AI will define the third generation of SaaS
I believe in 2017 we will start to see the clear emergence of the third generation of SaaS companies.
The first (c 2000-2010) generation was defined by deploying software in the cloud and making it accessible via a web browser. It was enough that these products were easy to deploy, you could pay as you go and were available from wherever you were.
The best known companies from the first generation are Salesforce and Netsuite. Salesforce is the undisputed market leader in SaaS. But I would argue its core CRM application is still doing so well because of the power of its platform and integrations rather than the product itself, which feels very dated.
The second (c 2010-2015) generation focused much more on user experience. UX became a recognised term and key battleground in the increasingly competitive SaaS marketplace.
Start-ups came to realise that their applications needed to work as well on mobile devices as on PC’s. But also that their products needed to be intuitive and ‘lovable’ if they were going to generate the levels of engagement, virality and differentiation needed to be one of the leaders. Functionality was no longer good enough in itself.
I would put Zendesk, Hubspot and Box as three of the leaders in the second generation.
The third (c 2016 – ) generation is characterised by AI. How will start-ups leverage AI to turn data into meaningful value for their customers? We started to see the early signs of this during 2016 and I think it will be further consolidated this year. The future potential is extraordinary as software learns to ‘think’ for itself.
This was certainly the rationale behind Microsoft’s mega acquisition of LinkedIn. You can see a future whereby Microsoft Dynamics CRM platform is enhanced by the LinkedIn data providing sales managers, for example, with further insight into the decision maker they are selling into.
Overtime AI would get better and better at identifying similar opportunities and people to approach based on historical sales data. To have all this insight baked into the CRM software and getting smarter over time is very powerful.
It will be fascinating to see this new generation of SaaS companies emerging and indeed what a true ‘AI first’ SaaS company even looks like. It will also be interesting to see how the older SaaS companies respond and stay relevant. History would suggest that the old guard will struggle to retrofit the new technology and that new winners will emerge.
At Notion we’re very focused on and also excited about backing some of these emerging companies.
This blog was first published on www.joswhite.com and the original article can be found here.