Inc - Are We Back to a 6x World?

And I’ve even been bullish the past 18 months, even with the headwinds some have seen:

• Sure growth is down at top Cloud leaders, but it’s still strong in absolute terms
• The best SaaS and Cloud startups that solve real, big problems are still exploding
• The U.S. economy overall remains very strong
• Many Cloud and SaaS leaders from Salesforce to Samsara to Monday have resumed hiring
• Secular trends still favor SaaS, spend still going up, even if inflation and vendor consolidation don’t always make it feel exactly like it

These aren’t the Best of Times in SaaS, but in many ways they are still very good times.  Just nothing like 2021.

So we last checked in with Freshworks at $400m in ARR.  Fast forward to today, and last quarter they crossed an incredible $560,000,000 in ARR growing 20% on a constant currency basis.

That should put them at about $600m ARR today!

Bigger Customers Keep Growing, But SMBs Have Slowed

A common theme across tech today.  Freshworks has 51,700 customers at around $2k ARR, with a quick close of just 25 days. 

But in contrast to their bigger customers, the macro environment — or perhaps market saturation — has led to slowing growth in this segment in 2023.

Early bird tickets end in just a few days!

Next year marks the 10th edition of SaaStr Annual and will feature 3 days, and 13,500 B2B/ SaaS Founders, Executives and Investors, coming together to share their learning in the heart of Silicon Valley. 

We’ll once again take over the 40+ acres of the San Mateo County Events Center for SaaStr Annual 2024 on September 10-12th and we'll bringing the best in SaaS with us. Use our exclusive newsletter code for a discount on early bird tickets.

Each year, tens of thousands of SaaS fans attend SaaStr Annual. And every year, Jason Lemkin, the founder and CEO of SaaStr, takes the stage to answer the audience’s most pressing questions.

For part one of this Ask Me Anything session, Jason covers everything you need to know about hiring your first VP of Sales, what he really thinks about AI, what the future of lead generation in 2024 looks like, and much more. 

Let’s jump right into the questions.

I’ve been investing for 10 years, across multiple billion+ outcomes, and only seen 1 founder “fired” in my portfolio, and one who the biggest VC suggested they step down.

And even there — the founders in the end came to the same conclusion, and remained on the board. And both companies did quite well.

And in fact in SaaS at least, almost all SaaS companies that IPO still have their founder-CEO as their CEO at IPO.

Full data here.

Now yes, of course, the ones that IPO are the outliers.  Making a change at a rocketship arguably makes far less sense than say, a startup that burns through all the cash, or has a founder CEO that isn’t at this level, etc.

But the thing is, just firing a CEO that is truly giving it 110%, knows the customer and products cold, and isn’t running out of money … well firing that CEO really gets you nowhere most of the time.

VCs have figured that out. 

Bet on the best. 

And just back them.

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

Merge’s Unified API allows you to access 150+ integrations across HR, payroll, ATS, accounting, CRM, and ticketing systems.

So for many of us, things still seem much harder than they used to be.  And yet, overall Cloud spend continues to grow to record levels. 

In fact, Gartner predicts 2024 spending will grow far faster than 2023, which still grew substantially.

Who’s getting hit hard these days are Optional Apps.  The ones folks want, but could cut because they already have some of that functionality in their core suite.

Who’s winning these days: often the core suite itself. Salesforce is back to aggressive hiring.

And ooooold SAP? Founded back on April 1, 1972?

Their Cloud business is on fire.

© SaaStr 2023

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