M. Allen LLC’s Post

There's a new gold rush in SaaS and it’s happening now. Here's the new AI playbook for building SaaS startups to $5M in ARR (with 5 FTEs): Take a legacy SaaS tool, add a layer of AI, slash the price and run it lean. The founders who do this will cause MAJOR DISRUPTIONS next year. Here's the 9 steps to follow: 1. Find a legacy SaaS app with the following characteristics: - Workflow automation, business process management, customer engagement - Preferably in a market niche - High Margin/Expensive 2. Find a way to inject AI: - Improve data collection using AI - Automate repetitive tasks and optimize workflows - Enhance personalization, improve analytics, enable predictive decision making - Identify new revenue opportunities using customer data - Automate mundane tasks using RPA or better information extraction 3. Build the app in weeks - Use rapid app development environment or AI code generators to create your app in weeks not months - I recently caught up with Jason Masciarelli from Pega Launchpad. Sounds like a terrific opportunity to cut down on dev time and cost to build a workflow automation tool. 4. Innovate on Pricing - Significantly lower SaaS pricing - Explore usage based pricing or outcome based pricing 5. Content and Thought Leadership - Position your app as a modern and efficient market substitute to legacy apps - Highlight the AI related optimizations and demonstrate - Mention the lower price and it’s impact on ROI - Ensure your buyers are receiving your content on Linkedin 6. Design efficient GTM - Don’t plan on hiring an enterprise sales team - Consider self serve GTM - Get early customers via Linkedin content and prior relationships 7. Don’t hire a large Support or CS team - Use as much automation as possible for support and CS - Try to serve 1000+ paid accounts with just 1 support staff   - Say NO to revenues that dont fit your initial business model 8. Org Design - Keep the team as small as you can - Don’t hire any VPs or senior folks for a long time - Hire a lot of fractional contractors, advisors or ICs 9. Capitalization - Bootstrap if you can, but you don’t have to - If you raise capital, find investors that care about efficiency and small exits - Do not take on the burden of large exit until you know that’s possible - Prioritize revenues. Pursue lean and profitable growth strategies By executing on this playbook, you could achieve a few million in revenue profitably with a lean team (<5 FTEs) in a year or two and possibly even an acquisition offer from a legacy app vendor. If you choose to scale further, you will have the option to secure a large investment from a growth fund to embark on your journey to scale at your terms.

There's a new gold rush in SaaS and it’s happening now. Here's the new AI playbook for building SaaS startups to $5M in ARR (with 5 FTEs): Take a legacy SaaS tool, add a layer of AI, slash the price and run it lean. The founders who do this will cause MAJOR DISRUPTIONS next year. Here's the 9 steps to follow: 1. Find a legacy SaaS app with the following characteristics: - Workflow automation, business process management, customer engagement - Preferably in a market niche - High Margin/Expensive 2. Find a way to inject AI: - Improve data collection using AI - Automate repetitive tasks and optimize workflows - Enhance personalization, improve analytics, enable predictive decision making - Identify new revenue opportunities using customer data - Automate mundane tasks using RPA or better information extraction 3. Build the app in weeks - Use rapid app development environment or AI code generators to create your app in weeks not months - I recently caught up with Jason Masciarelli from Pega Launchpad. Sounds like a terrific opportunity to cut down on dev time and cost to build a workflow automation tool. 4. Innovate on Pricing - Significantly lower SaaS pricing - Explore usage based pricing or outcome based pricing 5. Content and Thought Leadership - Position your app as a modern and efficient market substitute to legacy apps - Highlight the AI related optimizations and demonstrate - Mention the lower price and it’s impact on ROI - Ensure your buyers are receiving your content on Linkedin 6. Design efficient GTM - Don’t plan on hiring an enterprise sales team - Consider self serve GTM - Get early customers via Linkedin content and prior relationships 7. Don’t hire a large Support or CS team - Use as much automation as possible for support and CS - Try to serve 1000+ paid accounts with just 1 support staff   - Say NO to revenues that dont fit your initial business model 8. Org Design - Keep the team as small as you can - Don’t hire any VPs or senior folks for a long time - Hire a lot of fractional contractors, advisors or ICs 9. Capitalization - Bootstrap if you can, but you don’t have to - If you raise capital, find investors that care about efficiency and small exits - Do not take on the burden of large exit until you know that’s possible - Prioritize revenues. Pursue lean and profitable growth strategies By executing on this playbook, you could achieve a few million in revenue profitably with a lean team (<5 FTEs) in a year or two and possibly even an acquisition offer from a legacy app vendor. If you choose to scale further, you will have the option to secure a large investment from a growth fund to embark on your journey to scale at your terms.

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?

"Where is AI taking us?" "Is SaaS dead?" and "Will there even be a need for software?" I hope this post puts all the changes we are experiencing into context so we can navigate (and shape) this innovation landscape together. Having sold software for 30 years, I’ve had the privilege of experiencing the journey from on-premises software and data centers to cloud-based SaaS and now toward AI-based systems. This journey reveals a remarkably consistent theme: - Innovation reacts to inefficiency, - it is triggered by drastic changes in the market and - It proceeds at a very high pace, which is uncomfortable for most of us. To explore AI's revolution and anticipated impact, I’ve created a chart that maps the transformation of enterprise software, from the rise of servers and virtualization to the emergence of AI-agent marketplaces. Please trace the journey with your eyes (or finger), and you will see three trends emerge that will likely shape the future of GTM: i) Sustainable SaaS ii) AI-Led GTM iii) Consumption-Based Pricing As a side note, at Winning by Design, we have started using the term "PPX" as a shorthand to describe the various forms of consumption-based pricing, e.g., Pay Per Action, Pay Per Use, and Pay Per Outcome. It allows us to simplify the shift as SaaS --> PPX. Having said that, the next chapter in GTM appears to belong to autonomous GTM systems. These systems are AI-powered to enable durable growth from the get-go, and they are driven by PPX-based business models that will accelerate customer adoption. This is no different than subscription models did for SaaS over a decade ago vs. paying upfront perpetual software. In this, durable growth reflects a combination of GTM Efficiency and high GRR/NRR. The latter is governed by a new First Principle known to all 3,500 Revenue Architects out there (say it with me :-): Recurring Revenue is the result of Recurring Impact. Okay.. so where does that leave us? Well, let’s be clear: SaaS isn’t over—not even close! Many SaaS Scaleups and Grownups will simply evolve, powered by AI, into Sustainable SaaS Scaleups and Grownups. Some will fail, some will succeed. Meanwhile, Startups can choose to either pick Sustainable SaaS or embrace a PPX pricing strategy. And as they go to market, they can now opt for Product-Led Growth (low), AI-led growth (mid), or Human-Led Growth (high-end). Furthermore, AI-enabled GTM motions will democratize GTM, allowing companies from across the globe to compete with the existing SaaS juggernauts. These startups must show up with innovation, as today's buyers are more likely to side with a trusted brand. Simply put, there's something for everyone this holiday season. 💙 💙 💙 👉 What do you think will define the future of software?