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.

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.

Early bird tickets end SOON!

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.

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.

My biggest mistakes in SaaS investing actually in the end haven’t been truly costly because, in the end, power laws mean your winners overwhelm your losers if you do it right.  

A few winners more than make up for the mistakes. 

The real mistakes are just not getting in more winners.

But still I have screwed up a number of investments.

Here’s how:

Confusing non-recurring and recurring revenue. This hasn’t worked out well for me. Both times I did this, the start-ups ended up going from $1m-$2m “ARR” to basically $0.1m “ARR” pretty quickly. Because it was all really transactional revenue. It wasn’t truly recurring and was too fragile.  I should have done better diligence here the first time, and just not done the investment the second time.  Even though in both cases, the early revenue growth was impressive.

Investing when the CEO was even just a bit of a B.S. artist, and/or made something up. Being confident is good. Making things up is bad. Claiming something without knowing it correctly … about a customer I knew personally … was a flag. I shouldn’t have invested in this one. Even though the metrics were very impressive.

So we’ve talked a bit about high performing but toxic employees recently, and that sometimes you have to tolerate one, but not more than one, and not forever.

A different but related topic is The Hard to Work With VP.

The VP that’s smart, gets stuff done but:

• Constantly argues; and/or
• Does things they’re told not to do; and/or
• Breaks rules; and/or
• Creates lots of issues with other VPs
• Etc. Etc.

You’ll probably end up with one or two.  And to some extent, it’s OK.  Your job as CEO and founders is to backfill the weak areas of your VPs.  And to give them the runway to grow and improve as leaders.

And a little argument, some internal friction, etc. can be good.  You don’t want groupthink, and you want the best of your team challenging each other to do even better.  Complacency is a real risk once you start to scale.

So how much drama, how many internal issues, how many broken rules do you put up with — for an otherwise high performing VP?

My learning: 2 hours a week of your time and mental energy.  That’s the max.

Co-founder and CEO at Greenhouse, Daniel Chait, sits down with SaaStr CEO and Founder Jason Lemkin to share what’s new at Greenhouse, a successful recruiting software company at $200M in ARR today. 

When Greenhouse started, it was at a time when the market was growing up, and there weren’t any playbooks. You could do vanilla 101 SaaS practices and succeed. 

Could something like the Greenhouse of 2015 even make it to market today? 

Who knows. Getting off the ground is one thing — an easy pitch of being an HR tech startup focused on improving hiring. 

But today, it’s not that easy anymore. 

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.

• SaaStr 696: The Chat GPT Growth Story: How AI is Changing the Way We Work with OpenAI’s Head of Sales, Aliisa Rosenthal                        

• SaaStr 695: How to Close More Deals with Less Budget with Datadog's CMO Alex Rosemblat                                             

• SaaStr 694: Unlock Profitability and Growth - The Key Strategies with Expensify's COO Anu Muralidharan    

Listen on Apple Podcast, Google Podcasts or Spotify

If you have 24+ months of runway …

You don’t have to worry about a single VC tweet about the markets, multiples, valuations, or anything else, really

Worst case, just build what your top customers want

They can't see too far into the future

But they probably have a better sense of what really moves the needle in the short term than you do

We cut marketing in tougher times,

Ramp it way up when things are firing on all cylinders.

Makes total sense.

Just should be the opposite.

© SaaStr 2023

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