2024 Is The Year to Think About Buying Someone Or Merging

In 2021, no one wanted to sell. In 2022, no one knew what was going on.  In 2023, it was all about cutting.

2024 isn’t easy for everyone. But it is a year when everyone is more rational. This is surprisingly rare.

Take advantage of the vibe to think about if some sort of acquisition could truly move the needle for you, and be possible:

1. Think about acquiring another startup with an A+ team and/or A+ second product
2. Think about possibly merging with your top competitor. Hard but can open up interesting dominance opportunities when done right.
3. Think about possibly merging with a good partner to get to scale. E.g., one of you at $40m and the other at $40m with so-so growth might be meh. But together? You might be able to IPO in a few years.

I’m not saying do any of this for sure.

I am saying 2024 is the right year as founders to think about maybe, maybe doing one of these. Just one.

How do you build out a Sales Development (SDR) function at your SaaS company?

Sam Blond, Partner at Founders Fund and host of SaaStr’s CRO Confidential shares his advice for building an SDR function in 2024 based on his experience as CRO at Brex. 

We’ll cover everything from setup to efficiencies in setting up an SDR function, including:

• The benefits of SDR
• When to hire your first SDR
• Who to hire
• How to measure performance
• Scaling the team 
• Trends in outbound

MARCH 6, 2024 / WYNWOOD

SaaStr is coming (back) to Miami for an epic evening of networking and community to kick-off a year of events. Join 300 SaaS execs, founders + VCs. 
Grab your ticket to join us on Wednesday, March 6, and get ready to meet some incredible SaaStr speakers and talk about all things SaaS!

Featuring Amazing content! with:

• Jason Lemkin, CEO and Founder of SaaStr
• Sam Blond, Partner at Founders Fund and Host of CRO Confidential,
• and Adam Gross, CEO of Vimeo

So times are tougher for some, but for the most part, not in leaders in Cloud security. Cloudflare is a great example.

While it saw some slowdown last year, it’s now accelerating again with 2 record quarters of new bookings in a row.

At ~ $1.5 Billion in ARR, it’s still growing 32% and it’s gotten pretty darn efficient, with 14% free cash flow margins now.

And the markets really like Cloudflare.  Really, really like it.  It’s trading at a stunning $36 Billion market cap, or 24x ARR!

The key?  They are seeing no slowdown at all in revenue growth from $100k+ customers.

The landscape of customer success has been evolving rapidly. So much so that we seem to be releasing new content on customer success just about every week.

Today we’re focusing on actionable insights you can use to drive down churn with customer success in today’s new era of SaaS efficiency. You Mon Tsang, CEO and co-founder of ChurnZero, Colleen O’Sullivan, VP of Integrated Customer Experience at Hubspot, and Jason Lemkin, SaaStr founder and CEO, give their take on where the customer success industry is headed and shares data from the Customer Success Leadership Study done by ChurnZero at the close of 2023.

This is the fourth annual Customer Success Leadership Study brought together by ChurnZero, ESG, SaaStr, and Hubspot. The report provides a definitive overview of the customer success landscape and features insight from more than 1,200 CS leaders worldwide — making it the largest study in the industry for customer success. 

We’ll dive into the most interesting learnings and tactical takeaways together today including:

• How the economy has impacted customer success teams’ operations, measurements, and goals
• What CS budgets and departments look like today
• How AI will play a role in the customer success tech stack

Pretty darn common.

The “traditional” role of a sales engineer is to support the sales team through the close of a deal.

And as you scale, the role should likely end there. Traditional customer success, and/or a specific team for deployments, can take the baton from there.

But in the earlier days, having a sales engineer or solution architects (often, you’ll just have 1 or 2) continue to support the customer through and after deployment makes a lot of sense. You’ve learned the issues and challenges. Stick around until the customer is fully deployed, at least.

The biggest issue often is this just doesn’t scale.  But it can work just fine on the way to $10m ARR, or even beyond.

Nick Mehta, CEO of Gainsight and I did a recent deep dive on this and many related topics here.

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

In the Forrester Wave™ Customer Success Platforms, Q4 2023 Report, Forrester recommends that CS platform buyers look for providers that:

• Prioritize digital-led strategies for success at scale.
• Leverage AI and machine learning to harness predictive analysis and optimize resources.
• Include rich reporting and integrations out of the box.

“CS teams need to find alternatives to high-touch models and manual processes and invest in digital-led programs designed to meet customers where they are,” writes Shari Srebnick, principal analyst, Forrester.

Want to partner with SaaStr? Click here to Sponsor our events, podcasts, newsletters and more.

The best sales teams seem to just do amazing things together.  But what differentiates them?

They do tend to work at some of the best startups, so there is that. But it’s more than that.

A few factors that contribute to high-performing sales teams:

• High quota attainment. The best startups invest in their sales teams and work hard so most of the reps hit and exceed quota. It’s no fun and demotivating for everyone to miss their goals.  This doesn’t mean lowering the bar.  It does mean a well-oiled machine that hires strong reps of all backgrounds, and gets them the help and training so they can scale up and succeed.  You really do want 70%+ of the team hitting quota.  Or higher.
• They have low attrition. Turning over a sales team is very hard on the organization. It’s a lot of work to train and build a team. The best sales teams scale together, with low churn and, ideally, close to zero churn in management and top performers. The idea that you can just fire the bottom 30% each year doesn’t work in a solution-sale environment. At least, not that well.  Even the best reps take a few quarters to really hit their groove, even if they hit their number before then.  It’s hard to really hit 110% of the plan if any significant number of your top performers turn over.
• They have great leaders. A great VP of Sales is worth her weight in gold. The best reps want to work for the best VPs of Sales.  Oftentimes, in fact, it’s the main way they choose between multiple options.
• They are reasonably well trained. You have to train your team for many of them to succeed. The more you train them, the faster they scale.
• They are well — but fairly — paid. The best sales teams may have tough goals, but if they hit them, they are well-paid. This doesn’t mean huge compensation for low quotas. But it does mean if they sell a ton, they make a ton.

As a founder, the biggest thing that always surprised me was the limits of due diligence.

• In my first start-up, we had a very exotic, complex technology. None of the investors ever understood it.
• At Adobe Sign / EchoSign, the vast majority of investors that I met with understood what we were doing at the time — but not why it was changing/creating a market.

Now I understand. It is hard, especially in today’s hyper-compressed time frames, to really understand an early or early-ish stage product and even the market.

But the VCs weren’t lazy — for the most part. They did a great job on team diligence, prospect diligence, and customer diligence. It’s just going an extra layer deeper on diligence was what I expected before getting a seven-figure check. But in the reality — not so much.

You make your bet with the information you have, and you Face East.

© SaaStr 2024

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