---
title: 'What Is SaaS? (Explained in 5 Minutes)'
source: 'https://youtube.com/watch?v=UEHdYNXiIUU'
video_id: 'UEHdYNXiIUU'
date: 2026-06-19
duration_sec: 0
---

# What Is SaaS? (Explained in 5 Minutes)

> Source: [What Is SaaS? (Explained in 5 Minutes)](https://youtube.com/watch?v=UEHdYNXiIUU)

## Summary

This video provides a simple, five-minute breakdown of Software as a Service (SaaS). The speaker, who has 25 years of experience building software companies, explains the five key characteristics of SaaS: subscription-based, hosted remotely, accessible via the internet, scalable, and regularly updated. The goal is to help viewers understand what SaaS is and why it matters for both businesses and consumers.

### Key Points

- **Subscription Based** [0:58] — SaaS is paid for via a monthly subscription, similar to consumer services like Netflix or Spotify, but for business tools like accounting, project management, and email marketing software.
- **Hosted Remotely** [1:44] — The software is not installed on the user's local servers but is hosted on the provider's servers (often in the cloud, like Amazon Web Services), eliminating the need for hardware investment.
- **Accessible Through the Internet** [2:42] — Users access the software through the internet using a standard username and password, without needing a VPN or complex security setups, a shift pioneered by Salesforce.
- **Scalable** [3:54] — SaaS platforms are designed to automatically scale infrastructure (servers, databases) to handle any number of users, from one to 10,000, without manual intervention.
- **Regular Updates** [5:07] — Updates are managed by the provider and delivered automatically to users, often with a notification of new features. This contrasts with the old method of installing updates from CDs in a server room.

## Transcript

What is SaaS?
Software as a Service?
I'm going to take 5 minutes to break it
down, make it super simple for you
so that you can finally understand
all these people
talking about SaaS, SaaS, SaaS.
Why is it so much fun
and why does it matter for you?
I've been actually building
software companies for 25 years.
I started off writing code
way before we called it SaaS.
It was called
essentially ‘the Internet’,
and we were building applications
on top of the Internet.
And since then,
I've personally built five companies.
I've exited three.
Two of them were venture
backed out of Silicon Valley.
I've invested in 50
plus and I've helped literally
thousands of software CEOs
start,
grow and exit their software company.
But I want to teach it for you
so that you understand
when other people are like,
Yeah, I think we should work on
this SaaS idea,
you can understand what it is
and what it's not and help
you explain it to other people.
So let's get into it.
Number
one, is it’s subscription based.
It means that you pay every month
to get access to the technology.
Think about all the tools
maybe you pay for like, you know, iTunes
or Spotify or Netflix.
These are consumer
versions of subscriptions.
But in the business world, B2B,
these are
the tools that all the businesses use
to run their company.
It's the accounting
software, it's the merchant account,
it's the project management
software, the spreadsheet software,
the workflow tools, the email
marketing tools.
All of these are things that people,
businesses pay for these applications
every month on a subscription basis.
Number two is that it's hosted remotely.
Now, I know for some of you guys
you’re like,
what do you mean it's hosted remotely?
Where else would it be hosted?
When I first started writing software
back in the day, back in my day,
I used to spend
a lot of time in server rooms
because the way software was
deployed, was literally on CDs
and you would take those CDs
and you'd go into the server room
and you'd freeze your bum off,
because the computer's run better
and it's more efficient
and you would just like load
all the software onto these computers
and then people would usually access
the software
through other terminal clients
or other software
on their computer through the network.
It wasn't hosted remotely up in “the
cloud” right?
Which is what
a lot of people do today, is that
it is not installed on your servers,
it's installed in the company
servers and it’s
usually right now installed on Amazon.
And that way it doesn't require
a major investment in hardware
for you to buy software,
to deploy it, to use it.
Number three
is that it's accessible
through the Internet.
Now I know,
some of you guys are like, well,
how else would you access it?
Truth was, is back in the day
you would access the software
through the local network.
It was abnormal for a business
to host their information
on somebody else's servers.
It wasn't
till this cool company called Salesforce
that came along and with their marketing
and tens of millions of dollars of spend,
convinced the business community
that it is safe and okay for you
to upload your sensitive customer
information to their system
and allow your team
to access it through the Internet,
through a traditional
login, a username and password.
Prior to that, there was VPNs
required and deep security
and all these other things,
and it was just a no go for businesses
to trust their proprietary customer
data on somebody else's system.
And now this is how we do it.
Pretty much every one of the SaaS
tools out there, you just log in
using a username and password
and you're good to go.
Number four is it's scalable.
Here's why I love this one.
Scalable means that it doesn't
matter if you start off with one account
and it's just you
and you're
using this software as a service
or you have 10,000
team members that decide, you know what,
we're going to move everything
from email over to Slack, right?
Or whatever it is.
You're going to move
all your project management
from one software to this other software,
and you can literally just invite
everybody through a link
and they all register
and they start using this new product.
All SaaS companies
have an auto scalable feature
that it doesn't matter
if you're one or 10,000,
it will spin up the servers,
it will spin up
the databases,
it will spin up
the backend infrastructure
so that it can keep up to the demand.
And that makes it powerful
because prior to SaaS,
you'd have to go and buy
a physical server,
go install the software,
add it to the network
and try to configure it for it
to be load balanced.
Now you think of none of that.
You just send invites to your team
to use the product
and you don't even think twice
that it's
going to be available
or fast once they sign up.
Number five is regular updates.
This is probably the coolest part
that a lot of people take for granted.
SaaS is neat
because the code is managed on
somebody else's server
and when there's updates to the code
you don't have to do anything.
It literally new versions just happen
to get released or you log in and there's
a little notification window
that says like, alert,
new software update
and it tells you about the two
or three new features
and you're like,
very cool,
take a tour
or accept the changes or whatever,
and then the software just gets better.
Prior to it
being hosted, and being software
as a service,
you used to have to get the update on CD
and then literally spend more time
freezing your bum off in a server room
and updating the code
and then letting everybody know how
all those changes
were going to affect their workflow
so that they didn't
get lost in their ability
to keep doing their work
at their computer.
And it was just this big process
of change management.
With SaaS,
the software just gets updated,
it gets better.
It's clearly communicated.
You don't have to worry about CDs
and updates and all this stuff.
The companies take care of it
so that like as the years progress,
you keep paying the same amount of money
every month, yet
the developers
keep making the code better.
So that it’s actually an incredible deal
because you get new innovation
and new updates and new capabilities
that you didn't have to pay for,
and it's just part of the subscription.
So there you go, a five minute
breakdown of
what is Software as a Service, SaaS.
It makes it easy for businesses
to pay monthly, hosted in the cloud,
get updates
without having to deal
with anything themselves.
It's scalable.
That's what it's about.
And it's a powerful way for you
not only to build software,
but also consume it
so that you don't have to spend
a ton of money
upfront and get very powerful tools
and workflows to help you in your life.
If you like this video,
be sure to check out
other videos
I've done on SaaS, on writing code,
on building companies, etc.
They're all available for you.
I hope this finds you awesome and
I’ll see you next week.