In the current commercial world, software applications play an important role in how businesses operate daily, with companies using separate applications for each process.

Unfortunately, smaller businesses can’t design, develop and deploy such platforms internally, for obvious financial reasons, while outsourcing the job to professional software developers can also be pricey.

This is where Software-as-a-Service or SaaS applications come into the picture. The idea is that businesses and other users access software hosted on the internet that can be used from anywhere on any device with an internet connection.

It's like renting your own copy of the software from a company that manages it for you, eliminating the need for you to buy and install bulky, expensive software on your device or deal with the hassles of managing it.

However, that may soon come to an end according to Sam Lessin, a GP (general partner) in Slow Ventures.

So, what did Lessin say about the future of SaaS? Let’s explore!

What Is Sam Lessin’s Claim About SaaS?

 

• “The SaaS Era is Over” is what Sam Lessin led with in a post on X that accompanied an image explaining why he felt SaaS “Software is a Business Tool not a Business Model.”

• One of the prime reasons why he believes “Saas is dead” is the belief that it would come with infinite LTVs (lifetime values), where once customers were onboarded, they would continue using a SaaS platform indefinitely.

• Instead, such platforms face consistent pressures from competitive platforms in terms of pricing and functionality, leading to difficulties in customer retention.

• The second reason is that software is becoming more commoditized, especially with the advent and advancement of artificial intelligence (AI) and generative artificial intelligence (GenAI).

• The introduction and wide-scale adoption of these technologies has made it easier than ever before for businesses to create highly sophisticated software solutions without breaking the bank.

• As a result of the democratization of software development, the perceived value of coding and SaaS platforms has dropped.

• Lessin’s third reason covered the difficulties involved in selling SaaS solutions, where the PLG (product-led growth) “story” does not work (nor has it ever), unless there is a clear USP (unique selling point).

What’s Next For The Software Industry?

 

• Sam Lessin does mention a silver lining about the industry though, saying, “Just because SaaS is dead doesn’t mean that software is — you just have to think about it as a different sort of business weapon.”

• Essentially, companies should now see software as a tool to create value in other business areas rather than a standalone business model.

• They can leverage software to enhance business operations by 20-30%, making businesses more valuable, efficient and competitive.

• Furthermore, the use of proprietary software can help them improve and acquire businesses, benefiting from operational improvements and competitive advantages.

What Else Did Sam Lessin Say?

 

• Through the X post, Sam Lessin said, “If you can build software today that allows you to operate basically any ‘real world business’ 20%-30% better than it is operated today, use that leverage and take over those businesses.”

• “Take the wins, get the growth, use the margin expansion to dominate your competitors in the actual business.”

• “If you are selling ‘software’ you are [going to] get smoked in the next few years. Use software as a weapon to buy REAL assets while you can, before it gets fully commoditized [because] the SaaS dream is looking increasingly like the punchline of a joke.”

Do you think Sam Lessin is correct in his assessment of the current situation in the SaaS industry? Do you think it makes more sense for businesses to design and develop their own software solutions?

However, have AI coding agents really made the software development process easier and boosted productivity for businesses and coders? Here’s the answer!

Let us know in the comments below!