Video of the Week: Amazon’s Jeff Bezos on Artificial Intelligence(AI), Cashless Store, and Self-Driving Cars

For our video of the week watch Amazon’s Jeff Bezos on Artificial Intelligence(AI), Cashless Store, and Self-Driving Cars. Enjoy!

From YouTube: Amazon CEO Jeff Bezos talks about the “gigantic” potential of artificial intelligence to change everything from shopping to self-driving cars. Bezos also discusses his purchase of the Washington Post in 2013, which he says is transforming from a local to a global institution. He explains why he opposes both Peter Thiel’s campaign against Gawker Media and Donald Trump’s attempts to “freeze or chill” press scrutiny. Plus: Why Bezos’s other company, Blue Origin, is trying to lower the cost of entrepreneurship in space.

API-First SaaS 2.0 Single Page Apps

Two of the core components of SaaS 2.0 products are actually related: API-first platform and rich, responsive user interfaces. Ever since Gmail made the first mainstream Javascript-heavy web experience that feels more like a desktop app, developers have been building open source platforms to make that type of “Single Page App” easier and faster to build. Single Page Apps reload only the portions of the screen that have changed, instead of the traditional way which refreshed the whole screen. And, these Single Page Apps work best against REST APIs, the same APIs that make a product API-first.

Now, there are powerful Javascript libraries like Angular (MVC framework backed by Google) and React (view framework backed by Facebook) that are popular with strong developer communities and a long list of additional open source projects that plug in nicely. By having quality, proven open source platforms, more apps are going to adopt them thereby applying more pressure to the legacy incumbents. The incumbents are going to have an incredibly hard time modernizing. Just like many software companies couldn’t make the transition from on-premise to the cloud, many SaaS companies aren’t going to be able to make the transition from SaaS 1.0 to SaaS 2.0, and it’ll be most apparent in the user experience.

Look for Single Page Apps to be a defining characteristic of API-first SaaS 2.0 companies.

What else? What are some more thoughts on API-first SaaS 2.0 Single Page Apps?

SaaS 2.0 Companies Often Resegment an Existing Market

Continuing with yesterday’s post Examples of SaaS 2.0 Companies, there’s an important point that requires more explanation: SaaS 2.0 companies often resegment an existing market. Meaning, they go into a market that has plenty of credible incumbents (like Calendly with scheduling software) and offer a novel approach to a known opportunity (better user experience, better product modularity, better pricing flexibility, better integrations, better APIs, etc.).

Critically, this is best executed in existing markets. If it’s a new, unproven market, SaaS 2.0 often doesn’t work because new markets need armies of sales people to get the new type of product in front of a buyer that’s never used it before. One of the key benefits of sales people is that they help orchestrate the sale and initiate the change management in the customer’s organization. Change management is hard and sales people help create the urgency to make it happen.

SaaS 2.0 products, typically being self-service, are best resegmenting an existing market where the value is known and the incumbents deliver an outdated customer experience.

What else? What are some more thoughts on the idea that SaaS 2.0 companies often resegment an existing market?

Examples of SaaS 2.0 Companies

After talking about the The Next Generation Competitor to Every Public SaaS Company, it’s clear a better name for it is SaaS 2.0 companies. SaaS 2.0 companies are API-first, have rich, responsive UIs that are more conversational in tone, have approachable pricing models that are more flexible than the incumbents, and have a modularized platform so that customers can purchase only the features they need. With this definition in place, several people have asked for examples of SaaS 2.0 companies:

  • Intercom – Customer communications platform that’s one of the fastest SaaS companies to go from $0 to $50 million in revenue (see notes on Intercom’s growth)
  • Groove – Simple help desk software with a passionate following (read their blog)
  • Calendly – Schedule meetings without the back-and-forth emails (an amazing product!)
  • CallRail – Call tracking for data-driven marketers
  • MailChimp – Beautiful email marketing

Look for more SaaS 2.0 companies to emerge that reimagine the entire experience in a new, more personal approach.

What else? What are some more examples of SaaS 2.0 companies?

Software Contracts in the Age of SaaS 2.0

Continuing with yesterday’s post Software Contracts and Traditional Business Practices, a friend was skeptical that contracts would be less common in 5 – 10 years as so many software company business models are dependent on it. Yes, most existing companies that require them now won’t make the shift, but plenty of next generation upstarts will. Software contracts won’t go away but more options like the following will be offered:

  • Annual Prepay – Pay for a full year in advance and get a 10 – 20% discount off the monthly price. This is effectively an annual contract with an incentive attached to it.
  • Month-to-Month with Setup Fee – Instead of a long term commitment, vendors will offer the option of a setup fee that helps recoup some of the customer acquisition and on-boarding costs.
  • Annual Contract with 90-Day Out Clause – While this is still a contract, the customer has the option to leave within the first 90 days of signing, providing more flexibility to ensure it’s the right fit.

Look for more pricing and term flexibility from SaaS 2.0 startups. SMB customers will come to expect it as part of the next generation experience.

What else? What are some more thoughts on software contracts in the age of SaaS 2.0?

Software Contracts and Traditional Business Practices

As an investor, I like seeing portfolio companies have their customers sign annual (or multi-year!) contracts and get the benefit of cash flow predictability (including prepayment) and customer commitment. In exchange for doing a longer customer contract, the vendor company can invest more in the customer acquisition process, the on-boarding/implementation process, and on-going customer success and support.

As a buyer, I dislike contracts as the needs of the business can change (need to cancel or downgrade — not possible), the vendor can provide poor service or a poor product experience for a period of time and there’s no recourse, and product usage can fluctuate (Slack is famous for only charging for users that actually use the product, not all users in the system). No contracts and more flexibility to adjust spending (specifically, spending less during certain months) is more customer-friendly.

Over time, as more next generation SaaS companies emerge, and there’s more comparable competition in the market, I believe we’re going to see more SMB software vendors not require contracts and have more flexible business practices that better align with how users want to buy. This will be a slow transition but expect it to be mainstream in the next 5 – 10 years.

What else? Do you think SMB vendors requiring annual contracts will be continue to be the norm?

Video of the Week: Jeff Bezos 1997 Interview

For our video of the week, watch the Jeff Bezos 1997 Interview. It’s great to see his passion, share the importance of the long tail of book inventory, and articulate the benefits of online ads over offline ads (proven ROI). Enjoy!

From YouTube:
Published on Dec 22, 2013. This is an interview with Jeff Bezos – the founder of Amazon in 1997. It is very clear that Jeff is already on the right track in 1997 (three years after the introduction of NCSA Mosaic). While his words seem obvious now 15+ years later – in 1997 – he was way ahead of his time. The book “Long Tail” by Chris Anderson was published in 2006 (9 years later).