The Intersection of "コト消費" and the Future of Vertical SaaS

The Intersection of "コト消費" and the Future of Vertical SaaS

In today's rapidly evolving business landscape, it is crucial for companies to understand the changing dynamics of consumer behavior and the impact of emerging technologies on various industries. Two seemingly unrelated topics, "コト消費" (Koto Shohi) in the BtoC realm and the future of Vertical SaaS, share common points that shed light on the future of consumer experiences and software development.

コト消費, which translates to "experience consumption," refers to the concept of prioritizing experiential satisfaction over material possessions. Rather than simply showcasing a tourist bus tour through videos, companies are now focusing on delivering tangible experiences. Participants receive locally sourced products at their homes before the tour, allowing them to savor the local cuisine during the trip. This emphasis on the "here and now" experience, exclusive to a specific moment and place, differentiates Koto Shohi from other forms of consumption. It highlights the value and meaning derived from actively participating in an experience and feeling a sense of personal contribution.

On the other hand, the future of Vertical SaaS, particularly in the context of artificial intelligence (AI), raises questions about the viability of investing in this sector. Vertical SaaS has traditionally been a lucrative business model due to its high switching costs. However, with the advent of AI-based development tools, the process of migrating to a new software system becomes significantly easier and faster. Companies can write migration code and execute the transition in just a few days, potentially leading to increased customer churn rates. This shift in the build vs buy decisions could result in more companies opting to build their software rather than purchasing it.

If building software becomes cheaper and more accessible, it could have significant implications for software companies in general. Non-venture backable software companies may flourish, as the reduced cost of software production allows for greater market penetration. We might witness a rise in smaller software companies generating around $15 million in revenue, employing only a handful of individuals, and maintaining healthy profit margins. However, these companies may struggle to achieve the scale required for venture capital investment.

The potential increase in the availability of affordable software could also lead to more fragmented software markets. While this expansion may offer consumers a wider range of options, it can also create challenges in terms of integration and interoperability between different software systems. The complexity and overhead associated with custom software creation could impede the full realization of the benefits of rapid and low-cost software development.

Amidst these evolving trends, it is essential for businesses to adapt and thrive. Here are three actionable pieces of advice to navigate the changing landscape:

1. Embrace experiential consumption: Take inspiration from the concept of コト消費 and find ways to enhance the experiential aspect of your products or services. Consider how you can create unique and memorable experiences for your customers that go beyond the transactional nature of traditional consumption.

2. Evaluate build vs buy decisions: As technology continues to advance, reassess your build vs buy decisions regarding software systems. Consider the long-term costs and benefits of building your own software versus purchasing from external vendors, taking into account factors such as integration capabilities and potential future developments in AI-based tools.

3. Leverage AI for efficiency: Embrace the potential of AI-based development tools to streamline your software development processes. Explore how AI can help expedite migrations, reduce costs, and enhance the overall efficiency of your software development lifecycle.

In conclusion, the convergence of コト消費 and the future of Vertical SaaS offers valuable insights into the evolving consumer landscape and the impact of AI on software development. By understanding and adapting to these trends, businesses can position themselves for success in an increasingly dynamic and competitive marketplace.