The A16z GP said that software stocks have been completely oversold.Harry Murphy/Sportsfile for Collision via Getty Images
Anish Acharya says it is not worth it to use AI-assisted coding for all business functions.
AI should focus on core business development, not rebuilding enterprise software.
The A16z partner added that software stocks that took a beating last week were oversold.
Vibe coding everything is just not worth it, says an Andressen Horowitz partner.
On an episode of the "20VC" podcast released on Monday, A16z general partner Anish Acharya said that companies shouldn't use AI-assisted coding for every part of their business.
He said that software accounts for 8% to 12% of a company's expenses, so using vibe coding to build the company's resource planning or payroll tools would only save about 10%. Relying on AI to write code also carries risks, he said.
"You have this innovation bazooka with these models. Why would you point it at rebuilding payroll or ERP or CRM," Acharya said, referring to enterprise resource planning and customer relationship management software. Salesforce, Microsoft, Oracle, and SAP are among the top providers of such software.
Instead, companies are better off using AI to develop their core businesses or optimize the remaining 90% of their costs, said the venture capitalist of six years.
"Of course, there will be secular losers. There are specific business models that are now going to be disadvantaged," he said. "But the general story that we're going to vibe code everything is flat wrong, and the whole market is oversold software."
Acharya's comments follow a brutal week for software stocks, which dragged down tech and broader markets. The sell-off started when already-wary investors panicked about Anthropic's new AI tool, which can perform a range of clerical tasks for people working in the legal industry.
The A16z partner joins famed investor Vinod Khosla in saying that stock prices should be ignored when evaluating the future of tech companies.
On a podcast last month, Khosla dismissed talks of an AI bubble and said investors should not be concerned as long as API call volume, a benchmark of AI usage, remains high.
"If that's your fundamental metric of what's the real use of your AI, usefulness of AI, demand for AI, you're not going to see a bubble in API calls," he said. "What Wall Street tends to do with it, I don't really care. I think it's mostly irrelevant."
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