SaaS Subscriptions

Author

Henry Head
February 13, 2025

On Inflation?

Happy Thursday. Just after we brought out the “mission accomplished” banner on inflation, the U.S. Consumer Price Index rose an annual 3% in January, likely delaying any expected Fed rate cuts. On top of this, Chevron and JPMorgan both announced layoffs (cutting over 9,000 jobs), which comes on the heels of Meta’s layoffs.

What’s that mean for venture: Capital is likely to remain expensive, which might depress VC fundraising. Startups should prepare for extended funding timelines, focus on profitability earlier…if they were not already.

While economic uncertainty can slow VC funding, downturns have produced some of the best startups (like Airbnb, 2008) as top talent enters the market. With skilled workers seeking new opportunities, we might see more startups, and startups will have a chance to hire experienced talent.

Community Spotlight + Toolbox

One of my favorite things about sending out Pitch Club is seeing members share what they're building, along with helpful tips and tools.

Pitch Club member and Techstars founder Sukhpal Saini is building Engyne.ai, a platform that helps you turn your knowledge into influence on LinkedIn. While working on Engyne, Sukhpal found himself creating a lot of LinkedIn carousels (those scrollable posts), which aren’t the easiest to design. So, he built a Canva tool to simplify the process:

Carousel Studio lets you create LinkedIn carousels directly in Canva in <5 mins with AI. 

How to use

  • Pick a topic

  • Click “Generate” and it will create a 4-slide carousel perfect for Linkedin for you

  • Just edit & post!

It’s free, so if you are building a personal brand on Linkedin or want to play around on Canva, I highly recommend.

Field Notes - Subscriptions are expensive and here to stay

https://once.com/ - is an interesting company/concept I came across recently. The company’s founding letter that remains on the site rails against the rise of the subscription model of SaaS products and the lack of ownership over software we rely on. A trend that has dominated the software business model the past 10 years.

❝

[Software is] not owned, but rented. Buying it enters you into a perpetual landlord–tenant agreement. Every month you pay for essentially the same thing you had last month. And if you stop paying, the software stops working. Boom, you’re evicted.

Jason Fried

Once is Fried’s response, a company to buy software and own it…like the good old days (though there are only two products). It is a great concept, and Fried is right that the current model is extremely profitable for software makers, while not adding much value to the consumer. He also claims that subscription model’s grip on us will slip. I think he is, sadly, not just wrong, but that we are about to enter a even more SaaSified (trademarked term) subscription era, this time targeted directly at end consumers.

This is the inevitable product of “intelligence age”. Startups are building, and we are adopting, AI native products, which are computationally expensive. We could hope that companies will adopt usage based models, but subscription models offer companies more predictable revenue, obfuscate their AI costs, and are likely more profitable.

This means subscriptions are not only here to stay, but are about to become “streaming services after cable” but for tech enthusiasts.

Unless you plan to buy an extremely beefy computer, opensource/build your AI chatbot locally (the survivalist version of AI?), prepare for an increased “monthly AI budget”.

SIGNALS

(sorry, Musk is all over my feed these days)

  • Musk’s X paid Trump $10M to settle his banning lawsuit….which seems, friendly.

  • Musk also gathered funds to submit a $97.4B bid for control of the OpenAI non-profit board. Sama rebuffed the offer, which makes sense since OpenAI is reportedly in talks to raise $40 billion at a value of $260-300 billion.

  • Founders Fund is reported to have raised $3 billion for their third growth fund.

  • OpenAI released their product map, aiming to simplify their model offering and indicated GPT5 is “week/months” away.

Jobs in Venture

  • Chief of Staff: Volt Capital, NYC

  • Impact Investment Analyst: PureFuel, NYC (link)

Weekly Wit

“All overnight success takes about 10 years”

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