The Death of The Monolithic SaaS Product

This post is part of our series covering the SaaS industry. You can follow us on our Point Nine Capital Medium channel.


2004–2008

For SaaS companies 2004–2008 basically looked like this:

2004–2008, a SaaS product = a desktop / web client

Your SaaS product was basically a web / desktop client only and in terms of distribution (I won’t talk about direct sales in this post) your job consisted in having a good SEO / SEM + good PR (= being featured in online media) to drive traffic to your homepage and then to convert the visitors to your product (this is why homepage conversion was so important and so documented back then).

2008–2013

2008–2013 a SaaS product = a web / desktop client and a mobile app

Then, by 2008, mobile and social media arrived. From that point, things started to change both for product and distribution:

  • Product: people started to ask for mobile version / complimentary app of your SaaS. The “SaaS monolith” began to crack.
  • Distribution: social media and mobile appstores started to change also the distribution game as they enabled SaaS businesses to communicate and convert people directly where they were (bypassing the “drive them first to the homepage and convert them here”). Hence the “traffic + conversion” at the same time.

2014 — ?

2014 a SaaS product = a web /desktop client, an API, a Slackbot, some standalone products, segment / Zapier integrations etc…

This is how the situation looks like now.

  • Product: the web / Desktop client “only” approach exploded. Customers use so many full-featured SaaS clients already that it’s hard to ask them to use even more of them. They want more ways to interact with a product than the traditional “I go on mysaas.com, login, use the features and logout”.
  • Distribution: You need to attract and convert people directly on mobile stores, Product Hunt, directories like Getapp etc.
A SaaS product didn’t become a sum of many apps / plugins. No. What I mean here is that the concept of the SaaS product is shifting from a full-featured web client only to a coherent ecosystem of internal apps, plugins, APIs and soon bots.

[EDIT] I’ve been asked to give examples of startups illustrating this trend so here you go.

Intercom:

Clearbit:

[Edit 2] interesting comment I got on Quibb:

From Philip Branning:

“The conclusion is correct — if you don’t have an API, you don’t have a product. But the idea that saas products are sprouting new endpoints is somewhat misleading. It’s not a soup, most everything is built hierarchically on top of the API.”

My answer:

Definitely agree. In terms of “architecture” everything is built on top of your API. I was more speaking from the user point of view and how he perceives it. I wouldn’t compare it to a soup but more to a fancy buffet where he can chose what fits him more :-)

Comments

  • The importance of the traditional full-featured SaaS web / desktop client is shrinking
  • … and it’s increasingly important to offer great user experiences / value through a Slack bot, a great Zapier integration, a mobile app, an API, an integration to segment.com etc. The software experience is now decentralised and cut into smaller pieces.
  • The importance of the homepage is shrinking
  • …and it’s increasingly important to understand how to rank well on social recommendation platforms like PH, mobile appstores, SaaS directories… and how to convert visitors directly there (they won’t wait to see your homepage to decide whether they are interested in your app or not).
  • For the moment I don’t see this “fragmentation” trend (both for product and distribution) slowing down.
  • This is why APIs are also probably the future of SaaS

Additional notes

  • As usual it also depends on the SaaS category. Of course for high engagement products, like chat tools, full-featured mobile and desktop clients are still crucial. But for more and more sales, marketing, analytics, CRM (etc.) tools it makes less sense to develop a full-featured client.
  • Industry specific integrated solutions are not yet to that point (= current players which are disrupting old school industries like healthcare or real estate). But mainly because it’s the beginning of ‘SaaSification’ for these verticals, the market is not mature yet.
  • Standalone products = smaller / more focused products than a complete SaaS client. Want to see what I mean, just search for Clearbit standalone products on PH and you’ll understand.