5 Interesting Learnings from HashiCorp at $400,000,000 in ARR; Plus Weekly SaaS News and Updates

Hey SaaStr Community,

With times much tougher in the venture and public markets, you’ll see a lot more talk about tougher “terms” in VC rounds, especially later rounds.

Early-stage investors, especially, will complain about all these terms.  They force founders and earlier-stage investors to take more risk than a nice, clean unicorn round at a clean price.

But here’s the thing — almost all these terms, in the end, are just about price.  Price is … what it is in a venture round in the end.  You might want it to be higher, but in the end, it’s what clears.  And sometimes, more of these terms make it easier for a price to clear.

The Only Truly Terrible Venture Term is a Tranche

Fewer Cloud devops / commercial open source startups were more respected pre-IPO than HashiCorp — and still are.  The product is there, the market is strong, the founders and CEO are great.  At an almost $6B market cap, it’s a huge win, with a strong multiple at $400m ARR, growing a stunning 51%.

It was a $10B-$15B+ company in the go-go times of 2021, and even though it’s executed to perfection since then, the markets have caught up even to the best of us.  A $6B valuation today sure seems cheap with those numbers, and the ones below. Because almost everything is going so very, very well for HashiCorp.

Most especially, it’s executing with an enviable SaaS Golden Ratio.  It’s closing new customers even faster (86%) than its ARR is growing (51%). That, combined with high NRR, is a recipe for many years of high growth.

This edition of the SaaStr weekly is sponsored in part by Laika

Almost every category of SaaS exploded during the lockdown, but three saw just crazy boosts, and their stock prices went on a tear.  We’d never seen revenue acceleration like this ever in B2B software.

But it didn’t last.  It couldn’t last.  In fact, the top "Covid beneficiaries" were clear in their public announcements that the Covid boost was already over by the end of 2020.

Other categories were hit less dramatically. But one has to wonder if so many SaaS leaders would have been better off without a Covid Boost at all.  It merely created a disruptive blip in revenue in many cases.

This edition of the SaaStr weekly is sponsored in part by OnBoard

I got my best advice when I went to meet with one of my angels and mentors when things were probably toughest at my last start-up.

My co-founder had walked out the door. We had about 4 months left of cash. I was out of ideas. Yes, we had customers — hundreds — but not nearly enough. It simply “wasn’t working”, at least as I saw it narrowly at the time.

We’ve recently been posting polls on SaaStr’s LinkedIn account to get a feel for what SaaS companies are doing in the current environment. At SaaStr Europa, Jason did a deeper dive into 16 of the surveys. In this video, he discusses the results and where he thinks SaaS companies are on track or need improvement.

• SaaStr is seeking new team members! We're hiring in Sales, Marketing, Event Content, and Customer Success. If you're ready to help us grow the SaaStr community, see all the opportunities!

• Notion is looking for a Sales Operations & Strategy Manager, Americas to be a key business partner to the AMER go-to-market leadership team across Sales, Marketing, Product, and Operations. 

565

Classic Episode: The Importance of Company Values, a Great Hiring Process, and Ownership Culture with Gusto Co-Founder & CEO Josh Reeves

566

16 Ways to Level Up in 2022 with SaaStr Founder and CEO Jason Lemkin

567

Classic Episode: How to Market to Both Developers and Operators with with Shippo Co-Founder & CEO Laura Behrens Wu

Listen on Apple Podcast, Google Podcasts or Spotify

If you think your burn rate might be too high,

It is

Look, the stock market may be down

But it’s >never< been easier to get to $100m ARR in SaaS

Build something amazing, get it to $1m, then $10m ARR, keep the NRR up

Markets are so big, they sort of do the rest

Still the Best of Times

We’ll see, but Zendesk for $10B in 2022 may turn out to be the LinkedIn for $26B in 2016 of this downturn

A deal that is fair & makes sense when markets are turbulent and worried

But in just a few years, looks like just such a huge bargain

The support + CX space is exploding

A lot of VC advice to struggling companies is “cut marketing”

In SaaS:

* Cut sales, revenue suffers this quarter or next

* Cut marketing, revenue suffers 3-6 quarters out

Maybe the right trade-off if cash is very tight

Probably wrong trade-off otherwise

© SaaStr 2022

255 Kansas, Suite 300, San Francisco, CA 94103

If you'd like to stop receiving the SaaStr Weekly, click here