SaaS is alive and well

A little over a year ago I shared a presentation internally with our CEO, execs and other stakeholders urging action as AI was rapidly accelerating the time to market for new products, creating a threat to incumbents. I outlined several moats I believe we could exploit and I still believe they are valuable space to occupy - for example domain knowledge, compliance capabilities, massive datasets. I did miss one key moat that hindsight allows me to appreciate more fully: Distribution.

There are millions of people out there creating SaaS products, and many of them are probably good ideas solving real problems. The vast majority will never encounter their first paying customer. Why is this? Theodore Levitt, who I keep quoting and requoting lately once said

"People don't want to buy a quarter-inch drill. They want a quarter-inch hole!"".

Clients don't buy our software because they love our software and owning it will make them happy. They buy our software because they have a need we solve for. The software is the delivery channel we use to get them a solution for their problem. This is the biggest moat. A large enterprise is not going to buy a vibe-coded line of business system from a 20 year old with his mum's amex. the enterprise is buying trust, compliance, domain knowledge, reliability, reputation. Those form the foundations a successful SaaS player builds their distribution on.