The challenges of software as a service businesses

Software as a service businesses face challenges due to the short cycle time required to build features and achieve product market fit. This allows competitors to quickly copy and cannibalize their revenue. The constant need to build features and stay ahead consumes a lot of cash, resulting in little to no free cash flow. However, software businesses have high gross margins and the ability to create advantages through dominance in the market and a strong sales and marketing operation. While many software businesses are losing money, there is a growing number of them that are profitable.