The SaaSpocalypse is a rebuild problem

Somewhere in your industry there is a software product that everybody uses and nobody likes. It was probably founded between 2010 and 2016. It raised a lot of money, bought some competitors, was sold to a private equity firm, and now shows up on every invoice as a line item that goes up by eight percent a year.

We have started calling what is about to happen to that product the SaaSpocalypse.

How the products got here

The 2010s were a good time to build business software. Cloud hosting was cheap, venture money was cheaper, and the playbook was simple: pick a vertical, build the system of record, sell it on a subscription, and add features until the competition ran out of breath.

It worked. It also produced a very specific kind of product. Fifteen years of feature requests from a thousand different customers, all bolted onto a codebase designed for a hundred. Three acquisitions stitched together behind a single login. An engineering team that has grown to eighty people and ships less than it did at eight, because every change touches something nobody understands any more.

Ask the customers what they think and you hear the same thing everywhere. It is slow. It does far more than we need. The one feature we actually asked for has been on the roadmap since 2022. The account manager is lovely.

Paying for a hundred, using fifteen

The second problem follows from the first. To justify the valuation, these products had to serve everyone: every size of customer, every sub-sector, every geography. So they did, and the result is software where the average customer uses somewhere around fifteen percent of what they pay for.

That was tolerable when the alternative was building your own, and building your own meant a two-year project and a team you did not have. It is not tolerable now. The cost of building software that does exactly what one business needs, and nothing else, has fallen by an order of magnitude. Once that is true, paying for the other eighty-five percent stops looking like the price of convenience and starts looking like a tax.

What happens next

This is already happening in several sectors we work in.

The people who understand the customers best are the sales team, the implementation consultants and the domain experts who have spent a decade listening to what the industry needs. They know the product's flaws better than anyone, because they apologise for them for a living.

Those people can now leave, team up with a small studio, and have a focused, modern replacement in front of their old customers within months. They build it for the fifteen percent people use, with AI doing the work the old product only recorded. They take the relationships with them. They know exactly which conversations to have first.

The incumbent's real competitor is its own top performers with a laptop and a short list of phone numbers.

The two options

If you own one of these products, or you sit on the board of a fund that does, there are two ways this goes.

Rebuild, fast. Put a modern core in front of customers within a quarter, keep the data and the contracts, and drop the eighty-five percent of features that exist only because someone once asked. Done properly this is a smaller project than the incumbent engineering team will tell you, because they are measuring it against how long things take them.

Wait, and watch it happen to you. The sales team leaves. The domain experts leave. Within eighteen months a leaner product with better margins and the industry's best relationships is taking your renewals one at a time, and the asset you paid a multiple for is worth a fraction of it.

There is a version of the first option that most funds have not considered, which is to back the rebuild before someone else does. The people who would leave to build the replacement can instead build it for you. Same speed, same focus, and you keep the customer base.

Where we come in

This is the work we set IRLY up to do. A small team of senior engineers orchestrating AI can rebuild a product's core in the time it used to take to write the requirements document. We have done the discovery on enough of these products to know where the fifteen percent lives, and we are comfortable in the room with the fund, the management team and the customers who are wondering why the roadmap has not moved.

If you own a product like the one at the top of this article, someone will rebuild it. Whether you still own the result depends on whether you commission that rebuild or watch it happen.