Venture is Down but Seems to Be Back To Where It Was Before The Covid Boom; Plus Weekly SaaS News and Updates

Hey SaaStr Community,

There’s so much chatter on what’s going on in venture these days — and there should be. 

The industry has been turned on its head, as we went from private 100x ARR deals in 2021 to public SaaS companies trading at 5x ARR on average in 2H’22 and with multiples at all-time lows for the past 6 years. 

That’s massive change.

And with it, the venture markets have clearly slowed down.  Parts of the growth market have almost shut down completely. The IPO window is effectively closed.  Not literally, but no one seems willing to IPO at today’s prices.

But let’s step back a bit … where are we really? 

So we can only learn so much about Figma.  Even though it’s being acquired for $20 Billion (!) by Adobe — the largest private acquisition in SaaS ever, and maybe startups ever — it doesn’t really have to disclose any information itself, and Adobe only has to disclose limited information for now (it will share more later).

But we can learn some good stuff from what’s been disclosed.  And what we can learn is pretty darn interesting.  That Figma is growing so quickly, in such an important space … that maybe the deal wasn’t so crazy expensive after all!

So as I’ve written about before, I’ve interviewed a ton of folks for CS roles in the past 12 months.  Most for SaaStr itself (a lot of learnings there, but we have $30m+ of sponsors to keep happy), but also for a number of my investments and more.

And most of these CS execs and I share the same frustration: their job is mainly reactive.  That’s not what they want, or I want, but it’s a fact.

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

After our biggest, best SaaStr Europa ever this past June in Barcelona, we’re going even bigger with room for 4,000 SaaS and Cloud founders, execs, and VCs at SaaStr Europa 2022 in London!  6-7 June at Tobacco Dock.

We’ll be back, bigger and better, with the highest concentration of SaaS CEOs and execs at any event in Europe!  (Yes, we’re including UK in Europe — we’re Yanks).

You can grab Early Bird Tickets now for as low as $299, which is insanely cheap so just buy them now here.  See.  You.  There!

1.  Don’t do any VC investments your first year.  Take your time.   Sound advice.  But would have missed 4 unicorns if I had.

2.  It’s Hopeless.  Let’s Throw in the Towel.  Yes, it was.  But quitting doesn’t help.

3.  Don’t start that start-up, it won’t work, there aren’t enough customers, and the technology doesn’t work.  All true, based on conventional knowledge.  We sold that company (my first start-up as a founder) for $50,000,000 12.5 months later..

Freemium is great.  Freemium forces you to have better onboarding and a slicker, easier-to-use product.  Freemium is the way you and I like to try and often buy. 

But 9 times out of 10, Freemium alone isn’t enough alone to power you to $100m+ ARR.  The problem?  There simply aren’t enough businesses in the entire country + Europe to get most products to a $100m freemium business in almost any business/SaaS/work segment.

Every company moves through different growth phases, and eventually, the focus, strategy, and motions for growth must change alongside the business. Dave McJannet, CEO of HashiCorp, shares from his wealth of experience to reveal the secrets to building and expanding SaaS companies the right way.

Even with late stage VC capital much harder to get now, and the IPO markets still frozen, I see many folks on my LinkedIn feed saying Sales and Customer Success are underpaid.  And that they, in particular, are underpaid.  That they add so much value, they should be paid more.

That’s fine, and at SaaStr, we’ve been strong proponents of some of this.  Of paying your sales team well, of not capping sales commissions, of putting customer success on a variable plan, and of the power of second-order revenue.  We and I are still strong proponents of paying your revenue team well.  But they do have to deliver.  Paying up for performance.

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

• Capacity is looking for a Salesforce Administrator to maintain the day-to-day operations of Salesforce. Serve as a point of contact for application users which may include creating and customizing objects, workflows, record types, page layouts, fields, apps, tabs, roles and profiles, security, user, and approval processes.

   

• ChurnZero is seeking a Sales Engineer to foster business relationships with technical members at prospective accounts.

• SaaStr 597: VC State of the Markets with Cowboy Ventures Founder & MP Aileen Lee

• SaaStr 598: CEO Systems: 5 Lessons Learned from Scaling at Every Growth Phase with HashiCorp CEO Dave McJannet
  
• SaaStr 599: Growth vs. Efficiency: How to Weatherproof Your SaaS Startup for Tougher Times with Point Nine Founder and Partner Christoph Janz

Listen on Apple Podcast, Google Podcasts or Spotify

SEO is one of the few magical gifts of the internet

You don’t need to be popular for it to work

You don’t need 1,000,000 followers

You don’t need to make hip, cool videos

Every 5-7 years, as a founder, you'll have a Black Swan Event. E.g.,

Covid

SaaS Crash of 2016

Global Shutdown in 2009

"CEOs are great at getting partnerships and biz dev relationships going.

But they are terrible at maintaining them."

The 2022 “downturn” is a pretty crummy excuse to not grow

In 2008 and 2009 the world literally shut down.

Banks failed.

CIOs were worried they wouldn’t have cash to pay the bills.

Churn went way, way up for a while.

And we still all grew in SaaS

© SaaStr 2022

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