Putting the service back in software as a service

SaaS companies have much to learn about unreasonable hospitality

Why is it when people talk about “software-as-a-service,” they basically exclusively talk about the “software” part?

Likely because, from a financial perspective, service makes software businesses look uglier. Service isn’t zero marginal cost. “What about my margins bro? Can’t you just automate it away?”

As much as we try to squeeze service into data, APIs, and LLMs, the human part of it still matters. After all, it is humans creating the software and humans using it. Service as a differentiator in software is dramatically under explored, especially when compared to the role it plays in other industries.

SaaS companies are like restaurants

Another industry with a similar split between product and service is restaurants.

People think about restaurants in terms of food, but service has a massive impact (but hidden) impact on people’s experience. Often, the greatest restaurant experiences are the product of amazing service.

In Will Guidara’s “Unreasonable Hospitality,” the importance and magic of service is particularly clear. He was the general manager and co-owner of Eleven Madison Park, a restaurant that earned 3 Michelin stars and ranked first in The World's 50 Best Restaurants list. He writes about what it takes to be the most hospitable and service-oriented restaurant on earth. His ideas have a lot of potential to transfer across domains and apply to software.

Whatever you do for a living, you can choose to be in the hospitality business. Intention means every decision, from the most obviously significant to the seemingly mundane, matters. - Will Guidara

A similar pattern exists between software and restaurants. The abundance of bad service makes good service seem like a miracle, but good service still isn’t world-class service. You must innovate to reach that point, Guidara did that, and software businesses can learn from his path.

The service in software status quo

The type of restaurant service that was the status quo when Guidara took over Eleven Madison Park was what you think of a luxury restaurant to be: a luxurious setting, formal attire, perfectly set tables, and knowledgeable staff.

Service in software, at its best, is in a relatively similar position. Responsive support, helpful salespeople, onboarding or implementation guides to help you get started. In a world where so much bad support exists, these are great, and many companies are missing them, but are they really world-class service? Is it magical?

To be the best in the world, to have service as a differentiator, requires moving beyond this. Guidara moves to the definition of hospitality as not perfect service, but creating exceptional moments of connection and service.

Service is about people and their experiences

Everyone goes through life with an invisible sign hanging around his or her neck reading, “make me feel important.” - Danny Meyer

Does software ever make individuals feel important? Because everyone gets the same experience, making someone feel important is almost the opposite of what happens. Software is built for everyone and anyone to use, instead of being built to make people feel special. It is impersonal. There is no sign saying “this is for you.”

The impact of impersonal software continues to play out. To use another restaurant example, Howard Schultz, long-time CEO of Starbucks has spoken about how the Starbucks app and ordering ahead has negatively impacted the customer relationship and business.

No software starts by being impersonal. Many people build something for themselves or their friends. Much of the most popular startup advice focuses on people. What does “talk to users” or “build something people want” sound like to you? It could translate to “focus more on service.”

As companies and the software they create get larger, it often becomes more impersonal. The average employee gets further away from users. Rather than build for specific people, you build for some blob known as a “persona” or “target market.” The service aspect of software as a service is lost.

Guidara provides a solution for breaking this trend.

Unreasonability to the rescue

One of the best parts of “Unreasonable Hospitality” was around “legends.” Legends were moments or experiences Eleven Madison Park created for guests that were above and beyond.

One example was a group of foodies who had been to all of the most fancy restaurants in New York. Guidara overheard them say the only thing they didn’t try was a hot dog. So Guidara went out, bought a street hot dog, and convinced the chef to plate it fancy. When they were served a hot dog in the middle of their luxurious meal, they freaked out (in a good way).

The staff at Eleven Madison Park tried to pull these off as often as they could. They even had staff, with the title “Dreamweaver” dedicated to it. These moments helped create a world-class service culture that pushed them to be named the best restaurant in the world.

The beauty of this is that it isn’t exclusive to restaurants. “Legends” (or whatever you want to call them) are acts of radical service that break a natural drift towards the impersonal.

Examples of legends in software

You might say “that isn’t possible in software, it is all hard-coded” but that’s not true. Of course, Paul Graham has said this better in Do things that don’t scale, but examples of legends in software include:

• Shipping a fix within minutes of someone reporting an issue.

• Shipping a feature tailor-made for a specific user.

• Make your website, content, onboarding, and transaction emails unique, funny, clever, and useful.

• Adding a banner to the account when they do something great

More specifically, the companies behind software have even more room to pull off legends:

• Send pizzas like Antimetal or champagne like Brex

• Send hand-written notes like Wufoo.

• Host dinners, events, and conferences for your users, customers, and community.

• Do a Collison install and completely hand holding users through installation.

• Recruiting users IRL, door-to-door.

• Permissionless co-marketing. Shouting out or featuring other products.

Service in software is often about giving them what they want. Legends go above and beyond to give people experiences they didn’t know they wanted. It breaks both you and them out of the impersonal experience of their day-to-day interaction. Software can create “wow” moments, you just need to care about doing it.

Distributing legend responsibility

The connotation of “do things that don’t scale” in software is with founders, not employees. Similarly, unreasonable hospitality seems difficult to scale, but might not be. It’s about solving two blockers:

1. Budget. They cost money and time, but probably less than you expect. Guidara says: “Manage 95 of your business down to the penny; spend the last 5 percent foolishly. The last 5 percent has an outsize impact on guest experience.”

2. Ownership. The ability to do it needs to be distributed. Because interactions happen everywhere, a good idea can come from anywhere. Everyone needs the ability and permission to execute them.

3. Culture. Legends became part of the lore at Eleven Madison Park. They were chronicled, people talked about them. Pulling one off makes you want to do it again and encourages everyone to do the same.

Guidara notes that a great part about executing legends is that they can be repeated. Many of the examples above aren’t unique for one user. Although a legend might not be unique to you, it is unique to the user. You can send merch to 20 users, but for each of them, it is the one time they’ve got merch.

Cool, but what about my margins…

Again, looking at the examples, you’ll see a lot of tangible and massive successes that come with pulling legends off (Antimetal did $1M in revenue on $15k in pizza). It’s almost like caring about your users is good for business. The opportunities are real, but it takes a culture of unreasonable hospitality to capitalize on them.