“Pay-per-task” is the new business model of the internet

Your source for startup ideas - today's read time: 4 minutes

There is a shift happening in the business model of the internet and the internet will never be the same again.

Once in a while, you get lucky if you notice a business model of the internet starting to shift.

Last time this happened, billion dollar businesses popped up overnight like Dropbox to Salesforce. Luckily for you, you're reading this so you're in on this early.

The founders who take notice will be the leaders of the next software wave. I personally saw the impacts of when business models change in software 20 years ago.

I remember very vividly when I started seeing "freemium" become the defacto business model of the internet.

It was the summer of 2004 and a classmate of mine told me about a magical new software called Skype that let anyone place calls to their friends and family over the internet.

I went over to their website expecting to pay something to access it. After all, that's how the internet worked. Good software costed dollars.

To my surprise, it was free for the core functionality. You only had to pay if you wanted long distance calls. Good thing because I was still a high school student.

Freemium was an experiment in economics more than anything. Make the product free for 90%, charge 10%.

Free for most, paid for die-hards. It sounds so darn obvious now, but back then, this model shift was a game changer. I loved it. And I wasn't alone. Many others fell in love with the new model.

When you’re early on in a new business model for a validated product (ie: calling someone for free) in a big enough market, you get explosive growth. 7 years after I signed up to Skype on that summer day, it sold for $8.5B to Microsoft.

Recently, freemium fell out of fashion to a new business model called software as a service (I’m talking about enterprise software, freemium still thrives in consumer). It's normal for new business models to emerge as technology evolves.

Over the last 15 years, software businesses got addicted to charging customers monthly. SaaS became the default. VCs loved it. Public markets loved it. Founders too. Who doesn't love a recurring revenue business?

Truth is, it makes sense for some software businesses, but not every software business needs to charge monthly.

A new trend emerged. People gradually and quietly became sick of spending thousands a month on software.

Last week, we forked over ~$40k/year for Figma licenses for our team. Sure it’s super valuable but some teammates use it more, some less and some not at all. Sometimes I cringe when I see that bill knowing that not all our teammates are spending time in Figma.

Now, this has been in the air for a couple years now. but something recently has accelerated the shift away from monthly-recurring software….

It’s AI. Because AI is basically giving everyone an intern to perform basic tasks. Before software gave us databases and tools and now we have digital assistants tasks 24/7. An AI agent is basically an intern at this point.

AI has accelerated the new business model of the internet, pay-per-task.

The future internet sells work, not monthly seats .

And the shift has already begun to happen:

Some community-led SaaS businesses like Zapier ($5B valuation) are taking notice. If you go over your monthly Zapier plan, it moves to a pay-per-task model. I wouldn’t be surprised if they move completely to pay-per-task once this experimentation phase is complete.

Intercom ($1B+ company) has a new service called Fin. It’s a customer service bot that answers customer questions with no humans, just AI.

And instead of charging you based on how many employees you have or how big your customer support team is, they charge you a simple $0.99 for each resolved question.

This model aligns customer and company incentives beautifully, and it's a testament to the power of listening to community feedback.

So what does the future of software look like? Well, it looks a lot like a developer tool.

B2B SaaS investor Brianne Kimmel said it best:

“I’m a firm believer all SaaS companies will need to operate like a developer tool to be successful

• Usage based pricing is better than seat based subscriptions

• Some % of product needs to be open-sourced to allow community contributions and continuous product improvements

• Live events aren’t purely for marketing/sales, it’s critical for product, customer support, and community growth”

Could not agree more. Some other folks like the founders of 37Signals Jason Friend and DHH believe that we're moving back to a "pay once" for software movement. I could see that happening a bit too. This is the copy from Once.com a new software company from 37signals with this model in mind.

To summarize this post:

So why does this new business model shift matter for you reading this?

Well, the SaaS world is a $592B+ market. And it’s going through an earthquake right now. In moments like this is where the startup ground is fertile.

Smart startup founders will challenge the business model and create interesting experiments with pay-per-task and pay-per-usage models.

Founders who take notice and execute will be the leaders of the next software wave. The future Drew Houston's (Dropbox Co-Founder) and Dharmesh Shah's (Hubspot Co-Founder).

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Be well,

Greg Isenberg

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New podcast is live with my friend Michael Karnjanaprakorn, co-founder of SkillShare and Otis (exited to Public.com)

We jammed startup ideas and have some free startup ideas for you to take. Soho House for X was a pretty interesting convo that'll get your brain going.

Pick your podcast platform:

There are zero ads in my podcast to make the experience A+ for you.

All I ask is you share and enjoy it. That lets me know that I should keep recording it. Tag me on X if you do and I'll reply.

People often ask me: How important is design and brand?

My response is simple:

If you have no product/market fit, design won't help you. No amount of cool and interesting brand and design can put wings on a fish.

If you have some product/market, is your multiplier. It's wings on a bird. Totally natural.

I use Dispatch as my secret weapon to designs for social assets, websites, this newsletter template, marketing campaigns. Basically, anything that needs to look beautiful. I'll start to use Dispatch Pro later this year.

I liked it so much, I invested in the business.

Thank you for reading. Hope you enjoyed.

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Be well,