Creative/Generalist

Writing this at the start of 2025, I can say with a high degree of certainty that this piece is unlikely to age well, but at least we'll be able to look back and laugh about just how wrong we were.

Jumping right in - why might SaaS be 'dead'?

Death of the Backend

For context, let's restate Microsoft's Satya Nadella's December 2024 assertion that SaaS as we know it is dead:

I think the notion that business applications exist, that's probably where they'll all collapse right in the agent era, because if you think about it, they are essentially CRUD databases with a bunch of business logic. The business logic is all going to these agents and these agents are going to be multi-repo CRUD right, so they're not going to discriminate between what the backend is - they're going to update multiple databases and all the logic will be in the AI tier so to speak. And once the AI tier becomes the place where all the logic is, then people will start replacing the backends.

It's fair to say this interview sent shockwaves through the industry - not because it was the first time anyone had floated the idea that SaaS was moribund, but perhaps because it was such a concrete formulation of how it was going to happen coming from a senior industry player. But combing through the comments on YouTube, reaction videos and subsequent blog posts, it was clear just how polarised opinion was on how this might play out. A lot of experienced engineers refused to countenance the possibility that backend logic could be subsumed by LLMs, exemplified by comments like this:

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Last week Pakk reached a major milestone. Of course there have been many others: our alpha launch, our first live customer site, their first order etc. This one, however, was really big, both on a personal and professional level. This is the story of how that milestone was reached and what it represents — right from the very beginning. It’s a reflection on the past and future, on business and entrepreneurship, on technology, software and web development, on commerce and e-commerce. Mostly though, it’s about life: my life, our lives and life in general.

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So, here’s what happened.  Since January we had been living in a little flat with a big problem – there was a flaw in the plumbing installed when the building was remodelled which meant that sewer gases could rise through the pipes and escape freely into the bathroom.  It smelled like a public toilet all the time.

We talked about it with the owner who told us it was a construction mistake and couldn’t be rectified.  Every time I spoke to her I mentioned the fact the we weren’t happy and that the smell was sometimes so bad you would put off peeing as long as you could just to avoid going in there.  Once, when the landlord visited, we talked to some of the neighbours who had the same problem.  The couple upstairs who had two bathrooms even told us that they couldn’t use one of theirs (the one directly above ours) because it smelled so bad.

We had a minimum years contract, but told the owner at the beginning of April that we would have to leave because of the smell and would be out by the end of the month.  We went and found another flat and moved all our stuff out.

The end of the month was this week, so we went over there to give her the keys back and officially sign off.  I had trusted she would do the right thing, but my partner had had suspicions all week that she wouldn’t play ball.  She was right.  She refused to give us our deposit (1 months rent) back because we were breaking the contract early.

Now, we had always tried to behave reasonably towards the owner.  We had tried to solve the problems ourselves.  We had poured countless Euros worth of bleaches and chemicals down the tubes.  We had even called a plumber at our own expense.  In the end, when we couldn’t stand it any more, we gave her plenty of notice and told her she could bring people to see the flat whenever she wanted so she wouldn’t have the flat empty for any extended period of time.  When we gave the flat back, we left it cleaner than when we first took the keys.

Given the circumstances, I trusted she would see that we had behaved reasonably all along and would choose to do so herself.  Unfortunately, she obviously saw it as a chance to make some easy money from our horrible experience.  All she could say was: “Do you need me to read the contract to you?”.  She had also bought her beefy policeman dad as backup.  This is a person who knew about the smell, who had deliberately covered it up with air-fresheners the day we saw the flat and who had personally heard from the neighbours that their equivalent bathroom was unusable.

When we first met her, she seemed like a very pleasant and reasonable woman.  I wondered at what point her greed had overcome any natural human kindness instinct she might have had.  Yes, she did have the contract on her side – there was no clause that said “The bathroom will not stink”; there wasn’t even a ‘fit for use’ type clause.  So I guess if it went to court she’d probably win.  But really, is that the point?  Shouldn’t any reasonable person see that the contract means nothing if you can’t live in the place because it smells so bad?  That morally, not legally, she had no right to keep our money?  I asked her how she would be able to sleep at night.  The dad got aggressive.

When we came out of the meeting, both my partner and I were emotionally knackered.  We are non-confrontational types and recognised that the half hour intense argument had taken its toll on both of us.  We sat on a bench for a while and nursed our wounds.  When I got home I asked Google why we should feel so tired after a ‘fight’.  Apparently it’s something to do with hormones.

The whole episode got me thinking about whether these types of fight are actually worth it in the long run; and small business owners will recognise that when every day is a never ending fight with suppliers, customers, salesmen, con-artists and everyone else who wants a piece of your business, the battle can be exhausting.

The problem in the short term is the immediate desire for moral victory – “It’s not about the money, it’s the principal”.  You hear it all the time.  The problem is that when you’re up against an army of cold-hearted, empty-headed opponents, getting them to see the just truth is a very unlikely outcome.  And even if you do, as a non-confrontational person the victory might cost you more than the prize is worth.  So should you let people walk all over you, just for an easy life?  What’s the right action – fight or flight?

After running a small company for almost 4 years and taking a lot of crap and giving a lot back, I’m starting to think that either I don’t have the right personality for it, or that I’ve got the wrong approach.  When you sell stuff to the general public (and I’m sure all merchants will agree), there is always a small percentage of ‘bad customers’.  And I mean bad in every way.  The have a chip on their shoulder from the very beginning, demand discounts and special treatment, point out mistakes in your webpage or sales literature, behave irrationally and expect you to comply with their whims and then inevitably, ask for their money back.

In our business, problems are mostly delivery related.  Maybe 2-3% of deliveries go wrong.  People don’t take the time to read the information on the website, fail to receive their order and then expect us to bear the cost or responsibility.  When the customer is calm, genuine and reasonable, I never hesitate in helping them out, even making a loss on their order just so that they’re happy.  When the customer is an arsehole, it costs a lot more.  You’re left with a stark choice:

1)  Argue with the customer, exchange 6-10 heated emails, all of which leave you a little drained, get a chargeback on your PayPal or credit card merchant account, write letter(s) to them explaining the situation, exchange more emails and/or phone calls, worry, possibly progress to legal action, possibly win financially/morally, possibly not.  Or,

2)  Give the customer their money back.  Forget about it.  Move on.

What about suppliers who deliver late and mess up your whole logistics schedule?  Do you argue, complain, explain that their mistakes have cost you time and money, ask for compensation, risk ruining a stable relationship?  All of this takes time and emotional investment.  And it’s constant.

I know what my choice is.  But does that mean that I’m letting people walk all over me when I should be standing up and fighting my corner?  And I’m not just talking about customers – these situations arise constantly in business and come from all angles.  Fights with suppliers about pricing or delivery errors, with employees about behaviour, with customers about service and payment – business is a battleground, and my feeling is that the winners are the ones that are up for the fight, the ones who are prepared to not let anyone stand in their way, the ruthless ones, the ones who don’t care too much about other people outcomes or feelings.  Ultimately it’s survival of the fittest and a competition for resources and not everyone can win.

Me, I don’t want to fight so much.  So is the conclusion that I’m no good as a businessman?  Maybe.  No doubt that a more aggressive, less sensitive personality would serve me well in this particular domain.  But to be honest, I’m not that person and don’t want to be either.  I’m not prepared to force a change of personality just to get on in business.  Maybe I’ll learn to be more selective, to pick my fights better.  Maybe I’ll get naturally better at confrontation and negotiation.  Maybe I’ll find way to get others (professionals) to fight the bulk of my fights for me.  Maybe I’ll get comfortable with selectively letting people ‘get their way’ in pursuit of peace.  Maybe I’ll find a less conflictive business.

Maybe the hard edge of business is just for a different type of person though – and that’s a thought that troubles me.

A couple of months ago, I signed the company up for TrustPilot, one of the new breed of review collection services that prompt your customers to give you a score and leave you some feedback after placing an order. TrustPilot then collates these reviews on their website and pushes them out to aggregators, like Google. All this review stuff may or may not be important in the future, as search engines try to get a handle on commercial reality rather than just empty keywords, so I figure it’s good to be on board as early as possible. TrustPilot seemed like a good option – easy to set up, fairly comprehensive feature set and a competitive price. I’m satisfied with the service and would recommend them.

But that’s not what this article is about. What concerns me is what customers are saying in their reviews.

We’ve got a couple of hundred responses now – most good, some bad – and I’m starting to recognise the pattern. Let’s have a look at a smattering of typical good ones:

(5 star) Ordering on line was straightforward and goods arrived within a couple of days extremely well packaged with no breakages. No complaints at all and will certainly use again.

(5 star) Goods ordered late Tuesday and delivered early Friday, just what was expected and glad to recommend them.

(5 star) the products i bought where good quality and a quick good delivery service ,will continue to order in future

(5 star) Delivery as promised great service

And now for the bad ones.  There aren’t too many (thankfully), so I haven’t had to be very selective.  These are the worst:

(1 star) I ordered some of their products as a wedding present for some friends in France and it took 15 days to arrive to them. It looks like there was a first delivery attempt (according to their tracking system) but no card was left at the house so my friends could not pick it up.

(2 star) only part delivered and my staff tell me your courier wanted to wait until Tuesday and my staff insisted we had part delivery

(3 star) Everything about the service from tapas lunch company was good however I would normally expect swifter dispatch of items. The third party delivery service provided decent online awareness of delivery progression but I stipulated a telephone number to call for delivery. This was not used on my initial delivery day when I was in the flat all day long. They did ring it on the second delivery day but I was out and in meetings so could not answer the phone and on the third attempted delivery day a UK mail van pulled up outside my flat and delivered a parcel to a neighbouring permises. He was about to drive away when I ran out to question whether there was an item for me that I actually got my delivery.

Looking through all 200-odd reviews, the vast majority of positive comments centre on:

1. Fast despatch of order.

2. Good packaging of order.

3. Easy to navigate, pretty website.

4. Most importantly – successful and efficient completion of next-day delivery service by courier.

On the flip side, the bad comments all focus on:

1. Products arriving broken (interpreted as bad packaging by customers).

2. Non-immediate despatch of order (usually only if out of stock of a particular product).

3. Some problem with the website.

4. Most importantly – failure of next-day delivery service by courier.

Few comments say much, if anything, about:

1. The product – it’s quality or anything else.

2. The price.

3. The customer service they receive from us.

To be honest, I find this quite depressing.  When we started out in this business, we wanted to bring fantastic authentic Spanish food to the UK and offer it at a sensible price.  We also committed to being an open, honest and friendly company that would treat customers well, so that they would enjoy dealing with us.  Looking back, I might just as well have set up to sell empty boxes, but with the commitment to offer them through a beautifully designed website with a guarantee of same-day delivery.

To make things worse, like many online sellers we outsource our logistics and delivery service – we have a warehouse that pick, pack and despatch our orders and a courier service that delivers them.  That’s to say, aside from constant goading and remonstrating, there is little to nothing I can do to affect the quality of the service coming from these partners.  Of course we are constantly monitoring and talking to account managers to try to improve things, but at ground level, on a transaction-by-transaction basis, it’s out of our hands – which means we live and die by their strengths and weaknesses.  So the praise we are getting, mostly for speedy delivery, is really praise of the courier service.  Likewise, most of the criticism we get is really nothing to do with us, but more directed at the logistics providers.  It seems our core proposition, offering great food, at a great price, coupled with great service, is entirely overlooked by the customer.

It’s frustrating, but of course the truth is a little more complicated.  Firstly, the reviews are skewed by sampling bias.  Only 5% of customers actually bother to leave a review, which means the results are exaggerated.  Reviews tend to be either 5 star or 1 star, reflecting the fact that customers will only respond if they are elated or seriously pissed off.  The others just receive their order and get on with it.  More importantly though, I have a feeling that these reviews show how e-customers are evolving (or not) with the times.  In an online world where you can get pretty much any product from a hundred sources, it is the customer-facing aspects of the business – like the website and delivery service – upon which customers judge your performance, even if to you these are only fringe aspects of your business.

“I’m really sorry, but WE ARE NOT THE COURIER”, is a phrase I repeat about 3 times a day.  I’ve had to use it in an attempt to excuse anything from a customer being on the toilet when the van arrived to an unshaven delivery driver.  Clearly, it’s quite ridiculous for the customer to be judging us on these factors – but guess what, they do.  They don’t care who’s who in their transaction, they just want their stuff, and quickly.

The Bottom Line

As business people, we’re constantly offered services that allow you to ‘focus on your real business’, anything from contracted accounting, customer service, admin or logistics.  Supposedly we’re supposed to be ‘doing what we do best’ – which I guess is some kind of business development to allow us to offer bigger better products at lower prices.  But before you get stuck in developing your next killer product, think about the empty-box scenario above.  Perhaps you need to give some more thought to those ugly, customer-facing aspects of the business on which your customers are judging you.  I know I do.

We often think of our small businesses as growing and developing gradually and consistently.  We look at typical business indicators, such as revenue and profit curves, customer metrics or website hits and what we see resembles a car journey.  Sometimes it’s a motorway, and progress it fast.  Sometimes its a windy country lane and progress it erratic, at times rapidly accelerating, at times braking hard.  Sometimes you’re stuck in a dead end and just have to reverse.  And sometimes you’re just parked.  But it always looks like the same journey in the same car.

In the software industry, development traditionally takes the form of major and minor releases of applications.  Version 1 comes out – it’s not perfect, but it’s usable.  Bit by bit, the developers nail down the bugs and the functionality glitches, gradually releasing updates and patches – Version 1.1, 1.2, 1.3 etc.  By 1.6, it’s a perfect app – it does exactly what it’s supposed to do with no bugs.

But any good software company doesn’t stop there.  In fact, the minute Version 1 came out, they were probably already thinking “Hey, this app does x, but wouldn’t it be good if it did y and z too”.  So a year or two after Version 1 came out, they release Version 2.  It does more, it does it slicker, it does it bigger and it does it better.  It’s not compatible with Version 1.  You might even have to buy it again if you bought Version 1.  It’s not an upgrade, it’s fundamentally different.

Look at how we’ve come to think of and call the current phase of the internet ‘Web 2.0′.  It’s not just a geek thing either.  In our hearts and minds we know something has changed in Web 2.0.  Perhaps, if you’re not a techie, it’s hard to put your finger on.  But back in 1999, in Web 1.0, your grandma wasn’t keeping up with your shenanigans on social networks was she?  Most of the software you used was on your operating system, not through your web browser, wasn’t it?  Web 2.0 is different from Web  1.0 in many, many ways.  But the key is that they add up to a step change.  A fundamental shift in the way we use and perceive the internet and the way it shapes society.

Now what if we were to think of our businesses this way?  What if we went from major version to major version rather than just notching up an endless string of minor versions? What if your business was ‘Your Business 3.4′, rather than ‘Your Business 1.87′?

In fact, such a conceptualisation is incredibly empowering.  Thinking of your business as a serious of ‘major version releases’, each of which is fundamentally separated from the previous version by a step change, can only motivate you to push forward to the next iteration.  And in my eyes, step changes are not (or at least they don’t have to be) sharp jumps in metrics like sales or profits.  New major versions are triggered by changes that are fundamental to what your business really is, what it represents, what it offers, how it operates and what it brings to or takes from your life and that of others that are involved in it.

I’m not going to go into details here of of my own business (that’s for another post), but just as an example, we went to ‘Our Company 2.0′ to ‘Our Company 3.0′ the day we first stopped doing the physical warehouse work ourselves and moved to a contracted-out logistics solution.  This was a fundamental change for us – it changed the way the company operated, it changed what we could offer, it changed what we did on a day-to-day basis and it changed how we thought about our company and its prospects.

Major versioning is not all about the past though.  Of course, with the help of hindsight, you might look back and easily determine where your major versions were, and if they were positive, or even planned.  But really, major versions are all about the future, about where you’re going.  Don’t ask yourself where you see your business in 5 years – who knows what shape the world will be in in 5 years.  Better to visualise the next major version of your business – what it will look like, what will be fundamentally different about it, how it will change your life and the lives of others.  Does it excite you?  If it doesn’t, you’re jaded.

So why not get started ‘major versioning’ your businesses.  Look back to the past and then look towards the future.  Ask yourself the following questions:

• Starting back from My Business 1.0, how many major versions have there been?
• What major version am I at now?
• What were the characteristics of each major version?
• What will the next major version look like?  How will it be characterised?  How will it be fundamentally different?
• When will the next major version be?
• How many more major versions will there be?  Does the project have a ‘final version’?