ServiceTitan captured 1% of the market, then dropped
SaaS is ending. Here's what's replacing it.
Hey there,
ServiceTitan reached a $10 billion valuation.
Built an incredible product. Captured the home service market. Became the default software for HVAC, plumbing, and electrical companies.
Then it started dropping.
Not because the product got worse. Because the model broke.
The problem with SaaS
ServiceTitan targeted the IT budget.
What home service companies spend on software.
That's about 1% of their total operating spend.
For years, that worked. Companies didn't build software. They bought it.
Then everything changed.
Every customer started building around the platform.
Custom tools for dispatch. Internal dashboards for reporting. Side systems for marketing attribution.
ServiceTitan became a database they pulled from, not a platform they operated in.
The same thing is happening to Salesforce. HubSpot. Every major SaaS company.
Their customers are building their own tools because:
AI makes it possible. No-code tools make it easy. The cost of building dropped to nearly zero.
SaaS captured the 1%. Now that 1% is shrinking.
What we're building instead
We're not targeting the IT budget.
We're targeting OPEX.
Call centers. Marketing spend. Operations. Insurance. Back office.
That's not 1% of a company's budget. That's 10%.
Here's the difference:
SaaS says: "Buy our software to manage your business."
OPEX platforms say: "We'll run parts of your business for you."
One sells tools. The other sells outcomes.
What this looks like in practice
Home Alliance Phone isn't just call tracking software.
It's an AI receptionist that answers calls, qualifies leads, and books jobs. We're not selling software. We're replacing a call center.
Home Alliance Academy isn't a training platform.
It's a talent creation engine. We're not selling courses. We're replacing recruiters and HR.
The platform we're building doesn't compete for the IT line item.
It competes for the operational budget that grows with every job.
Why this matters
The IT budget is fixed. Companies spend X% on software and that's it.
The operational budget scales. More revenue = more operational spend.
SaaS is capped at 1%. OPEX platforms can capture 10%+.
The shift is already happening
Look at what's growing:
Managed services beating software subscriptions. Outcome-based pricing beating per-seat licenses. Full-stack solutions beating point tools.
Companies don't want more software to manage. They want problems solved.
Three signs you should pivot from SaaS to OPEX
Sign 1: Customers build around you, not with you
If your customers are constantly requesting integrations, exporting data, or building side tools, they're using you as a database, not a platform.
That's a sign the SaaS model is breaking.
Sign 2: Expansion revenue is hard
If growing revenue per customer means adding seats or features, you're stuck in the SaaS model.
OPEX platforms grow revenue by taking over more operations. No seat limits. No feature tiers.
Sign 3: You're competing on price
If new competitors can undercut you by 50% and customers switch, you're selling software, not outcomes.
OPEX platforms compete on results. Price becomes irrelevant when ROI is obvious.
What to do next
If you're building a SaaS product, ask yourself:
What operational problem does my software help solve?
Could I solve that problem directly instead of giving them a tool to solve it?
What would it look like to charge based on outcomes instead of seats?
The companies that win the next decade won't be selling software.
They'll be running operations.
Not tools for managing call centers. AI that replaces call centers.
Not platforms for tracking technicians. Systems that train and deploy technicians.
Not dashboards for analyzing data. Services that make decisions from the data.
SaaS captured 1% and is shrinking.
OPEX platforms will capture 10% and keep growing.
That's it for today.
Talk soon,
P.S. I read every email personally. Hit reply and tell me: Are you building software or solving operations? The answer determines whether you're capped at 1% or growing to 10%.