The future is self-hosted

The future is self-hosted

Privacy is baked in, not an afterthought. You own the server, you own the data. Your data is not being sold to advertisers or used to train machine learning models. You can hide the server behind a VPN or Tor if you want to, only exposing it to people you trust.

The pricing is simple. You pay upfront once for a license and get access to the files/source code. This is not like subscriptions that can change in price/features or can be taken away.

Distributed by design. The software industry is pouring a lot of resources into making distributed systems work. But often it’s not needed nor worth it. It makes sense for Facebook cause they want billions of people all across the world to interact within the same structure. But Dropbox, for example, can be shipped as a self-hosted solution. Each user could have their own Dropbox instance, hosting their own files. This would result in distribution by design. No need to sync nodes.

Self-hosting is easy in 2024. Even if the user is not very technical, with Docker and other similar technologies we can ship software that’s just as easy to install as WordPress. The user just needs to run a few commands, do a few clicks and they’re done. Worst case they hire a low-cost webmaster to do it for them once.

What’s stopping us?

Part of it is complacency. We’re all, from investors to devs and users, used to the current model and it’s hard to change. But it’s not impossible. Some people are already doing it (r/selfhosted, and it’s working out great for them.

Part of it is that companies think the current model is more profitable. In a sense, it is but it doesn’t come without trade-offs.

A lifetime deal makes the seller think about the long-term. They can’t just take the money and run. They have to keep the software updated, fix bugs, and add features. They have to keep the customer happy. How will that be sustainable?

The answer is that it’s not sustainable for everyone. But it is for more products than you’d think. And that’s because of one nice thing called TAM (Total Addressable Market).

There are billions of people in the world, tens of millions of them turn 18 every year and they all need software. They also start tens of millions of businesses every year. They all need software too.

Let’s look at a real life example. Xnapper which recently got acquired is a license based product that runs locally on your Mac. You might think that’s a small market, but it’s not. There are millions of new Macs sold every year.

Another key factor is that when selling self-hosted or locally-hosted software, your infra costs are much lower. In fact, they are close to zero. You just need a static site to market the product, a payment processor and a way to deliver the files (or just give them access to a private GitHub repo).

So, what’s stopping you from building a self-hosted product vs a SaaS?

P.S.: Another cute thing that happens when you sell lifetime licenses is that you know the LTV (Lifetime Value) of a customer from day 1. This is a very powerful metric to have with such accuracy. It’s also a metric that’s hard to get with SaaS, especially in the early days.