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Per-seat SaaS is only a wedge
The End of SaaS as God
Two years ago SaaS was God, and a 10x to 20x multiple on next twelve months of revenue was an iron law. That is not true at all now.
From Wedge to Moat
A per-seat product is perfectly fine as a first step. A company building one in 2026 had better hope it leaps to a moat around data, network effects, or something else.
The game has changed for founders, and the number one thing is to be more ambitious than ever. Chasing the path of the founders who came before no longer works.
Why did investors pay big multiples for SaaS?
Subscription revenue repeats each month, so it is easier to forecast than one-time sales. Software also costs little to deliver to each added customer, which gives it high gross margins. Investors paid for the predictability and for the chance that customers would expand their spending over time. Salesforce, founded in 1999, built its business on subscriptions priced per user, and its early marketing slogan was 'No Software'.
How do network effects build a moat?
A network effect means a product gets more valuable as more people use it. Robert Metcalfe, the Ethernet co-inventor, proposed around 1980 that a network's value grows with the square of its users. Telephones, marketplaces, and social networks follow the pattern. In 2006, Bob Briscoe, Andrew Odlyzko, and Benjamin Tilly argued in IEEE Spectrum that the square law overstates the value, and put it nearer n log n.
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