What Comes After SaaS?

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Operating a SaaS app is like running a one-room hotel that has unlimited occupancy. It’s as if you’ve figured out how to rent the same hotel room to many guests at a time through some weird tricks of quantum superposition. It is the greatest business in the world.

Customers pay for your hotel room by the month. Each one gets the same basic setup: bed, desk, and Wi-Fi that never works when you need it. When you make changes to the core room, all guests get the new version. But they can also request customizations personal to them, like a wake-up call—5 am for the gym rats, 1 pm for the barflies. Guests tend to stay for months or years at a time, paying for the same room as everyone else.

It is an absolute license to print money.

Quantum hotel rooms are not all roses and free cash flows though. There are two crucial things to know about being the owner/proprietor of a business like this. The first is that transitioning from a single-user room to infinite occupancy takes effort. Your quantum superposition technology is a little complex to build. The second is that the longer you’re in business the more of your time and money you’re going to spend enabling “personalizations” for each guest. In the end, each guest customizes your hotel room so much that it looks like their own home.

This is very expensive and frustrating to deal with, but you console yourself by wiping your tears with stacks of thousand-dollar bills.

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What is true for quantum hotel rooms, is also true for SaaS apps: Everyone gets the same basic app. You can host infinitely many users in parallel. People tend to stay for months or years at a time.

But making the app available for many users at once requires a lot of up-front effort. You need to build login systems, a database architecture and code that accounts for multiple users, you need to deal with keeping user data secure, and you need to build lots of settings screens so that customers can configure the product. The more time goes on, the more money and effort you’re going to expend building customizations for users, instead of building core product improvements.

This is the way of the world. It makes SaaS harder for solo developers to build products, and it means that the larger you get the less time you can spend on fundamental innovation.