SaaS companies scale revenue not by adjusting price points, but by creating distinct packages for different segments. The same core software can be sold for vastly different amounts to enterprise versus mid-market clients by packaging features, services, and support to match their perceived value and needs.

Established SaaS firms avoid AI-native products because they operate at lower gross margins (e.g., 40%) compared to traditional software (80%+). This parallels brick-and-mortar retail's fatal hesitation with e-commerce, creating an opportunity for AI-native startups to capture the market by embracing different unit economics.

Data businesses have high fixed costs to create an asset, not variable per-customer costs. This model shows poor initial gross margins but scales exceptionally well as revenue grows against fixed COGS. Investors often misunderstand this, penalizing data companies for a fundamentally powerful economic model.

Palantir commands a massive valuation premium because it is both well-run and unique, with no clear alternatives. This lack of competition dramatically reduces churn risk and increases the durability of future cash flows, justifying a higher multiple than other software companies that operate in more crowded markets.

AI is making core software functionality nearly free, creating an existential crisis for traditional SaaS companies. The old model of 90%+ gross margins is disappearing. The future will be dominated by a few large AI players with lower margins, alongside a strategic shift towards monetizing high-value services.

When a company like Synthesia gets a $3B offer, founder and VC incentives decouple. For a founder with 10% equity, the lifestyle difference between a $300M exit and a potential $1B future exit is minimal. For a VC, that same 3.3x growth can mean the difference between a decent and a great fund return, making them far more willing to gamble.

Investors and acquirers pay premiums for predictable revenue, which comes from retaining and upselling existing customers. This "expansion revenue" is a far greater value multiplier than simply acquiring new customers, a metric most founders wrongly prioritize.

Buyers pay a premium for predictable income, not just high revenue. Even non-SaaS businesses, like a home builder, can create valuable "durable revenue" by adding contract-based services like lawn care, significantly increasing enterprise value.

Recent acquisitions of slow-growth public SaaS companies are not just value grabs but turnaround plays. Acquirers believe these companies' distribution can be revitalized by injecting AI-native products, creating a path back to high growth and higher multiples.