SaaS people don't want to be in SaaS

One of my clients today me he was thinking about pivoting his agency into more of a SaaS model. They'd vibe-coded something internally, they were already selling a small version of it, and he was excited about turning his team into a "fast delivery" operation built around the software instead of around services.

The vision was that the SaaS would scale infinitely, the team would shrink, and the business would suddenly look more like a tech company than an agency.

I asked him to tell me more about it, because I've been having this exact conversation with a lot of agency owners over the last few months. And the funny thing is, while all of these agency owners are looking at SaaS and dreaming about pivoting into it, almost every actual SaaS founder I know is doing the opposite. They're moving away from SaaS. Some of them are actively looking to acquire service-based firms because they want to get into the agency game.

So…

…the people who are already in SaaS - who built the businesses you're trying to turn yours into - are leaving. And the people in services are trying to climb into the burning building they just walked out of.

There's a reason this is happening, and AI is the reason.

AI is, in a lot of ways, the end of traditional SaaS. Or at least the end of the version of SaaS that minted everyone's heroes over the last decade.

Because AI democratizes coding. It collapses the moat that most SaaS businesses were built around. The thing you used to be able to charge $200 a month for as a SaaS subscription -there's a very real chance someone can now build a comparable version in an afternoon with Claude or Cursor or whatever they're using. The barrier to entry has collapsed and the economic value of being a SaaS company has come down with it.

Meanwhile, services - actual human expertise applied to specific problems - has gotten more valuable, not less. Because AI can produce a generic answer. It cannot replace the strategic thinking, the relationship management, the judgment calls, or the accountability that good service work involves. The moat is moving from code to expertise. And expertise is exactly what agencies are built on.

So when an agency owner tells me they want to pivot into SaaS, my honest reaction is: why are you trying to climb into a model that the people already in it are abandoning?

Let me be clear about what I'm not saying: I'm not encouraging you to ignore AI. I'm saying the opposite.

I want you to go all in on AI in a very specific way.

By using AI to find operational efficiencies and delivery efficiencies inside the agency model you already have.

Instead of trying to productize your service into a piece of software you can sell standalone, you should be asking how AI can let your team deliver work that was previously impossible to do at scale. Instead of building a SaaS, you should be building Claude skills and MCP workflows and proper internal tooling that makes your existing service offering 2-3x more efficient. Instead of pivoting your whole company, you should be assigning your senior people the job of figuring out how to use AI to do what currently looks impossible - and getting your frontline team comfortable using it on a daily basis as a baseline expectation.

That's the actual play. SaaS-enhanced agency, not full SaaS pivot. Use the technology to widen the gap between what your agency can deliver and what your competitors can deliver. The leverage is enormous. The risk is minimal. And you don't have to abandon the business model that already works for you to do it.

The SaaS dream is appealing because it sounds like an escape hatch from the parts of agency life that are hard. The fantasy is that you build a piece of software, the software runs itself, and you collect MRR while you sleep. I get it. I've had that fantasy too.

But that's not how it works for 99% of people who try it.

Don't pivot into the building they're leaving. Stay in your lane. Use AI as a multiplier for the work you already do well. And focus your senior leadership on building the internal AI infrastructure that makes your agency genuinely impossible to compete with.

If you want help figuring out where AI fits into your specific operation - what to automate, what to leave alone, where the highest-leverage efficiencies are hiding - book a call here.

Nick

P.S.

10 signs your agency is healthy:

1. you can fire a bad-fit client tomorrow and your PNL doesn't flinch

2. when someone asks what keeps you up at night, you genuinely don't have an answer

3. you're not working past 5pm putting out fires

4. your agency funds the life you actually want (not just a bigger agency)

5. you love getting off on Friday, but you're not dreading Monday either

6. you spend your days building with people you trust, not babysitting people you don't

7. you're growing because you want to, not because you need to cover payroll

8. you stopped comparing your MRR to every other agency owner on LinkedIn

9. your family actually sees you at dinner, not just on weekends

10. you could disappear for 2 weeks and nothing breaks

...what did I miss?