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It’s going to happen. It’s just a matter of time…
A single-person launched, owned, and operated software company will become worth a billion dollars. The first one-person unicorn.
It hasn’t happened yet, but it will, and sooner than most might expect.
And it will be possible because of generative artificial intelligence (AI).
We glimpsed this possibility last week when the website development company Wix (WIX) acquired Base44 – a vibe coding startup – for $80 million.
Source: Wix
Vibe coders use generative AI to write software code using natural language prompts. They simply tell AI what they want it to create, and it produces the code for them. No experience in software programming is necessary. Anyone can do it simply by prompting the software.
That’s what Base44’s product does. It helps non-programmers build websites, software applications, productivity tools, or software automation without the user needing to understand how to program.
Base44 did a good job of abstracting away complexity and automatically integrating things like a database, e-mail, authentication, analytics, and storage into its vibe coding platform.
While this all might sound straightforward, the background is far more interesting, and here’s why. Base44…
Consider that… Just six months of hard work and then an $80 million payout via acquisition. It sounds impressive because it is impressive.
The founder and the rest of the team will receive $25 million from the transaction, and if I had to guess, the remaining amount is paid with equity in Wix.
Even better, there are additional earn-out payments through 2029 if the Base44 team hits certain metrics. Who knows what the total payout will be worth by 2029?
The transaction made a lot of sense as both the publicly traded Wix and Base44 are based in Israel. That makes for a simple integration. And integrating Base44’s vibe coding software into its website development services will help make Wix’s business far more automated and efficient.
Base44 is part of a new breed of what used to be called no-code – now called vibe coding – companies.
This new vernacular has become popular due to Andrej Karpathy, a computer scientist and the former lead for Tesla’s Autopilot software.
He was instrumental in the development of Tesla’s full self-driving (FSD) software. He then went to OpenAI for a bit before going out on his own. He coined the term vibe coding earlier this year.
What made Base44’s launch-to-acquisition speed run possible is how it utilized the ability to develop an application layer on top of an existing generative AI model. In Base44’s case, it used Anthropic’s Claude as the foundation for its vibe coding software.
The advantage in this is obvious. Base44 didn’t have to spend billions of dollars building a frontier generative AI model that excels at writing code.
In fact, it didn’t have to spend anything at all on the underlying software. It could just focus on the application layer that pulls from Anthropic’s Claude.
That’s how it achieved a $189,000 profit in May and clearly showed Wix that there was a path towards accelerated growth and, ultimately, free cash flow. And that’s why Base44 was able to exit at an $80 million valuation, plus additional earn-out payments.
Naturally, this raises the question about the future value of other prominent vibe coding companies like Replit (now worth $3 billion), Bolt (also known as Stackblitz, now worth $700 million), and Lovable (now worth $1.5 billion).
Unlike Base44, all three of these companies went down the path of multiple rounds of venture capital funding. Because of that, the Base44 team may very well come out with a better financial exit, in the end.
But I’m sure some of us are wondering – why did Base44 sell so early? Why not wait until it achieves a $1 billion valuation?
Personal reasons can always factor into these decisions, but the dilemma that everyone in tech is faced with right now is how to best scale quickly.
It is such a competitive market, and talented teams basically have access to the same software and tools as others. The answer to scale is almost always more compute, and more compute costs more money.
To stay competitive and accelerate growth, Base44 needed a lot more capital. That’s where Wix (WIX) can help. It has $1 billion in cash and will generate about $600 million in free cash flow this year. Wix is also a lot more interesting now that it has Base44 in-house.
This is such an interesting example of what’s coming for software development. Large corporations are going to be able to improve their software development efficiency with vibe coding. Their programmers will be more efficient, and non-programmers will be able to get meaningful software development work done themselves.
Vibe coding technology makes software development accessible to nearly anyone familiar with computers. It’s a game changer.
But that doesn’t mean all software programmers will suddenly be out of a job. As with many new applications of AI, there still needs to be human oversight. In software development, this means having programmers ensure quality and function at every step. This is especially true when software goes into commercial production.
Guessing that a software program developed by vibe coding software will be able to support millions of users without a problem right out of the box is a fool’s errand. Programmers will still be needed for reliability, performance, security, and, of course, the creative aspects of software applications.
If anything, the software industry is already thriving with the use of AI. Vibe coding for software development is just one example of how AI is increasing efficiency and expanding what is possible, not reducing opportunity.
And, as the cost of inference (the cost to run an AI application using a frontier generative AI model) declines at an exponential rate, it empowers one-person companies and very small teams to achieve billion-dollar valuations.
Are you vibing yet?
Jeff
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
