I’m starting to think that SaaS itself might not be a business for me right now.

It seems like it burns cash at the start, stays cash flow negative for a while, and then makes money.

I don’t think I want that.

Where are we now then?

I had written another thing before that when we are operating a SaaS, we want to not have power customers like those who put a lot of strength.

We want power customers when we have products.

So productized service seems nice because if we somehow attract those power users, we can get a lot out of them.

See, the point is I am after SaaS in lieu of white labeling or product-based businesses because I do not have money for inventory or the legal things that come with maybe international shipping and all those things.

So, I have to try to make these digital things as close to those things as possible.

And I think the main problem here is of retention, LTV, and CAC.

So, to solve it, my way of thinking about it is to just productize the offering.

What that means is that instead of unlimited offer, you just provide access, right?

Cover each transaction’s margin in that transaction itself, unlike in SaaS where you try to recover your CAC over next n number of months.

This needs to be cash flow-based that, okay, take the product, give the cash, and the whole price of it.

And it should be such that we are okay even if it’s just a one-off thing.

Like, even if we don’t retain him, fuck him.

There are like a lot of people in the world.

The primary problem with most SaaS models is that you’re betting on retention.

Let’s say you spend $700 to acquire a customer and your monthly subscription is worth hundred dollars now you are essentially making a bet that this guy will stick around for the next seven months.

Otherwise if he leaves before seven months, you are going to incur a loss.

And that is essentially the bad thing about the SaaS model – you are betting that retention will lead to a lifetime value that is greater than CAC, which I believe is simply very naive.

The flip side to this model is that of just normal products where you recover your whole cost and the margins in a singleton transaction.

Like when you go to buy a biscuit, you pay the price, which includes the cost to get it till here and also the profit margin so each transaction is modular in nature because even if the customer doesn’t visit again, even if there is zero retention, we are still cool because we made our cut.

So I think we have to somehow think about how to make this SaaS model more like productized, where we can cover margin in each transaction where it is more cash flow based.

Like yeah, take the product give me the cash and we should be okay even if there is no retention.

After all, there are seven billion people in the world.

Basically my justification for this is that even if there is some SaaS company offering the same service for like $50 a month, I am going to charge $100 for like 2-5 outcomes only.

And that is all because of my belief in my targeting.

If with the software as a service they are getting 10 interviews because of their natural utilization, I’m going to charge like 50 for 2 interviews.

I saw a video where some person was charged 700% interest per annum on amount they borrowed and it was a legit thing.

It’s not even like some personal transaction.

It’s a company doing that to a person 700% interest.

It’s like the people out there are gullible enough to do anything as long as they think they need it so I simply cannot believe that you cannot sell something because there are other competitors who are doing it for cheap.

People out there in USA would be giving out loans at like single digit interest rates and somehow this company figured out a way that they can charge 700% interest to some person.

That should just motivate you to charge a bit more and try to find a better cohort of customers because what is this?

We cannot go on just under charging and not realizing the full potential.

Of course, if we are doing something to help out people, we can use coupon codes, but by not charging the full potential value that your product can fetch is just undercutting yourself.

If you do not prioritize cash flows, in future, your company might not exist.

So the primary takeaway for me is that if a lending company can charge 700% interest and someone is agreeing to it, almost any offering can be sold as long as you know how to find the right person.

Be more expensive than SaaS competitors offering same thing but cover your margins in single transactions

The primary challenge becomes how do you create digital products or softwares which lead into transactions that are modular and self-reliant and do not require any assistance from any other transaction to cover their margins. Of course, we can have promotions that sont cover their own margins but that’s a different topic. What we are after is digital transactions that are self-sufficient, containerized, and modular.