Physical Product Renaissance

What rebuilds DTC?

This is a positive newsletter.

Sometimes I am negative about the space.
But I see a bright future ahead of us.
Why?

First lets get a little negative.

SAAS is Dead.

When Yopto came out, I think it was $500 a month.
Then they needed to move up market, capture more value, please shareholders and show revenue growth.

Now you have $12,000 a month A.I. POWERED REVIEWS.

Its not just Yopto. Its all SAAS.
They start off as helpful cheap tools to deliver value in a new way and end up being black holes of money.

Thats where you get stuff like:
- Charging for page views
- Charging for users
- charging for features that used to be free
- price increases every year

SAAS revenue growth is often just exploiting the burden of switching.
So fuck them. They are not your friend.

“Your margin is my opportunity”

In comes the indie builders.
The solo coder who sees a market and hacks together a solution.
The okendos, the judge.mes, the whoever.

There ends up being endless, nearly identical options, all for a lot less.
They attack the price leader and compete away all value capture to the lowest level possible.

Thats capitalism in its purest form.
Delivering better features for less and less.

But then the indies become a little too big.
They want to do more, they raise money, they raise prices…

And the cycle repeats.

You arm the rebels so much that they storm the barracks.

Enter OpenAI
The “Netflixification” of software.

The future of openAI is a $20 a month subscription that will build you any tool you want.

”Please create a review software plugin that works with shopify”

“Now code it”

We are maybe 2 years away from that.

Then what the fuck happens?

While Yopto is charging $1,000 a month and Okendo is charging $500, openai will just make you a clone in 3 minutes.

And maybe it wont be that easy, someone still needs to submit it to shopify, add some design, etc.

But instead of having 30 review options, we will have 30,000.
The price falls from $500 to $5.

And this will happen to everything.

I do not see how startup SAAS survives.
I dont see how any of it is viable.
It stops being an investment class, a place to drive value and wealth.
All software becomes like music.

$9.99 a month from spotify.

“Just invest in the AI leaders”.
Nope. That will just be the largest players, the music studios.

AI will be won by: Apple, Amazon, Meta, Microsoft, Google.

Why is this a good thing?

SAAS is dead. But people still like stuff.
While SAAS is being destroyed people will still need Yeti water bottles.

Its the death of an industry and an investment vehicle.
But it isnt like this is new.

Renting movies, printing photos, pagers and typewriters.
All were once staples of the world, basically destroyed.
That is coming for most SAAS.

But what wont change?
People need to eat.
People like new stuff.

There will always be trends, holidays, and gifting.

Physical product innovation has actually been at a recent low.
Off the shelf shit from china, no one in an org knows how to design something.

they are all going out of biz.

But- if you prioritize new products, I think that can push you into the next growth wave coming.

The pendulum swings.
It is moving back in favor of the physical world.

Survive and enjoy the next 10 years.