this post was submitted on 24 Jun 2024
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Subscribers? 90 some odd % of SaaS is sold to businesses, not individuals.
And if the business needs aren't met, said businesses will go to another SaaS company that promises them a better, brighter future.
The user might not be the subscriber, but the user being less productive because the software is getting in their way, will irritate the subscriber.
I know a SaaS company that put thousands upon thousands of engineering hours into making small (and sometimes large) optimizations over their overall crappy architecture so their enterprise customers (and I'm talking ~6 out of the top 10 largest companies in one industry in the US) wouldn't leave them for a solution that doesn't freeze up for all users in a company when one user runs a report. Each company ran in a silo of their own, but for the bigger ones... I'm not going to give exact numbers, but if you give every user a total of half an hour of unnecessary delays per day, that's like 500 hours of wasted time per day per 1000 employees. Said employees were performing extremely overpriced services, so 500 hours of wasted time per day might be something like 100k income lost per day. Not an insignificant number even for billion dollar companies.
I've since left the company for greener pastures and I hear the new management sucks, but the old one for sure knew that they were going to lose their huge ass clients over performance issues and bugs.
The key phrase was work well. You are saying they have a motive for it to work. Like not freeze up. I am saying they have no motive for it to work well. As in be user friendly or efficient or easy to use.
Ok, well really splitting hairs on what "working well" means but ok. Why do UX designers exist? I mean if you have a bad UI that takes a user 10 min to do something that can be done in 10 seconds in another solution, you lose. Time is money. Anyone who has ever been in magament knows it's all about cost vs output. If a call center employee can handle 2x more cases with another solution due to a better UX, they will move to that.
You are saying efficiency doesn't matter, which is just %100 false. A more efficient solution makes/saves more money. It saves time, which is also money and improves agility of the team. How can you say with a straight face that a business doesn't care about efficiency of it's workers....
Because I have worked with software for 30 years. When the employee is salaried, thier time costs nothing. I will say I have no experience with call centers. So those may be an exception. I believe the majority of computer use jobs are salary though.
Ugh, wrong again. Time is money. People have limited bandwidth and output, you want to get at much output as you can for the salary spend while realizing each person has a finite output. You keep saying things like "time costs nothing" and "quality doesn't matter" which are just completely wrong and if true would upend the industry.
Also I've been in software for just over 20, the last 4 of those as a CTO. Since you seem to keep bringing up your credentials for some reason.
In one thread someone questioned if I even work in tech. So I started mentioning my experience to back up my claims. My current CTO fully admits that we have to cut corners and deliver features to win customers. That why I work for him. He is honest about it. And he is not new at it either.
As for time is money... take a person working 40 hours a week, and replace thier tool with a cheaper lower quality tool, then tell them to make it work. They start working 44 hours a week. You saved money and got the same result. Awards for you. And a lot of people will do the extra work, because they care about the work. As a bonus, the people who won't work extra leave. Now you have a self selecting group of people who will work longer for the same price. And those tend to be the people who won't leave for various reasons. So now you can even not backfill some of the ones who left, and tell the ones who stayed to cover the slack. Wow, even more money saved. I've seen that happen at a company with billions in revenue and great profits. But the shareholders demand growth, so if they can't sell more, they must cut expenses to grow profits.
Yes, you have to cut certain corners sometimes, that's reality. That does not equate to "quality doesn't matter." That's a major false equivalency.
"As for time is money⦠take a person working 40 hours a week, and replace thier tool with a cheaper lower quality tool, then tell them to make it work. They start working 44 hours a week. You saved money and got the same result. Awards for you."
Yes, except people's hours are much more expensive than licenses. To scale this model as your business grows you would have to hire more and more people, with fully loaded benefits most times, instead of paying for licences to better software that has discounts at larger volumes. If I showed a %25 decrease in a single software spend but a %10 increase in staffing cost I would be crucified. Employees become more expensive the more you have, and software is the exact opposite. Not to mention if you are working 44 hours you now have to pay overtime, and added cost.
"As a bonus, the people who wonβt work extra leave. Now you have a self selecting group of people who will work longer for the same price."
This is just not true. Especially in the economy people will hold onto jobs as long as they can, no matter how rough, they just have less output. Which you could track and manage, but that's yet another expense to manage.
"So now you can even not backfill some of the ones who left, and tell the ones who stayed to cover the slack. "
This would put extra pressure on existing employees, possibly causing them to quit or need overtime which would cost more. Then backfilling an employee if very expensive on the HR and benefits side, that's yet another expense.
"Wow, even more money saved."
I'm not trying to be mean, but a lot of your takes to consider some very basic concepts when it comes to staffing. Like the fact that someone leaving and being replaced the very next day, for the same pay, is actually a large financial drain, it is not break even. Or that fact that software licenses get cheaper as you buy in bulk, where ramping employees to meet scale does not. it becomes more expensive.
I am starting to doubt your credentials. When a salaried employee works 44 hours, it costs the same as when they work 40. And the tougher the economy, the more work you can squeeze out of each person. And no, even in this economy people will leave, not everyone will hang onto thier jobs. And it will be the ones who refuse free overtime that go. This is even amazons well known work model. Only they enforce required firings to take it a step further.
You're doubting my credentials, this is hilarious. Here's a news flash, most of the employees using software at scale, like say Salesforce, are call center hourly employees. If you actually sold SaaS for as long as you said you have you'd know this, because it's part of a savings analysis you do in pitch decks. So ya, I'm starting to doubt your credentials.
Yes yes, not every single person will hang out in their job, but look at the market. It is flooded with talent with no place to go due to everyone having layoffs. You do not have a lot of power as a prospect right now, so people stay put for the most part. Anyone who is in management would realize these things as people start leaving less and you're flooded with applications when you open a position.
Yes, people who refuse the free overtime will go, so you have more people you need to rehire, which is very expensive. Have you ever managed a P&L before?
Amazon does this because they have an infinite supply of applications wating due to them being in the Big 3. Not every company has that pull.
It still worked - you could use the software with occasional hiccups, it's not like there was data loss or anything. It just didn't work WELL.
Yah, clients are subscribers
Okay then the users aren't subscribers, thier boss or the boss above that are. And that person doesn't really care how hard it is to use. They care about the presentation they gave to other leadership about all the great features the software has. And if they drop it now, they look like a fool, so deal with it.
They do care, %100 they care. If you take longer to do task X because the SaaS solution crashes or is unavailable, or causes issues in finance, or a dozen other things then the company will very much care. I literally work at a SaaS company and hear complaints from clients. Money is all that matters, if your solution isn't as good at making/saving them money as another solution, you get dropped. And reliability is a big part of that. A solution that frequently has issues is not a money-making/saving system that can be relied on.
It's not about looking like a fool; it's about what your P&L looks like. That's what actually matters. Say you made a nice slide deck about product X and got buy-in. Walking that back is MUCH easier to do than having to justify a hit to your P&L.
What experience do you have to be making these claims?
I have 30 years of work experience on both sides of the equation with companies of varying size. Once a company gets to somewhere between 500 and 1000 employees, the 2nd level managment starts to attract professionally ambitious people who prioritize thier career over the work to a more a more extreme degree. They never walk anything back. Every few years they will often replace a solution (even a working one) so that they can take credit for a major change. Anyway, you get enough of these and they start to back each other and squeeze out anyone who cares about the work. I have been told in one position that it doesn't matter if you are right, you don't say anything negative about person X's plan. And many other people from other companies and such have echoed that over the years. Now small companies often avoid this. But most software targets the big companies for the big paydays. Of the ones I have worked at, some even openly admitted that financially they couldn't justify fixing a user issue over a new feature that might sell more product because the user issues don't often lead to churn, where as new features often seal a deal.
You seem to be basing how the entire industry works on some people you've encountered who want to climb the ladder. Again, when you stand in front of a board and have to justify your EBITDA, it doesn't matter how good your PowerPoint slide was. They don't have to walk it back, the P&L is numbers, they have to justify those numbers or deal with not hitting budget. A company runs off numbers not initiatives people want to push.
You seem to be ignoring the fact that you have to report metrics to investors. Spend, rev, output, etc. And a poor SaaS solution that has poor quality negatively impacts those numbers. Numbers don't lie, no matter how much spin you put on them. You say you have 30 years of experience both consuming and delivering SaaS solutions but seem to ignore that you have defended your P&L and your performance, all numbers, not office politics. Investors only care about money, dollars and cents, numbers. So what happens when solution X that Bob pushed and no one can talk bad about tanks your topline, or your EBITDA? Then what? You tell the board not to say anything bad about it? That just doesn't make sense.
I haven't been in the board room, but I have seen the department heads deflect by focusing on different numbers that do look good for unrelated reasons. Then blame the poor performance that was the result of a bad decision as an expected outcome of a long term decision. These people at those levels are pros at this. And the board cares about the stock price. Guess what, the stock price is not based on numbers, it is based on speculation. If the ceo can spin it, it doesn't matter what it is. Like how layoffs often make the stock price go up. "We are reducing expenses to accelerate progress and be more nimble..." no they are firing people because they can't manage to use those people to make money.
And I wish it was just me who has encountered these people... but sadly it isn't. If you want an example. Look at Google, and read up on how the culture changed over time as it got bigger. It probably staved off the change longer than most and grew faster, so the number of employees that triggered the change is a lot higher than average, but it's easy to read about.
So you've seen dept heads, not been one, and that's make you confident is saying how all businesses operate?
The stock price is not just based on speculation, Jesus dude. Your revenue massively impacts stock price, saying it doesn't is just straight stupid.
You seem to be giving a lot of options that on their face make no sense while never having been in a position where you would actually have to understand and manage these things.
Stock price is all speculation. Revenue yesterday doesnβt mean revenue today. And you don't buy stock in a company that stays the same, you buy stock in a company that you speculate will go up in value. Revenue can be going up, and the stock price down because people think the price will go down. How do layoffs make revenue go up? Yet they often make the stock price go up. If the stock prices was super dependent on metrics, algorithms would be making soo much money we wouldn't have anything else picking stocks. But the algorithm traders can't predict human speculation. So they tend to work much better on smaller companies where there is less attention and less speculation.
And not all companies by any means just the big ones. And I am sure there are some exceptions, there always are.
The stock price is perceived value. Many things go into that perceived value, such as number of clients and revenue. I mean it's not just a random roll of the dice like you seem to be implying.
Sure, revenue can go up and stock price go down, but that would be a very small dip that would recover ASAP, that's how the stock market works, off of numbers. And showing YoY or even MoM growth bumps the stock price, almost every single time. If you disagree I would love to see examples showing the counter.
"How do layoffs make revenue go up? Yet they often make the stock price go up."
See this is kinda what I'm getting at, again no offense, but you're speaking on topics you don't fully understand. Layoffs does not make revenue go up, but it makes EBITDA go up, which is the actual number most companies care about. Topline rev doesn't mean much on it's own. If you make $1 mil in a year, that's great topline revenue, but if it cost you $980k to make that, you're not doing well. You can make that $980k go lower through layoffs. Your revenue will be the same, but your EBITDA will jump because you reduced expenses. That's how value can go up with rev changing. It costs you less money to make the same amount of money.
"If the stock prices was super dependent on metrics, algorithms would be making soo much money we wouldnβt have anything else picking stocks."
No..... I mean, it's just frustrating I have to explain all this to someone acting so confident. The stock market runs off metrics, yes, it does. But the things that effect those metrics are not just some alrogithm. You can't anticipate how the tech sector will react to new technology, but if you see a company's revenue going up because of new tech, that's a good enough reason to invest. It's not that the stock market is all guesses, it's that it's driven by metrics that are not always clear to everyone engaging in the stock market. For example, the stock markets can run off real estate revenue, and invest based on that, what it could not magically compute with an algorithm is how COVID would impact that revenue. Hence it is "perceived" value, not actual value.
So I know layoffs don't make revenue go up. But in your previous comment you said revenue drives the stock price.
You are so sure of yourself, anyone who disagrees must be an idiot. And you then miread what they are saying because they must be idiots.
But at this point you have just validated what I am saying. You said there is no metric for covid. Correct it was people perceived evaluation that drove the price. Which is what I have said all along. Everyone can see the numbers, so the numbers no longer matter. When you buy a stock, you are betting others will too, but for a higher price. And if you both have the same numbers, then it isn't numbers that would make the difference, it is perception.