Some thoughts on Vibe Coding, SaaS vs AI (10 Moats) and Guidewire Software
Executive Summary:
This post does not contain any actionable investment advice but rather some personal ramblings on Vibe coding and the attempt to analyze a specific Software company (Guidewire) according to a Template of 10 Moats for Software companies and their vulnerability to the AI threat.
Introduction:
My track record as a Software investor is to put it mildly, very poor. My best Software Investment so far is Chapters Group which I bought as a net-net before it even became a VMS Serial Acquirer. My blog and portfolio archive also tell me that I sold Microsoft in 2011 at ~25$ per share with a 4% gain because I thought that the Office products had no future. So please take everything I say about Software with a grain of salt or even better, just ignore it.
I do have a background in Software development. Although I would not call it Software development but “Code butchering”. It started as a teenager on a C64 with Basic and Assembler and ended in the late 1990s with Cobol/PLSQL working for a large US Consulting Company (yes, I was young and needed the money). Knowing the speed of financial institutions, I would not be surprised if some of my Spaghetti code would still be running somewhere….
Why am I saying this ? Because of course, Software stocks have been doing quite poorly over the past weeks/months. In addition, I also had the opportunity to play around with Claude Code first hand.
value and opportunity 
Great post – yes moaty… but need to come down another 50% … I think Dassault System is something we should try to look based on those 10 criteria… ultra cheap..
Yes, Dassault would be a candidate, but I am an absolute non-expert for their Software…..
Just looking briefly at them, I do not think that a Gross margin of ~22% points to a comparable business model. Doesn’t look like a “true” Software business to me.
The post is missing a bit here compared to substack.
I basically agree with your arguments.
I don’t like the “Business Logic” point much, but like your interpretation (LLMs might make implementing business logic easier).
The argument in the tweet claims that at the extreme the business logic can be replaced by natural language text. The problem is that if you encode all the if, then, else statements from the current business logic into natural language you’d just need language lawyers instead of software engineers. You’d still need to have tests for business logic, even if it is in natural language. You’d still have the problem of teaching domain experts to become language programmers. Then, running the business logic via LLM is not really reliable. See “Mecha-Hitler”.
The fix is to have the LLMs produce code, have it reviewed and tested, etc. So normal software engineering, just with improved productivity.
So this criterion would IMO need to be combined with the question if it is okay to have unreliable results. In insurance, not. But for investement research, maybe? There it “just” needs to be better than the existing tools when combined with pricing.
The question is: Will results still be unreliable in 3 or 5 years ? Who knows that ? I guess no one.
Yeah, the “rule following” might improve. But the problem of the rules being underspecified remains. I.e., what to do if something falls outside of the mentioned rules or disagrees with each other, or just unintended conquences of different possible interpretations of a rule like “Be not woke”.
Possibly Asseco is the stock you are looking for. From what I understand, they do similar things as Guidewire, but in Eastern Europe, and the stock is faaaaar cheaper.
May be cheap via Constellation Software.