Remember the year 20… something? ‘14 or ‘16 or something, when subscriptions became mainstream and everyone was happy with them?
“Why the hell would I pay $699 for Photoshop when Sketch is $99/yr?”
Why buy X for [huge amount upfront] when I could buy [Y] subscription for [small amount that equals many years of X’s price].
Companies followed suit - the common advice started becoming:
- MRR is great
- Then you have ARR
- Then you have multiples, for ✨ when you sell ✨
- Or you can just think of it in terms or ARPU, CAC, LTV, etc. etc.
Fast-forward to 2023 (and even earlier, I’d argue): people are getting tired of subscriptions.
We’re headed towards subscription hell:
- 25 subscriptions, as a consumer
- Some refresh monthly, some refresh yearly
- 2 of them were cancelled but didn’t really cancel → contact customer support → “Help” button is hidden on an obscure page
- On another 3, you can’t find the unsubscribe button
- 1, that is very deep within subscription hell, requires you to call to unsubscribe
- Multiple yearly ones refresh at about the same time, making a big gap in your bank account
- Seeing your bank account slowly getting clawed by so many subscriptions is… depressing
We’re back at credit!
We’re back into not being able to put some money aside, because the TV + Car + House + etc. loan are slowly clawing into the few thousands you’re making! I thought we were over that…?
Not exactly. There’s this running meme now: “Evil doesn’t die, it reinvents itself”. Same here with credit and subscription hell.
Then we grow this resistance: when so many things are fighting to get us to subscribe to them, we think “No more!”.
But then we actually need some of them (they’re all “needed”, until we hit a recession). And we realise we now have a mental cost for every new subscription we add.
The problem? The mental cost of adding a $0.99/mo subscription is about the same as adding a $5/mo subscription. Funny enough, a B2B $100/mo subscription is easier sometimes.
What about from the founder’s perspective?
All founders are also consumers. I’ve talked above about the consumer’s perspective, but what about the founder?
Well, turns out, the magic wasn’t really magic for all.
Even for the heroes of the past:
1. MRR is virtual
Virtual, as in: it doesn’t exist. It’s just a metric in our head.
As with anything, there’s more happening than just what I present, but we like A → B explanations. I’ll do it anyway:
- MRR is insidious.
- It makes you project into the future - it makes you have expectations
- Expectancy is the mother of pain
- Many founders assume (and some are right! But few) that when someone subscribes…
- A. If it’s an unexperienced founder, they assume “the user won’t unsubscribe for a long time” (or even worse “they won’t unsubscribe!”)
- B. If it’s an experienced founder: “they’re going to stick for [add napkin math here] months”. That number changes so often across the lifespan of a product.
- Reality: There’s the curve of churn flatlining. Churn may hit at one point - and if it does, it flatlines the business — or kills it when marketing can’t bring in more new customers than the customers they’re losing, a few years later
- And that assumes the business is still existing in those “a few years later”. Big assumption! Not all survive.
2. We’re headed towards the “Minimising churn” hell
Just leaving this here:
And I will mention that more SaaS companies will follow suit — hopefully not to the same degree of shamelessness.
But even small, indie SaaS companies.
We’re headed towards the period of time in which anti-churn advice will become mainstream, as I keep seeing more and more churn-prevention B2B SaaS coming up.
It’s insidious too.
Great for business, bad for consumers - why play games of optimizing the metrics of NOT having someone leave? What is this, secret services developing interrogation techniques? Or just “startups that change the world for the better”?
3. Projections make you feel dumb later, if you’re not in a best case scenario
Another reality: while the founder is on the beach “sipping margaritas because MRR is at $X/mo”, the founder-from-3-years-later knows that… well… it wasn’t 100% the way they imagined it.
Dare I even say: it was dumb to have that false sense of security. (At least it feels dumb, in retrospect, when/if you get there).
The Good news is this! For a percentage of founders, this never happens, because “the paranoid survive”. And this is the keyword I want to push forward: survival.
A way out: cockroaches vs unicorns
Unicorns are for those who play the game of startup.
Cockroaches are for those who play the game of… enhancing their lives (+ those around them). 2 completely different things.
I find them disgusting too, don’t worry. But I admire their biological badass-ness the same way I do for Silverback Gorillas (wouldn’t stand anywhere near one though. Doesn’t change my admiration one bit).
I think people are getting really tired of subscriptions.
And cycles come and go.
Myself? What am I doing? I’ll be trying something new with my eSignature company I’m launching: selling Lifetime Deals (LTD)
A one-off, bigger charge. Because not all companies need to sell a subscription.
Most people (buyers) don’t need a subscription for an eSignature tool — unless you store a lot of documents! In which case, we do. But most people will be just fine with no subscription.
(I haven’t written a blog post as to why LTD look like a better option, rather just a page of upsides. If you’re curious and want to join me, check it out here).
If LTDs don’t work, I’ll try something else.
And I might even get back to subscriptions but… I’m getting really tired of them.
I’m not saying SaaS is dead - I wouldn’t even be able to prove that. What I’m saying is: I don’t think subscriptions are the “heavenly, great thing for both sides” that everyone is making it to be. No. Customers are only paying subscriptions because they have no other choice, when you sell your software in a subscription system. But it’s not because they’re so happy with it.
P.S: I expect any founder that made a successful business that hasn’t gone through what I described above to jump in the comments and explain how this is all wrong. Those voices will be louder.
Don’t get me wrong, I’ve had my small successes in SaaS too. I wish SaaS was for everyone like it was for us: successful. But it isn’t — I’ve seen both sides of the table. And the picture that was painted is not 100% accurate.
Let me be clear: I’m happy for you/us, successful founders. But this post isn’t addressed to you. It’s for all those that believed this is “the dream”. It isn’t. There is no dream, ever. Realism is needed.