The Latest from SaaStr: Job #1 Once You Hit Initial Traction

So we’re almost there, the 9th ever SaaStr Annual.com in the SF Bay Area on Sep 6-8!!  We’re again sprawling out across our 40 acre campus in San Mateo, halfway between Palo Alto and San Francisco.

We’re keeping all the great innovations from the past few years, and of course, adding some great new ones!

So Sprinklr is one big Social Media and More management tool you might not have heard of — because it’s pretty darn enterprise.

And yes today, it does a lot more than social media management, but that’s its original core. And managing content and the overall customer experience at scale in big companies is a big endeavor.

Sprinklr is good at it.

At $700m in ARR, it’s still growing 20%, and it’s getting better and better at closing big, $1m+ deals. And it’s worth an impressive $3.7 Billion.

Although a 5x ARR multiple is still pretty modest compared to the Go-Go Days of 2019-2021. Here are 5 interesting learnings. 

Ultimately, the job is to beat Nasdaq by at least 20%. 

Otherwise, their own investors (the LPs) should just invest in … Nasdaq.

It’s liquid and full of great tech companies!

Net net, this means returning at least 3x the capital they are given to invest.

Now what does the job look like?

Roughly:

Source new investments. Maybe 15%-20% of time.

Support existing investments, serve on boards, etc.  Maybe 20%-25% of time.

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We all screw a lot of things up. But I think the biggest, #1, mistake successful first-time entrepreneurs in SaaS make time and time again these days is

they own a key function area or two too long.

They stay the VP of Sales, Marketing, Product, etc. for far longer than they should.

I I see this again and again, and in SaaS, it’s a real lost opportunity.  I think it’s a byproduct, in part, of two things.

First, the fact that founders are just so much better these days.  Or at least, better at able to do many functions.

So an amazing founder CEO often can also be the VP of Sales, VP of Product, hack Marketing, fly across the globe as the VP of Customer Success, and sometimes, even continue to write some code.  

That’s great. 

But it’s way, way, way too much for one person to do one day longer than necessary.

So what the heck happened in 2022 and into 1H’23, when SaaS unicorns could go from 100%+ growth to 0% in 12 months? 

How could growth for some decelerate so quickly?  It didn’t happen in the last big downturn, and it didn’t happen to everyone:

• Datadog’s growth slowed to 33% from 61%.  But it still grew at an epic pace at $2B in ARR.
• Zscaler’s growth slowed to 41% from 61%.  But still pretty strong growth at $1.5B in ARR.
• Monday’s growth slowed to 50% from 65%.  But again, still very impressive at $640m in ARR.

The list goes on.  The macro impacts for most in SaaS and Cloud are real. 

But customers didn’t stop buying.

And yet many startups even at $100m+ ARR saw growth slow to 0% or close to it.  What happened there??

Basically what’s clear now is customers went through a “10% App Layoff.”

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Either find a smaller role in the company, and still be supportive. Do that if you can. If you can’t, if you really don’t want to stay. Then rip the band-aid off.

And just leave.

It’s OK. It’s for the best. Don’t stretch it out. Don’t pretend for the next round of financing. Folks will likely see through it, or at least figure it out in the diligence process.

The company may immediately lose its funding. It’s terrible. But it’s OK. If the CEO is really great, they’ll find someone else. More committed that you. Better than you. Then somehow, someway, find more funding. In the end, the company will be better off, no matter how much the short term pain.

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