A sell-off in software stocks last week is having consequences. Enterprise software firm Workday announced on Monday that it has replaced CEO Karl Eschenbach, with co-founder and former CEO Anil Puisri returning to "lead the company into its next chapter." It should be noted that Puisri has been in a leadership role for most of the company's history, serving as co-CEO or sole CEO between 2009 and 2024. The signal Workday appears to be sending is: "Everyone is panicking about the impact of AI on the software industry, so we're bringing back the veteran to reassure everyone that we can handle it." Unfortunately, investors seem to be interpreting the move as one of panic. How else to explain Workday's stock falling 5% on Monday, after a 7% plunge last week? Eschenbach's performance was not poor—at least from an external perspective. In the first nine months of the fiscal year ending this past January, the company's revenue growth slowed to 12.6% from the 16% to 17% rates of the previous two years. This performance is not stellar, but it is far from disastrous. Workday has been actively positioning itself in the AI space. Last November, the company announced the acquisition of Pipedream, which connects AI agents to business applications. Workday has also acquired enterprise AI startups Sana and Paradox, and has developed its own AI models to automate tasks such as generating job descriptions and screening resumes. However, these moves have not altered the external perception of Workday as a software company focused on human resources and finance-related functions. Puisri may be able to push Workday to innovate more aggressively or achieve other significant breakthroughs. There is no doubt the company must become more assertive. As Puisri stated in today's announcement, "We are entering one of the most critical moments in our company's history." He added that the transformation brought by AI is more profound than the shift to software-as-a-service and "will define the next generation of market leaders." Puisri has the advantage of being able to make major decisions quickly, as he holds controlling interest in the company alongside retired co-founder David Duffield. Eschenbach will certainly not be the only software CEO replaced over the next year or two. Changing the top management team is not the only option for software companies navigating industry changes. Corporate partnerships could be a logical path, although a wave of large-scale mergers and acquisitions is unlikely in the short term. In such an uncertain environment, no one wants to act rashly. Indeed, it took the television industry five years to begin consolidating after cord-cutting eroded profits. Even so, if software executives have not yet considered partnering with other companies, perhaps they should start planning now.

**Software Industry Developments** As Workday changes leadership, other software companies are touting their own successes. For example, Databricks announced on Monday that it has completed a new funding round of $5 billion, valuing the company at $134 billion, a 34% increase from its valuation during a funding round last August. Databricks CEO Ali Ghodsi posted on platform X on Monday: "I keep getting asked about the SaaS [software-as-a-service] crash, the role of AI... I don't have answers... But I do know that our business grew in Q2 and Q3, and finished the year with accelerated growth in Q4." He noted that Datadog's annualized revenue reached $5.4 billion in the fourth quarter, representing 65% year-over-year growth. Of course, it would be better if Datadog reported actual quarterly financials like a public company, as annualized revenue is not a perfect performance metric, being essentially a single month's revenue multiplied by 12 (or a single quarter's multiplied by 4). But this is one advantage of being a private company—the ability to choose which metrics to disclose.

**Other News** OpenAI announced on Monday that it has begun showing ads to some US users within ChatGPT. OpenAI stated this is a test, and ads will be shown to users logged into the free or low-cost basic version. Uber will acquire Getir's food delivery business in Turkey for $335 million in cash, expanding its presence in the local market. Uber will also invest $100 million to acquire a 15% stake in Getir's grocery and water delivery business, with the acquisition of the remaining shares "subject to specific operational and financial performance conditions." Alphabet Inc. plans to raise $20 billion in the US bond market. This large-scale debt issuance will also include bonds denominated in British pounds and Swiss francs. Elon Musk stated on platform X on Sunday that SpaceX has shifted its focus to building a "self-sustaining city" on the moon, a goal achievable within 10 years, rather than the Mars colonization plan which would take over 20 years.