📶 the end of SaaS

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Some things are bigger than this newsletter, and the current situation happening in the South is one of those things.

For those who don’t know, I’m from North Carolina, so seeing the damage caused by the hurricane has been surreal. Entire towns are gone, and many of the people are currently stranded and will need to completely start over when all of the dust settles.

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TL;DR:

• 📰 News

• 🔗 Links

• ™️ Startups

• 🐥 Tweet

• 📰 News

• 📶 Recs

• 🗳 Poll

HEADLINES
SaaS is dead. Long live software-as-a-Weapon. 🗡

Sam Lessin (partner @ Slow Ventures) wrote this one-pager last week on the future of SaaS.

Spoiler alert: the outlook looks bleak, and the dream of SaaS as a "beautiful business model" has fizzled.

High churn rates, commoditization due to AI, and difficulty selling have revealed the harsh reality that SaaS isn’t the perpetual money-making machine many thought it was.

In his view, software isn’t dead, but its role has shifted.

The new job of business owners is to use software as a tool to make real-world businesses more efficient, then acquire those businesses. The value is no longer in the software itself but in leveraging it to control tangible assets.

For VCs, founders, and execs, this is a wake-up call. 

The margins and growth rates SaaS once promised are gone, and AI’s commoditization of code means that even "sticky" software can be easily replaced. The future isn’t about selling software but using it strategically.

If you can deploy software that improves operational efficiency by 20-30%, you gain a competitive edge to dominate entire industries by buying real-world businesses.

Those still clinging to SaaS-only models are likely to be left behind.

What happens next? Expect more investment in software that targets operational improvement across traditional sectors like logistics, manufacturing, and retail.

The next wave of M&A will likely focus on tech-augmented acquisitions of legacy businesses, where software is the enabler, not the end product.

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LINKS

🏆 How Marketplaces Win—Liquidity, Growth Levers, Quality, and More: Benjamin Lauzier (Lyft, Thumbtack, Reforge) discusses marketplace growth, supply-demand tactics and his new health tech startup, Nurra

🔮 The Future of Work: Acadian Ventures explores the key trends shaping the future of work, focusing on the digital transformation of the workplace

🔥 How I Built a 7-Figure Business in Less than a Year: Peter Yang shares his conversation with Ben Tossell, founder of Ben’s Bites, a 7-figure business that has taught 10,000+ people how to use AI to save time and automate work

🕵️ Zuck & Spotify CEO’s $1B Secrets: Guillermo Flor brings the podcast that is a masterclass for startup founders

📊 How to Start the Journey to Becoming a Data-Driven VC: By embracing both technological innovation and human expertise, forward-thinking funds can set themselves up for long-term success

📶 Deal Flow Report: Industry-leading forecast planning for grocers, AI-powered embedded analytics, and AGI for the enterprise

STARTUPS (Together with Harmonic)
Slow Ventures companies founded in 2024 🔎

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TWEET

HEADLINES
What else we’re reading 📖

• StepStone’s $4.8 billion fund bets on a lasting liquidity crunch (Pitchbook)

• Softbank to Investy $500 Million in OpenAI (The Information)

• Artisan raises $11.5M to deploy AI ’employees’ for sales teams (Venturebeat)

• Fertility investors look to ancillary services as platforms remain scarce (Pitchbook)

RECS

• Strategy Breakdowns: How the best companies in the world think about micro and macro decisions

• Creator Spotlight: Deep dives on how to make a living from your audience

POLL

Thanks for reading this far and giving us a little bit of your attention this week.

Feel free to unsubscribe whenever this stops becoming valuable to you.

- Clay

RESULTS

Here are the results from our poll question in yesterday’s piece:

Which trend is most interesting to invest in?

🟨🟨🟨🟨⬜️⬜️ “Doing more with less” becomes achievable (5)

🟨🟨🟨🟨⬜️⬜️ Leaders get into the details (4)

🟨🟨🟨🟨⬜️⬜️ Software as a Service → Software provides a service (5)

🟩🟩🟩🟩🟩🟩 Succession planning gets urgent (6)

🟨🟨🟨🟨⬜️⬜️ Working downstream with AI (4)

🟨🟨🟨🟨⬜️⬜️ Quiet performing (5)

29 Votes