Q: What will SaaS companies look like in the future?
I’m no brilliant futurist, but here’s what I see in the best SaaS companies today, so I assume will be table-stakes going forward:
- The Bay Area will remain a draw, but mainly as a small-ish HQ. Everyone will become distributed by employee #10. Yes, this has started, but in a few years, it will be the default.
- We’ll learn how to work efficiently as distributed revenue teams from Day 1. Product and engineering teams have learned the past few years how to be 100% distributed, but in the coming years, sales teams will start off as 100% distributed on Day 1. This is different from multiple offices, remote teams, field offices.
- Partner rakes / commissions will become almost untenable. Every partner is now charging to use their platform — Salesforce, Shopify, Apple, Google, everyone. But you can’t pay 30% to Apple, 30% to Salesforce, and then 30% to another partner. It’s too much. As SaaS products continue to run on multiple platforms, APIs, and more, partner take rates will need to evolve.
- Overall corporate budgets for SaaS will start to come under stress. A massive amount of IT spend has not just moved to SaaS over the past decade, but almost as importantly, the % spent on business software by IT has also gone up. Good times + good time = amazing times. But this can’t last. Budgets will get maxxed out for SaaS, and new vendors will have to fight for fixed budget with existing, budgeted SaaS vendors. This will be the start of the end of the sweetheart run for SaaS from 2015–2016 through today.
- “No code” enables much better software. SaaS software keeps getting better, both as we get better at it, but also as we don’t have to do as much low-level stuff. Not deploying your own data center was a big start of not having to do stuff yourself. “No code” won’t remove the need for engineers but it will continue to allow them to work on projects which provide more and more value. This means software will continue to get better, as much of the basic parts of SaaS software will be able to be built without more than a few lines of code.
Good times!
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