Monday.com Rise, Fall, and AI Pivot Amid SaaSpocalypse

Name: When You Spend Everything On Marketing...
Uploaded: 2026-05-25T19:00:05+00:00
Duration: 15 min 5 s
Channel: Logically Answered
Description: Summary and key takeaways on Monday.com Rise, Fall, and AI Pivot Amid SaaSpocalypse, covering Origins and Rebranding Wix’s founders built a tool called Dapulse

Logically Answered

May 25, 2026

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15 min video

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YouTube video ID: I0L_5E9shCA

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Wix’s founders built a tool called Dapulse to ease scaling pains, but the name failed to inspire confidence in Silicon Valley. They responded by rebranding to Monday.com and deliberately shifted focus toward non‑technical departments such as marketing, HR, and creative teams. This pivot avoided direct competition with engineering‑centric platforms like Asana and Microsoft.

The Pandemic Boom

Remote‑work demand surged during the pandemic, and Monday.com rode that wave to an IPO that raised $574 million at a $6.8–7.8 billion valuation. By November 2024 the company crossed the $1 billion annual revenue threshold, and its market cap briefly peaked at $16 billion.

Aggressive Marketing and Financials

Monday.com adopted a “human‑to‑human” (H2H) marketing model, pouring money into Facebook look‑alike audiences, Google ads, and massive YouTube campaigns. In 2020 the firm spent $191 million on sales and marketing—118 % of its $161 million revenue—while maintaining an 88 % non‑GAAP gross margin. The strategy assumed that customer‑acquisition costs would fall as the brand scaled, but operating margins remained deeply negative, at times estimated at –86 %.

“Every dollar they made cost them one dollar and eighty six cents.”

Market Correction and Legal Challenges

Growth slowed sharply in Q2 2025, a dip the company attributed to Google AI overviews siphoning web traffic. Investors reacted to the widening gap between a September 2025 revenue target of $1.8 billion and a February 2026 revision down to $1.45 billion. The discrepancy sparked class‑action lawsuits alleging that management misled investors by reaffirming unrealistic projections while aware of the slowdown.

“Companies that make specific promises to investors about future performance have an obligation to disclose known risks to those projections.”

The “SaaSpocalypse” and Pivot

Across the software sector, AI‑enabled internal tool creation erased roughly $2 trillion in market value within a year. Tools such as ChatGPT, Cursor, and Claude Code let companies build custom solutions, reducing reliance on seat‑based SaaS subscriptions. Monday.com now positions itself as an “AI Work Platform,” replacing traditional boards with AI agents—Sidekick, Magic, and Vibe—and shifting to per‑credit pricing.

“The entire industry may never be the same.”

Takeaways

Monday.com grew from Wix’s “Dapulse” into a $1 billion‑revenue firm by rebranding and targeting non‑technical teams, but its early name hampered credibility in Silicon Valley.
The company’s “human‑to‑human” marketing blitz—massive Facebook, Google, and YouTube spend— drove rapid user adoption yet pushed sales and marketing costs to 118 % of revenue, eroding operating margins despite an 88 % gross margin.
Pandemic‑driven remote‑work demand fueled an IPO and a market‑cap peak of $16 billion, but a Q2 2025 slowdown linked to Google AI changes exposed a gap between aggressive revenue forecasts and actual growth.
Class‑action lawsuits allege that Monday.com misled investors by reaffirming unrealistic targets while knowing growth was faltering, highlighting a clash between aggressive projections and market saturation.
The broader “SaaSpocalypse” sees AI tools replacing seat‑based SaaS subscriptions; Monday.com now pivots to an AI Work Platform with per‑credit pricing and AI agents, aiming to survive a $2 trillion industry valuation collapse.

Frequently Asked Questions

How does Monday.com's AI Work Platform differ from its original seat‑based model?

The AI Work Platform replaces fixed seat licenses with a per‑credit pricing structure that charges for AI agent usage such as Sidekick, Magic, and Vibe. This model aligns costs with actual AI workload rather than the number of user seats, addressing the decline in traditional SaaS demand.

What triggered the sharp decline in software valuations known as the SaaSpocalypse?

AI tools like ChatGPT, Cursor, and Claude Code enabled companies to build internal automation solutions, dramatically reducing the need for external seat‑based SaaS products. The resulting shift in procurement cut revenue expectations across the sector, wiping out roughly $2 trillion in market value within a year.

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Full Transcript YouTube

Monday.com. One of the fastest 
growing software companies. 
Now it’s dying.
From a $15 billion market cap, to $3 billion. 
And in less than a year.
This company was everywhere.  
Advertised on basically every 
YouTube video. Every Google search. 
So, what happened?
Lawsuits. Marketing spend larger than revenue.  
And a billion-dollar promise, quietly walked back.
But it’s not just Monday. 
Something massive is happening in software itself.
The entire industry may never be the same.
In the early 2010s, corporate 
work was very different. 
Collaboration, project management, tasks, 
everything was sorta all over the place. 
Excel spreadsheets, Gantt charts, email chains 
forty replies deep, and weekly meetings. 
There were a few products: 
Trello, Asana, Microsoft Project. 
But, it was all a bit technical. It 
was mostly just for HR or management. 
Two developers, Eran Zinman and Roy Mann, 
were looking for a simple way to track  
Eran's coworkers' projects at Wix, which were 
rapidly scaling, and having those growth pains. 
To solve this, they created a visual, 
no-code software that allowed teams to  
build custom workflows for projects.
But, there were two big problems.
It wasn't called Monday. Not yet.
It was called Dapulse. 
A name might not sound like 
a big problem… but it was. 
And second, when it came time to break into the 
Western market, Dapulse faced major obstacles. 
In project management, companies 
are rarely quick to switch tools,  
even if their current system isn't great.
Especially with established players like Asana and  
Microsoft Project already dominating the space.
And, even when they did get attention,  
the product name worked against them.
In Silicon Valley, Dapulse struggled  
to be taken seriously. Every sales call 
focused on the name instead of the product.
For marketing director Joel 
Goldstein, it was pretty embarrassing. 
"I knew it was really bad when I went on TV for 
the first time in my life and all the anchor  
could focus on was how bad the name Dapulse was."
They had to change the name. They already had a  
strong product, but no one was focused on that.
But, to what?
And that wasn't the only change.
Instead of competing directly with  
Asana and Microsoft, which mainly targeted 
managers, developers and engineers. 
Monday went wider.
They targeted non-technical teams like marketing  
departments, creative agencies, and HR teams.
And they would go way broader down the  
line. But for now, it was working.
Before the rebrand in November 2017, the  
company had 18,000 paying customers. By 2018, that 
number had grown to 35,000, then 80,000 in 2019. 
And with more users, came more 
funding, from $25 million in 2017,  
to $50 million within a year, and then to $150 
million, valuing the company at $1.9 billion.
That name, Monday.com, was suddenly 
everywhere. It was universal. 
It sounded synonymous with work itself.
But all of this was nothing. 
Monday's real big break came during the pandemic.
The pandemic ushered in remote work,  
and companies needed software to better manage 
the team and tasks, without being in person. 
A lot of management at the time happened 
in person. Meetings, talking at desks,  
whiteboards. A lot of it was in the same room, 
so the software didn't need to be as strong. 
But when everyone's remote… 
that's all out the window. 
A unified platform like Monday, was 
perfect. Everyone was on the same page,  
even if no one was in the same room.
Sign-ups exploded. Revenue climbed 85%  
year over year to $58 million that quarter.
But, they were still losing a lot of money. 
Regardless, it was the perfect 
time to take the next step: an IPO. 
Zoom and Salesforce had already 
poured in $150 million before the IPO. 
With shares priced between $125 
and $140, the company raised  
$574 million at a $6.8–7.8 billion valuation.
The stock climbed to $400 per share by late 2021. 
Everything was going great.
But there are big gaps in this story. 
Monday was still losing a ton of money.
Also, how did Monday manage to compete  
with Asana so quickly, while Trello and 
Notion were also rising and taking ground? 
Well, when we look closer, things 
start to get a bit strange.
Take a look at their YouTube channel. Over 1 
billion views. But most of that is paid for. 
Monday was spending a lot on advertising. That 
might not sound crazy, but, this was a lot, a lot. 
The amount of money Monday.com was 
pouring into advertising, is staggering. 
But for now, Monday was pretty much 
doing the opposite of everyone else. 
Remember what I said about them going broad?
Well, in the words of their AdWords team leader:
[Rotem Shay]: "Our target decision-maker [was]  
basically anyone [with] a computer [who] works 
with a team. Some might say that we hacked B2B  
to become B2C, but I say that our marketing 
approach has always been H2H—human to human." 
Their competitors were targeting tech, sales, 
managers. But Monday was basically targeting  
everyone but those people. To get as much 
growth as possible, and as fast as possible. 
And then, rather than targeting tech companies, 
they focused on real-world industries like  
construction, wedding planning, and even churches.
They uploaded data from their existing customer  
database into Facebook's lookalike 
feature, allowing their ads to  
reach people with similar profiles.
Then they expanded beyond Facebook,  
to Google and in particular YouTube ads.
So many, YouTube, Ads. 
While this was working, Monday was slowly turning 
into that one annoying ad you could not skip.
While they were targeting everyone, 
they were also annoying everyone. 
In 2020, they spent 118% of their 
revenue on sales and marketing. 
Not profit, revenue.
$191 million on S&M  
against $161 million in revenue.
In Q1 2021, around their IPO,  
they spent $63M, or 107% of 
revenue, just on advertising. 
They were trying to capture as much market 
share as possible, as fast as possible. 
To be clear: Monday had a 
non-GAAP gross margin of 88%. 
Essentially, the product itself is 
cheap to deliver, and profitable. 
But in the big picture, they were losing money.
Some estimate Monday.com had an operating  
margin of negative 86%, one of the 
lowest out of all SaaS products.
Every dollar they made cost them 
one dollar and eighty six cents.
Over time, Monday.com was spending 116% 
of its revenue on sales and marketing,  
one of the highest figures in all of SaaS.
Though, this was never intended 
to be a long-term strategy. 
In their S-1, they stated: "As our business 
scales through customer expansion and market  
awareness of Monday.com, we anticipate that 
sales and marketing expenses as a percent  
of total revenue will continue to decline."
The hope was that it would eventually pay off. 
So… would it?
Monday is currently struggling, but we're 
still growing. We're trying to get to 1  
million subscribers, and if you can click that 
subscribe button, we might be able to reach it! 
Setup
In November 2024,  
Monday officially passed $1 billion in 
annual revenue, with 90% gross margins,  
$45 million in net income, and 
$82.4 million in free cash flow. 
Everything had panned out. 
Monday was making profit. Great… 
Then something strange happened. 
The stock fell 20% in a single day. 
Their market cap dropped by $3 billion overnight.
Why? 
Something massive was taking place. People 
just didn't realize how big this would be. 
Tension
Wall Street believed  
there were problems ahead, so they lowered the 
expected growth rate to 28%, down from 33%. 
Eran Zinman, in response, said: "We have 
no control over market expectations,  
which have risen significantly in recent months. 
From a performance perspective, everything is  
proceeding as planned, but perhaps the market 
expected us to beat forecasts even more." 
To be fair, Monday was 
performing exceptionally well. 
But… Wall Street was right, and we would see 
how at the end of the next financial year. 
In Q2 2025, they beat revenue expectations, 
and reached 299 million, growth of 29%. 
But growth slowed among small 
businesses, their core market. 
Monday said this was thanks 
to Google algorithm changes,  
like the new AI overviews dropping traffic.
But nonetheless, investors were growing concerned. 
So they pushed:
[Brent Thill, Jefferies LLC]: "I think there 
are a lot of questions just as it relates to  
the Google change and what percent that impacted 
your business if you think about just x, y,  
z percent covered in this category from Google."
CEO Eran Zinman responded saying:  
"I don't exactly, I don't control, we don't 
control, exactly, Google will play this out,  
how the world is going to be. So we're trying 
to understand what the implications are." 
Then another question:
[Matthew Bullock, Equity Research Analyst,  
Bank of America Merrill Lynch]: "And then 
help us understand, why call this out now?  
How did the influence of Google SEO disruption 
change this quarter versus 1Q, for example?" 
[Eran Zinman]: So look, I think like we said, 
we optimize in real-time. We just budget daily. 
This seems to imply they were not aware 
of the problem until they saw Q2 results. 
But a reminder during all this… 
Monday had beaten projections. 
Only by about 7 million, but still. 
Growth was ahead of expectations. 
Unfortunately, stock performance is more 
about the future than anything else. 
So the stock dropped 26%.
Something was happening…  
The SaaS world was changing.
For now, Monday had to ease concerns. 
So to combat the doubt, in September 2025, on 
Analyst and Investors Day they made a big promise. 
$1.8 billion in annual revenue by 2027.
Current annual revenue was 1.2 billion. 
That's a big leap given their 
market saturation. And they knew it. 
Because a few months later, they 
pulled back these expectations. 
From $1.8 billion to about $1.45 billion. 
Slower growth of 18–19% versus 27% in 2025. 
Monday said it was due to "choppiness 
in the no-touch demand environment",  
along with longer enterprise sales cycles.
Investors were not happy, sending the stock  
down 21% in a single day.
When you promise one thing,  
then change your mind, people get annoyed, 
especially if that promise made people invest. 
But it was about to get way worse.
Multiple law firms came forward with  
class action lawsuits, each alleging that 
management hid slowing customer growth,  
weaker expansions, and longer sales cycles, 
making the $1.8 billion target unrealistic,  
yet executives still publicly 
reaffirmed it as conditions worsened. 
"Companies that make specific promises 
to investors about future performance  
have an obligation to disclose known risks 
to those projections. The gap between what  
monday.com projected in September and what it 
disclosed in February raises important questions  
about what was known and when."
But there's a bigger question. 
Why was Monday's growth slowing down?
As it turns out, it wasn't just them. The  
entire industry was going through a metamorphosis.
On February 5, 2026, about $285 billion was wiped  
from software stocks in just 48 hours.
(Show all the stocks falling). 
Salesforce fell over 30%, Workday 
dropped 33%, HubSpot 39%, Figma 40%. 
Roughly $2 trillion in market 
value over the past year. 
And of course, that includes Monday.
⚠️ From a peak of $16 billion,  
they're now worth less than $3.4 billion.
People are calling it the "SaaSpocalypse". 
Small and medium-sized customers are 
hugely pulling back from the market. 
Why?
AI. 
Many companies are leaving these tools, and 
those that aren't, are paying for fewer seats. 
Tools like ChatGPT, Cursor, and 
Claude Code let companies build,  
essentially their own internal tools.
It might not be ready to ship,  
but to the company, who cares? It works 
as an internal tool for management. 
For the first time, Atlassian, the 
giant of these enterprise platforms,  
reported fewer enterprise seats.
So, what is Monday doing about it? 
They're essentially killing 
the seat-based business model. 
And it is changing from a "work management 
platform" to an "AI Work Platform." 
A platform for automation, 
AI credits and AI agents. 
From per-seat pricing to per-credit pricing.
They're also changing their core product,  
boards, the spreadsheet grid for tracking 
work, to different agents. Monday Sidekick,  
Magic, Vibe, all about agents.
Might sound annoying, another  
company pivoting to AI. But for Monday, 
their market is speaking pretty clearly. 
Their business model no longer works.
They have to change,  
or they'll disappear entirely.
I also do respect Eran Zinman. 
He still holds about 80% of his shares since the 
IPO, he isn't cashing out and abandoning ship,  
he's trying to figure out how 
to solve this new problem. 
Another company tool struggling is Slack, 
but for totally different reasons to Monday. 
They used to be dominating, but despite 
being the better product, ended up losing. 
Click here to learn the rest of the story.

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Google Stopped Trying To Be Apple...And It's Working!

Logically Answered

May 20, 2026

The Pandemic Boom

Aggressive Marketing and Financials

Market Correction and Legal Challenges

The “SaaSpocalypse” and Pivot

Takeaways

Frequently Asked Questions

How does Monday.com's AI Work Platform differ from its original seat‑based model?

What triggered the sharp decline in software valuations known as the SaaSpocalypse?

Who is Logically Answered on YouTube?

Does this page include the full transcript of the video?

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