The Latest from SaaStr: It’s Now Year 2 of the Venture Downturn

So folks in venture are back to business. 2022 was a year of dealing with the fallout of fallen unicorns, terrible deals, and slashed valuations. It was tough in venture for many, but it is behind us.

And as a result, venture is back to work.

This seed markets remain vibrant, and later stage investors are looking at more deals.

But … but … here’s the thing.

A reality has set in.

It’s Year 2 of the Venture Downturn in SaaS.

That’s OK, everyone has adjusted.  But it also means optimism has seeped out of the market.

Yes, it did seem like in the old days, VCs replaced founder CEOs pretty often.  It happened at Apple, Google, Cisco, and more. 

But it’s rare these days.

In fact, ~90% of SaaS companies that IPO still have their founder as CEO!

And when founders do step down as CEO these days, most often I see it as voluntary, when the company really hits scale and the founders know they’ve personally hit a wall they can’t scale past.

But is still does happen sometimes.  Founders get replaced as CEO by their VCs.  But it’s rare in SaaS these days.

For at least 4 reasons.

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.

Well, first go get some experience with sales.

At least, close the first 10 customers yourself.

If you don’t, you’ll never have any idea how to do it. And the odds your first rep succeeds goes way, way down.

OK, assuming you know how to do it (you’ve closed 10+ customers yourself) … then you do you structure your first team?

Don’t overcomplicate it.

A few thoughts:

First, make sure your sales reps can “eat”, that they can make enough money if they close deals.

This often means that for their first 1–3 months, you might even let them take home 50%-100% of what they close. It’s an investment in them.

After that, scale back the take-home % to a more normal percentage. In the end, reps total comp can’t really exceed about 20%-25% of what they close. But that doesn’t have to be the case in the earliest days.

Significant strides in digital technology combined with the COVID-19 pandemic heavily impacted the world of corporate summits, events, and tradeshows. Many businesses changed their strategy to incorporate virtual or hybrid events recently. Before the pandemic, hybrid and virtual gatherings accounted for only 18.9% of all events. But after the pandemic, the number shifted, with 59.5% of event planners stating that they will focus more on hybrid events.

Is there still room for in-person events in 2023 and beyond? Further, can it drive value for your business? For Todd White, Co-Founder of GUIDEcx, the answer to both questions is a resounding yes.

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

Merge’s Unified API allows you to access 150+ integrations across HR, payroll, ATS, accounting, CRM, and ticketing systems.

Join Amelia Ibarra, GM of SaaStr, and Bee Design CEO, Massimo Arrigoni, for an exclusive webinar!

Learn how our marketing team at SaaStr designs and deploys emails to communicate across all the different stages of their customer journey. 

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