Hey SaaStr Community,

So two recent data analyses across both private and public SaaS companies interestingly showed basically the same thing:

Even for the best SaaS companies, on average, growth in Q1 was down about 33% or so from a year ago.

The time periods are different, but they also are sourcing the data at slightly different times.

ChartMogul’s data, which we covered in another recent post, shows data from 1000+ SaaS startups from $1m-$30m ARR in essentially real-time, as they are doing real-time revenue analytics.

What did they see?

Growth rates down about 33% from the peak 2 years ago, and maybe 20% from a year ago.

Yes, these are slightly different time frames, but the same basic trends.  SaaS has gotten about 33% harder overall.  Not impossible.  Not frozen.  Just about 33% harder.

So Twilio is perhaps the top “hero” SaaS company that has taken the biggest hit from the crunch of 2023.

Twilio dominates many of its spaces and segments. It’s the Stripe for Communications. But that’s also a segment of the market when customers have cut back heavily.

As a result, growth has radically slowed for the first time ever, to just 15% at $4 Billion in ARR.

From 48% growth to 15% in just 12 months.

Twilio is the same great company it was in 2022 and 2021, but it’s also been the segment where buyers have cut back perhaps the most.  Almost half of that growth is from acquisitions, though, so the “organic” deceleration is from 35% to 15%.

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So this post isn’t meant to be a sub-tweet, or a sub-post — it’s just a general learning over the years.  So please, no one take this personally.  It’s not about you.

But I’m still going to make one simple suggestion when you go to hire your first set of VPs, your second, or even your third: Beware The Mediocre Recycled

What does that mean?  Well, there is a certain type of VP candidate that worked somewhere good once, twice, sometimes even three times.  And they seem to know the talk and walk the walk.  So they just … keep getting hired. 

As a VP of Marketing, again and again.  A CMO role, again and again.  A VP of Sales role.  But they actually aren’t that good.  They didn’t really do it.  They just worked there.  And sometimes, even oftentimes, left the place worse than when they got there.

A few tells:

• No CEO-level reference.  Any great VP-level candidate should have at least 1 CEO willing to sing their praises.  Maybe not everywhere.  Maybe a role or two didn’t work out.  But someone to say they were great.
• Too many short job hops as a VP / Director.  We can debate if this is OK or not early in your career, but someone who never seems to make it a year as a VP … well … they probably won’t at your shop either.
• No one great wants to come with them.  This is especially rough in a VP of Sales candidate, but it goes for any leader.  And great leader should have 1-2 great folks that want to follow them.

BusinessInsider had a great story a ways back on Datto’s $1b exit to Vista Private Equity. So much of it resonated with me, especially the story of the CEO’s 10-year journey, and turning down an earlier $100m offer to sell. 

A decent offer to buy your company is so rare. Founders think it is common.

M&A is not.

Most founders never get a decent offer to buy their company.  And those that do in SaaS, often only get one or two.  Assume you get few-to-no offers to buy your startup. Ever.

And it’s even tougher now. Take a look at the latest Pitchbook data.  Acquisitions are way, way down.

So saying no is so risky.

It seems like start-ups are all about innovation. And they are.

But how innovative should you be as a founder? Should you do something brand new? Or just reinvent a huge, existing category?

• Zoom reinvented WebEx, GoToMeeting, etc.
• Slack reinvented 100 versions of chat, including Hipchat, Basecamp’s product, etc.
• Salesforce reinvented CRM for the web, but the paradigm was as old as software can be.
• Datadog reinvented observability and more for the Cloud, but New Relic and others were already darlings here
• We now have about 1,000 SaaS payroll apps, many of which are unicorns.  They are remixing things, but in one of the oldest categories there is.

Now that there are 100+ public SaaS companies and unicorns, we can finally answer a question — is it better to start a company that remakes an existing category, or that creates a new one?

Scaling a tech startup doesn’t come easy, and when you’ve tried all the conventional SaaS advice, it might be tempting to give up. But sometimes, the road less traveled is the path to success. 

In this workshop, WorkRamp CEO Ted Blosser shares how to overcome setbacks, trust your customers, and defy traditional wisdom to carve out a path to growth.

• SaaStr 665: CRO Confidential: Principles that Drove Wiz’s $0 to $100M Journey with Wiz CRO Colin Jones
• SaaStr 664: What You Need to Change at $10M to Scale to $100M with Sameer Dholakia, Partner at Bessemer Venture Partners

• SaaStr 663: 9 Things I Wish I Would Have Told My 2013 Self: Lessons Learned from 9 Years with Heap's Former CTO, Dan Robinson

Listen on Apple Podcast, Google Podcasts or Spotify

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It's like Magic

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t's Magic .. because no one in B2B does it

If a second time founder doesn't want their prior investors on the cap table this time, I get it

If the prior investors made money and don't want to invest, though

... that is a flag

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