Don’t Judge Tech Companies by their Technology
Don’t judge tech companies by their technology.
Judge them by their capacity for driving organizational change.
But Jeremy, technology is literally what they sell! Are you saying we shouldn’t judge tractors on how well they tract, or plumbers on how well they plumb?
Software has gotten exponentially easier to build. The time needed to cross any technology moat has trended towards zero. Open-source tools and no-code builders did their part. Now, LLMs will accelerate this even more. Same for marketing and sales - a B2B SaaS company could put up a website with enablement and reach 100 prospects in their ideal customer profile, all in one day.
However, implementing that software in a way that drives organizational change remains just as challenging. Converting that into a repeatable process is damn near impossible, and requires real humans figuring it out the hard way. I can count only a couple companies that have figured it out. They’re printing money. Meanwhile, I can count a few companies that have incredible technology, but haven’t figured out ProServ. They’re broke.
Investors tend to bias against services-heavy SaaS companies. Higher overhead, lower margin, higher risk. I believe that directionally, that’s still correct - but we’re seeing the flip side start to rear its ugly head. If it’s easy to implement, and is also an innovative technology with fewer entrants, then it’s also less likely to be solving an important problem - and therefore easier to get rid of. Above all that, our subconscious bullshit detector is growing. We’re realizing that all of those fairy-dust “time-saver” tools aren’t actually making us less busy. Something’s breaking down in the value chain.
Salesforce’s tiptoe into consumption-based pricing is a high-profile signal that there is more to come here. Instead of seat-based pricing that is asking to be overbooked and underused, Salesforce will have their skin in the game with every AI interaction. Did you buy shelfware? Pay shelfware prices. Is it valuable? Pay highway robbery margins to their stand-up comedian war chest.
Sellers have long known that feature selling (e.g. workflow automation) loses to benefits selling (i.e. higher productivity). But in an oversaturated market where everybody is building features, and all of those features have benefits in theory, the winners will be the ones who can drive tangible outcomes (i.e. capital-efficient revenue growth leading to IPO) and tell the story about it.
That’s messy work. That’s frustrating work. It involves herding cats and knocking down obstacles both internally and externally. But if features and benefits are table stakes now, that leaves the messy work as the only work worth doing anymore.
