{"id":8983,"date":"2017-06-01T17:20:44","date_gmt":"2017-06-01T15:20:44","guid":{"rendered":"https:\/\/chartmogul.com\/blog\/?p=8983"},"modified":"2023-08-17T10:09:12","modified_gmt":"2023-08-17T08:09:12","slug":"saas-demise-exaggerated","status":"publish","type":"post","link":"https:\/\/chartmogul.com\/blog\/saas-demise-exaggerated\/","title":{"rendered":"It’s time for SaaS to be boring"},"content":{"rendered":"

If you stay up to date with the SaaS and B2B publishing trends (subscribe to our SaaS Roundup<\/a> if you don’t!) you may have noticed a number of recently-published articles spelling doom and gloom for Software as a Service. Reading into all of them, you’d probably come away thinking that the industry has moved on to the “next big thing\u201d and the model has no future in the tech industry or elsewhere.<\/p>\n

Point Nine Capital’s Clement Vouillon<\/a> started out with an argument that a lot of new SaaS businesses are no longer compatible with the VC model, in his article The Rise of Non \u201cVC compatible\u201d SaaS Companies<\/a>:<\/p>\n

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“Founders in 2017 can effectively build something in their bedroom, building on an increasing number of “building block” tools, frameworks and API-based services. This means an increase in entries to the market, a lot more bootstrapped companies and overall decreased potential for the huge returns that venture capital demands.”<\/p>\n

~ Clement Vouillon<\/p>\n<\/blockquote>\n

If that wasn’t a strong-enough sign, from Europe’s premier SaaS VC, Christoph Janz<\/a> followed up more recently with a similar take on the topic, The growing dissonance between two business models (SaaS and VC)<\/a>:<\/p>\n

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“There will be more and more SaaS companies that, based on the \u201cpattern recognition\u201d that we\u2019ve developed in the last years, we\u2019d like to invest in but will have to pass on. We can only make 10\u201315 new investments per year and we\u2019re obviously trying to find the very best ones\u200a\u2014\u200athe outliers among the outliers, if you will.”<\/p>\n

~ Chrisoph Janz<\/p>\n<\/blockquote>\n

Just as Clement started, Christoph discusses the “rise of bootstrapped SaaS”, with some more specifics on how the VC is turning down deals that would have seemed mightily attractive to them just a couple of years ago. He argues that new SaaS businesses today will have to raise the bar even higher than ever before, with growth metrics and traction showing something that’s an “outlier of the outliers.”<\/p>\n

He was also probably the first person ever to apply a quote from Daft Punk in a Venture Capital article. Nice one, Christoph!<\/p>\n

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Noah Jessop<\/a>, writing in Hacker Noon, takes the entire discussion a good few steps further with his all-out argument that SaaS is “dying”, in What Comes After SaaS?<\/a>:<\/p>\n

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“SaaS\u2019s own success is it\u2019s own enemy\u200a\u2014\u200athe cost and the time to build novel things has fallen significantly. Thus as a software company hits real scale, it\u2019s left in a no man\u2019s land\u200a\u2014\u200anot large enough to stack, not worthless (or weak enough) to die\u200a\u2014\u200abut too much competition\u200a\u2014\u200afrom the low end, the high end, from customers cobbling together a series of other tools\u200a\u2014\u200ato prevent any real growth.”<\/i><\/p>\n

~ Noah Jessop<\/p>\n<\/blockquote>\n

All valid points, and many of those overlap with the points made in the aforementioned Point Nine articles.<\/p>\n

So it’s game over, then?<\/b><\/h1>\n

Fortunately, the increasingly common “X is DEAD!!!!!” narrative isn’t usually quite as extreme as it’s made out to sound. In this scenario, the word “dying” simply means “not as sexy and hyped as it used to be.” Allow me to explain.<\/p>\n

Let’s remind ourselves where SaaS is today<\/b><\/h2>\n

SaaS is a model for building and selling software products. It’s a way of selling and distributing software to customers that marries very well with the benefits that cloud computing brings: Always-on connectivity, scalability, low onboarding friction and a focus on delivering constant value to the consumer.<\/p>\n