The Resilient Entrepreneur, Edition #128
Hi there
I hope you had a great week!
Here are the topics in today's edition:
- Every Entrepreneur Needs AI. And SaaS. And Maybe Excel
- 3 Signs It’s Time to Renegotiate Your Contracts
Please reach out with comments, questions, or suggestions for articles!
Talk soon,
Tom
TACTICS FOR RESILIENT ENTREPRENEURS
Every Entrepreneur Needs AI. And SaaS. And Maybe Excel
AI tools are flashy but token-based. SaaS is reliable but has vendor lock-in. Here’s why Excel still belongs in every entrepreneur’s toolkit.
These are the 10 ultimate AI tools to automate your business.
Here are the 5 SaaS tools every entrepreneur needs.
How to build a 1 million ARR business without a team.
The internet is full of catchy headlines of this type. And yes, there are plenty of AI and SaaS tools out there that make life easier for entrepreneurs. But no, AI will not entirely replace SaaS (I will tell you why later in this article). And yes, there is a surprising third option for entrepreneurs out there (I will not spoil the last paragraph of this article yet).
Are you curious about the third option? Don’t jump to the last paragraph of this article yet; let’s go through the options one by one.
The Contemporary Choice: AI
Needless to say, the whole world talks about Artificial Intelligence nowadays. AI labs claim that their models will solve every IT problem in the world, and that soon, all Software-as-a-Service (SaaS) tools will be dead. Plus, all software developers will be made redundant. And on top of this, AI will write better software than any human ever could.
Well, that’s marketing blah blah. The future will hold a place for both SaaS and AI tools. We’ll come back to SaaS a little later in this article.
But first, let’s look at the advantages of AI tools. First of all, entrepreneurs can build their own simple tools relatively easily by using a 20$ monthly ChatGPT or Claude subscription. Building is easy even for non-technical entrepreneurs, and results are visible almost immediately. If you’re not into building your own AI tools, there are many ready-made AI tools you can subscribe to the same way as any SaaS tool.
So much for the advantages. What are the disadvantages of all those AI tools?
First of all, never forget that all AI tools are based on probabilistic language models. This means that no two outcomes for the same operation will ever be 100% identical. That isn’t a problem per se, but it can be if you’re working in a safety-critical domain such as aviation or med tech.
Second, all AI tools consume tokens of text. The more tokens you consume, the higher your bill will be. That’s the case for input tokens (the prompt you use to talk to the AI tool) as well as for the output tokens (the response you get from the AI tool). And we all know that all the major AI labs are still highly unprofitable. Therefore, they will raise the token prices significantly at some point in the future. The question is not if, but when. When token prices rise significantly, you can either pass on the cost of AI tokens to your customers, which will probably lead to some customer churn. Or you are paying for the higher costs yourself, which will probably push you into unprofitability or even bankruptcy. It’s that simple.
Third, don’t confuse self-built AI tools with production-ready software. What might work in an early-stage company on your local machine will most probably fail gloriously at a later stage when your company has grown, and more users put a higher workload on your home-built AI tool.
The Reliable Choice: SaaS
And that’s where good-old-SaaS enters the stage. With Software-as-a-Service, as the name suggests, you’re not just buying software, but also a service. The service consists of a team at the SaaS company who fixes bugs, upgrades components, applies security patches, and restores your data at 2 am when disaster strikes. Furthermore, most SaaS tools are deterministic, i.e., outputs for a specific operation will always be 100% identical. In certain industries, predictability is more important than AI fanciness.
Where there is light, there is shadow. Just like AI, SaaS has a few disadvantages.
First of all, just like with AI tools, you are dependent on your SaaS providers. If they raise the prices, shut shop, or discontinue a product you depend on, there is nothing you can do. You cannot transfer the software to your servers; in many cases, it’s even difficult to extract all your data from a SaaS tool in a useful format.
Second, the world has shrunk in recent years: Geopolitics is back. Gone are the times when you could do business globally without any restrictions, and gone are the times when you could rely on a contract with a SaaS company from a foreign country. Digital sovereignty is back, which means many companies favor SaaS solutions from their own countries or regions, or open-source solutions they can install in their own server rooms.
Third and last, SaaS tools cannot adapt to user requests as quickly and as individually as AI tools. Whereas AI models can learn from a user’s behavior and adapt, SaaS tools are usually based on a single code base for all users. This means that feature requests and feature improvements take longer to implement than an AI tool able to adapt its behavior to individual users.
The Pragmatic Choice: Excel
Now, what’s the third option? It’s surprising, but it’s Excel (or LibreOffice, if you’re surfing on the digital sovereignty wave).
For many tasks in a small or mid-sized company, Excel is good enough: There is no need to buy a risk management software tool if you’re tracking just a dozen risks. There is no need to buy a license tracking tool if you need to track the license expirations of just a few tools. You can set up a simple Excel tool for this, and put the update of those Excel tracking sheets on your end-of-month task list. Subscribing to an AI or SaaS tool for such simple tasks would be a complete overkill.
With Excel sheets, you get the benefits of both AI and SaaS in one go: They are easy to build and maintain, and easy to adapt. And beyond the benefits of AI and SaaS, Excel sheets don’t carry a running cost — not even a Microsoft 365 license if you use LibreOffice.
The downside of Excel sheets? They are easy to screw up, especially when multiple people work with them.
Conclusion
Just because you have a hammer, not every problem is a nail.
Frontier AI models are hammer tools. But tracking a dozen risks in a startup is not a nail problem. Therefore, you can do very well with an Excel sheet for this problem.
On the contrary, try managing compliance with regulations and policies in a multinational airline with Excel sheets. I’d recommend a specialized SaaS tool for this (and yes, at Yonder, the B2B SaaS company I co-founded, we have a suitable solution for you).
In today’s world, it’s not either-or. You will benefit most from using a healthy mix of AI tools, SaaS subscriptions, and self-built Excel sheets. Don’t be guided by AI marketing talk; think for yourself which tool fits your business and your problem best.
And never forget the pragmatic Excel option before you make a final decision. It’s suitable for more problems than you think.
STRATEGIES FOR RESILIENT ENTREPRENEURS
3 Signs It’s Time to Renegotiate Your Contracts
Technology moves faster than any contract can follow. Three real-life examples of why you have to renegotiate your contracts.
I’m an entrepreneur and an engineer, and I’m proud of it. I love doing things, and I hate administering things. I’m a pragmatist moving fast, not a perfectionist discussing details multiple times. That’s why lawyers are my natural enemies.
Yet even as an entrepreneur, I have to deal with lawyers regularly. At Yonder, the company I co-founded, we’re selling B2B SaaS. So naturally, we have lengthy, complicated, and sometimes messy contracts with our customers.
As time passes, things don’t get easier. Just last week, I spent a whole hour explaining the legacy elements of a 10-year contract that was set up 5 years ago to the procurement team of one of our long-time customers.
As great as long-term contracts are for entrepreneurs, the world doesn’t stop changing just because a contract describes a reality long past. And as much as you like to keep the contractual relationship running for as long as possible, sometimes there is no way around renegotiating your old contracts.
Let’s look into some real-life examples that make contract renegotiation necessary.
Reason 1: Change of Team
If you’re selling to enterprise customers, you’re rarely selling your service to the entire organization from day one. The typical approach is land-and-expand; you start selling to one department or team within the organization, and try to upsell to further departments at a later stage.
Imagine you’ve sold your product to an airline’s compliance department, rolling it out across the entire flight crew a few years later. When that happens, it’s not just the point of contact that needs updating in the contract: The scope of work, the SLAs, and several other provisions all come back to the negotiating table. Try convincing flight operations that the original scope still works for them when it was drafted by a compliance team with little understanding of what flight ops actually do.
The reverse happens just as often. With another customer, we closed the deal with flight operations first, only to expand into ground operations at a later stage. Same discussions, different direction.
And if that wouldn’t be enough, you can even experience a change of key persons within the same department: If a new head of compliance joins your customer’s organization, he might have completely different ideas about how to use your product (or not).
Reason 2: Change of Financial Situation
We founded Yonder in 2015, a time when the upturn was still in full swing. Nobody knew what a Coronavirus was, and nobody imagined there would be a full-blown war in Europe or that the Strait of Hormuz would ever be closed.
All three events had a profound effect on aviation, one of our core markets. Do you think you can defend your pre-COVID pricing into the second half of the 2020s? Do you think the survival of your airline customers is god-given when jet fuel prices double?
Sometimes, reality is ugly. Sometimes, you have the choice of losing a contract due to changes in the macroeconomic situation, or of renegotiating a contract before it comes due to save at least some of your revenue.
It’s not just your customers who feel the economic pressure and want to renegotiate. It’s the same for you: Server costs have increased dramatically, foreign exchange rates have changed materially, just to name a few reasons for renegotiation.
Reason 3: Change of Technology
Last week, I didn’t just explain the legacy elements of a 10-year contract that was set up 5 years ago to a long-time customer; I also reviewed the contract template for one of our prospects in the final stage before contract signature.
That contract had a whole set of clauses on compliance with the EU AI Act.
I grinned. Technology has changed so dramatically in those five years since we set up that 10-year contract I mentioned above that even the EU had enough time to enact new technology regulation.
Conclusion
I have to finish with a rant on lawyers again. Lawyers are perfectionists, and they want to define every little detail in verbose text. When they have done so, they need their peers and superiors to review it. And how could you review a contract without adding your own two cents? That’s why reviews can take weeks or even months before you can finally sign the contract.
Within those weeks or months, your SaaS product might already have improved from what is described in the statement of work section in the contract.
Fast-forward five or even ten years. The contract will no longer describe your current product or the current technology regulations in place.
What do we learn from this? Paper is patient. You can write whatever you want into the statement of work section of a B2B SaaS contract; technology and your product will change faster than you can update any contract.
And should you ever get into an agreement on a clause in a well-aged contract: Sit back, grin, and ask if the customer wants you to redeploy that software version from 2021 to be in line with the signed contract.
About Me
I’m a tech entrepreneur, active reserve officer, and father of three — writing about entrepreneurship, leadership, and crisis management from hard-won experience. No AI, no fluff, no promos. Just plain-text insights for people building and leading under pressure.
When I’m not solving problems, I find clarity in the mountains around Zermatt.
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