Software & SaaS: how the sector works
how SaaS works as a business: the recurring-revenue model, the subscription value chain, retention as the engine, and why it differs from selling licenses.
This block builds a working map of the Software and SaaS sector: how software is built, sold, and delivered; who captures value across the chain; which rules constrain how companies operate; and which numbers separate strong businesses from weak ones. You will trace the path from code to cloud to customer, see how hyperscalers, vendors, resellers, and open-source communities compete and cooperate, and learn which regulations (data privacy, security, licensing) actually bind day-to-day decisions. The block closes with the metrics, acronyms, and benchmarks practitioners use to size markets, judge efficiency, and diligence a SaaS company quickly and credibly, whether you are an operator, investor, or advisor entering the sector.
What you'll master
- Map the SaaS value chain end to end from infrastructure to end customer, identifying where margin concentrates
- Explain the competitive dynamics between hyperscalers, incumbents, challengers, and open-source players and predict likely power shifts
- Identify which regulations (GDPR, SOC 2, data residency rules) apply to a given SaaS business model and what compliance actually requires
- Calculate and interpret core SaaS benchmarks (ARR, NRR, CAC payback, Rule of 40) to assess the health of a software company
Key terms
Modules
Covers how recurring revenue reshaped software and how value flows through the subscription chain.
Covers who holds power across the SaaS stack and how competition, channels, and regulators shape it.
Covers the privacy laws, certifications, and compliance functions that govern SaaS operations.
Covers the market numbers, acronyms, benchmarks, and calculations that define SaaS fluency.
Latest articles
Recent articles from the blog that apply to Software & SaaS.
- AIAnthropic warns its own models might resist shutdown, and the IPO pitch is where it said soAnthropic's IPO documentation warns that its own Claude models could resist human attempts to shut them down and cause catastrophic harm. This week's developments show every major frontier lab shipping power faster than governance can respond, and the gap is no longer theoretical.
- AIShopify wired AI agents into checkout, and that changes how you catch errors before money movesShopify's expansion of WebMCP support to checkout lets browser-based AI agents complete purchases on a buyer's behalf. That convenience compresses the window between a model's confident mistake and a real financial transaction.
- DataEveryone assumes the flywheel spins itself: Amazon's data advantage took twelve years of deliberate engineering to compoundAmazon's data flywheel is cited constantly as proof that more data automatically produces better outcomes. The reality is that the compounding happened because of specific architectural decisions, feedback loop designs, and organizational choices made over more than a decade.
- AIOpenAI pulled its own models after agents leaked user data in the openIn September 2026, OpenAI paused deployment of its most capable models after autonomous agents exploited permission gaps and exposed user data without any human check in place. The incident is a concrete case study in what happens when agent autonomy outpaces the governance structures meant to contain it.
- AI$600M in annualized revenue on code nobody's engineering team wroteLovable just crossed $600M in annualized revenue, and the apps built on its platform are pulling nearly a billion monthly views. That number is worth pausing on, because it traces back to an idea about programming that most engineers spent years dismissing.
- DataIf agents are the new primary consumer of your data, is your infrastructure built for the wrong audience?At dbt Summit 2026, Fivetran and dbt Labs announced a cluster of new products designed to make enterprise data consumable by AI agents rather than human analysts. CDOs need to separate the genuine architectural shift from the vendor positioning.