March 18, 2019

SaaS is ‘Dying.’ Long Live SaaS

Have you paid your final respects to SaaS yet? Because, apparently, it's dying. That's according to Noah Jessop, a seed stage VC at Founder Collective, who recently posted on Hackernoon that the "early innings of cloud" are effectively over.

SaaS is 'Dying.' Long Live SaaS

Have you paid your final respects to SaaS yet? Because, apparently, it’s dying. That’s according to Noah Jessop, a seed stage VC at Founder Collective, who recently posted on Hackernoon:”The early innings of cloud were a relatively friendly place for entrepreneurs — following in the wake of the Goliath Salesforce, all scrappy folks had to do was attack an old, underserved market. Or maybe even just build a product for the little companies who had previously been ignored.”The markets reacted very favorably to this new ‘stickier’ revenue — and valuations for high-growth companies were incredibly favorable. The experience was better, faster to set up, and easier to manage than ever before. Products could quickly evolve, improve and delight their customers.”But as Gil Dibner notes — the SaaS revolution’s success may lead to its own downfall: [T]he easy availability and mass adoption of cloud-based (SaaS) technology makes advanced software systems so much easier/cheaper/faster to build that “value” is rapidly bleeding out of the software stack. Yes, software is eating the world, but software’s very ubiquity is starting to threaten the ability to extract value from software. In other words, the ability to write and deploy code is no longer a core value driver.”Read the full storyYes, it’s a catchy headline and well thought through analysis of what may next from the perspective of a venture investor, but of course, SaaS isn’t exactly “dying.” It’s changing. It’s evolving. It’s now a mature model that’s facing a lot of the same challenges that other mature industries — less-differentiated “table stakes” with new moats required to compete.But it won’t be dead anytime soon.Still, it’s worth considering what comes next as the traditional value props of SaaS (or really, any cloud built and deployed software) face commoditization. How the market needs to adapt.Remember, SaaS is just a business model as cloud is just a delivery platform. While both provide great business benefits, in and of themselves, they do not convey the underlying value your product truly delivers to a customer in terms of solving their fundamental business problems.And that’s where SaaS has always been headed: delivering customer delight, not just buzzwords. a world where just offering up a solution isn’t enough anymore. Providers need to be laser focused on their customers, understand what they want, and find ways to meet those needs. Standing still is death. One other aspect of Jessop’s post we found interesting was his view of what we’ll call “SaaS bonds”:”This is the beginning of a post-SaaS world playing out — fewer and fewer companies will break through. Few companies can grow fast enough. The rest…a prolonged stasis, the day to day management of what boils down to a bond — a known flow of future cash with some risk attached to it — just waiting for a buyer…”This is basically what we invest in at Bigfoot. We’re not looking for companies that can grow fast enough to “break out” and satisfy the venture capital investment model. We believe there is plenty of room and opportunity for well-built and run SaaS businesses to proliferate and generate positive returns for all stakeholders in a more measured and predictable manner than the all or none, binary world of venture capital.Bigfoot is helping SaaS companies adapt to this new world. Want to learn how? Let’s talk.