SaaS Death Narrative vs Reality: What Actually Works in 2025

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Read time: 5 minutes.

Welcome to the 158th edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 8,000+ founders, operators, and leaders from businesses such as Shopify, Google, Hubspot, Zoho, Freshworks, Servcorp, Zomato, Razorpay and Zoom.

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Last week, a viral Reddit post declared, "SaaS is already dead but no one wants to admit it." 400+ upvotes, 227 comments, and a flood of founders nodding along like they've discovered some profound truth.

Here's what they got wrong.

"SaaS Is Dead" Argument (And Why It's Wrong)

Doom narrative:

• Every SaaS feature gets copied within months

• CAC has exploded while LTV has flatlined

• AI will replace all software with agents

• The market is oversaturated with identical solutions

The reality from my CXO work:
These aren't SaaS problems, they're operator problems. Bad founders blame the model instead of fixing their execution.

[1] What's Actually Working in 2025

Vertical SaaS is thriving:

• Industry-specific solutions command 3x higher pricing than horizontal tools

• Vertical SaaS companies average 40% higher retention rates

• One of my advisory portfolio companies: 127% NDR by solving one problem deeply vs many problems poorly

AI integration (not replacement) drives growth:

• SaaS companies embedding AI in workflows see 23% higher activation rates

• AI-enhanced features reduce churn by 18% when implemented correctly

Community-led distribution beats traditional marketing:

• User communities drive 31% lower CAC

• Peer recommendations convert 4x higher than vendor demos

• Founders building in public see 2.3x faster growth than in stealth mode

[2] Why Most SaaS Companies Are Failing (It's Not the Model)

They're competing on features, not outcomes:

• Building "me-too" products instead of solving unique problems

• 80% of SaaS features go unused, yet teams keep adding more

• Winners focus on customer success metrics, not feature parity

They're optimising for vanity, not value:

• Chasing MRR growth instead of unit economics

• Prioritising new logos over expansion revenue

• Ignoring retention until churn destroys their math

They lack operational discipline:

• No clear ICP or value proposition

• Leaky funnels disguised as "growth experiments"

• Founder bottlenecks killing team velocity

[3] SaaS Companies That Are Winning

They specialise ruthlessly:

• Own a specific use case, industry, or workflow completely

• Build switching costs through data, integrations, or network effects

• Price on value delivered, not competitor benchmarks

They optimise for retention first:

• Customer success drives expansion, not just satisfaction

• Product roadmaps based on usage data, not feature requests

• Time-to-value measured in hours, not weeks

They scale operations, not just revenue:

• RevOps systems that predict problems before they happen

• Delegation frameworks that remove founder bottlenecks

• Unit economics that improve with scale

[4] Real Test: What I See in Turnarounds

Dying SaaS companies I work with:

• Generic positioning: "We're like X but for Y"

• Founder-dependent everything: sales, product, customer success

• Growth at any cost: burning cash without improving metrics

The ones that survive and thrive:

• Clear value prop: "We solve [specific problem] for [specific customer]"

• Systems-driven growth: predictable, repeatable, scalable

• Profitable unit economics: every dollar spent returns more than a dollar

Bottom Line

SaaS isn't dead. Lazy thinking is.

The model works when operators execute with discipline. Vertical focus, operational excellence, and customer obsession still win.

Companies declaring "SaaS is dead" are usually the ones doing it wrong: competing on price instead of value, features instead of outcomes, growth instead of sustainability.

Opportunity has never been bigger for founders who understand the difference.

Stop blaming the model. Start building better operations.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria