Hey SaaStr Community,

Did you know there is a “LinkedIn for Doctors”?  That is doing $450,000,000 in ARR … growing a fairly mature 18%, but at an insane profitabilty level with a 43% (!) adjusted EBIDTA margin?

Well, there is.

It’s called Doximity and it’s worth $6.5 Billion Dollars.. 

That’s 12x ARR even with fairly mature growth.  Why?  Profits.  Lots and lots of profits.

As you can see above, in the early days of SaaS … it was tough to be a public SaaS company.  Public multiples often were around 4x-5x in 2008, and then the global meltdown came, and public multiples fell to as less than 2x revenue for a while.

Then, well, right after we sold EchoSign to Adobe way back in 2011, things picked up, with a slow with material and steady increase in public multiples from 2012 to 2015.

At 8x or more ARR in the public markets, SaaS all of a sudden for many people, became interesting for the first time. 

It was just too hard to make money at 4x ARR.

And then the “Flash Crash” of 2016 came, our first big hit.  It seemed really bleak when enterprise SaaS spend stopped growing for the first time — albeit briefly.  The markets panicked, and LinkedIn sold itself to Microsoft for what now seems like a bargain.

But buyers came back, and the Flash Crash of ’16 didn’t last.  Multiples basically kept growing until a peak of about 17x in August-November 2021.

And then, the markets began to crater once again, the biggest fall of our SaaS lifetimes, and hit a local low in November 2022. That’s when SaaS revenue multiples fell back to 6x, the lowest rate since 2013. 

A few telltale signs of a rep that isn’t going to succeed:

Immediate, massive discounting. Because they have no other idea how to close a deal or create urgency.

Doesn’t understand the product. Way too many AEs don’t even really understand, let alone use, the product they are selling.

Fear of the competition. This is different than respect. The best salespeople respect the competition, and see it as a game to beat them. Even sometimes where maybe they’d otherwise lose.

Blames others. They blame marketing, or the leads, or the lack of support. It’s usually all true, but still.

No updates or the exact same updates again and again. A terrible or even mediocre salesperson just plain has no updates to share.

So VCs have a lot of “-isms” that simplify a lot of complex things, as many -isms do.

One is how certain startups will just “grow into their valuations”.

It’s a good rationalization when you’ve invested in a good company that just was way, way overvalued at the peak, or for whatever reason, in the last round.

Today, a $20m ARR startup growing 100% that magically raised at $1B in 2021 might fetch only a $200m valuation, for example.  A far cry from $1B.  

But … if the startup’s burn rate is low and it won’t need to raise for years, you can rationalize it.  That $20m growing to $40m (pretty impressive) next year, then $70m, then $120m … and boom.  They’ve grown into their $1B valuation from 4+ years ago.

And that’s a slow process that’s rolling out all across tech and SaaS now.

Every top VC has several of these unicorns and pre-microns in their portfolios that are doing fine, but aren’t worth a fraction of their last round price.

But that doesn’t mean issues don’t lurk, even if you are well funded, and your burn rate isn’t very high, if you are way overvalued and have to grow into your valuation.

Protect your business against lost revenue, compromised customer confidence, and reduced competitive advantage.

Sign up for hCaptcha’s complimentary traffic analysis to uncover the fraud and abuse that is targeting your company. 

Product-led growth is a hot topic. As a startup, you want people to love your product, plain and simple. Getting them to love it is more complicated.

At SaaStr APAC 2023, Matt Vethuis, the VP, APJ at Amplitude, shared his take on how to bring power to your products through a hybrid blend of product and sales-led growth called product-led sales.

Product-led growth is a GTM strategy where the product is the main driver for growth. I.e., your product is helping your customers try, buy, and ultimately grow with it. You want them to fall so deeply in love with your product that they will spend money on it. 

But PLG hasn’t always been the way companies do things. Let’s take a walk down memory lane. 

DevRev is looking for Account Executive who can work closely with customers end-to-end throughout their lifecycle - from concept to technical requirements, implementation, adoption, expansion, and paid.

Drata is seeking a Sales Development Manager who will be responsible for 

hiring, training, and leading a high-performing team of Sales Development Representatives. You will also work closely with Sales and SDR Leadership team to improve opportunity management and qualification processes.

• SaaStr 639: Scaling a SaaS Sales Team While Building Culture with Figma VP of Sales Scott Pugh

• SaaStr 640: CRO Confidential: How The Biggest Product-Led Enterprise Company In The World Found Success with Atlassian CRO Cameron Deatsch

• SaaStr 641: The Playbook to Blending Product-Led Growth with Sales-Led Growth: Teams, Tools, Processes with Amplitude VP of APJ Mark Velthuis

Listen on Apple Podcast, Google Podcasts or Spotify

So much of your job as CEO is one way or another getting the company to grow a bit faster than it otherwise naturally would

You can challenge someone great to do better.

They usually do if the challenge is fair.

Challenge someone mediocre to do better though?

They usually lash out

The hardest segment of SaaS: Sales-led SMB sales

You have to be wildly, wildly efficient and effective

And you have to further fight the inherent churn in SMBs

CAC has to be really, really low

© SaaStr 2023

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