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SaaS is dead?

11m 12s

SaaS is dead?

The speaker argues that traditional SaaS is "dead" and is evolving into a new model he calls "smart SaaS." For the past 15 years, SaaS businesses built software tools with large teams of engineers and charged customers per seat, a model that made companies like Slack billions of dollars. However, AI has made building software so easy that the tool itself is no longer the hard part, so the per-seat subscription model no longer holds. In the new model, companies give the tool away for free, using it to acquire proprietary data and build network effects that create a moat. Revenue then comes from upselling intelligence through AI agents, charged per token or per outcome, and from human services charged weekly or monthly. A concrete example is a free calorie-tracking app that upsells personalized AI meal plans or a paid weekly weight coach. The speaker notes this expands the total addressable market, since far more people want to accomplish outcomes than want to use tools. Pricing is trending toward free for SMBs, prosumers, and individuals, while enterprise customers will still pay for security, support, and peace of mind. He closes by inviting comments and subscriptions to produce more content on where SaaS is heading and the opportunities available.

Transcription

1569 Words, 8092 Characters

English
Speaker 1Sass is dead everybody and in today's video I'm going to basically break down why I think that's the case where the opportunities are and what's really happening here and I think the people that understand where sass is really going I think are just they're going to understand how they can reorient themselves to build something that people actually want so I'm going to make this the clearest breakdown on the internet for what's happening with sass where it's going why it's dead quote-unquote why I think it's evolving into something else what that something else is and yeah by the end of it you're gonna you're gonna understand it so how did sass typically work for the last 15 years was people basically built some code that was the software right software as a service they created some code and that code was essentially a tool so the hard part about sass was can you get enough smart engineers in a room pay them to code something out that was high quality that worked that was a tool for a human being to go and and and use right and in exchange for using that tool you paid money and the whole business model was a per seat basis so you would pay per seat you know $9.99 $29.99 and you would go and access that cool tool as a service in the cloud and that was basically how it worked and for a long period of time this model made people billions of dollars I mean there's so many examples of sass companies that made billions of dollars slack for example I think sold for 29 billion dollars this model really worked for a while and the reality is it does not work anymore because AI makes the ability to create the sass super easy I think you know when we hit the opus 5.5 GPT-6 Astra that like a level of model even argon carbon like these these models are so good that building the sass is not the you know is not hard so what is the okay so cool Greg you know that's very academic of you how can I actually go and build a sass that works in today's environment let me explain where we're going with all of this in the simplest way I possibly can so the the the new version of sass it has actually like a different business model so in a world where the the tool is so easy to create and by the way we're going to talk about you know the ICP and who to target later so sticker you know stick around for that so there you know you're still building a tool right so you know you may be using AI to create the tool instead of or AI with one or human or two humans instead of no AI and 20 humans but you're creating a tool but the business model is actually free so you're actually giving away the tool I don't know why more people aren't actually doing this I tweeted this the other day like give away the CRM give away the dashboard give away the app get people onto the tool find niches where there's something in this old model that people are paying for and literally give away the thing to the person for free and we're going to get to how you can actually make money from this in a second but the value exchange here initially isn't the money right so it used to be that you would go and pay for this but what do you so what are you giving here not giving money well you are giving data so that is going to help you make a better tool you know you are creating network effects and that's going to help you create a moat so that's the idea is like you're in the tool free tool business and you're going to be trying to acquire proprietary data which you can eventually sell or use to make your tool a lot better and then a tool that helps you know create network effects now how do you actually make money from this tool then well and by the way I actually think that the market for in this world we'll call it sass 2.0 um or sass 1.0 this is what I would call dumb sass because it's just a tool and this is what I would call smart sass because it's intelligent and I'll get to that in a second um you're basically upselling uh intelligence you actually you know you're upselling intelligence so you're basically saying hey I'm going to give you away the crm say but if you want the crm to go and do something for me with ai agents you're going to have to do something for me with ai agents and that's going to cost you money and you can upsell that um the other thing that you can upsell is some service so a service provided by humans and this is intelligence provided by agents so this is you know when sequoia talks about you know trillion dollar service is the software when they're talking about this um and they're they're basically saying like hey there's going to be a tool and that's going to get you in and that's going to bring data and network effects and if you want a upsell uh you can have service a service now what's a concrete example of this in the consumer space it would be something like a calorie tracking app right the tool is free but if you want to actually you know use agents to go and help you um you know make personalized meal plans or give you like more you know precise uh calorie tracking you would have to pay for that or if you wanted to be upsold to a weekly uh weight coach to help you get on track that is is something that you would pay money for so it's it's it's pretty interesting I think like why the why it's interesting is this was kind of limiting the tool per seat was kind of limiting because not everyone wants to pay for tools but if you create like essentially a product studio around free tools get people in get their data get their network effects and then upsell them either to AI agents or to human beings um there's a lot of niches that have are are just wide open right now that I think you can go and build stuff in so it excites me so when I see things, tweets and stuff like that around like sass is dead period, it's not that sass is dead period, it's sass is dead long live sass this is like, we're evolving from this which is no longer a thing anymore, like it's dead don't create this right the other thing to mention is you could, the business model of, okay it's free over here upsell to agents, how do you charge for that? I mean you can either charge by token you can charge by pay per outcome, so if the agents actually do something and then for human beings it could be weekly or monthly fee so I think that the total TAM for total addressable market for sass is now bigger because the market for people accomplishing things is just a lot bigger than people actually using a tool to complete something when I posted about this whole smart sass thing and how sass is going to be free, my point is that sass is trending towards being free so I think that here, this is sort of the price where things are going now, I think for a lot of SMBs prosumer stuff it's going to be free but I do want to say when it comes to enterprise enterprise when I'm talking about enterprise I'm saying like fortune 500, 2000, those companies they still might pay something per seat I think that number goes down over time and I still think that there's upsells to humans and super intelligence but you know the point is enterprise they're not going to want some enterprises are just not going to want free stuff they're going to want to pay for the security. They're going to want to pay because it just feels good to pay because it feels like you're getting taken care of. So I think that enterprise, they will still pay something. But again, the main point I'm trying to make is it's going towards free. I think for SMBs, you're going to see it becoming more and more free. And individuals, too. I hadn't seen anyone really clearly explain this, so I wanted to put it in here. I think I'm happy to do more on this. Just comment below, like, comment, and subscribe. And I can do more on where SaaS is going, the niches, the opportunities. If this gets 5,000 likes, comments, and subscribes on YouTube, I will go and do more of that. This is a really interesting time to be creating SaaS. This is the map. Enjoy. Go and do it. Thank you for watching. Thank you for listening. Have a creative day, and I'll see you next time.

Podcast Summary

Key Points:

  1. Traditional SaaS relied on per-seat subscriptions for software tools built by large teams of engineers, and that model generated billions of dollars for companies like Slack.
  2. AI now makes building software tools so easy that the old per-seat model no longer works, which is why the speaker calls traditional SaaS "dead."
  3. The new model, called "smart SaaS," gives the tool away for free in exchange for data and network effects that create a competitive moat.
  4. Revenue comes from upselling AI agent intelligence (charged per token or per outcome) and human services (charged weekly or monthly).
  5. A consumer example is a free calorie-tracking app that upsells personalized AI meal plans or a paid weekly weight coach.
  6. The total addressable market grows because far more people want to accomplish outcomes than want to pay for tools.
  7. Pricing is trending toward free for SMBs, prosumers, and individuals, while enterprise customers will still pay for security, support, and peace of mind.
  8. The speaker invites engagement to produce more content on SaaS opportunities and niches.

Summary:

" For the past 15 years, SaaS businesses built software tools with large teams of engineers and charged customers per seat, a model that made companies like Slack billions of dollars. However, AI has made building software so easy that the tool itself is no longer the hard part, so the per-seat subscription model no longer holds. In the new model, companies give the tool away for free, using it to acquire proprietary data and build network effects that create a moat.

Revenue then comes from upselling intelligence through AI agents, charged per token or per outcome, and from human services charged weekly or monthly. A concrete example is a free calorie-tracking app that upsells personalized AI meal plans or a paid weekly weight coach. The speaker notes this expands the total addressable market, since far more people want to accomplish outcomes than want to use tools.

Pricing is trending toward free for SMBs, prosumers, and individuals, while enterprise customers will still pay for security, support, and peace of mind. He closes by inviting comments and subscriptions to produce more content on where SaaS is heading and the opportunities available.

FAQs

AI has made building software tools much easier, so the hard part is no longer creating the code. The old per-seat model of paying for a tool no longer works as well because the tool itself is no longer the main barrier.

Dumb SaaS is just a tool that people pay for per seat. Smart SaaS gives the tool away for free and upsells intelligence (AI agents) or human services on top of it.

You give the tool away for free to acquire users, data, and network effects. You then make money by upselling AI agent intelligence or human-provided services.

You upsell AI agents, which can be charged by token or per outcome, and human services, which can be charged weekly or monthly. The free tool brings people in and the upsells generate revenue.

You get data that helps you build a better tool, plus network effects that create a moat. This proprietary data can eventually be sold or used to improve the product.

Not necessarily. Fortune 500 and large enterprises may still pay something per seat because they want security and prefer paying for a sense of being taken care of, though that amount will likely decrease over time.

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Transcription

1569 words