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The bread paradox: why convenience always wins, and why SaaS isn't doomed

joanwestenberg.com

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Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#121

Post by Ekaros »

heisgone wrote: post #120
outime wrote: post #70

Earlier quoted context omitted.

That is, until a given SaaS becomes too greedy and someone identifies the core features people actually use, then spends a few weeks replicating them internally. I think AI familiarity still varies a lot across companies and individuals. Small companies/startups often move much faster than large corporations, so that may also explain what you're seeing. Long before LLMs I worked at places where even monitoring soluti…

Greed and inefficiency is what define SaaS. Compare what Microsoft give you for 50 bucks per month vs Atlassian or any ticketing services. It's absurd. They can charge up to $80/month for what shouldn't cost more than $5.

Looking at some of the pricing and then multiplying it by 12 and ask question would you pay this for shrink wrapped software is bit eye opening. At least from not filthy rich Europen perspective.

Not to say that some products like MS aren't seemingly very good value. But on other side like chat and source control I do raise eye brow...

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#122

Post by woeirua »

triceratops wrote: post #117

She's right about Saas. But breadmakers are not an example that land for me. Breadmaker bread is cheaper, healthier, fresher, and more convenient in every way. I don't always eat bread for breakfast. If I want it tomorrow I have to remember to drive to the store today, costing me at least 15 minutes. Or I can spend 5 minutes setting up the machine before bedtime, and wake up to the smell of fresh bread.

Yes, but the market prefers store bought bread despite the fact that homemade bread is: cheaper, tastes better, and nutritionally better. That's the exact point. Homemade bread should objectively win but it doesn't!

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#123

Post by triceratops »

woeirua wrote: post #122
triceratops wrote: post #117

She's right about Saas. But breadmakers are not an example that land for me. Breadmaker bread is cheaper, healthier, fresher, and more convenient in every way. I don't always eat bread for breakfast. If I want it tomorrow I have to remember to drive to the store today, costing me at least 15 minutes. Or I can spend 5 minutes setting up the machine before bedtime, and wake up to the smell of fresh bread.

Yes, but the market prefers store bought bread despite the fact that homemade bread is: cheaper, tastes better, and nutritionally better. That's the exact point. Homemade bread should objectively win but it doesn't!

She says store-bought bread wins on convenience, just like SaaS apps. I'm making the case that, actually, it does not - even leaving aside freshness and quality and health.

Her unused breadmaker may be indicative of a skill issue or a more general disinterest in meal planning. Nothing wrong with that. It's just not an apt analogy (for me).

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#124

Post by segmondy »

On another note, we have a similar bread machine. We bake bread multiple times a week. Costs about 10%, takes about 5 minutes to add the ingredients and set. Most times we set it before bed and wake up to the smell of fresh bread and get to eat hot bread. We are 100% certain of the ingredients. We bake different types and when we have a guest, we give them a parting gift of a fresh bread. Our constant baking and the ease has convinced extended family members to do the same. So, I'm not convinced that convenience always wins. If 20-40% of SaaS are replaced with homegrown AI, that is roughly the definition of "doomed" in a market.

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#125

Post by maybiiLen »

notarobot123 wrote: post #23

The risk for SaaS isn't that customers will build their own but that the barrier to entry for competitors is lower. The Chorleywood process created mega bakeries that displaced regular bakeries because they changed the economics. AI is doing the same and fundamentally changing the economics of production. What used to take years and huge teams to build can be built by much smaller teams much faster. SaaS isn't going…

yes, this is the point the article completely glosses over. the threat isn't that a non-technical founder is going to build their own custom CRM, but that a couple of college kids in a dorm can build something that can compete against your SaaS in a weekend. While the cost of software production drops to zero with the advancement AI and with newer model being better than ever, the market gets flooded with infinite cheap alternative. If I see another calorie tracking AI SaaS, I'm going to lose it.

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#126

Post by keeda »

antonvs wrote: post #64
keeda wrote: post #46

The underlying MBA principle is that companies strongly prefer to focus on their "core competencies." This makes sense because the distraction to a business could be much costlier than the extra money spent in outsourcing non-core functions. This is basically also why the cloud business was thriving even when on-prem is much cheaper in monetary terms, and why the trend will probably extend to cloud AI providers even…

> This is basically also why the cloud business was thriving even when on-prem is much cheaper in monetary terms On-prem is almost always much more expensive "in monetary terms" when you take into account the cost of staffing the operation needed to maintain those on-prem systems, especially if a company has e.g. compliance requirements etc. The idea that cloud is obviously more expensive is not actually supported by…

I'd say it's more of a rent vs buy situation, in that there is a particular company-specific scale at which the TCO's cross over. For smaller companies, public clouds absolutely make more sense, but at larger scales on-prem is much cheaper (see e.g. BaseCamp's recent shift with numbers.)

The reason I say that a primary driver is a focus on core competencies because there are a surprisingly high number of companies with 10M+ public cloud spends... and even they sometimes complain about being treated as small potatoes. (For reference BaseCamp's spend was 3.2M/year when they decided to switch back.) Plus there are reports showing that much of these cloud deployments are at abysmally low levels of utilization (like 30% at best!)

So not only are there many companies at the scale where on-prem would make sense, they are likely even wasting a significant % of their cloud spend, yet they continue and even expand their usage.

Rather than attributing this to widespread corporate incompetency, a more rational explanation is that they have a sensible calculus that is based on more than solely financial numbers, i.e. the organizational distration is more expensive than the $$$ cloud premium.

Re: The bread paradox: why convenience always wins, and why SaaS isn't doomed

#127

Post by bryan_specgit »

davidpapermill wrote: post #28
notarobot123 wrote: post #23

The risk for SaaS isn't that customers will build their own but that the barrier to entry for competitors is lower. The Chorleywood process created mega bakeries that displaced regular bakeries because they changed the economics. AI is doing the same and fundamentally changing the economics of production. What used to take years and huge teams to build can be built by much smaller teams much faster. SaaS isn't going…

I don’t agree. I think businesses including SaaS are not primarily their tech, but are mostly composed of other functions: sales, marketing, customer success, product management, strategy etc. The value is actually more in these other components than in the code.

Agree the functions aren't primarily their tech, but all of their activities ends up serving a business outcome, usually manifested in code (with much distilled or cut along the way). Marketing, PM, and strategy aren't directly shipping slides or docs to production - but they should get distilled into code that ships to fulfill the activity's productivity (decisions, features, etc.).
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