The Latest from SaaStr: 5 Interesting Learnings On The Trade Desk at $2B ARR

So what if I told you there is a SaaS company you likely have never really heard of unless you are in adtech / advertising, doing $2 Billion in ARR, with a $28 Billion market cap even today, that’s insanely profitable and yet still growing 32%?

Yes, this company exists.

It’s called The Trade Desk.

It’s self-service SaaS for AdTech, so it’s often seen more as an Adtech player than a SaaS company, but the reality is it’s software for ad spend.  It’s SaaS.

Let’s dig in.  Because they’re doing just about everything right. And even in today’s low multiple, tougher world — being rewarded for it.

So Zoom has just been the craziest story of all time in SaaS. It was already a rocketship before Covid. At $450m in ARR, it was growing a stunning 110% already, as fast as anything we’d ever seen.

Good Times, indeed.

Then lockdown came, and in the end, it wasn’t a boom for Zoom.

Revenue rocketed from $1B ARR to $4B ARR … in just 12 months. Truly insane. But also, something that could never possibly be sustained. It was too much, pulled forward too quickly.

Fast forward to today, and to no fault of its own, we can see what happens when 5+ years of growth was compressed into 12 months: a reversion.

At $4.4B in ARR, Zoom’s enterprise business is robust, if not a true rocketship, growing an impressive if mature 24% a year. But the 110%+ NRR Zoom had from SMBs through 2021 didn’t last. It probably couldn’t last.

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

Lark is a collaboration tool designed to improve team productivity. Get chat, email, video conferencing, calendar, and docs together in one place.

A few signs someone senior is likely to leave:

They start arguing with you — when they didn’t before, or more than before. A clear #1 sign of frustration, when it starts seemingly out of nowhere. Especially when it sort of seems to come out of the blue.

They stop following up as well with customers and prospects. A clear sign of disengagement.

They start doing odd deals. Unapproved discounts, or odd contracts.

They stop following up on things they said they’d do. None of us are perfect here, but if follow-up abruptly changes … that’s a clear sign of someone starting to check out.

Building a sales team that can sustain the exponential SaaS growth needs an expert’s opinion for more granular insights.

Chris Merritt, Chief Revenue Officer at Cloudflare, has been with the company for almost a decade. He joined Cloudflare when it was bringing in roughly $1M in ARR and has since helped grow its revenue to nearly $1B.

Chris breaks down a typical company’s growth into three phases based on its ARR, providing actionable insights on what you should do and prepare for in each phase.

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

Revenue has always been at the top of list of "Things Businesses Want More Of."

But not like this.

A global SAP survey shows companies are seeing beyond traditional growth tactics and are shifting focus on sustainability as a critical way to boost revenue, increase efficiency, and mitigate risk.

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At SaaStr, our goal is for all of our events, and the community and companies who participate in them, to include, encourage, and recognize people of all races, ethnicities, genders, ages, abilities, religions, sexual orientations, and military service.

We believe that true innovation depends on hearing from, meeting with, and listening to people with a variety of perspectives and diverse backgrounds.

To help, we've set aside 500 no-charge passes to SaaStr Europa for members of underrepresented groups in the B2B / SaaS community.

I’ve implemented and experienced all three sales commission outcomes with sales teams I’ve worked with:

1. “Mostly got it right”. When I did this, the top reps made a lot more than I expected — but that’s good. The key here IMHO is not to essentially punish the reps that make a ton from a fair system, by ratcheting things up too much.
2. “Overpaid”. I’ve done this once. But you gotta just live with it. As long as the overall payments don’t break the bank and were within the formula you set, you live with overpaying. At least for that year or period.
3. “Underpaid”. Your question. I think I’ve paid sales more than fairly, so this only happened to me once. I made a set of assumptions that made sense with trailing data, but didn’t totally make sense in the end. The accelerators were way too hard to hit.

When I underpaid, I course-corrected. I addressed it. But I waited too long. I waited until it was 100% clear the plan couldn’t be made. I paid up at that point, made a correction, and increased comp going forward by about 50%.

And that was too late.

The economy is settling into a new normal (at least this year’s version of normal) and after two years of rocketing sales, some newer salespeople are experiencing their first sales cyles that aren’t influenced by the recent funding boom. So how can sales leaders best manage their sales teams, both new and more experienced, to keep both morale and numbers up?

Stripe Sales Leader of Platform Partnerships Nicole Arboleda joined us at a recent Workshop Wednesday to share some tips. Workshop Wednesdays are held live every Wednesday at 10 a.m. PST for those of you who want to connect with SaaS experts.

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