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I've been speculating for a while that SaaS is a zero interest rate phenomenon. It's not that the SaaS model can't be economical, it's that all these companies

by api 2y ago

I've been speculating for a while that SaaS is a zero interest rate phenomenon. It's not that the SaaS model can't be economical, it's that all these companies are suddenly expected to beat a much higher interest rate bar and must enshittify rapidly to squeeze their customer base. Since SaaS is absolute lock-in, they can... for a while. The PC revolution and local software exploded when interest rates were high and in addition to the novelty and flexibility a major driver was cost reduction and having local control over cost. If you can run software locally on your own stuff you can decide whether to invest in an upgrade. If everything is a subscription to a remote system you have zero control, which seems like less of a problem when money is free. Lots of economically irrational things like variable-rate outsourcing with hard lock-in make sense when money is free. Maybe those of us interested in decentralization and local-first just have to wait for the ZIRP era to unwind.

meiraleal 2y ago
Look, SaaS, or plain classic Software isn't an inherent enterprise stuff. SaaS model isn't a zero interest rate phenomenon. VCs selling successful software is a ZIRP phenomenon. We will survive without them.
- crabmusket 2y ago
  Hear, hear. There are plenty of profitable SaaS companies with sensible unit economics.
heisgone 2y ago
This is amplified by the fact that many of those SaaS are startup and privately financed. They are living on borrowed money, and if the money dry up, they will need to move to a viable business model, that is, charging the consumer the real cost.
gruez 2y ago
>The PC revolution and local software exploded when interest rates were high and in addition to the novelty and flexibility a major driver was cost reduction and having local control over cost. At that time (80s to 90s), computer networks weren't really a thing outside of institutional settings, so it wasn't like there was anything to compete with "local software".
marcosdumay 2y ago
Software subscription is basically a form of loan. Obviously interest rates influence them a lot. What is different from the ZIRP inflating unsustainable startups. SaaS is a loan even when it's bootstrapped or financed in a normal way.

by api 2y ago

meiraleal 2y ago

Look, SaaS, or plain classic Software isn't an inherent enterprise stuff. SaaS model isn't a zero interest rate phenomenon. VCs selling successful software is a ZIRP phenomenon. We will survive without them.

crabmusket 2y ago
Hear, hear. There are plenty of profitable SaaS companies with sensible unit economics.

heisgone 2y ago

This is amplified by the fact that many of those SaaS are startup and privately financed. They are living on borrowed money, and if the money dry up, they will need to move to a viable business model, that is, charging the consumer the real cost.

gruez 2y ago

>The PC revolution and local software exploded when interest rates were high and in addition to the novelty and flexibility a major driver was cost reduction and having local control over cost. At that time (80s to 90s), computer networks weren't really a thing outside of institutional settings, so it wasn't like there was anything to compete with "local software".

marcosdumay 2y ago

Software subscription is basically a form of loan. Obviously interest rates influence them a lot. What is different from the ZIRP inflating unsustainable startups. SaaS is a loan even when it's bootstrapped or financed in a normal way.