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1/ The most interesting thing I’ve read all day: Bill Gurley’s 2001 (!) obituary of the software industry’s first aborted attempt to move to subscription
abovethecrowd.com/2001/10/29/whe…
abovethecrowd.com/2001/10/29/whe…
2/ I mean, I had heard of application service providers before, but man this was straight-up SaaS all the way back in 1995 
3/ So why did SaaS 1.0 fail? What’s different this time?
The most obvious difference is just cheap capital: Gurley blamed “capital availability” for sinking the ASPs, but today investors are more than fine with financing -50% FCF margins
The most obvious difference is just cheap capital: Gurley blamed “capital availability” for sinking the ASPs, but today investors are more than fine with financing -50% FCF margins
4/ The second, more subtle difference has been price
Gurley (reasonably) assumed sub pricing would mimic license pricing. But in actuality, the SaaS transition has just been one big case study in software pricing power... aka why Photoshop now costs 3x more than it did in 2010
Gurley (reasonably) assumed sub pricing would mimic license pricing. But in actuality, the SaaS transition has just been one big case study in software pricing power... aka why Photoshop now costs 3x more than it did in 2010
5/ In summary, SaaS didn’t take off in the 2010s because it was new - it took off because investors suddenly became willing to fund huge losses in enterprise startups
And also maybe b/c Adobe discovered that subscriptions appealed to some deep human irrationality about pricing
And also maybe b/c Adobe discovered that subscriptions appealed to some deep human irrationality about pricing
