The Latest from SaaStr: Software Spend Will Actually Grow in 2023

So the latest data from Gartner is out, and overall it’s a mixed bag — but good for SaaS in 2023:

• Overall IT spend will grow now just 2.4% in 2023 to $4.5 trillion, way down from the 5.1% projected last quarter.  CIOs are cutting back overall much more than anticipated just a few months ago.

But — the cuts aren’t really coming in enterprise software budgets.

• Gartner is predicting enterprise software spend will grow a stunning 9.3% to $856 Billion in 2023.  And that’s up from 7.1% growth in 2022 and a total of $783 Billion in enterprise software spend.

Software is the one place CIOs still plan to spend a lot more on in 2023 than 2022.

When we look at SaaS companies’ success stories, everything looks great on their growth maps. However, the truth is that every company has tried, failed, and restarted before getting to success. Shuo Wang is the CRO and co-founder of Deel, one of the fastest-growing SaaS companies.

She shares the challenges faced at critical stages of the company’s growth journey, the lessons learned, and how they grew to $100 million ARR in just 20 months.  And on to almost $300m ARR today!

Free Trials are Great.  And really, it would be great if every app had one today.  It’s 2023!

But they don’t always work. It depends.  We aren’t all Zoom.

Downsides to Free Trials:

• The Free Trial Has To Work — and Be Great. If your app requires a lot of data to input to get value from, or requires real business process change … the prospects probably won’t bother during a Free Trial. So they may have a worse experience than if you did a carefully planned Pilot.
• Many Bigger Customers Don’t Want A Free Trial.  They Want You To Do The Work for Them. Yes, you and I prefer a Free Trial. But many more enterprise buyers don’t want to do the work. They want the vendor to set everything up, do the onboarding, etc. Many likely would prefer a carefully planned Pilot, run by a human — free or paid.

It's nearly time. 

Ticket prices for SaaStr Annual are going up at midnight, tonight!

This September, join an unbelievable community of 12,500-15,000 fellow SaaS industry experts--CEOs and Founders to CROs and CTOs. 

Attend the SaaStr Annual this year to:

• Meet-up with your fellow team members while learning extensively from the top SaaS CEOs and professionals in the world 
• Network with 12,500 SaaS professionals. You could meet your next valuable customers or hires at this year's event
• Learn extensively from top professionals in workshops, Braindates, Meet a VC, the Big Party and more

Don't miss out on a chance that could change everything! 

Find your next great customer, hire or Investor at the Annual. 

Basically all of the SaaS CEOs/founders I know of have made at least one terrible VP+ level hire.  It’s one of our enduring topics on SaaStr.

Sometimes it’s VP Sales (OK, often, this is the most common mishire — another post here on what a really great VPS can do for you, and how a poor one can wreck your company).  Sometimes it’s VP Marketing.  Or VP of Eng, or whatever.

Different companies, different positions.

But there’s one common thread — the mishire seems almost always to be the Great “Been There, Done That” VP. 

Often the Great Guy from Salesforce or Shopify or ServiceNow or LinkedIn or whatever other leading SaaS company.  Or sometimes, from a successful unicorn that everyone’s heard of.

So I’m seeing something I haven’t seen since the high-stress times of March-June 2020 or so: founders alienating their investors during tough times.

Some of it is almost natural in tougher times in general, but VC-founder tensions are exacerbated these days due to the mammoth size and outsized valuations of 2H’20 to early ’22.  Founders are under stress where growth has slowed or stopped, and VCs are under even more stress than in other challenging times because they might lose a lot of money.  Not just a little money.

So I see … tensions.  And some of the tensions are just fine.  But then, sometimes, I see founders push it too far.  Often because they feel pushed too far by their own board and investors. 

The thing is, it’s not symmetrical.  As a founder, you aren’t an investor — you’re much more.  You’re the CEO and the folks that run the place.  That means, of course, you know more operationally than your VCs.  And your VCs have more pattern matching on their side.  They’ve seen multiple startups struggle, and are looking for signs you’ll either bounce back later … or won’t.

One bit of advice, though.  No matter how frustrating it can be to work with your VCs and investors in tough times, don’t break things.  There’s no upside to it. 

This edition of the SaaStr Daily is sponsored in part by Brex

Brex is reimagining corporate cards and spend management to help founders get fast access to 10-20 times higher credit limits, unlimited virtual cards, a no-fee business account, and built-in software. 

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