The Past, Present, and Future of SaaS and Software

Here are some great notes from masters of SaaS


Parker Rex


Nov 2, 2020

  • Link [[ The Past, Present and Future of SaaS and Software]]


Tags: #SaaS #Investing #InvestLiketheBest #Podcasts

Author: [[Patrick O'Shaughnessy]]

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  • Number of people = #saas
  • Number of transactions = API SaaS
  • Software talks to other software. Historically folks would sit in front of software and use it. Now it's increasingly encoded in software. Many businesses are building software themselves, but now we want to use a library of API's which is really just a set of lego blocks.
  • Health care and education, in my view, are next up for fundamental software-based transformation.

Gen 1.0 SaaS

  • Loudcloud - application service providers or ASP's.
  • Capitalized on a better delivery model, and better economic model.
  • Better economic model; 18% maintenance fee
  • Initiation fee, recurring fee.
  • Large implementation, big ticket SaaS.

Gen 2.0 SaaS

  • Very nice user experience
  • Easy to consume
  • High cost of failure brought to low cost of failure
  • Try and toss model -> doesn't mean executive buyin.
  • Shifted from a macro model to a micro adoption model.
  • Now an individual can make a decision to try it instead of enterprise decision making
  • New Relic, Wix, added an adoption model that was super easy.
  • This generation ended up being massive.
  • Big customer bases, initial land prices weren't big.
  • Slower revenue growth, but it compounds and grows like wildfire.
  • Consumer like adoption models
  • Look at facebook... google. Grew massive user base and laid a revenue model on top of it.  
  • More capital efficient
  • "capital consumptive" is a great word.
  • Time to $100M revenue will take long time from the time the first line of code is written.

Gen 3.0 API's

  • GUI's don't go away. Primary consumption vehicle of Stripe isn't the GUI, it's the API.
  • There will be software, but they all need API's to be a part of the ecosystem that they need to call functions of and gather data from.
  • Micro adoption model, better delivery model, better economic model
  • TAM's are exploding.
  • Gen 1 SaaS served the fortune 2000
  • Gen 2 could serve the SMB's and it opened the mid market.
  • This opens up new customers now.\
  • Seemingly Narrow functions that end up being deep
  • Zuora
  • FP&A
  • HackerOne
  • Security penetration and bug bounty. A marketplace that uses a SaaS model. cross pollination of business model..
  • How will this work? Will this scale?
  • Systematically find any point of friction and eliminate them.