Moats Don't Mean Growth

Jason Lemkin published a piece this week that puts hard numbers on something I've been writing about for a while. The argument is worth internalizing, especially for anyone running or relying on a media SaaS platform.

SaaS moats are real. High switching costs, deep integrations, workflow dependencies, data lock-in... they keep customers from leaving. You can see it in Gross Revenue Retention. The median GRR across B2B software is still around 90%. The best companies hold above 95%. Once a customer is in, they tend to stay in.

But here's Lemkin's distinction, and it's the one that matters: moats just keep your existing customers from leaving. That's it. That's all they do.

In 2026, that is not enough.

Morningstar recently reclassified six companies, including Adobe, Salesforce, ServiceNow, and Shopify, from wide moat to narrow moat. Moat duration estimates shortened from 20 to 10 years. As Lemkin frames it: your customers aren't leaving, they're just spending less. The moat is intact, but the revenue is declining.

The distinction shows up in NRR, not GRR. Net Revenue Retention tells you whether your existing customers are expanding their spend. And across much of B2B software right now, the answer is no. Customers stay. Budgets compress. The moat holds. The business quietly erodes.

We saw a version of this when SaaS itself disrupted licensed software. The rise of SaaS wasn't the death of incumbents overnight. It was a slow squeeze. Licensed software companies that evolved their delivery model and technology base survived and, in some cases, thrived. Microsoft became one of the most successful SaaS businesses in history, built on top of decades of entrenched installed base. SAP is still a backbone for the world's largest enterprises thirty years later.

But the ones that relied on switching costs and contract lock-in without evolving what they actually delivered? They survived longer than the market expected, and then they didn't.

The same pattern is playing out now, and the AI budget is the only budget growing. Gartner projects AI spending approaching $1.5 trillion in 2026, with software specifically growing over 15% year over year. The money is moving. The question is whether it's moving toward you or around you.

For media SaaS specifically, this distinction matters.

The platforms powering content operations, asset management, metadata, QC, supply chain, distribution... they encode decades of institutional knowledge. Workflow logic. Compliance rules. Integration architecture. That accumulated depth is genuinely valuable. It's the reason customers don't leave.

But it's not the reason they'll spend more.

The growth question for every media SaaS company right now isn't whether your customers will renew. Most will. The question is whether your platform becomes part of the agentic orchestration layer where the new budgets are flowing, or remains a system of record that customers keep but gradually spend less on.

That means more than adding an AI feature or a chatbot. It means exposing your platform's capabilities in ways that agentic systems can compose reliably. Clean interfaces. Well-documented capabilities. Integration models designed for orchestration rather than manual navigation. It means becoming a building block in a larger system, not a standalone destination.

The SaaS companies that get this right will find themselves integrated into far more workflows than their original footprint ever enabled. The ones that don't will hold onto their customers while watching their share of the budget quietly decline.

That's the quiet part of what Lemkin is saying. The moat doesn't collapse dramatically. It dries up slowly, one budget cycle at a time, while the platform looks healthy on the surface.

The reclassification from wide moat to narrow moat isn't an event. It's an acknowledgment that the erosion has already been underway for a while.

For media SaaS leaders, the question isn't whether your customers will leave. They probably won't. The question is whether you're building toward the layer where growth is happening, or defending a position that is structurally sound and strategically shrinking.

Retention is table stakes. The orchestration layer is where the next chapter gets written.