SaaS is dead?

0:00SAS 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, [music] um, and what's really happening here. And I think the people that understand where SAS are go 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 [music] what's happening with SAS, where it's going, why it's dead, quote unquote, why I think it's evolving into something else, what that something else is, [music] and uh yeah, by the end of it,

0:37you're going to you're going to understand it. So, [music]

0:47how did SAS typically work for the last 15 years? was people basically built some code that was the software, right? Uh software as a service. Uh they created some code and that code uh was essentially a tool. So the hard part about SAS 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

1:19being to go and uh and and use, right? Um and in exchange for um using that tool uh you paid money and the whole business model was a per seat basis. So you would pay uh per seat you know $9.99 $29.99 um and you would go and access that cool uh tool as a service uh in the cloud. And that was basically how it worked. Um, and for a long period of time, this model uh made people billions of dollars. I mean, there's so many examples of SAS companies that made billions of dollars. Slack, for example, I think sold for $29 billion. Um, this model really worked for a while. Um, and

2:13the reality is it does not work anymore. Um, because AI makes the ability to create the SAS super easy. I think you know when we hit the Opus 5.5 GPT6 uh Astra um that like level of model um even Argon carbon like the these these models are so good that building the SAS is not the you know is not hard. So, what is the Okay, so cool, Greg. You know, that's very academic of you. Um, how can I actually go and uh build a SAS that works in today's environment? Well, let me explain where we're going with all of this uh in the simplest way I

3:01possibly can. So, uh the the the new version of SAS um it has actually like a different business model. So, in a world where um the the tool is so easy to create. Um and by the way, we're going to talk about you know the ICP and who to target later. So, stick you know stick around for that. Um, 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. Um,

3:46but the business model is actually free. Um, 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. Um, get people onto the tool, find niches where um there's something in this old model that people are paying for and literally give away the thing to the person uh for free. And we're going to get to how you can actually make money from this in a second. Um, but the value exchange here initially isn't uh the money, right? So it used to be that you would go and pay

4:29for this but what do you so what are you giving here you're not giving money well um you are giving data um so that is going to help you make a better tool um you know you are creating network effects and that's going to help you create a mode um so that's the idea is like you're in the tool free tool business um and you're going to be trying to acquire proprietary data uh which you can eventually sell or use to make your tool a lot better and then a tool that helps uh you know create network effects. Now how do you actually make money from this tool then? Well um

5:17and by the way I actually think that the market for in this world we'll call it SAS 2.0 0 um or SAS 1.0. This is what I would call dumb SAS because it's just a tool. And this is what I would call smartass because it's intelligent. And I'll get to that in a second. Um you're basically upselling

5:43uh intelligence. You're actually, you know, you're you're upselling intelligence. So, you're basically saying, "Hey, I'm going to give you away this CRM, say, but if you want the CRM to go and do something for me with AI agents, 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 new 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

6:35that'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 ser 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,

7:17that 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. Um, so it excites me. So

7:57when I see things, tweets and stuff like that around like SAS is dead, period. It's not that SAS is dead, period. It's SAS is dead. Long live SAS. Uh this is like, you know, we're we're evolving from this, which is no longer a thing anymore. Like don't like it's dead. Like don't create a this, right? Um the other, you know, the other thing to mention is, you know, 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 out u pay per outcome. So if the agents

8:36actually do something and then for human beings it could be weekly or monthly fee. So I think that the total TAM for um total addressable market for SAS is now bigger because the market for um you know people accomplishing things is just a lot bigger than people actually using a tool to complete something. When I posted about this whole smart SAS thing and how SAS is going to be free, my point is that SAS is trending towards

9:10being free. So, you know, I I think that here this is sort of the price where things are going now. I think for a lot of uh SMBs, proumer stuff, it's going to be free. Um, but I do want to say uh when it comes to enterprise um you know enterprise when I'm talking about enterprise I'm saying like Fortune 500 2000 those companies they still might pay uh something per seat. I think that number goes down uh over time. Um and I still think that there's upsells

9:46to humans and super intelligence. Um, but you know, the point is, you know, enterprise, you know, they're not going to want, some enterprises are just not going to want free stuff. Um, they're going to want to pay. They're going to want to pay for the security. Um, they're going to want to pay uh because it just feels good uh to pay because it feels like, you know, you're getting taken care of. Um, so I think that, you know, enterprise they will still pay something. Um, but again, uh, the the main point I'm trying to make is it's it's going towards free, I think, for SMBs where you're going to see it

10:27becoming more and more free. Um, and and and individuals, too. I hadn't seen anyone really clearly explain this, so I wanted to put it in here. I think, um, you know, I'm happy to do more uh more on this. Just comment below, like, comment, subscribe. Um, and I can do more on this, like where SAS is going, the niches, the opportunities. Um, if this gets, you know, 5,000 likes on YouTube or 5,000 likes, comments, subscribes on YouTube, I will go and do more of that. Uh, but yeah, I think this is a really interesting time to be creating SAS. This is the map. Enjoy. Go and do it. Thank you for watching. Uh,

11:08thank you for listening. Have a creative day. and I'll see you next time.