SaaS: Why are people so attracted to it? (mini rant)
Last 3 years of startups have been all about SaaS. I just don't get it. So far, it was about solving real problems at scale. First with consumer websites (google etc), then software, then shopping & delivery (amazon swiggy zomato fk etc etc)
And now, it's all SaaS:
- Imma build a startup to help white businessmen in America do better billing
- Imma build a 360 degree feedback tool specifically for Norwegian miners
- Imma build a SaaS software to help HR people note down who isn't dressed properly
- Imma build a software to help hillbillies in the US better manage their trucking company
Like how are smart people in India taking up entrepreneurship to build these ideas that are dull and feel like the end of life? How does anybody become excited by this?
is it just money? what am I missing?
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Money and scalability. I personally hate it
Finally somebody from B2B SaaS with a real opinion! What made you hate it tho?
Possibly my work profile and the day to day I do. I'm responsible for adoption and consumption and I feel like I'm not learning anything? I probably wouldn't have this opinion if I was in tech tho tbh
tl;dr - easy to hit revenues faster and get paying clients, like all IT services companies.
Saas is 70-80% like service industry. Similar common demand products, same clients (what an Infosys does), except it packages each 'client project' to market better and let client get the solution bit faster.
Demand for services at low cost is huge worldwide. Tech salaries are lowest in the world, and hence easy to build solutions in India and sell in US, Europe with sales offices there like how all the WITCH are the biggest tech listed companies in India. Most saas startups you see will be in CRM, marketing, sales, ITSM, Data Ops, Infra segments and there will always be some segment of client company (maturity, size, industry wise and all) who have unmet needs. Founders have to work finindg them, shape their offering and start making money soon. Unlike consumer products which are super hard to monetize.
P.S. Saas companies are still service companies as the last letter says. They will still have solutions engineering fleet, deployed to onboaed their 'Saas product' to each client.
very well put, agree with you so much There are things attractive about SaaS as a model
Just that it lacks.. soul
Agreed. Also, why founders are focusing on niche and probably random problems is also because the low hanging fruits have already been taken, and enough money is being pumped in by giants to solve those problems. The real differentiator is for a founder to find a relatively unorganised sector and add meaningful value to it through SaaS, while creating a sustainable revenue stream. That's a skill that new founders don't have. But yeah, if everyone had it, all startups would be successful and making money would be easy.
Answer is simple: It’s easier to build. There is an established playbook (written by david sacks) which means VCs have relatively more certainty, margins are higher, lean team can get high early revenue, accepted multiples are bigger, and overall it is a clearer path to money and riches.
Just look at snowflake’s revenue multiple.
Hey man i am trying to build something for India. Softwares that have been built by global companies from their India employees and for which they charge millions of dollars.
If you are also interested in building something for India, then let's connect. I will flag that there is no money yet, just a guarantee that it will solve real problems.
Because they’re just ponzi schemes to save taxes and move money. Most of these saas startups have common VCs or advisors or co-founders share common ex-employers.
Here’s an example: A saas startup cofounded by an ex Adobe employee will have adobe as one of their clients. Now, there exists 10 similar saas startups out there and they all have Adobe as their client.
Why does Adobe need 10 different saas products while one does the job? Because of multiple products and departments.
All these deals are done by internal employees who are friends with cofounders. They’re just ripping off the big tech and generating recurring revenue.
++ Founders get direct entry to silicon valley and better work life balance and citizenship in the long run.
Very interesting insight this
Are you sure this is happening? Or is this a hunch?
Share insights, if you get to know something. I feel the same
To each their own. There are people building businesses which do not add any value at all as per your framework of analysis. That's fine, it's a choice. They aren't disillusioned, they believe a gap exists and they want to go after it. And yes, only creating any kind of value, will make you life changing money as a founder when you exit. So everyone, including all the people that you would consider doing great work has capitalistic motivations. (Please exclude the exits which are secondaries where founders make money, I am talking real large outcomes).
To add, SaaS is probably the most liquid private company shares. Look at the history of acquisitions that have taken place. One of the best sectors in that context. Plus, these are cash rich businesses which do not need a lot of capital to start and run.
There are several problems which have not gotten any attention and that's fine. Nothing wrong with how people spend their time. And as Rustin Cohle once said, "Your dime, boss."
Well, sab sahi hi hai, kya dikkat hai. Similar rant-banter tone mein we can list down a bunch of clown ass consumer products too XD.
Real business problems at scale is also an equally foundational timeline - First with local-softwares that started digital transformation (Excel, Office, Adobe suite), followed by cloud infrastructure revolution (AWS), and then Payments (Stripe/PayU/Razorpay).
Because VC money is attracted to it
I don't know what's your issue with people following saas model.
Alteast moat of the saas startups are profitable unlike other startup.