Why AI startups have different economics from classic SaaS startups

Let's rewind the clock a bit. Back in the day, software vendors would write code, package it, and often distribute physically (through those nifty things called CDs). In this old world, buyers were shouldering most of the operational costs, such as running the applications that they bought on their own local data and compute centers (or laptops and desktops). Then came the advent of faster Internet speeds and cloud computing, which really opened up software development and deployment to a whole new world. With that, we started to see a dramatic shift of infrastructure costs back to the software vendor. That is, under the SaaS world, vendors host and manage web apps in their own data centers or cloud environments, allowing buyers to gradually decrease their investment and expenses associated with managing infrastructure.