SaaS Multiples are Down 75 Percent; Plus More Weekly News and Updates

Hey SaaStr Community,

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

There are so many metrics out there these days on how public SaaS companies are doing.

Versus last week, last month, etc. etc,  So many metrics, sometimes it’s a little hard to get a handle on what they all mean.

The latest Bessemer Parting the Cloud summarized it all, I think, with one helpful metric: SaaS multiples are down 75% from a year ago.

That means each dollar of ARR is valued at just a bit more than 25% of what it was a year ago.

So Paycom is a quiet SaaS leader you probably don’t know that much about unless you are in payroll or HR services.  I don’t really know as much about them as I should.  But Paycom is both a big winner in general — and especially in today’s new world and public markets.

At $1.2B ARR, Paycom’s growing at a healthy 30%, very profitable — and worth almost $20 Billion. That’s a very impressive revenue multiple in today’s world.  It’s a quiet SaaS leader that has the trifecta of growth, profitability, and scale.

So recently, we were collecting feedback from our 200+ sponsors at SaaStr Annual, and I noticed something odd. 

Our Sponsor NPS this year was 75, which is high in general and especially high for event sponsors. 

But when we then went to talk to them, we mostly got complaints.

It took me a cycle to figure out why, but the answer was obvious: we weren’t asking for feedback the right way.  We didn’t tell them what was coming down the road at SaaStr, how it could help them, and engage them as part of the planning process.

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

New! We’re kicking off SaaStr Workshop Wednesdays

We’ve been hosting Workshops both in-person and digitally for the past few years now, and one of the #1 pieces of feedback we got from the SaaStr community following our SaaStr Annual and SaaStr Europa events this year, was that our SaaStr community wanted more.

Not until the company is very big — if even then.

It’s often the case that top sales reps close 2x to as much as 5x as much as an average rep. With the exact same / equal leads.  And you may even end up with a rep that makes 8x or more than the average, if they can close just a ton of revenue.

Like any partnership or business venture, being a founder or co-founder takes a lot of communication and planning upfront to increase the likelihood of success. The most decisive founders have a solid grasp of their industry and are ready to take a risk to achieve something big.

HubSpot co-founders Brian Halligan and Dharmesh Shah share what they learned along their journey, from creating HubSpot to scaling it, and what you can do to be a successful founder in today’s economy.

We all want to push, push, push.  To make the month and the quarter.  And you have to.

But there’s a lot of stuff you also need to hold back on to go long.  Like not pushing too hard.

Many enterprise customers have narrow windows during the year when they evaluate new apps, often for budget and planning purposes.  And other narrow periods where they get the resources to deploy a new app and manage the often significant business process change involved.

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

• Strike Graph is looking for a Sales Development Rep to play a fundamental role in achieving their ambitious customer acquisition and revenue growth objectives.

   

• Zeni is seeking a Head of Finance Operations to lead process development, motivate client-facing teams, and drive financial performance across Zeni’s customer portfolio.

• SaaStr 599: Growth vs. Efficiency: How to Weatherproof Your SaaS Startup for Tougher Times with Point Nine Founder and Partner Christoph Janz

• SaaStr 600: Founder Confidential with HubSpot Co-Founder and CTO Dharmesh Shah and Co-Founder and Executive Chairperson Brian Halligan
• SaaStr 601: What It Takes to Forge Your Own Category with Braze Co-Founder and CEO Bill Magnuson

Listen on Apple Podcast, Google Podcasts or Spotify

SaaStr At the Beach: 11.15.22

We're heading to So Cal for a Super Meet Up in Newport Beach on Tuesday, November 15th

SaaStr Europa: June 6-7, 2023

SaaStr Europa 2023 is heading to London for the first time! Join 3,500 SaaS executives

SaaStr Annual: September 6-8 2023

Our flagship event! 12,500 SaaS CEOs, Founders, revenue leaders and investors will join us in the SF Bay Area.

You hire a VP of Sales to hire reps 3-300

Not to create product-market fit

As a rough rule, if you sell your company for $100m or less, there's > 50% chance the acquirer shuts it down later

It's just a bet for them, nothing more

In 2021, the next venture round was often easier than the last one

The days of easy money

Now, we are back to the next round almost always being harder than the last one

That's what the stats really show

As a VC right now, you can certainly ask for half the valuations of earlier in the year

More than fair

But there's still a subset of VCs investing at basically the same prices, more or less, as before -- for the hotter deals

You have to be willing to lose those deals

© SaaStr 2022

255 Kansas, Suite 300, San Francisco, CA 94103

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