move is Chuck Ganapathi, a startup veteran that co-founder Nick Mehta brought in to lead the retention-focused company two years ago.
At Gainsight’s annual conference in Las Vegas today, Ganapathi is announcing the company’s shift to what it calls an ‘AI-Native Services,’ or AINS, business centered around its AI agents solution called Atlas.
In an exclusive interview, Ganapathi tells Upstarts that the shift is the culmination of a year’s work to reposition Gainsight for an AI-disrupted market.
Gainsight is self-funding the shift from its profits from that aforementioned hundreds of millions in annual recurring revenue; as such, while it’s moved some top engineers to the new product, it’s not shuttering or deprecating its traditional software product used by corporations like IBM and Workday.
Instead, the Atlas unit will operate as its own business within the company, with a general manager, dedicated team, and separate profit-and-loss bookkeeping.
“There would be a revolt if we said we were going to kill that business,” Ganapathi says. “But our fundamental belief is that Atlas, and the AI native services business, has a larger market.”
In a tumultuous time for enterprise software, Gainsight’s example is the latest in a series of signs pointing to the disruption of the subscription model. Last fall, we wrote about a shift to outcome-based pricing, and how high-growth companies like Cursor were handling customer sticker shock.
The big AI labs continue to apply pressure from the product side, as seen in the recent tensions between Figma and Anthropic about the AI company’s design-focused release, which we scooped last month.
Public software companies have been hammered by Wall Street investors who currently prefer chips. Even at billion-dollar startups, $300 million in annual recurring revenue is no longer enough not to disrupt your own product.
Across the ecosystem, it’s out with the SaaS (Software-as-a-Service), and in with the SaS (Service-as-Software).
And at its core, it’s an attempt to leverage AI tools to get more bang for your buck – meaning companies can deliver white-glove-caliber results for customers, and charge higher margins – for automated services that historically weren’t valued much.
Event alert 🚨: We’re in Boston tomorrow for a founder-focused lunch event with three active startup CEOs, where we expect this will come up; we’ll also get into it next week at our New York Tech Week event, featuring a panel discussion with the CEOs of AI unicorns Crosby and Merge. Apply to join that conversation here.
Coming out on the other side of this major effort at Gainsight, Ganapathi has some advice for other software leaders looking to follow suit — and warnings. He identifies three must-have conditions for success in any repositioning from SaaS to SaS.
Paid subscribers can learn more about Gainsight’s process, and those practical lessons, below.
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