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Seems the words "rent seeking" should appear more in this discussion. "B2B SaaS" companies may well be cargo cults; but the blessing they're dancing to secure,

Seems the words "rent seeking" should appear more in this discussion. "B2B SaaS" companies may well be cargo cults; but the blessing they're dancing to secure, the goal they seek, is "passive income".

robertlagrant 3y ago
> but the blessing they're dancing to secure, the goal they seek, is "passive income" That's not rent seeking.
- phkahler 3y ago
  >> That's not rent seeking. SaaS companies are quite literally charging rent for the use of software. Presumably that software does something of value, so they call it a "service" so people can feel like they're getting something for their money.
  - robertlagrant 3y ago
    > SaaS companies are quite literally charging rent for the use of software That's not rent seeking either. Look up rent seeking and see if it means "charging for the thing you sell or lease". I don't think you'll find that.
    - phkahler 3y ago
      You're right, I looked it up. SaaS software is essentially rented but that's not the same thing as "rent seeking" by the company. I think that's an unfortunate name for the bahavior. The examples I found sound like getting a legislated flow of money for doing nothing. In that light, lobbying for tax reductions would be rent seeking? A penny saved is a penny earned - for nothing.
      - CRConrad 3y ago
        > I think that's an unfortunate name for the bahavior. It made sense when it was coined; it's not like that was the day before yesterday. (Can't recall for sure, but I'm guessing Adam Smith, in The Wealth of Nations.)
      - robertlagrant 3y ago
        You're talking as though tax is a right of some sort. You shouldn't have to justify keeping your money. Government should justify why it needs to take it, or it's even less different to the mafia knocking on your door.
  - Veuxdo 3y ago
    That's true if you re-define rent to mean payment for a service...
    - phkahler 3y ago
      >> That's true if you re-define rent to mean payment for a service... You're paying for the use of something (software) not a service. I can rent a U-Haul by the day (rent) or I can pay for the use of some software by the day (rent). Calling the use of software a "service" was just a fancy way to disguise what's really happening to make it sound more acceptable.
      - mardifoufs 3y ago
        Rent seeking is literally not that though. The word has a definition, and if there's one thing you can't really accuse those corporations of is to basically just extract value without any investment of their own. It's the total opposite, just look at head counts, the amount of money getting spent etc. That alone is basically the opposite of rent seeking, where we expect to see wealth extraction for minimum investment/productivity(and thus, headcount)/cost More to the point, rent seeking involves taking money for something that provides no additional value in return, usually because you have a monopoly on something that isn't related to the service you charge for. For example, you own the land so you charge for passage, without building a road or giving back anything or investing any of that money back to create wealth. That makes almost 0 sense for most software corporations. Sure, they might not be profitable but SaaS is basically the opposite since you get the service or a value out of the service directly, and if you don't, there's no reason to pay for it . I can't think of a lot of cases where a SaaS product is more or less "forced" on you to the point where you continue paying for something that doesn't provide you value. Rent seeking isn't profit seeking.
cyanydeez 3y ago
Their heros are places like Oracle, and now Uber. Orgs that get to just the right level of dependency where people and businesses just sigh and accept whatevers necessary. Eventually, some country is going to realize a piece of software is essentially a utility and letting some private company keep a sector of the economy in it's grasp prevents progress and it'll be nationalized.
- JKCalhoun 3y ago
  So China. If you're right it will be interesting to watch. Interesting to see how other countries respond.
  - cyanydeez 3y ago
    China comes from the wrong angle. everything in China already was nationalizes and they've been trying to give some , mostly fictious freedom. we're talking and socialism and European compromises. it's really weird you think we're talking about China.
    - JKCalhoun 3y ago
      I thought so because, as you say, Chinas has nationalized banks, the airline industry — because they view them as important components to the nation. I assumed we were not talking about the U.S. (and to a lesser degree European countries) since nationalization of the private industry is anathema to these countries. To be sure though I know nothing about nationalization sentiments in Europe these days.
      - cyanydeez 3y ago
        you are confused they didn't "nationalizes" banks they were never independent to begin with. you have a naive comparison and force it uncritically into this conversation.
- robertlagrant 3y ago
  Damn that private sector for inventing things that create progress. Let's pretend it's actually stopping progress when it creates progress.
KoftaBob 3y ago
"Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions.[8] Profit-seeking in this sense is the creation of wealth, while rent-seeking is "profiteering" by using social institutions, such as the power of the state, to redistribute wealth among different groups without creating new wealth." https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking
magicalhippo 3y ago
One of the things that made us dominate over our competitors in the time I've been here was that our boss switched to a SaaS business model early, while our competitors held on to the "buy new version every 2-3 years". Accounting really loved the predictable expense, and it was easy for us to scale price with activity, so our customers paid less during slow months or as user count fluctuated. We even had a competitor which was about our size nearly go bankrupt, as their customers weren't interested in the .Net rewrite they had spent 2 years on, opting to keep the old version rather than buying the new, but functionally very similar, version. So it's not clear cut IMHO.

robertlagrant 3y ago

> but the blessing they're dancing to secure, the goal they seek, is "passive income" That's not rent seeking.

phkahler 3y ago
>> That's not rent seeking. SaaS companies are quite literally charging rent for the use of software. Presumably that software does something of value, so they call it a "service" so people can feel like they're getting something for their money.
- robertlagrant 3y ago
  > SaaS companies are quite literally charging rent for the use of software That's not rent seeking either. Look up rent seeking and see if it means "charging for the thing you sell or lease". I don't think you'll find that.
  - phkahler 3y ago
    You're right, I looked it up. SaaS software is essentially rented but that's not the same thing as "rent seeking" by the company. I think that's an unfortunate name for the bahavior. The examples I found sound like getting a legislated flow of money for doing nothing. In that light, lobbying for tax reductions would be rent seeking? A penny saved is a penny earned - for nothing.
    - CRConrad 3y ago
      > I think that's an unfortunate name for the bahavior. It made sense when it was coined; it's not like that was the day before yesterday. (Can't recall for sure, but I'm guessing Adam Smith, in The Wealth of Nations.)
    - robertlagrant 3y ago
      You're talking as though tax is a right of some sort. You shouldn't have to justify keeping your money. Government should justify why it needs to take it, or it's even less different to the mafia knocking on your door.
- Veuxdo 3y ago
  That's true if you re-define rent to mean payment for a service...
  - phkahler 3y ago
    >> That's true if you re-define rent to mean payment for a service... You're paying for the use of something (software) not a service. I can rent a U-Haul by the day (rent) or I can pay for the use of some software by the day (rent). Calling the use of software a "service" was just a fancy way to disguise what's really happening to make it sound more acceptable.
    - mardifoufs 3y ago
      Rent seeking is literally not that though. The word has a definition, and if there's one thing you can't really accuse those corporations of is to basically just extract value without any investment of their own. It's the total opposite, just look at head counts, the amount of money getting spent etc. That alone is basically the opposite of rent seeking, where we expect to see wealth extraction for minimum investment/productivity(and thus, headcount)/cost More to the point, rent seeking involves taking money for something that provides no additional value in return, usually because you have a monopoly on something that isn't related to the service you charge for. For example, you own the land so you charge for passage, without building a road or giving back anything or investing any of that money back to create wealth. That makes almost 0 sense for most software corporations. Sure, they might not be profitable but SaaS is basically the opposite since you get the service or a value out of the service directly, and if you don't, there's no reason to pay for it . I can't think of a lot of cases where a SaaS product is more or less "forced" on you to the point where you continue paying for something that doesn't provide you value. Rent seeking isn't profit seeking.

cyanydeez 3y ago

Their heros are places like Oracle, and now Uber. Orgs that get to just the right level of dependency where people and businesses just sigh and accept whatevers necessary. Eventually, some country is going to realize a piece of software is essentially a utility and letting some private company keep a sector of the economy in it's grasp prevents progress and it'll be nationalized.

JKCalhoun 3y ago
So China. If you're right it will be interesting to watch. Interesting to see how other countries respond.
- cyanydeez 3y ago
  China comes from the wrong angle. everything in China already was nationalizes and they've been trying to give some , mostly fictious freedom. we're talking and socialism and European compromises. it's really weird you think we're talking about China.
  - JKCalhoun 3y ago
    I thought so because, as you say, Chinas has nationalized banks, the airline industry — because they view them as important components to the nation. I assumed we were not talking about the U.S. (and to a lesser degree European countries) since nationalization of the private industry is anathema to these countries. To be sure though I know nothing about nationalization sentiments in Europe these days.
    - cyanydeez 3y ago
      you are confused they didn't "nationalizes" banks they were never independent to begin with. you have a naive comparison and force it uncritically into this conversation.
robertlagrant 3y ago
Damn that private sector for inventing things that create progress. Let's pretend it's actually stopping progress when it creates progress.

KoftaBob 3y ago

"Rent-seeking is distinguished in theory from profit-seeking, in which entities seek to extract value by engaging in mutually beneficial transactions.[8] Profit-seeking in this sense is the creation of wealth, while rent-seeking is "profiteering" by using social institutions, such as the power of the state, to redistribute wealth among different groups without creating new wealth." https://en.wikipedia.org/wiki/Rent-seeking https://en.wikipedia.org/wiki/Rent-seeking

magicalhippo 3y ago

One of the things that made us dominate over our competitors in the time I've been here was that our boss switched to a SaaS business model early, while our competitors held on to the "buy new version every 2-3 years". Accounting really loved the predictable expense, and it was easy for us to scale price with activity, so our customers paid less during slow months or as user count fluctuated. We even had a competitor which was about our size nearly go bankrupt, as their customers weren't interested in the .Net rewrite they had spent 2 years on, opting to keep the old version rather than buying the new, but functionally very similar, version. So it's not clear cut IMHO.