# AI agents can expand software into service budgets Markdown copy of https://realalpha.app/s/ai-agents-can-expand-software-into-service-budgets/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy. - Speaker: [Aaron Levie](https://realalpha.app/people/aaron-levie/) · Aaron Levie is cofounder and CEO of Box. - Host: [Logan Bartlett](https://realalpha.app/people/logan-bartlett/) · Managing director, Redpoint Ventures · Backs enterprise software companies like Ramp, Cribl, Cyera and Legora. - Show: The Logan Bartlett Show - Episode: [Box CEO on Enterprise AI Trends No One is Talking About Yet](https://realalpha.app/v/g9E7iCnYOoI/), Mar 28, 2025 - Moment: 13:09 to 17:32 of the episode (4 min), playing on https://realalpha.app/s/ai-agents-can-expand-software-into-service-budgets/; the episode from there: https://realalpha.app/v/g9E7iCnYOoI/?t=789 ## Quote > “Contract management software as a category is like a couple billion dollars, like globally in the world. Legal services is **a couple hundred billion dollar category**.” > — [Aaron Levie](https://realalpha.app/people/aaron-levie/) at [15:43](https://realalpha.app/v/g9E7iCnYOoI/?t=943) · The Logan Bartlett Show ## Takeaways 1. SaaS expanded markets by lowering upfront costs and removing infrastructure. 2. Agents let software compete for labor and service budgets. 3. A niche software category could grow by delivering outcomes. ## About this segment Aaron Levie argues AI agents can sell outcomes and labor, not just seats, expanding software into service budgets. Contract management could grow by tapping legal-services spend. From “Box CEO on Enterprise AI Trends No One is Talking About Yet”, Mar 28, 2025. [Watch the full episode](https://realalpha.app/v/g9E7iCnYOoI/) ## Transcript Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there. [13:21](https://realalpha.app/v/g9E7iCnYOoI/?t=801) I think it's, I think it's, I think it's very relevant. And then, you know, so my, my characterization of SaaS in cloud from a business model disruption was it took something that you used to spend upfront, like maybe millions of dollars on to now you spent thousands of dollars on. The CapEx to OPEX transition. CapEx to OPEX, sort of like perpetual license to, you know, buy the drip, you know, anything that was just like, okay, I have to wrap my head around this major outlay of capital, system integrator fees, infrastructure I have to build out, team, like, you know, if you, this is more anecdotal, but if you were like to deploy a CRM system in the 90s, you know, just think about what had to go into that. [14:11](https://realalpha.app/v/g9E7iCnYOoI/?t=851) like, like data centers, system integration, like, uh, you bought software for the, for the CRM system, but you still had to buy hardware, you had to buy all the servers, you had to have a network. So like, think about how many steps from the moment you said, I want a CRM system to the day that you're actually going to like log into it with your data, I don't know, a year, year and a half, you know, millions of dollars Salesforce shows up and they're like, literally like tomorrow, you can just have a CRM system. And Oh, by the way, you could use it for 20 people in your company. And there's no, you don't need some kind of like critical mass to make the economics work, like just like start using it. And so, so, you know, you multiply that over two decades or two and a half decades. And it's like every SMB on the planet can do it. Every small [14:52](https://realalpha.app/v/g9E7iCnYOoI/?t=892) team can do it. And these, and the TAMs of these markets just basically grow because now everybody can afford a CRM system that couldn't. So, so that was, it was because it was a seat base, it was because it was subscription. It was also just because literally like, like your day one upfront bill was just a hundredth of what it would have been, you know, because you don't have all the other, all the other things, you know, wrapped around it. Cloud did the same thing, obviously more on an elastic basis with compute. So I think what agents do is, is that I think there's going to be two big, two big kind of areas of upside. One is you're doing that now for effectively a form of labor. And so that kind of has this interesting impact of it expands the TAM of software from only being able to sell the software to people on the other end, so you were kind of [15:33](https://realalpha.app/v/g9E7iCnYOoI/?t=933) capped by the number of seats, to now you have kind of like, you know, like I can think of categories where the category of AI agent spend will be an order of magnitude more than the spend of the software in a kind of a non-AI world. So take, you know, a relatively simple example like contract management software. Contract management software as a category is like a couple billion dollars, like globally in the world. Legal services is a couple hundred billion dollar category. And so now can software take 10% of that spend through AI and pull from the legal services spend or expand the legal services spend? And then all of a sudden this category that was relatively niche, couldn't make that much money because the amount of people that wanted to buy contracts. [16:25](https://realalpha.app/v/g9E7iCnYOoI/?t=985) management software is kind of low, could that now be a $20 billion category as opposed to a couple billion dollar category? So you could do that probably 20, 50 times across software and already underwrite master TAM expansion after going after a whole bunch of new use cases that used to be kind of labor essentially. And then the other part is AI has a way of just completing the things that people have kind of always wanted to do in the products themselves, but just were never possible, which then also unlocks a whole bunch of new budget as well. [16:59](https://realalpha.app/v/g9E7iCnYOoI/?t=1019) So I think you're going to see this is the new version of disruption is it just will, it makes, you know, it lets you go and complete the outcome that the customer was looking for in a way that they are not required to go and deliver it themselves with their people. And then that means that you, you know, more of them, that value accrues to you. And so that's the usage base or outcome pricing I think we're going to see in AI.