He made his product 10x better. His revenue fell a third.
A three-tweet exchange on X this week is the clearest snapshot yet of what AI is doing to software businesses.
The setup. Matt Welter (@_mattwelter), who builds ReelFarm, posted: "1 year ago i made $48,000 in a single month, but now with the product being 10x more developed and better in every way, i'm not hitting that $48k anymore. i'm at $30k a month." A better product, for less money.
The twist. One of his own customers, Pedro Machado (@pedrotech_), replied that ReelFarm took his app "from 0 to 5k by just posting slideshows" and then: "Eventually i built a version of it myself so i didn't have to pay." The happiest customer quietly becomes the competitor.
The read. Pieter Levels (@levelsio) quote-tweeted the exchange with the diagnosis: every competitor also got 10x better with AI, so the baseline rose for everyone while the barrier to entry vanished. "it's like a race but everyone gets nitro now without realizing everyone else has nitro too." The business chain, he argues, collapses from customer > app > ai model provider to just customer > ai model provider. "The app layer is possibly getting removed!"
The nuance, worth keeping. Both pushed back honestly. Matt: this mostly bites B2B tools without a moat; the masses won't vibecode their own Spotify, Figma or Duolingo. Pedro, on his own clone: "it was still not as good as ReelFarm," and continuing to pay "would've been the smarter business move" because it was profitable from day one.
For founders, the takeaway is sharp: the moat isn't the feature anymore, anyone can rebuild the feature over a weekend. It's distribution, taste, and the niche you actually own.
