There's a new gold rush in SaaS and it’s happening now. Here's the new AI playbook for building SaaS startups to $5M in ARR (with 5 FTEs): Take a legacy SaaS tool, add a layer of AI, slash the price and run it lean. The founders who do this will cause MAJOR DISRUPTIONS next year. Here's the 9 steps to follow: 1. Find a legacy SaaS app with the following characteristics: - Workflow automation, business process management, customer engagement - Preferably in a market niche - High Margin/Expensive 2. Find a way to inject AI: - Improve data collection using AI - Automate repetitive tasks and optimize workflows - Enhance personalization, improve analytics, enable predictive decision making - Identify new revenue opportunities using customer data - Automate mundane tasks using RPA or better information extraction 3. Build the app in weeks - Use rapid app development environment or AI code generators to create your app in weeks not months - I recently caught up with Jason Masciarelli from Pega Launchpad. Sounds like a terrific opportunity to cut down on dev time and cost to build a workflow automation tool. 4. Innovate on Pricing - Significantly lower SaaS pricing - Explore usage based pricing or outcome based pricing 5. Content and Thought Leadership - Position your app as a modern and efficient market substitute to legacy apps - Highlight the AI related optimizations and demonstrate - Mention the lower price and it’s impact on ROI - Ensure your buyers are receiving your content on Linkedin 6. Design efficient GTM - Don’t plan on hiring an enterprise sales team - Consider self serve GTM - Get early customers via Linkedin content and prior relationships 7. Don’t hire a large Support or CS team - Use as much automation as possible for support and CS - Try to serve 1000+ paid accounts with just 1 support staff - Say NO to revenues that dont fit your initial business model 8. Org Design - Keep the team as small as you can - Don’t hire any VPs or senior folks for a long time - Hire a lot of fractional contractors, advisors or ICs 9. Capitalization - Bootstrap if you can, but you don’t have to - If you raise capital, find investors that care about efficiency and small exits - Do not take on the burden of large exit until you know that’s possible - Prioritize revenues. Pursue lean and profitable growth strategies By executing on this playbook, you could achieve a few million in revenue profitably with a lean team (<5 FTEs) in a year or two and possibly even an acquisition offer from a legacy app vendor. If you choose to scale further, you will have the option to secure a large investment from a growth fund to embark on your journey to scale at your terms. Identifying legacy SaaS companies ripe for disruption involves targeting those with high margins, outdated technology, and limited AI integration. Here are ten such companies across workflow automation, business process management, and customer engagement: 1. Pegasystems Inc. • Overview: Specializes in software for workflow automation, customer relationship management, and business process management. • Opportunity: Despite offering AI-powered decisioning, Pega’s extensive legacy systems may lack the agility of newer AI-native solutions.  2. BMC Software • Overview: Provides software solutions for automation, service management, and workflow orchestration. • Opportunity: Their traditional enterprise focus presents an opportunity to introduce leaner, AI-driven alternatives.  3. Ontraport • Overview: Offers business automation software for small businesses, including CRM and marketing automation. • Opportunity: Potential to enhance their platform with advanced AI features for improved customer engagement.  4. Azuqua • Overview: Provides cloud-based integration and automation solutions. • Opportunity: Integrating AI could enhance their automation capabilities, making processes more efficient.  5. Nintex • Overview: Offers workflow automation and business process management software. • Opportunity: Introducing AI could streamline processes and reduce manual intervention.  6. Kofax • Overview: Provides intelligent automation software for data capture and process management. • Opportunity: Enhancing AI capabilities could improve data processing and decision-making.  7. Integrify • Overview: Specializes in workflow software and business process management solutions. • Opportunity: AI integration could optimize workflows and enhance user experience.  8. Genpact • Overview: Offers machine learning and AI solutions for data analytics and business process automation. • Opportunity: Further AI enhancements could provide more predictive analytics and automation.  9. Eleviant • Overview: Provides consulting and app development for firms replacing legacy systems. • Opportunity: AI integration could facilitate smoother transitions and more efficient systems.  10. Ultimus • Overview: Empowers businesses through technology, services, and support, focusing on business process management. • Opportunity: AI could enhance their automation services, making processes more efficient.  By focusing on these companies, you can identify opportunities to develop AI-enhanced, cost-effective alternatives that address the limitations of existing legacy systems.