Hey everyone -

We're quickly approaching our largest, and most ambitious SaaStr Annual yet -- and with less than 80 days to the biggest SaaS event of the year, we don't want you to miss out!

Be there September 6-7-8 in the heart of the Bay Area for 3 days of tactical content, hands-on workshops, mentorship sessions, speed networking, recruiting and epic evening events.

With 12,500+ of the best SaaS leaders, executives, revenue leaders and investors joining us this year, this will certainly be the biggest and best SaaStr Annual yet.

So G2 has its latest Buyer Behavior Report for 2023 out here, sourced from 1,700+ buyers.

A few great takeaways:

#1.  49% of G2’s Buyers are Increasing Spend in 2023.  42% are holding spend flat (or say they are), and only a tiny 9% are actually cutting spend.  This is consistent with all my data and experience.  Almost no one is cutting SaaS spend other than overfunded startups.

#2.  47% of Deals Are Less Than 1 Year in Length.  Of course, this is very sensitive to the specific vendor, type of buyer, etc.  Most enterprise deals in general IMHE are 1+ years in length.  But super interesting to see that across all G2’s buyer base, 47% of deals are 6 months or less, and that exceeds 50% outside the U.S.  Let folks buy the way they want to buy, and more folks buy.

I held off for many years on writing a post on Board Meetings.

Why?

Because every investor in the world writes lengthy posts on How to Have a Great Board Meeting. 

How to Have a Great Pre-Board Meeting. 

How to Have a Great Board Meeting Week. 

Etc.

etc.

etc.

VCs, once they have been doing it a while, basically become professional Board Members, and they write a lot about that. But I rarely find these posts help founders hack board meetings to help them. 

Or even explain why you should do them — if you don’t have to.

But how can you make Board Meetings work for you as a founder — especially if you are early stage and don’t have to have them yet?

A few non-obvious ways you can use having regular Board meetings to help you. A lot.

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

Whether you're early stage or preparing for exit, your growth trajectory requires a constant evolution of skills, systems, and future planning. Kick off and support exponential growth with a cloud-native solution for up to six months free with partnership perks.

So startups are just soooo hard, at least until you hit scale.  At least until somewhere between $10m and $30m ARR, depending on the category, competition, and timing.  

Sooo hard until you can’t be stopped.

You’re always almost out of money, or at the edge of slowing growth, or just can’t find that critical VP you need, or build that feature in time.  

It’s constant latent stress, and in many ways, you’re sort of alone outside of your cofounders and some of the folks on the management team.

We had a great convo with Todd McKinnion, CEO of Okta, where he said until $30m ARR or so, he always felt things were just … fragile.

But as tough as some times were, and even dark as thing seemed in some cases I was never … down.   But never down.  Maybe because there was never time to be down.

No, the only time I’ve been lost is twice — after selling my startups.

Stock options can be really unfair to employees by their nature. Almost no one has the facts to actually know what to do what them. And fewer still even have the financial background to know what to do with the facts even if they have them.

I don’t even know what to do with stock options I have myself from many companies.

Even if you are in the money — a good sign — the taxes can be so high on exercise in some cases, it can hardly seem worth it.

But you can look for certain signals. If the company has just done a big “up” round, that’s generally a good sign (faux unicorns of 2021 aside). And if the options are underwater, like here — that’s a pretty bad sign.

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

Achieving SOC 2 compliance helps you build trust, raise capital, scale your business, and rise above the competition. Download the checklist to get started.

Just a few observations from bootstrapped SaaS companies I’ve had some involvement with:

It probably will take 3–4 years longer to get to $10m ARR or so. I don’t fully have the data to support it, but usually, bootstrapped startups take longer. Atlassian and Qualtrics took longer to get to $10m ARR. But after that, they grow just as quickly.

You or your co-founder will freak out about how expensive (and for the best ones, highly compensated) salespeople are. Once you have a few reps that are doing a good job closing, you may get mad / frustrated that they are making far more than anyone else in the company. Even if you don’t get mad, one of your co-founders might. Bootstrapped SaaS companies seem to have trouble making the transition to the fact that your best sales reps should be making real money.

You may have a harder time seeing it. Related to point 1, but a bootstrapped SaaS company that took 4–5 years to get to $2m-$3m in ARR often can’t “see” the $100m+ future / vision anymore. It’s still there. They just worked so hard, for so long, to get to 2–3% of that vision … that they can’t see it anymore.

Eventually, most startups “de-bootstrap” if they go big.  Just an interesting observation that 95%+ of SaaS leaders, even if they boostrapped at first, didn’t bootstrap forever.

We’ve closed over $50,000,000 of sponsorships to SaaStr events but it took me a while to totally understand why they perform — and when they perform.

And a lot of folks who have been doing this a while will talk about how, for example, they now just do side events at Dreamforce, rather than participate in the event itself.  Fair enough — and we’ll talk about why that’s good too, at first.

It depends on how profitable the acquirer is.

All things being equal, most tech companies that are very profitable (Adobe, Microsoft, Intuit, SAP, Oracle, Google, Facebook etc) would prefer to do acquisitions with cash.

Why?

Cash is basically stuck on the balance sheet — acquisitions are one of the few ways to really use it.

If you spend it on comp or hiring, your earnings go down. But if you spend it on acquisitions, it doesn’t impact your earnings from an accounting perspective.

At least, not until years later if you do a markdown of goodwill.

Cash acquisitions can almost be free in the short and medium term for cash-rich big companies. They don’t have to issue more shares and they are just converting one asset (cash) to another (assets and goodwill). This is hard to understand at first, but it does drive M&A up to a point.

Cash is not dilutive.

Public tech companies have to work hard to manage the annual dilution they incur from stock and equity grants. That includes any stock-based acquisitions. So if they use stock to buy a company when they could use cash for, it leads to additional dilution. They can buy back an equivalent number of shares to offset it, but that’s more complicated.

© SaaStr 2023

644 Emerson St. Suite 200, Palo Alto, CA, 94301

If you'd like to stop receiving the SaaStr Daily, click here