Apparently Fred Wilson has been telling this fantastic parable for years, but just recently published it on his blog with an enhanced alternate ending:
The gist is very simple, in Fred’s own words: “This story is designed to illustrate the fact that software alone is a commodity. There is nothing stopping anyone from copying the feature set, making it better, cheaper, and faster. And they will do that.”
In particular, Fred is making a case for software companies who are taking advantage of a network effect to create a defensible competitive advantage.
When people talk about utilizing a SaaS (Software-as-a-Service) business model, they often refer to the revenue model (subscription) and delivery model (cloud vs. on-prem). But if you’re only thinking about these two aspects, you’re not building SaaS, you’re building SaaC – Software-as-a-Commodity.
Depending on the problem your product is meant to solve, a SaaS business model can put you in a better position to pull certain defensible differentiation levers and not others. But either way, those levers are not going to pull themselves…
So what are you building? SaaS or SaaC?