A reaction to David Heinemeier Hansson's (DHH) fireside chat and ScaleUp&Up podcast.
David has talked about a lot of topics, and two most resonating ones are cloud exit and the once model. Theo has published a great video reaction on cloud exit, so let me focus on the once model only - and why I think he omits a lot of important aspects to portray the once model as a good business strategy.
First, let me acknowledge that I think the once model wraps not one paradigm change, but two actually, and this realization is important. First, it removes "aaS" from SaaS, leaving you with bare software, no service. Second, it replaces a monthly pricing with one-time payment. I will touch on both changes.
It's not really once
In the podcast, DHH talks about Adobe as a good example of the once model-driven successful company. However, in reality Adobe was a once-a-year fee company. I don't know any graphics designer who didn't upgrade to the newest version every time it got released, and Adobe knew that very well. It forced Adobe to innovate faster, probably, because each major release had to be that much better to persuade customers to purchase again, but I don't think it is honest to call that kind of pricing form the once model.
Funny enough, it's the same with Campfire - updates are provided for free only up to next major version.
It's not really cheap
Companies don't usually think in terms of total valuation, but rather in cash flow. It is difficult for company to purchase an expensive item, that's why loans, leasing and other financial tools exist. I dare to say that SaaS monthly pricing is another such tool, because it allows your company to skip the bank and purchase highly complex and expensive software as a loan really. With almost all risks moved to SaaS vendor. Monthly pricing is a financial leverage!
Back to Campfire. It is unbelievably cheap. I wonder if it is profitable even. But even if it is, the price doesn't reflect all the inputs other companies had to deliver or are constantly delivering, see next points.
It's not really all-in-one
Support. Let's look at Campfire again. It only includes bare bones support. While any SaaS keeps customer support up and running to satisfy customers every single month, the once model just skips that part altogether. You may argue that some customers want this support-excluded deal and you are probably right. I only argue that those products aren't batteries included and that is reflected in the price.
The same applies to running costs - the once model just offloads this to the customer. This may be just "running one command", but I rather think it means hiring a DevOps - not cheap, and not once. Not to mention that SaaS has ability to optimize running costs by centralizing it while self-hosted server most probably stays underutilized for the most of the time.
It's not really innovative
If you’ve used Slack or Teams, you already know how to chat with Campfire.
That's the problem! All the research towards UX was carried over by Slack, Teams, WhatsApp and who knows who else. I am not against copying good designs and user patterns. But I have a feeling that this particular product is cannibalizing on that, allowing it to lower its price. Again, it is actually good that we are able to optimize production, but in the world where everything is the once model we may have no innovation eventually!
It's not about production costs only. Take Spotify vs iTunes example. Before Spotify was a thing we purchased every song for 1 USD. Can you imagine that now? Spotify has revolutionalized the way we purchase music, solving music pirating in totally unexpected way. Not to mention that barriers to discover new authors are ridiculously low, almost non-existent today. I don't want to return to the once model in music.
It's not really protecting the business
I am old enough to remember cracking software that bypassed the once model software's license verification to use it for free. Adobe remembers it well, too. Can you fight this? I guess you can, partnering with OS producers, a big lawyer firm, or by other means - all costly, reflecting in the final price. SaaS, by running software under its own conditions, is avoiding this trap, allowing further price optimizations.
It's not really simple
Imagine you'd have to manage servers for every single software your company owns. If you don't employ a senior DevOps your hard-earned company might suddenly be offline, hacked or compromised in a thousand other ways. There is nothing simple in running servers, starting from physical aspects like material failure, up to security holes in (not updated) OS, or even the once model product itself. David himself is hard proponent of compressing abstractions, and in my point of view, cloud compresses servers, and SaaS compresses running software on those servers.
It's not really the same thing
Ultimately, you may think that using the once model is just a relic of the past. I don't know. Maybe it is a pendulum swinging back, but maybe it is a model long-overcome. Only time will tell, and I want to thank David for doing it, because it is to the benefit of us all when businesses challenge standards.
So the once model vs SaaS? Let's just remember that we cannot compare apples to oranges.
Trivia: I always enjoy listening to someone who is highly philosophical, an art I don't see often in these times.
Fingers crossed, David! 🤞
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