# What SaaS Buyers Actually Want in 2026

Channel: Rob Walling
Video: https://www.youtube.com/watch?v=bLZJpTHXG9M
Duration: 14 min
Language: English
Words: 2882
Transcript page: https://viewrankai.com/tools/youtube-transcript/bLZJpTHXG9M

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[0:00] Last year, a SaaS company went up for sale with metrics most founders would kill for. Great growth, great retention, the works. 22 private equity firms took a meeting. Not one of them made an offer. Nothing was wrong with the business. What changed is what buyers are now [music] looking for. Private equity firms that usually set the price have quietly raised the bar and a lot of companies aren't even getting offers anymore. So, I sat down with Einar Vollset to get the real picture. And what he laid out is a set of five moats that now have a huge impact on what your company's worth. I'm going to walk you

[0:33] through all five with the best of what he told me. And we'll come back to that company at the end because how it played out is clear proof of the shift we're seeing. The headlines say AI is killing SaaS, but Einar has a different perspective. In addition to being my co-founder at Tiny Seed, he runs Discretion Capital, which helps SaaS founders doing two to 20 million in ARR sell their companies. So, I asked him, "Why is everyone so sure SaaS is

[0:56] doomed?" His answer was simple. I think AI is amazing. I think AI is super impactful. But, one of the funny things for me is this is still software. Now, I think people lose track of that sometimes cuz they talk to it and so they anthropomorphize this thing and they think of it as somehow different to software. But, I'm like, "Look, it's software." And if you're very bearish on SaaS companies, then you're sort of saying that the companies that are the best in the world at deploying software are going to be bad at deploying this

[1:22] particular kind of software. And it's not just theory. He's seeing it inside the Tiny Seed portfolio in real time. I actually think it's a great time to be an early stage software entrepreneur just because there is so much uncertainty. The cost of developing software has gone way down. That's definitely true. And honestly, like I think we see that inside the Tiny Seed portfolio. We've invested in 200 plus companies. I've never seen the sentiment be so different between what we're seeing internally at the sort of the Slack channels among founders who are

[1:52] like, "Things are going super well. Growth is accelerating. And we're adding features in 3 weeks. We normally it took us 6 months. And everyone's gung-ho and up to the right. And same actually thing with most of the like public SaaS companies are reporting. You know, they're coming like, "We're not seeing any disruption whatsoever from AI. No additional churn." But in the public markets the sky is falling. It's strange

[2:11] to me. So if SaaS isn't going anywhere, here's why this matters to you specifically. Even the bootstrappers watching who are thinking, "I'm never going to sell. Why do I care what buyers want?" Well, for two reasons. First, everyone sells eventually or you shut down. I've watched almost 100% of the founders who swore they'd never sell hit a moment where that makes sense. They get tired or someone offers them 10, 15, 20

[2:35] million dollars. Their life changes. They go through a divorce. They have a kid and they sell. Second, even if you never sell, you're sitting on an asset worth a lot of money. Knowing what makes it valuable is like knowing the value of your house. You don't need to check it every day, but you should pay enough attention to spot an opportunity or a storm coming. And what makes it valuable comes down to moats. In the SaaS playbook, I laid out four that have always mattered. Integrations, especially custom integrations that make you part of a company's core workflow. A strong brand, the reason people just buy Salesforce or Zapier. High switching

[3:09] costs and owned traffic channels, like really strong SEO. I also called out a false moat, unique features. As developers, we love to think the clever thing we built is a moat. It never really was and it definitely isn't today. Now AI didn't erase those four moats. It just changed what they look like and it added five more. So let's go through Anar's five, starting with the one I underrated the most and that's hardware. Two years ago, if a founder came to us at Tinyseed with a hardware component baked into their SaaS, it was a strike against them. Too hard to scale, too slow to ship. But today,

[3:44] that's flipped. When your software delivers value tightly coupled with a hardware layer, switching you out isn't just an API swap. There are real-world downstream consequences. Einar puts it like this. If you have a hardware component that like is tightly integrated into your thing and it's a key part of what you deliver and it's not just like an off-the-shelf hardware component with an open API that anyone can just vibe code in an afternoon, then yes, I can

[4:11] definitely see that being a moat. We've got Tiny Seed companies with exactly this. Digital scales in grocery stores, software running inside EV chargers, a physical printer sitting in specific warehouse locations. When we first invested, that hardware looked like a liability. Now it's a moat. Nobody's vibe coding their way around a physical device. If the first moat is something physical you build, the second is something you almost can't build at all, a two-sided marketplace. The platform gets more valuable as people join each side. More supply pulls in more demand. More demand pulls in more supply. Now I almost always tell founders not to bootstrap one of these

[4:49] because if you don't already have access to one side of the market, your odds are approximately zero that you're going to make it work. But if you can pull it off, it can add real value when you sell. It's hard to do, but that's hard to undo if you succeed at it. And it's not actually not unusual that folks have a

[5:03] component of like marketplace stuff. They have the key thing and then like a component. Before I was always like, yeah, this is great. And now I'm like, actually this might be with the moat because the marketplace as that scales makes the software stickier. And to be clear, when I say don't bootstrap a marketplace, I always follow that up with unless you already have access to one or both sides. When we went to launch Tiny Seed, which if you think about it is a two-sided marketplace of founders and investors, it's different. I already had access to founders and it turns out I had access to investors as well, which I wasn't

[5:36] even fully aware of. Dan and Ian of the Tropical MBA building Dynamite Jobs when they already had a remote work audience made sense. But those are the exceptions, not the rule. A marketplace is a moat you have to manufacture. The third moat builds itself just from people using your product. The software that's hardest to rip out is usually the one where your team's messages, approvals, and shared context already live. And I connected this straight to something I'm always saying about

[6:03] pricing. One of the things we always talk about how you always say is there's got to be something else going on when you log in. You're not going to sell 10 seats to a a company if every single one of those 10 logins are the same. It's sort of related to that cuz SaaS buyers that they really want to deal with what you might call a system of record type systems where this is where you run your business. This is where you're sending messages back and forth. This is where the context is. This is where the coordination between people are happening. This is the various states of

[6:30] the you know, the conversation. All that kind of thing is on the platform and that just makes it a lot harder to move off. And the perfect example is the one we all complain about and never leave. We try to leave Slack feels like every year and then we come back and we're like, "Please give me some more of that

[6:46] sweet, sweet Slack." The fourth moat is the same idea with a different asset, data instead of conversations. You capture exclusive, constantly refreshed data and use it to make your product smarter. Here's the catch and this is really the whole moat. It only works if that data flows in and never flows back out through an API. This is another one of those like the incentives are now for companies to not give you access to your even your own data through API. That's the key difference, right? That the data flows in but doesn't flow out because if I can take the entirety of the data that's in there and quickly just take it out

[7:22] including all the timestamps so that I can replicate, I can write vibe code, all the code around it, then yeah, that's that's hard. Think of BuiltWith scraping a big chunk of the largest websites on the internet constantly or fiscal.ai and Deal Forma, both TinySeed companies where the data keeps refreshing and a snapshot today is

[7:42] worthless next month. Where like data goes in and doesn't necessarily just flow out immediately and even if you took a snapshot, what good is that? You know, like you still need the next the data next month and the month after and then every single month. The fifth mode is the one I'd bet on most and it pulls a few of the others together. Switching costs. Here's the test for whether you have high switching costs. A competitor shows up offering everything you do at half the price. For most serious businesses that pitch doesn't even land. They stay put and why

[8:13] they stay is the whole mode. That's sort of the your classic like system of record. You are the finance team and everybody uses QuickBooks or some ERP to just coordinate absolutely everything. Or you are a warehouse and all of your stuff coming in and going out approvals and shipping is all in this one system. You could build a system that sort of does the same, but the risk of to your actual business of that collapsing is high enough that it just

[8:41] isn't worth it. And this is where it loops back to brand and trust and to the people insisting AI is about to eat all of this. It's much more important to people to like be able to like I trust this brand, this company to do this job well and I'm willing to pay for that and partly what I'm paying for is the brand and the brand trust and honestly being able to call someone up or email them and shout at them if something's broken and know that I'm their number one

[9:08] priority to to get this up and running. That you're never getting if you vibe coded at all. I'd like to get all of them and be like, okay, you guys were all probably on like the open claw, you know, thing like a month, two months ago and like it just didn't take over. Oh my god, my chief of staff it does everything for me. I just sort of want to like put them all in a room and say, how many of you people are still running it and like how is that still something you think is fun because there is a surprising number of people who are deeply technical who like after

[9:33] being like super evangelical for open claw, whatever, two weeks later I see on Twitter they're like, "I just can't. It's too much. I spend more time fixing my open claw than I do actually getting productivity out of it." But, that's just you, and you're a technical person. Now, apply that to a business doing millions in revenue and have employees and to pay. Why would I want a vibe-coded thing to save an inconsequential the the

[9:55] downside risk is just way way too high. In a second, I'll get to that story I promised you at the top. The way it ends is not what you'd expect. But first, a quick word on where this whole framework actually came from. Ainar learned it while talking to folks running private equity firms, and he put these five motes into our TinySeed Slack one afternoon. Founders piled in with questions. The thread got good, and we turned the whole thing into the video you just watched. The real conversations happen inside our communities first. And if you're running a SaaS past a million in ARR, you're probably doing it at this

[10:30] size for the first time, where every decision gets bigger, and so do the consequences. That's what the SaaS Institute is built for. You get a dedicated coach who scaled B2B SaaS to eight figures, a mastermind of founders at your exact stage, and direct access to experts in growth, sales, product, and finance. The kind of sounding board that tells you whether you're on track or about to burn six months on the wrong thing. If that's you, head to SaaS institute.com and apply. So, remember the rule I mentioned at the top? In the thread under Ainar's original post, he said some buyers, mostly private equity, but some strategics, told them that if a

[11:05] company has none of these five motes, they won't even bring it to their investment committee. And the investment committee is the group that actually signs off on doing a deal. In the public markets, repeat buyers putting higher and higher hurdles up before even looking at it. And just so you know, like what investment committee are the ones that are like they're the ones that sign off on sending an LOI and actually doing a deal. If that committee at a private equity firm is saying like, "Don't even show us things unless these criteria are met," that means that company is not buying your company, no

[11:33] matter what happens. And if you're thinking AI-native companies get a pass on all this because AI is the product, it's actually the opposite. The bar is even higher. So, we are seeing stories about folks going from like to 4 million of ARR in like 3 months or something crazy and like because it's an AI SaaS thing. This is certainly true that like a lot of these businesses are getting a very fast adoption. But, what we're also seeing, and I know of at least one private equity firm that like invested in one of these fast-growing things and it went to zero within a year and that's what

[12:07] they're worried about. Which brings us to the story I promised you. This is the one that makes the whole shift real. An example for us from Discretion Capital was this. We had a business that we were selling. Company was called ZyraTalk. It was basically a AI voice agent, like a receptionist for like HVAC and all this stuff. This business had great metrics on every measure, on growth, on retention, integrations, they had everything. We showed them to the market. We had tons of interest, lots of strategic interest, lots of private equity interest and they actually ended up selling to Fortune 500 public company called Evercommerce. So, they sold to a

[12:42] pure strategic. But, the private equity guys like tons of interest. Usually the way it works with during an auction is like you're going to market and like you show them all the marketing materials and the people that are really interested will do like a management meeting and meet them prior to making a bid. I think we had something like 22 or 23 management meetings, which is quite high. And I was expecting an avalanche of LOIs for this cuz metrics are great, but not a single one of the private equity firms even put in an LOI. It became a fight between

[13:09] strategics in that auction. 22 meetings, zero letters of intent from private equity. Nobody passed because the company was weak. They passed because of the question every PE firm is now asking first. A year from now, is this revenue still there and what stops someone from rebuilding it? Every one of these five moats is really just a different way of answering that question, which is why a company can have great numbers and still not get a bid. So, as you're building, I think

[13:36] it's worth keeping these moats in mind. You've probably seen the takes on X or here on YouTube that AI is killing SaaS. There's a kernel of truth in it, but it almost certainly doesn't mean what the headlines say. And I make the full case in this next video. Go check it out. And if you got something out of this video,

[13:53] a like and a subscribe genuinely helps. Thanks for watching. I'll see you next time.

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