What Is SaaS? (Explained in 5 Minutes)

[00:00] What is SaaS?

[00:01] Software as a Service?

[00:03] I'm going to take 5 minutes to break it

[00:05] down, make it super simple for you

[00:07] so that you can finally understand

[00:09] all these people

[00:10] talking about SaaS, SaaS, SaaS.

[00:13] Why is it so much fun

[00:14] and why does it matter for you?

[00:15] I've been actually building

[00:16] software companies for 25 years.

[00:19] I started off writing code

[00:21] way before we called it SaaS.

[00:23] It was called

[00:24] essentially ‘the Internet’,

[00:25] and we were building applications

[00:26] on top of the Internet.

[00:27] And since then,

[00:28] I've personally built five companies.

[00:31] I've exited three.

[00:32] Two of them were venture

[00:34] backed out of Silicon Valley.

[00:35] I've invested in 50

[00:36] plus and I've helped literally

[00:38] thousands of software CEOs

[00:41] start,

[00:42] grow and exit their software company.

[00:45] But I want to teach it for you

[00:47] so that you understand

[00:48] when other people are like,

[00:49] Yeah, I think we should work on

[00:50] this SaaS idea,

[00:51] you can understand what it is

[00:52] and what it's not and help

[00:54] you explain it to other people.

[00:55] So let's get into it.

[00:58] Number

[00:58] one, is it’s subscription based.

[01:00] It means that you pay every month

[01:03] to get access to the technology.

[01:05] Think about all the tools

[01:06] maybe you pay for like, you know, iTunes

[01:10] or Spotify or Netflix.

[01:12] These are consumer

[01:13] versions of subscriptions.

[01:16] But in the business world, B2B,

[01:20] these are

[01:20] the tools that all the businesses use

[01:22] to run their company.

[01:23] It's the accounting

[01:24] software, it's the merchant account,

[01:26] it's the project management

[01:28] software, the spreadsheet software,

[01:30] the workflow tools, the email

[01:32] marketing tools.

[01:32] All of these are things that people,

[01:35] businesses pay for these applications

[01:37] every month on a subscription basis.

[01:41] Number two is that it's hosted remotely.

[01:44] Now, I know for some of you guys

[01:45] you’re like,

[01:45] what do you mean it's hosted remotely?

[01:47] Where else would it be hosted?

[01:48] When I first started writing software

[01:51] back in the day, back in my day,

[01:53] I used to spend

[01:53] a lot of time in server rooms

[01:55] because the way software was

[01:57] deployed, was literally on CDs

[02:00] and you would take those CDs

[02:02] and you'd go into the server room

[02:03] and you'd freeze your bum off,

[02:05] because the computer's run better

[02:06] and it's more efficient

[02:07] and you would just like load

[02:09] all the software onto these computers

[02:11] and then people would usually access

[02:14] the software

[02:15] through other terminal clients

[02:17] or other software

[02:18] on their computer through the network.

[02:20] It wasn't hosted remotely up in “the

[02:24] cloud” right?

[02:25] Which is what

[02:26] a lot of people do today, is that

[02:28] it is not installed on your servers,

[02:30] it's installed in the company

[02:31] servers and it’s

[02:32] usually right now installed on Amazon.

[02:35] And that way it doesn't require

[02:37] a major investment in hardware

[02:39] for you to buy software,

[02:40] to deploy it, to use it.

[02:42] Number three

[02:43] is that it's accessible

[02:44] through the Internet.

[02:45] Now I know,

[02:46] some of you guys are like, well,

[02:46] how else would you access it?

[02:49] Truth was, is back in the day

[02:50] you would access the software

[02:53] through the local network.

[02:54] It was abnormal for a business

[02:56] to host their information

[02:57] on somebody else's servers.

[02:59] It wasn't

[03:00] till this cool company called Salesforce

[03:02] that came along and with their marketing

[03:05] and tens of millions of dollars of spend,

[03:08] convinced the business community

[03:11] that it is safe and okay for you

[03:15] to upload your sensitive customer

[03:17] information to their system

[03:20] and allow your team

[03:22] to access it through the Internet,

[03:24] through a traditional

[03:26] login, a username and password.

[03:29] Prior to that, there was VPNs

[03:30] required and deep security

[03:32] and all these other things,

[03:33] and it was just a no go for businesses

[03:37] to trust their proprietary customer

[03:40] data on somebody else's system.

[03:42] And now this is how we do it.

[03:44] Pretty much every one of the SaaS

[03:46] tools out there, you just log in

[03:49] using a username and password

[03:50] and you're good to go.

[03:51] Number four is it's scalable.

[03:54] Here's why I love this one.

[03:56] Scalable means that it doesn't

[03:58] matter if you start off with one account

[04:01] and it's just you

[04:02] and you're

[04:02] using this software as a service

[04:04] or you have 10,000

[04:07] team members that decide, you know what,

[04:09] we're going to move everything

[04:11] from email over to Slack, right?

[04:14] Or whatever it is.

[04:15] You're going to move

[04:15] all your project management

[04:16] from one software to this other software,

[04:19] and you can literally just invite

[04:21] everybody through a link

[04:22] and they all register

[04:24] and they start using this new product.

[04:26] All SaaS companies

[04:27] have an auto scalable feature

[04:30] that it doesn't matter

[04:31] if you're one or 10,000,

[04:33] it will spin up the servers,

[04:35] it will spin up

[04:36] the databases,

[04:37] it will spin up

[04:37] the backend infrastructure

[04:39] so that it can keep up to the demand.

[04:42] And that makes it powerful

[04:44] because prior to SaaS,

[04:46] you'd have to go and buy

[04:47] a physical server,

[04:48] go install the software,

[04:50] add it to the network

[04:51] and try to configure it for it

[04:53] to be load balanced.

[04:54] Now you think of none of that.

[04:56] You just send invites to your team

[04:58] to use the product

[04:59] and you don't even think twice

[05:01] that it's

[05:01] going to be available

[05:03] or fast once they sign up.

[05:05] Number five is regular updates.

[05:07] This is probably the coolest part

[05:09] that a lot of people take for granted.

[05:11] SaaS is neat

[05:12] because the code is managed on

[05:14] somebody else's server

[05:16] and when there's updates to the code

[05:19] you don't have to do anything.

[05:20] It literally new versions just happen

[05:23] to get released or you log in and there's

[05:25] a little notification window

[05:26] that says like, alert,

[05:28] new software update

[05:29] and it tells you about the two

[05:30] or three new features

[05:31] and you're like,

[05:31] very cool,

[05:32] take a tour

[05:33] or accept the changes or whatever,

[05:35] and then the software just gets better.

[05:37] Prior to it

[05:38] being hosted, and being software

[05:40] as a service,

[05:41] you used to have to get the update on CD

[05:44] and then literally spend more time

[05:46] freezing your bum off in a server room

[05:48] and updating the code

[05:49] and then letting everybody know how

[05:51] all those changes

[05:52] were going to affect their workflow

[05:54] so that they didn't

[05:55] get lost in their ability

[05:56] to keep doing their work

[05:58] at their computer.

[05:59] And it was just this big process

[06:01] of change management.

[06:02] With SaaS,

[06:02] the software just gets updated,

[06:04] it gets better.

[06:05] It's clearly communicated.

[06:07] You don't have to worry about CDs

[06:09] and updates and all this stuff.

[06:11] The companies take care of it

[06:12] so that like as the years progress,

[06:15] you keep paying the same amount of money

[06:17] every month, yet

[06:18] the developers

[06:19] keep making the code better.

[06:21] So that it’s actually an incredible deal

[06:23] because you get new innovation

[06:25] and new updates and new capabilities

[06:28] that you didn't have to pay for,

[06:29] and it's just part of the subscription.

[06:31] So there you go, a five minute

[06:33] breakdown of

[06:34] what is Software as a Service, SaaS.

[06:37] It makes it easy for businesses

[06:39] to pay monthly, hosted in the cloud,

[06:41] get updates

[06:42] without having to deal

[06:43] with anything themselves.

[06:45] It's scalable.

[06:46] That's what it's about.

[06:47] And it's a powerful way for you

[06:49] not only to build software,

[06:51] but also consume it

[06:52] so that you don't have to spend

[06:53] a ton of money

[06:54] upfront and get very powerful tools

[06:57] and workflows to help you in your life.

[07:00] If you like this video,

[07:01] be sure to check out

[07:01] other videos

[07:02] I've done on SaaS, on writing code,

[07:04] on building companies, etc.

[07:06] They're all available for you.

[07:08] I hope this finds you awesome and

[07:09] I’ll see you next week.