Comment by dmix | Hacker News Reader

Comment by dmix | Hacker News Reader

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A lot of SaaS businesses aren’t really SaaS, they’re glorified custom development shops with a few high paying customers.

That’s not a great business to run though as it’s very difficult to scale.

Far too many fall into the trap of saying yes to the first BigCo that comes by early on because they need the $$. While they neglect every other niche and business where it could fit like a glove.

Or more often doesn’t even bother legitimately testing it on the open market since their very limited programming time is spent serving BigCo and doing support.

A lot of companies using SaaS have a bunch of different systems interconnected with Zapier or their own systems. Which IMO is far more like Unix than x product that turns into a full blown CRM, CMS, ERP etc tacked on top a niche product.

Building highly customized software also generates tons of risk for smaller companies as it binds their entire revenue on the success of a small group of other companies who may die, switch core business, or get stolen away by a bigger enterprise software sales team.

I’d much rather build a niche software product and instead of building a CRM on top just add every sort of API, webhook, Zapier, or direct integration. Or isolate them into separate products with shared authentication and logging systems.

> they’re glorified custom development shops with a few high paying customers

That's true, but sort of necessarily so, though. How else do you build a product that meets such a broad set of needs? Someone's got to do the work. At some point, features are going to drop linearly.

A lot of the time the client would be better off buying actual custom software. It's very easy to end up with a SAP (say) "configuration" so complex that you'll spend more on maintenance than you would if it were a standalone program.

> A lot of the time the client would be better off buying actual custom software.

I agree in theory, but I thoroughly disagree in practice.

If a client could spec/develop good software and cost it realistically, then sure. But I have rarely had clients like that - instead they think the problem-space is simple and end up with a half-baked solution that can't be maintained.

Developing greenfield software is a high risk strategy. (Edit: with a high reward if core function, and not much reward if not core).

The pretence that there's cost savings, followed by the sunk cost fallacy.

This happens because management is doing cover-your-ass methodology of software procurement. If they backed a greenfield development and it failed, then get blamed. But if they choose SAP/salesforce/bigCo, the same failure can be blamed on the vendor, or if it ran over budget, they can claim the vendor is expensive.

That's very true but still, in my experience anyways, it's much easier (i.e. perceived as 'less risky') to buy SAP and attempt to roll it out than to convince others that custom software would be better.

'Custom' is scary in a way that 'customizable' isn't.

It's hard not to wonder what might happen if more managers and executives became aware of "The Inner Platform Effect" and that "customizable" often just means "custom, but a worse, more expensive programming language".

Are SaaS businesses really customizing for high paying customers? They may build new features which are then made available to other businesses but I would be surprised if there are separate source trees.

The other issue is that a "great business" and "scale" are not synonymous. In fact many of the current batch of companies of great scale, like Slack, have spent enormous amounts of money to get there, and still lose money after becoming public. Then you have a company like Atlassian, with a confounding mix of enterprise products that are hard to use: but a fantastic businesses that's been profitable since the very beginning.

I do agree with you that the APIs, webhooks, and Zapier integrations solve the problem of customization, although I'd still say it's less customization and more a bevy of options.

> Are SaaS businesses really customizing for high paying customers? They may build new features which are then made available to other businesses but I would be surprised if there are separate source trees.

They are often using the same source tree and instance, but are enabling feature flags for certain customers. This often extends beyond code to data and caching. These don't get maintained and are a pain for support, as well as developers/operations. Over time they are almost as bad as a separate source tree.

That’s why I said they aren’t true SaaS companies. There are thousands you’ve never heard of in every major city with a few super niche customers.

And scaling beyond 2-3 real customers does make a very big difference for any legitimately good company.

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