Generative AI: the evolution of Bottom Up SaaS
Freemium motions can deliver value faster than ever with AI
With the recent explosion of generative AI, it will be easier than ever to build bottom-up products. All SaaS apps, including those previously restricted to top-down GTM, will trend towards bottom up in the not too distant future. Fast “time to value” is a critical reason bottom up works. Generative AI makes it even faster.
For the unfamiliar, bottom-up SaaS is essentially “freemium.” After getting started on your product for free, users get hooked on a delightful, ideally viral product, and once usage hits a crescendo the company is able to sell an enterprise deal in an efficient way.
The underlying logic of bottom-up SaaS
The bottom-up GTM motion is based on the following principles:
Lead gen is extremely cheap, via voluntary free sign ups. People willingly adopt your product as opposed to expensive top-down sales motions. Users can find value in a bottom up product on their own, without the need for human intervention.
Users already love your product. Competitive selling is easier and sales cycles are shorter since users are hooked.
No barriers for users to set up an account makes it easier to go viral.
Fast revenue growth with transactional deals layered on top of mid market and enterprise deals.
Generative AI supercharges each of these
Each of these tenets evolves in an AI-native world, and the tried and true bottom-up playbook only becomes more powerful.
Even faster free sign up rates: with generative apps going viral, we’re seeing record growth for the best AI apps. Why? Users can click a single button and create something magical, and thus, free sign ups can hockey-stick more easily than ever.
New heights for user love: users love products that save them time and deliver outsized value- generative AI unlocks new levels of user love. In a world where all products can integrate with AI quickly, easily, and increasingly cheaply, the most intuitive and fastest to set up workflows will win.
Even fewer barriers to account set up: generative features can provide immediate time to value, and thus, reduce pressure to be top down – which is typically the chosen path if the SaaS company doesn’t feel a user can reach productivity on their own.
…Will all lead to faster revenue growth: faster free leads will lead to faster organic revenue and faster b2b deals. Over time, generative features will contribute to pricing tier differentiation, and further fuel revenue growth.
Integrate with AI, or get left behind
All products, and especially bottom-up products, will be forced to integrate with generative AI or die. Generative AI makes it easier to onboard users, perform valuable actions faster, and search more reliably– all of these are non-negotiable for any SaaS product.
Generative AI also makes things faster on the users’ side: setting up their accounts, achieving significant value, and hitting a viral loop. Bottom-up products that fail to integrate with generative AI will feel slow, unintuitive – and worse – their best features will be quickly absorbed by competitors.
Consider ChatGPT, which is now the fastest product ever to hit 1M users (it took them just 5 days.) This is the definition of bottom up: anyone can sign up due to an attractive solo value prop and soon enterprises will be lining up to pay for enterprise-wide licenses.
Other apps are following the ChatGPT-style, hyper-bottom-up playbook. A few experiencing explosive growth right now have one thing in common: they allow users to sign up, put a credit card down, and achieve never-before-seen superpowers in a matter of minutes. We are seeing a time-to-value revolution, and bottom up as a motion is becoming more powerful with generative AI rocket fuel.
Even more impactful than the revolution in time to value is the revolution of depth of value. Generative experiences are much more valuable, powerful, and more efficient. These features and supercharged products are saving users time at an unprecedented rate.
How to win in the generative-AI powered world
The playbook for winning in this new world is shockingly similar to winning in the old world: you must be able to achieve a moat. This can be a workflow moat, a collaboration moat, or a data moat. There must be some reason that the population you serve flocks to your product versus the product of a competitor. You must be able to defend a premium price point against future competitors that could flood your space.
In a world where a solo developer with a Replit or Github Copilot account can clone products in a matter of days, these moats will stand between your product and death. The original world of bottom-up SaaS showed us the way: offer fast time to value, become collaborative, go viral, sell to the enterprise, become irreplaceable. The challenge now: doing each of these things just got easier for everyone, which paradoxically means it just got more difficult for everyone in the same breath.
Generative AI ushers in all types of arms races in SaaS. It becomes easier for big incumbents to displace upstarts because they now have generative AI at their fingertips. It also becomes easier for upstarts to challenge the Series A and Series B companies for the same reason.
Because of this innovation, it is easier than ever for all b2b products to get their users to significant value much more quickly. The stakes are higher, the bar is higher, and the competition is stronger. Everyone in the SaaS ecosystem is forced to evolve.