Generative AI could change the SaaS pricing model — and that’s a good thing | Equity Podcast

08 Jul 2024 (4 months ago)

Vanessa Larco's Background and Generative AI's Impact on SAS Companies

Vanessa Larco, a General Partner at NEA, discusses her background and how she became a venture capitalist.
Larco explains why she believes generative AI could impact the pricing model of SAS (Software as a Service) companies.
She suggests that as generative AI increases efficiency, the need for multiple seats or licenses may decrease, leading to a challenge for SAS companies that rely on seat expansion for growth.
The per-seat pricing model for SaaS companies may not be sustainable in the future due to the rise of AI and the potential reduction in the number of employees at companies.

Consumption-based pricing, where customers are charged based on how much they use the software, is a more viable option.
Value-based pricing, where customers pay based on the value or outcomes they achieve from using the software, is the ultimate goal but can be challenging to implement.
Investors should not solely rely on recurring revenue as a metric for success but also consider factors such as expansion, growth, and margins.

Despite the recent decline in funding, the SaaS space remains attractive due to the constant evolution and opportunities for new entrants with fresh perspectives.
The rapid adoption of generative AI by incumbent companies poses challenges for startups in the space, but opportunities still exist for those that can create new categories and move faster than the incumbents.
The consumer space has outpaced the enterprise space in terms of growth, and consumer-focused startups have the potential for significant success.

Maria, the speaker, initially focused on enterprise software investing but gradually built a consumer portfolio due to compelling opportunities.
Maria's consumer investments have performed well, with faster growth compared to enterprise investments.
Maria is drawn to consumer startups that offer clear value to end-users and address pain points, such as Kindred for affordable stays and Greenlight for teaching financial literacy to kids.
Maria sees potential in fintech for the masses, particularly in tools that enable entrepreneurs and small businesses to generate wealth.
Maria believes there will be a next wave of fintech innovation beyond savings and trading, focusing on entrepreneurial ventures.
Maria has witnessed Robinhood's growth and impact as a disruptive force in the financial industry, reflecting the needs and preferences of millennials.

The podcast is produced by Teresa Lo Consolo, edited by Kell Bryce, and illustrated by Durban.
The speaker thanks the audience development team and Henry Pit, who manages TechCrunch audio products.
You can connect with Maria on LinkedIn, where she is actively engaged.
Becca and the speaker will return on Friday with a weekly news roundup.