SaaS is dead?

In this solo episode, I explain why I say SaaS is dead and what I see taking its place. For 15 years, SaaS meant paying engineers to build a tool and charging per seat, and now models like Opus 5.5, GPT-6, and Argon make the tool easy to build. I walk through what I call smart SaaS: give the tool away for free, collect data and network effects, and make money by upselling AI agents and human services. I share a calorie tracking example, three ways to charge, and why enterprises still pay per seat. If you build software, this episode gives you a map for building something people want in a market where the tool is free. Timestamps 00:00 – Intro 00:47 – SaaS 1.0 02:56 – SaaS 2.0: The New Business Model 05:12 – How to monetize SaaS 2.0 06:18 – Service is the new Software 07:22 – SaaS Is Dead, Long Live SaaS 08:58 – SMB vs Enterprise 10:31 – Closing Thoughts Key Points AI makes the tool easy to build, so the per-seat model of the last 15 years has run its course. Smart SaaS gives the tool away and collects data and network effects as payment. The money comes from upselling intelligence from AI agents and services from humans. Agents can charge by token or by outcome, and human services by the week or month. SaaS for SMBs, prosumers, and individuals trends toward free, while enterprises still pay something per seat. The market for getting things done is bigger than the market for tools, so the total market for SaaS grows. The #1 tool to find startup ideas/trends - https://www.ideabrowser.com LCA helps Fortune 500s and fast-growing startups build their future - from Warner Music to Fortnite to Dropbox. We turn 'what if' into reality with AI, apps, and next-gen products https://latecheckout.agency/ FIND ME ON SOCIAL X/Twitter: https://twitter.com/gregisenberg Instagram: https://instagram.com/gregisenberg/ LinkedIn: https://www.linkedin.com/in/gisenberg/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Greg Isenberg?

  SaaS is dead, everybody. And in today's video, I'm going to basically break down why I think that's the case, where the opportunities are, and what's really happening here. And I think the people that understand where SaaS is really going, I think are just, they're going to understand how they can reorient themselves to build something that people actually want. So I'm going to make this the clearest breakdown on the internet for what's happening with SaaS, where it's going, why it's dead, quote unquote, why I think it's evolving into something else, what that something else is. And yeah, by the end of it, you're gonna, you're gonna understand it. So.

• 0:47Greg Isenberg?

  How did SaaS typically work for the last 15 years? Was people basically built some code? That was the software, right? Software as a service. They created some code and that code was essentially a tool. So the hard part about SaaS was can you get enough smart engineers in a room, pay them to code something out that was high quality, that worked, that was a tool for a human being to go and, and use, right?

• 1:26Greg Isenberg?

  And in exchange for using that tool, you paid money. And the whole business model was a per-seat basis. So you would pay per-seat, you know, $9.99, $29.99. And you would go and access that cool tool as a service in the cloud. And that was basically how it worked. And for a long period of time, this model made people billions of dollars. I mean, there's so many examples of SaaS companies that made billions of dollars. Slack, for example, I think sold for $29 billion.

• 2:09Greg Isenberg?

  This model really worked for a while. And the reality is it does not work anymore. Because AI makes the ability to create the SaaS super easy. I think, you know, when we hit the Opus 5.5, GPT-6, Astra, that like a level of model, even Argon, Carbon, like these, these models are so good that building the SaaS is not the, you know, is not hard. So what is the, okay, so cool, Greg. You know, that's very academic of you.

• 2:50Greg Isenberg?

  How can I actually go and build a SaaS that works in today's environment? Well, let me explain where we're going with all of this in the simplest way I possibly can. So the, the new version of SaaS,

• 3:12Greg Isenberg?

  it has actually like a different business model. So in a world where the, the tool is so easy to create. And by the way, we're going to talk about, you know, the ICP and who to target later. So stick, you know, stick around for that. So there, you know, you're still building a tool, right? So you know, you may be using AI to create the tool instead of, or AI with one or human or two humans instead of no AI and 20 humans. But you're creating a tool, but the business model is actually free. So you're actually giving away the tool.

• 3:53Greg Isenberg?

  I don't know why more people aren't actually doing this. I tweeted this the other day, like give away the CRM, give away the dashboard, give away the app, get people onto the tool, find niches where there's something in this old model that people are paying for and literally give away the thing to the person for free. And we're going to get to how you can actually make money from this in a second. But the value exchange here initially isn't the money, right? So it used to be that you would go and pay for this, but what do you, so what are you giving here? You're not giving money. Well, you are giving data.

• 4:38Greg Isenberg?

  So that is going to help you make a better tool. You know, you are creating network effects and that's going to help you create a moat. So that's the idea is like you're in the tool, free tool business. And you're going to be trying to acquire proprietary data, which you can eventually sell or use to make your tool a lot better. And then a tool that helps, you know, create network effects. Now, how do you actually make money from this tool then? Well, and by the way, I actually think that the market for, in this world,

• 5:21Greg Isenberg?

  we'll call it SaaS 2.0 or SaaS 1.0. This is what I would call dumb SaaS because it's just a tool. And this is what I would call smart SaaS because it's intelligent. And I'll get to that in a second. You're basically upselling intelligence. You actually, you know, you're, you're upselling intelligence. So you're basically saying, hey, I'm going to give you away the CRM, say. But if you want the CRM to go and do something for me with AI agents, that's going to cost you money. And you can upsell that.

• 6:03Greg Isenberg?

  The other thing that you can upsell is some service. So a service provided by humans. And this is intelligence provided by agents. So this is, you know, when Sequoia talks about, you know, trillion dollar service is the new software, when they're talking about this. And they're, they're basically saying like, hey, there's going to be a tool and that's going to get you in and that's going to bring data and network effects. And if you want a upsell, you can have a service. Now, what's a concrete example of this?

• 6:47Greg Isenberg?

  In the consumer space, it would be something like a calorie tracking app, right? The tool is free, but if you want to actually, you know, use agents to go and help you, you know, make personalized meal plans or give you like more, you know, precise calorie tracking, you would have to pay for that. Or if you want it to be upsold to a weekly weight coach to help you get on track, that is, is something that you would pay money for. So it's, it's, it's pretty interesting. I think like why, why it's interesting is this was kind of limiting,

• 7:29Greg Isenberg?

  the tool per seat was kind of limiting because not everyone wants to pay for tools. But if you create like essentially a product studio around free tools, get people in, get their data, get their network effects, and then upsell them either to AI agents or to human beings. There's a lot of niches that have, are just wide open right now that I think you can go and build stuff in. So it excites me. So when I see things, tweets and stuff like that around like SaaS is dead, period. It's not that SaaS is dead, period. It's SaaS is dead, long live SaaS. This is like, you know, we're, we're evolving from this, which is no longer a thing anymore.

• 8:14Greg Isenberg?

  Like, don't like, it's dead, like, don't create a this, right? The other, you know, the other thing to mention is, you know, you could, the business model of, okay, it's free over here, upsell to agents. How do you charge for that? I mean, you can either charge by token, you can charge by pay per outcome. So if the agents actually do something. And then for human beings, it could be weekly or a monthly fee. So I think that the total TAM for total addressable market for SaaS is now bigger because the market for, you know, people accomplishing things is just a lot bigger than people actually using a tool to complete something.

• 8:59Greg Isenberg?

  When I posted about this whole smart SaaS thing and how SaaS is going to be free, my point is that SaaS is trending towards being free. So, you know, I think that here, this is sort of the price, where things are going now. I think for a lot of SMBs, prosumer stuff, it's going to be free. But I do want to say, when it comes to enterprise, you know, enterprise, when I'm talking about enterprise, I'm saying like Fortune 500, 2000, those companies, they still might pay something per seat. I think that number goes down over time.

• 9:44Greg Isenberg?

  And I still think that there's upsells to humans and super intelligence. But, you know, the point is, you know, enterprise, you know, they're not going to want, some enterprises are just not going to want free stuff. They're going to want to pay, they're going to want to pay for the security. They're going to want to pay because it just feels good to pay because it feels like, you know, you're getting taken care of. So I think that, you know, enterprise, they will still pay something. But again, the, the main point I'm trying to make is it's, it's going towards free. I think for SMBs, where you're going to see it becoming more and more free.

• 10:29Greg Isenberg?

  And, and individuals too. I hadn't seen anyone really clearly explain this, so I wanted to put it in here. I think, you know, I'm happy to do more, more on this. Just comment below, like, comment and subscribe. And I can do more on this, like where SaaS is going, the niches, the opportunities. If this gets, you know, 5,000 likes on YouTube or 5,000 likes, comments, subscribes on YouTube, I will go and do more of that. But yeah, I think this is a really interesting time to be creating SaaS. This is the map. Enjoy, go and do it. Thank you for watching. Thank you for listening. Have a creative day and I'll see you next time.