Yet there exist channel intermediaries<\/a> (or resellers, as you might say) who are doing quite well. How is this possible?<\/p>\n\n\n\nThe answer is simple.<\/p>\n\n\n\n
They don’t run lifestyle businesses.<\/h4>\n\n\n\n
Over the past few decades resellers became lazy. They wanted their 8 weeks of vacation. They wanted to spend the month of December in Europe. They’d live on the lake in the summer and “work remotely”. <\/p>\n\n\n\n
This might have worked before SaaS, but investors are giving recurring software businesses massive<\/em> multiples relative to hardware and perpetual software businesses. That means capital is aggressively chasing these software growth opportunities. Can you blame Toast for raising $500M? The restaurant market is massive, and converting those merchants to a SaaS POS could bring great returns to investors. And to chase that opportunity people at Toast are working 60, 70, or more hours per week.<\/p>\n\n\n\nAre you willing to work that hard?<\/p>\n\n\n\n
You can’t run a lifestyle business in software unless you’re in an uninteresting, small market. Otherwise you’re going to be competing with intelligent people managing billions of dollars who are eyeing every possible way to generate outsized returns. And globalization has only made things more<\/em> competitive.<\/p>\n\n\n\nDealers thought they were in a hardware business. The market has shown them differently.<\/p>\n\n\n\n
Don’t bring a knife to a gun fight.<\/p>\n