In a previous post I briefly mentioned that one of the effects that emerging tech can have on industries is to make them transition from scarcity to abundance. Like the printing press that enabled the transition from scarcity to abundance of books or the computer that enabled the transition of many industries from scarcity to abundance of data.
An interesting aspect is that as it happens, the products/services in these industries usually not only improve in quality but also become more standardized. It seems that this trend reflects a pattern seen across various industries throughout history.
From scarcity to abundance: Toward standardization
In industries where there has been a shift from scarcity to abundance of products, a consistent trend keeps coming back: The average quality of products increases while a standardization occurs.
This happens because as more people and companies start making stuff, they contribute to rapid improvements and refinements a.k.a the pace of innovation and iteration accelerates. In turn these improvements are quickly adopted by others, leading to a set of refined best practices that eventually evolve into industry standards. This transition to abundance typically results in higher average product quality but also leads to a convergence in design and functionality, making it increasingly difficult to create products that really stand out.
It’s also worth noting that during this transition from scarcity to abundance there's an initial phase of exploration where innovation thrives due to the lack of established best practices. It’s during this period that you have bold experiments and diverse approaches. But as the industry matures and standards solidify, the opportunities for radical innovation goes down.
You can see this pattern in plenty of fields such as literature, music, video games, automobiles, smartphones, Youtube videos where the overall quality has improved, but the average products are more uniform (look how all the cars or smartphones look the same today, or how every new trend of Youtube or TikTok formats are quickly adopted).
As a side note, it’s even happening in sports. For instance, the introduction of analytics in basketball has revolutionized the game, but since most teams have now adopted these new “best practices” most teams play the same way now.
The SaaS standardization
Looking at the SaaS industry the past fifteen years, it's clear that this sector has undergone a similar transition from scarcity to abundance: Most businesses could choose from a couple of SaaS products fifteen years ago to thousands today. SaaS was a scarce type of software product at the beginning of the 2010s but it’s now available in abundance. And hence they look all the same.
Higher quality but more uniform SaaS products: Today's average SaaS software is far more user-friendly than it was fifteen years ago because a larger number of founders have iterated on SaaS products. However, this has also led to a uniformity in appearance and functionality. For example see how product onboardings, dashboards or user invite processes look similar across most SaaS today.
The standardization of Sales and Marketing: The patterns of innovation and standardization have also affected how SaaS products are marketed and sold. As founders and marketing teams have refined their strategies, many have become widely copied and adopted. This is why inbound marketing or SEO are much harder today than a couple of years ago for example.
Like many other industries, SaaS software has also undergone this transition from scarcity to abundance which lead to a standardization of product and sales & marketing.
Consequences for SaaS founders
For founders of incremental SaaS, this has several implications (if you are building a radical SaaS this doesn’t necessarily apply):
It’s extremely hard to build a product that stands out at early stage. Because there are now plenty of best practices and playbooks available for product development it’s super hard to create a wow effect with a SaaS product.
You need to be very good in both Product and Marketing from the get to go: To succeed in growing an incremental SaaS business, founders need to excel in both product development and marketing. In the current landscape, having strength in just one of these areas is often not enough. A good illustration of that is that most of the successful indie SaaS makers have recognized the importance of marketing and actively prioritize it. Those who still think that building a great product is enough (build a great product and customers will come) often find themselves struggling to attract customers.
It’s a grind: Achieving growth up to the $1M ARR mark is a grind for most incremental SaaS businesses. Since product and marketing strategies have become more uniform, the real differentiators are the things which are harder to standardize such as talent acquisition, building a great company culture, a brand that resonates with customers etc. And these take a long time to establish and are much more uncertain.
Beyond the MVP Era: The age of the minimum viable product (MVP) seems to be behind us for some time now (in incremental categories). Users expect polished and fully functional products from day one. Catching their attention with MVPs and raw SaaS products is becoming increasingly difficult, pushing founders to deliver more refined and complete products, which takes time.