June 2, 2020

🛠️ Trends #0017 — XaaS: Anything as a Service

dru_riley

🔍 Problem

Some things require a human touch.

Property management, podcast editing and website maintenance are problems with solutions that have not been automated.

💡 Solution

Anything as a Service describes a service that solves a recurring problem with a fixed scope and fixed price.

🏁 Players

XaaS Types

XaaS Examples

XaaS Marketplaces

🔮 Predictions

  • There will be more XaaS marketplaces. Mentors use MentorPass and MentorCruise. Fitness studios use ClassPass and FitReserve. Will ClassPass for graphic designers emerge?
  • The best XaaS companies will not use marketplaces. They'll own their own distribution. See opportunity #7 in Trends #0013 --- Online Courses to understand why this matters. Skillshare vs Podia

☁️ Opportunities

😠 Haters

"XaaS has lower margins than SaaS."
There's no free lunch. XaaS is faster to revenue but comes with higher marginal costs than SaaS. All else equal, would you prefer XaaS or consulting?

Anything as a Service means Platform-as-a-Service, Infrastructure-as-a-Service and Data-as-a-Service. Not lawn care, massages and bookkeeping."
Anything means anything. For this report, I narrowed the scope to anything except for software and one-time services. Recurring productized services.

"You can't make money with a white-label service like WP Buffs."
Retailers sell the same products. What's the differentiator? Service. Convenience. You can add value to standardized products.

"Some of these services will be automated in the future."
The purpose of this report is to identify opportunities right now. Look at what's not going to change if you want to play long term games.

"Atrium didn't work out."
Atrium failed as a venture play. Maybe the XaaS model is not venture scale. They tried to go fully automated towards the end but it was too late. Bench raised $49.1M and the jury is still out.

"The marketplace model won't work for all XaaS."
Marketplaces* may not *work for "sticky" services like bookkeeping and property management. Some services have lower switching costs. ClassPass for copywriters?

🔗 Links

  1. Growing a Productized Service from $0 to $50,000/month --- Robin Vander Heyden wrote a book (in 24 hours) about how he helped build ManyPixels.
  2. Offering X as a Service --- Ed Gandia explains how to find out what your clients need on a regular basis.
  3. The Ladders of Wealth Creation --- Nathan Barry describes the major types of income as time for moneyyour own service businessproductized services and selling products. Check out The Stairstep Approach to Bootstrapping by Rob Walling.
  4. From Productized Service to SaaS --- Patrick McKenzie makes a great case for starting a productized service before a SaaS. Quotable moment: "Turn a repeatable outcome into a repeatable income."

Thoughts?

Always trying to make these better.

Any thoughts? Feedback?

Want more?

🧰 Growth Tools
📖 Open Startups
💬 Paid Communities
🍎 Online Courses
💰 Micro Private Equity
💌 Paid Newsletters
🦄 Startup Studios
🌐 Virtual Meetups
🏋️ Remote Fitness
🧱 No Code
🥾 Bootstrap Funds
💸 Income Share Agreements
🎙️ Podcast Memberships
🍳 Cloud Kitchens

You can get these reports at 👉 Trends.vc

  1. 4

    Another great breakdown @dru_riley. I think integrating the 'human touch' is a competitive advantage that many of us need in order to gain traction in early stage product building.

    1. 4

      Agreed. Thinking of Superhuman's concierge service

      1. 3

        i experienced it first-hand... 3 years ago!

        https://john.do/superhuman-email/

        1. 3

          Did you stay with Superhuman?

          I really disliked the whole concierge thing, and quit it after a few weeks.

          1. 2

            nope. i didn't like it at all. i promised rahul that i'd give it a serious try and i did... but, i couldn't move on from gmail.

            i made a good decision though: https://john.do/ethical-trajectory/

            i don't like those things... 😬

  2. 4

    CTO as a service - I'd love to offer this to small businesses who don't have the budget or need a full time person but still need IT and InfoSec leadership.

    Analysis as a service (AaaS) - Lakebed is now offering a "data concierge" to small businesses who can benefit from a dashboard or analysis or all data in one place but who don't need a full-time employee.

    1. 2

      Hey Simon. Great additions!

    2. 1

      I can tell for sure that there is a significant demand for CTO out there
      Everyone looking for a CTO partner

      However, until now I still didn’t find one good reason for someone to become a CTO for shares without salary (that what most people offering)

      And if someone just looking for someone to code he can go to a program warehouse )

    3. 1

      I think you just invented consulting :).

      But seriously I'm seeing more and more of the need for this and I know a few people that do CTO or tech lead consulting and quietly make FAAMG money. This is a huge market.

      1. 1

        Yeah, I like the idea of being CTO for multiple small businesses because I find they are often grateful for help and it allows you to pick & choose the good customers rather than ending up with one bad employer. I just want to get Lakebed to a good place first so I don't divide my time too much. I also believe it is challenging to build & grow a consulting practice during a global pandemic lockdown and civil rights curfews.

  3. 2

    i've heard of community as a service but i immediately was repulsed by the idea... except, it's happening everywhere... there are "full service agencies" that manage your business' community for you... which feels so weird.

    ¯\(ツ)

    1. 2

      Yeah that just seems counter intuitive

      1. 2

        but, apparently there's enough demand... i'm not entirely poo-pooing the idea... because clearly there's a business here.

        just curious.

        1. 1

          Yeah I can see that side eof it.

    2. 2

      Think I read about that in @rosiesherry newsletter. I see what you mean @8bit

      Wondering what goes into the thinking behind hiring a community manager versus an agency?

      1. 1

        i'd really like to understand this because... i understand the need... eventually... but, it really strikes me when early-stage founders / project creators "outsource" their community-building workflows so early in the process.

        how are they getting real feedback from their users/customers/community members if they aren't really talking with them?

        🤔

        1. 2

          Yep 👍. Done too early, it’s a lost opportunity for feedback.

          1. 1

            true dat.

            (that's my attempt at like... high-fiving you through the internet... but... 🤷🏻‍♂️).

            lol.

            1. 2

              😂

  4. 2

    Great stuff. I'd add "Insurance" to your list of players.

    1. 1

      Interesting. Could you tell me more?

      1. 1

        In most insurance scenarios there is significant information asymmetry. This creates demand for an "unbiased" third party service provider (agent/broker) to help the consumer make confident decisions.

        Perhaps the broader category is "broker/agent" which applies to instances where information asymmetry exists (real estate, insurance, etc).

        Example: You may recall Zenefits from a few years ago. Their original business model (which got them into some trouble) was acting as a XaaS provider in the group health insurance space.

        1. 2

          I'd have to take a look at Zenefits. Thinking of XaaS as recurring productized services.

          1. 1

            I'm thinking about it the same way.

            I see LegUp Health (what I'm working on now) and Zenefits (as it was originally) as a productized service.

            The only difference is that the client pays a recurring fee to the health insurance company and the health insurance company gives that to the broker / agent on the back end. (Though, I do plan to charge the client directly for a premium offering down the road at LegUp Health.)

            Let me know if I'm thinking about productized services the wrong way. That's how I've been talking about LegUp Health since Feb 2020 when I started it. If I'm using the term incorrectly, well... that's embarrassing. 😅

            1. 1

              https://fs.blog/2015/01/richard-feynman-knowing-something/

              No need for embarrassment. ☝️That’s a good piece on why terms don't matter. Understanding does.

              That indirect recurring model reminds me of Upwork Plus. They strapped a SaaS offering on their marketplace.

              Haven't seen that a lot. Amazon Prime is another example. Not software as a service but subscription benefits on top of a marketplace.

              1. 1

                "indirect recurring model" - I like this. Thanks.

              2. 1

                Thanks. Shane Parrish is my hero.

  5. 1

    Just bought http://mentorasaservice.com/, waiting for it to redirect 😈

  6. 1

    Fantastic post. Maybe even the sectors that currently need a human touch are (partially) replaced by AI in the future. Not that I wished that, but development is rapid

  7. 1

    Thank you for brining the haters section back 🙏

  8. 1

    I think my other company, GetFed is XaaS. Would you agree?

    1. 1

      How do you get paid?

      1. 1

        12.5% of each transaction.

        1. 1

          Managed Ads are based on N% of ad spend.

          Do you have a subscription plan?

          (Note: Don’t think it matters though. A good biz is a good biz.)