Inc - A Brutal Week in SaaS

Hey SaaStr Community,

So with the latest batch of earnings out, we can get a sense of where the leaders are in SaaS.  I think we can learn the most from the #1 leaders in each category.

Let’s start with Datadog: Crazy Growth Still — 61% at $1.8B ARR — But Not Quite as Crazy as Before.

Datadog had an epic quarter growing a stunning 61% at $1.8 Billion in ARR, and increased its $100k+ customers by 41%.  Epic.

But … they cited some economic headwinds in their quarterly announcement, and importantly, new bookings were actually down a bit.  They added $121m in new ARR this quarter, versus $172m in Q2 and $146m in Q1.  So still an incredible quarter, but not quite as big as the 2 preceding.  That’s both great growth in absolute terms … but some slowdown in percentage from headwinds.

Datadog, ZoomInfo, Atlassian, AWS: Epic Growth — But Some Real Headwinds For The First Time

Duolingo has dominated online language learning, rocketing to $360m in ARR and a $3.25 Billion market cap after launching back in 2012.  And in today’s market, that’s strong performance. 

While the average Cloud stock has fallen almost 50% in 2022, Duolingo’s has stayed up, and is down just 10% in the past 6 months.  So it’s doing what Wall Street wants today. Despite crossing $1.4B ARR, it’s trading now at $4.7 Billion. A big number.

But is Duolingo SaaS?  Well, it’s SaaS-ish.  The core product is very B2C, but the upgrade to paid has very SMB B2B metrics, and 80% of the revenue is subscription based.  So at a minimum, it’s a good one to learn from, especially in this PLG and freemium world.

What’s happening on Twitter and the internet these days is confusing on many levels.

And one of the most confusing thing is that:

• Many of the best SaaS and Cloud companies
• That are growing really quickly and
• Also just raised massive funding rounds are …
• doing layoffs.

This at first doesn’t sound like it makes sense.

Why would some of the best B2B companies that just recently raised $50m, $100m, $200m+ in just the last year do layoffs? 

CNBC had a good write-up of how the Figma acquisition got done.  How you really need a lot of both CEO and President/SVP level support to get a big “Bet The Farm” deal like this done, and more.

One of the many things that stuck out to me was just how long the $20B acquisition was in the making.

 A decade.

There’s a lot to learn here, and it’s easy to say with hindsight perhaps Adobe should have tried to buy Figma earlier for a lower price — maybe.  Or maybe Figma just had to get big enough for it all to make sense.  Hard to say.

But what is clear is Big M&A Deals often take a long time. 

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

So we’ve talked about it often here at SaaStr, but things are just so … odd right now in SaaS.  The best are still growing, if not faster than ever, then still close to it. 

And while AWS’s growth is down a bit, it’s still at epic levels, Azure isn’t even really down, and Google Cloud is growing faster than ever.  It’s still close to the best times ever in SaaS for growth and customers, even with mixed signals in the economy.

And yet … the stock markets have plummeted.  Cloud stocks are down 50%, and multiples are down 75% from their peaks.

Workshop Wednesdays is new series where we’ll be bringing some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 30-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive 30-minute format, including Q&A.

This coming Wednesday, Brandon Gleklen, VP at Battery Ventures will be hosting, The Fall of the “Metric Monolith”: Are Traditional SaaS Metrics Outdated?

A founder-CEO has 4 big advantages:

They can make big bets. Mark Zuckerberg spent 10% of Facebook’s shares to buy WhatsApp. Without even allowing much board-level discussion. $20b at the time — far more now. And $1b to buy Instagram when it had a handful of employees. Crazy!

These are bets a Non-Founder CEO almost never can make. Too risky, too much from the gut / hip, too dilutive. The Hired/Non-Founder CEO loses her job when these don’t work out. Zuck doesn’t. And the non-founder CEO has to socialize the idea, convince everyone. It takes months or even years. Zuck can move in a day.

In this second session of the CRO Confidential series, Founders Fund Partner Sam Blond chats with SaaStr CEO Jason Lemkin about whether tech founders still need to be based in SF, the current correction of the VC market, and what to look for in an investor.

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

• Zomentum is looking for a Sales Development Specialist who can

  manage large volumes of daily outbound and inbound interactions with prospective Zomentum customers using a combination of outreach mechanisms [ cold calls, email, and social media].

• Paddle is seeking a Senior Marketing Operations Manager to help optimize their marketing tech stack, ensure high data quality, help colleagues access that data to enable smarter decisions, and assist in marketing analysis, planning and strategy.

• SaaStr 603: SaaStr CRO Confidential Presents the Ultimate Guide to Sales Compensation, Quotas and Recruiting with SaaStr CEO and Founder, Jason Lemkin. Hosted by Sam Blond, Partner at Founders Fund

• SaaStr 604: SaaStr CRO Confidential Presents How to Fundraise in Late 2022 with SaaStr CEO and Founder, Jason Lemkin. Hosted by Sam Blond, Partner at Founders Fund

• SaaStr 605: Increasing Runway Without Sacrificing Growth with Norwest Venture Partners' Sean Jacobsohn & Scott Beechuk and Andreessen Horowitz GP Kristina Shen

Listen on Apple Podcast, Google Podcasts or Spotify

Dear @elonmusk just make Tweetdeck better and a lot of us would pay $29 a month for that

The good news about joining a tiny startup is you will interface directly with the CEO on a regular basis

Sometimes even as a peer

The "bad" news is that CEO will hold you to a pretty darn high standard

ZoomInfo has 1,848 customers that pay $100,000 or more

That’s how you do six figure deals, folks

Just so I'm clear

Once interest rates fall, and they will, 100% chance of it

Valuations will double

JUST CONFIRMING

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