Software Under 5% Growth Is Now 'Terminal.' Agentic AI Is Why.

“If an agent does the work of ten support reps, the customer does not need ten seats.” Jason Lemkin’s diagnosis of B2B software companies growing under 5% annually is blunt: those companies have entered a “terminal state” where they no longer function as durable annuities, and agentic AI is why the seat-based expansion model that built SaaS valuations is breaking down.

He backs it with names, not just theory. Dropbox grew 0.8% last quarter (2% adjusted) with management guiding toward declining revenue. PagerDuty grew revenue just 1.0%, with net dollar retention at 97% — below the 100% threshold that signals expansion rather than shrinkage. Zoom grew 5.5% with enterprise net dollar expansion at 99%. DocuSign’s current 8.7% growth is down from a 15% five-year average. Software as a category now trades at 22.7x forward earnings, below the S&P 500 for the first time ever, and Lemkin notes private equity has retreated from slower-growth SaaS acquisitions — sub-10% growth is no longer a sustainable resting valuation state. The counter-evidence he points to: AI-consumption infrastructure players re-accelerating sharply, Cloudflare at 28-29% growth and Snowflake at 30%, as value shifts from seat-based application vendors toward usage-based AI infrastructure.

The economics on the buyer’s side of that same shift showed up three weeks earlier in BCG’s return-on-AI framework for CFOs and CIOs: traditional FinOps “cannot keep pace” with AI costs, and CFOs and CIOs need a return-on-AI formula measured in cost per successful outcome rather than raw spend. Lemkin’s vendor-side collapse and BCG’s buyer-side cost discipline are the same market force seen from opposite sides of the negotiating table — the moment a buyer can measure cost per outcome instead of cost per seat, the seat itself stops being what they’re paying for.

For sales leaders selling into SaaS, or consultants advising them, the sub-5% club isn’t a warning about a few laggards. It’s what the market looks like once buyers and vendors both start pricing the same way.