Inc - IPOs are Back: Really, Really Good Ones

So Klaviyo and Instacart reopened the IPO markets — from a 20 year low. 

We are back.  At least, for the very best. 

Mostly.

Two great leaders, worth almost $10B now and public, and both “priced” at the high end of the IPO ranges.

Klaviyo is the more relevant for us in SaaS, and it’s a monster:

• $650,000,000 in ARR (!)
• Growing a stunning 56.5% at this scale (!!)
• 119% NRR from SMBs
• Profitable, and only burned $15m net to date
• 130,000 total customers

That’s really just about as good as it gets in SaaS, folks.  It has a few risks.  It’s dependent on Shopify, and growth in some of its core customer segments have slowed as it’s dominated those markets.  But other than that, it’s just about as good as it gets.

So Databricks hasn’t IPO’d yet — hopefully it will in the next 9-12 months to help keep the just reopened IPO window … well, open.

But as part of its most recent private round at a $43 Billion valuation, it did disclose enough interesting metrics to do 5 Interesting Learnings.

#1.  Growing Over 50% at $1.5 Billion in ARR.

This is mighty impressive in general, but especially in today’s still murky “macro” environment of higher interest rates and more budget scrutiny.  Like its rival Snowflake, Databricks business remains extremely healthy.  Growth at $800m ARR, during Peak Best of Times, was about 75%.

This edition of the SaaStr Weekly is sponsored in part by DevRev

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Given the massive downturn that started 18 months ago, many SaaS founders are nervous about what it takes to raise capital in SaaS in 2023 / 2024.

Christoph Janz, General Partner of Point Nine Capital, shares what it takes to raise capital in SaaS, overall investment activity in 2023, and how to develop a convincing AI strategy.

The biggest structural difference is you have to hire all the VPs by employee 50–100.

You won’t be able to scale this far without a full management team — VPs of Sales, Marketing, Product, Engineering, Customer Success at least.

But the toughest personal challenge for many CEOs is letting go.

By employee 100, you have to let go of things. You have to let go of being the product manager and head of product.  You have to let go of what you say being almost divinely correct.  You will have to let marketing do things you don’t think will really work, and let sales hire folks you wouldn’t yourself buy from.

You have to let go of the many mistakes that will be made — so long as you hire great VPs to run the playbooks. You have to let go of the fact that some important things will be done “worse” than if you were doing them or managing them yourself.

You have to let go, and learn to backfill the team you build.

This edition of the SaaStr Weekly is sponsored in part by Booking.com

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How is AI going to impact the software and SaaS landscape of the next couple of years and also the next 5-10 years?

Kristina Shen, General Partner at a16z, shares some insights into the present and future of generative AI at this week’s Workshop Wednesday, held every Wednesday at 10 a.m. PST.

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