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.
Distributed sales teams are the last frontier
So many startups now are distributed … except for sales
But sales needs it even more
— Jason ✨Be Kind✨ Lemkin (@jasonlk) January 20, 2020
- Partner rates / commissions will become almost untenable. Almost every platform partner is now charging a toll 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, multiple clouds, multiple core 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. Absolute IT budgets will get maxed 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 2020. At some point, budgets are SaaS-ed out. We’re getting there in enterprises that leaned in early and deep in Cloud, even if you can’t see it directly in the growth rates of top SaaS companies.
- “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.