In this episode, a16z GP Martin Casado sits down with Metronome CEO Scott Woody to unpack how AI is fundamentally changing the value proposition of software—and why that shift demands a rethink of the traditional SaaS business model. They explore how, in the cloud era, value scaled with the number of users accessing a shared system (think Salesforce). However, in the AI era, value shifts to the work the software performs on your behalf, automating tasks such as writing code or resolving support tickets. As a result, the old value metric of “users” is being replaced by “output,” and it’s upending how companies monetize. This conversation goes deep on: - What new pricing models will emerge in an AI-native world - Why usage-based billing is gaining ground—and where it breaks - How to align GTM teams and customer success orgs with evolving value metrics - Strategic advice for SaaS founders navigating hybrid business models and incentive design If you’re selling software today, you don’t want to miss this discussion. Follow everyone on social media: - Scott Woody https://www.linkedin.com/in/scott-woody-21677121 - Martin Casado https://x.com/martin_casado Check out everything a16z is doing with artificial intelligence, including articles, projects, and more podcasts here: https://a16z.com/ai/ Topics Covered: 00:00 Introduction 00:46 What is Metronome? 03:49 Problems and Complexities of Billing 06:14 Usage Based Billing 09:07 The Rise of Hybrid Business Models 11:02 Challenges With Building Billing Infrastructure Software 15:23 Strategic Usage Billing Advice 16:52 Aligning Incentives With Customers 19:36 Top 5 Concerns For CEOs Considering Usage Based Billing 21:09 The Role Of CS Teams 21:55 Core Value Metrics For The Customer 25:15 Which Software Based Companies Will Go To Usage Based Billing? 28:19 Emerging Patterns, and Recommendations 31:12 Pricing Models, Agility, and Shifts In Pricing 35:09 Market Dynamics, Competitive Dynamics, and Spend 36:48 Monetization In This AI Wave 39:25 How To Architecture Business Around Billing 🔔 Subscribe to the a16z YouTube channel for more conversations at the intersection of AI, software, and startup strategy.