Poor Decision-Making, Not AI, Is Hurting Some SaaS Companies, Argues Teresa Torres

In a recent LinkedIn post, product growth expert Teresa Torres discusses why she is leaving two long-standing SaaS providers, arguing that poor business decisions, rather than the rise of AI, are the primary culprits behind customer churn for some companies.

Torres begins by stating her belief that SaaS is far from dead, but personal experience has led her to switch providers. She highlights a critical issue with one provider: a mid-year price increase on an annual plan. This action, she explains, eroded her trust entirely.

“I am leaving the first because I signed up for an annual plan and they raised prices mid-year. That means I paid a lump sum expecting to get a year of service and actually only got 11 months of service.”

The justification offered by the provider for the price hike was the addition of new AI features. However, Torres found these features to be of low quality and unused, making the price increase feel unjustified. This experience has prompted her to seek a provider that is genuinely “AI-native.”

The Impact of Unused AI Features and Core Product Degradation

The second provider Torres is leaving has seen its core product performance decline over the past two years. According to Torres, the company’s focus shifted to building tangential AI products that she, as a user, did not need or use. This, combined with a lack of communication following an acquisition by a company with a questionable reputation, was the final straw.

“The second is a product I have been on for years. But in the last two years their core product performance has degraded while they focused on building tangential AI products that I don’t use.”

As Teresa Torres points out, the acquisition handling was the catalyst for her departure, even though she was already considering leaving due to the product’s declining performance.

Prioritizing Core Value Over Unproven AI Hype

Torres emphasizes that the core issue is not the existence or advancement of AI, but rather the strategic decisions made by SaaS companies. She argues that companies focusing on poorly implemented AI features at the expense of their core product or customer trust are making a critical mistake.

“AI isn’t killing SaaS. Really poor quality decision making is killing some SaaS companies. Others are flourishing.”

In Torres’s view, the key for businesses is to make sound strategic choices. For consumers, she advises careful vendor selection. The implication is that while AI offers opportunities, it should not come at the cost of fundamental product quality, customer relationships, and transparent communication.