You only have 1 day left (!) until prices for SaaStr Annual 2023 go up at midnight on July 31st!

Join 12,500+ of the Best in SaaS and Cloud at SaaStr Annual 2023 on Sep 6-8 in the SF Bay Area! 

Now's the time to REGISTER while it’s top of mind. You seriously don’t want to miss the most relevant SaaS event of the year.

So if you’re looking for ways to be more efficient and do more with less, here is your perfect opportunity. 

Plus!

• You get to hang out with more than 12,000 SaaS professionals who are just as hungry about growth as you are. 
• Listen to 279 LIVE speakers across 8 stages and 3 days.
• Attend 2,000+ networking sessions
• Meet and pitch VCs and investors.
• And enjoy nightly Happy Hours and great parties

Hey SaaStr Community,

Our top post this week was, Raising Capital in H2 2023: What You Really Need To Know with Creandum Partner Peter Specht.

Amongst all this uncertainty in the market, Peter Specht, Partner at Creandum, shares a data-driven perspective and real-time insights into the market of very recent rounds and current VC expectations. 

Specht walks you through what has happened in the last 12 months and the best practices for raising capital right now.

So price increases have been the name of the game in SaaS for the past 12 months, in many (not all) cases to help make up for slowing growth:

• Zendesk up 16%
• Salesforce up 9%
• Google Workspace up 20%
• HubSpot up 12%
• Webflow up 16%
• Shopify up 33%
• Slack up 10%

And some of them like Slack and Salesforce hadn’t raised list prices in quite some time. 2022/2023 was the year!

What did we learn from so many SaaS leaders raising prices — in many cases, a lot?  Well, we learned for the most part there was a lot of price elasticity.  Churn didn’t go up much at all, and the customer base absorbed the price increases.

But it can’t last forever.  You can’t raise and raise forever, at some point the elasticity hardens.

And one of the first to see it was Toast. 

 Toast added a $0.99 fee to orders of $10 or more.  Now that may not sound like a lot, but Toast’s margins are lower than a pure-play software vendor, and the impact to the bottom line and net margins would have been huge.

What happened?

The customers revolted.

This edition of the SaaStr Weekly is sponsored in part by New Zealand Trade & Enterprise 

New Zealand technology is made for the world. From sustainable space travel to AI-driven agritech, we deliver innovative technology on a global scale.

Quiet but Mighty SaaS security leads Zscaler just keeps on growing at epic rates at $1.5 Billion in ARR — growing a stunning 46% even at that scale. 

And profitably (or at least with strong operating margins). 

And with high NRR. 

And with … well just about everything. 

It’s the full package.

Yes, times are a bit tougher out there.

But Zscaler has mostly shrugged it off by providing a mission-critical solution with strong demand — cyber attacks are only growing and growing, and stopping them is seen as a “must have”.   

And it’s been rewarded for it.

So don’t look now, but things are getting a smidge better in SaaS.  It’s still tough out there for many, and selling is challenging.  

Goldman Sachs is now predicting the first re-acceleration in ACVs in years:

And:

Top Cloud and SaaS stocks are up 31% this year. 

Now they still are way down from their 2021 highs.  But +31% is real.

Top Cloud and SaaS stocks are trading at 15x ARR or more.  And top quartile is approaching 10x ARR. 

Now this is nothing like the 2021 days.  Nothing.  But it’s way off the lows of earlier in the year.

Inflation appears to be down, and interest rates have mostly peaked.

We’re all macro experts in SaaS now!  But inflation does seem to be way down in the U.S. at least, and interest rates appear close to the maximum.

We’ll start to lap tougher times. 

Growth has slowed for almost all Cloud and SaaS leaders this year, but that also makes maintaining and even beating that growth next year much easier.

Almost everyone has gotten much more efficient. 

The top startups all are more efficient and in many cases break-even.  This will make them much more attractive in the current markets.  Everyone got into better shape the past 12 months.

And … there are a lot of really, really good SaaS companies ready to IPO. Let’s dig in there.

So perhaps the first SaaStr post that generated a lot of controversy was “If Your VP of Sales Isn’t Going to Work Out — You’ll Know in 30 Days”. 

The point of the post wasn’t that a new VP of Sales can get everything done in 4 weeks. 

But rather, that you should see improvements ASAP.

1 or 2 new, better reps.

A few stuck deals that finally close.

Etc. etc.

A lot of veteran SaaS revenue leaders protested, but most of them, upon reflecting on it, came to agree the point was right. A new VP of Sales doesn’t always double sales in 30 days — although it can happen in SMB sales. 

But they do move the needle.

They don’t just talk.

As an update to that classic post, I asked founders what were the signs they first saw … that a mis-hired VP of Sales wasn’t going to work out. I’ve collected them below. If you think you’ve made a mishire, but aren’t sure, take a look at the list below. These are warnings signs.

What is one thing all hyper-growth SaaS companies have in common? 

“A growth team that takes risks and looks for outlier effects,” says Guillaume “G” Cabane, Co-Founder at Hypergrowth Partners, a collective of advisors, VPs, and others working on an equity basis with companies like Maze, ramp, and Honeycomb.io. 

In our latest Workshop Wednesday, held every Wednesday at 10 a.m. PST, G shares low CAC, scalable tactics for earlier growth-stage startups. 

• SaaStr 678: Raising Capital in 2023: What You Really Need To Know with Creandum Partner Peter Specht
• SaaStr 677: MongoDB at $1.5 BILLION in Revenue: An Epic Growth Story with SaaStr CEO Jason Lemkin
  

• SaaStr 676: CRO Confidential: How to Grow Revenue Faster in the Second Half of 2023. Hosted by Sam Blond, Partner at Founders Fund

Listen on Apple Podcast, Google Podcasts or Spotify

Who exactly taught SDRs the line "I recently came across your profile"?

I know it may not be what you want to hear

But the answer to how to get through tougher times is generally to work even harder

At least for a while

© SaaStr 2023

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