AI-Powered Roll-ups Part IV: The Pivot Path — From SaaS to Services
Some thought starters for SaaS companies pivoting to the AI Roll-up model
I hope across Parts I, II, and III I have done enough to convey my belief that for the right industry, team and capital structure, AI-powered Roll-ups could be a fantastic business idea for someone starting up, and a great investment opportunity for VC investors.
But what about people who’re not starting from scratch?
I've been having conversations with founders who are already running traditional SaaS or AI-application businesses—and who are beginning to explore a new direction. Many of them are considering “buying distribution” by acquiring services businesses. A few have already pulled the trigger on their first acquisition.
In this essay, I’ll explore why this shift—from product to services, from SaaS to hybrid—can make sense, but why it’s far from trivial.
From SaaS to Services: A Growing Playbook
Metropolis’ successful(?) acquisition of SP Plus is a canonical reference for this approach. And I do believe it can work. But it’s not an easy journey. There’s a reason you don’t see this playbook used more often—it’s operationally complex, culturally intense, and capital-sensitive.
Pulling it off requires getting several ducks in a row - here are a few considerations for founders exploring this shift.
1. Investor Expectations and Valuation Math
Existing investors who had funded your company based on SaaS multiples (c.10x ARR) are not going to be pumped at the prospect of you becoming a services company (valued at c.5-10x of EBITDA). This could also likely mean an immediate valuation haircut when raising your next round (yes, narratives wildly affect valuations in our world).
It is essential to thoughtfully manage this transition for your existing investors and bring them along for the journey: Show them the long-term perspective, and give them comfort that there is light at the end of the tunnel. And most importantly, have an honest conversation around the different paths forward for the business. Accept that some of your past assumptions around growth did not pan out that way, and work with the investors to build more robust assumptions for the next stage of your business. You’ll need to get them excited about the long-term narrative and comfortable with the short/medium-term numbers. (Now is also a good time to remind them that they promised to be “founder friendly” 😉)
2. Is This the Team to Lead the Next Chapter?
Shifting from SaaS to services—and layering in a roll-up strategy—is not a minor evolution. It’s a fundamental change in how the business operates.
Building great software and scaling a services org are different skill sets. Leading M&A on top of that is a third. It’s worth asking, candidly: do you have the team for this?
Do you have operators who know how to run high-quality, margin-sensitive services?
Can someone build a repeatable M&A playbook—and avoid expensive rookie mistakes?
Is your finance lead ready to handle deal structures, integration, and debt?
These aren’t easy questions. But they’re necessary ones. Sometimes the answer is yes—but with some support. Other times, you may need to level up the team, or even rethink your own role.
That doesn’t mean stepping aside. But it might mean stepping into a different seat—or bringing in people who’ve walked this path before. The sooner you get real about the gaps, the faster you can fill them.
This is still your company. But to lead the next chapter well, you may need to lead it differently.
You don’t need all the answers now. But you do need to acknowledge the open questions—and accept that there will be some hard answers along the way.
3. The HQ Right-Sizing Dilemma
You no longer have the luxury of 90% gross margins.
That means no room for a bloated HQ. Every dollar saved needs to go toward acquisitions, contingency, critical R&D, and debt service. You probably don’t need a large sales and marketing team anymore. What you do need: lean, focused corporate functions that can support integration, financial planning, and ops.
Right-sizing HQ while simultaneously building new capabilities is one of the trickiest balancing acts in this transition. But it’s necessary. Think deeply about how you will achieve this, before you make the plunge.
4. Customer Strategy and Communication
One of the trickier parts of this shift is figuring out what to do with your existing customer base.
Some might willingly shift from buying software to services. Some might even become competitors once you enter the services market; while others might be great candidates to acquire. The equation is complex, but with some thoughtful structure will help. Some questions to answer:
You might not have capital to acquire all of your services customers on Day1, what is your phasing strategy?
Would you prioritize acquiring new players (net new revenue) or existing customers (familiarity)?
How do you prioritize the product roadmap when internal and external needs diverge?
There are no easy answers, but what matters most is having a definitive plan—and a communication strategy that keeps customers in the loop and reassures them about what’s changing (and what’s not).
5. Rebuilding Culture from Product to Services
This pivot is not just financial or strategic—it’s also cultural. Be deliberate about how you will build a services culture - and define a new set of north star metrics, incentives, and values so the entire organization embodies it.
What does success look like in a services org? What does operational excellence mean? How do you balance responsiveness with profitability?
One of the most overlooked aspects of this transition is change management (platform + people + processes). Aligning the team on new KPIs, behaviors, and expectations takes time—and intentional effort.
Conclusion: A Narrow Bridge, But a Real One
If you’re at this crossroads, know that you’re not alone. I believe there’s a real opportunity here—especially in sectors where the tech/services boundary is blurry, and where AI capabilities can be a force multiplier for delivery.
But don’t underestimate the complexity of this path. It’s not a simple extension of your current business—it’s a reimagination.
If you’re contemplating this shift—or already deep in it—I’d love to hear from you. Reach out on LinkedIn or Twitter. Always happy to chat.
Also, do check-out this public database of AI-powered Roll-ups (and fill the form/ reach out to me if you’d like to get featured in there)!