Hey SaaStr Community,

There’s one thing I think it’s really important for sales reps to understand:

AI is coming for your job.

You can laugh, and say ChatGPT is never going to replace an enterprise AE.

But that’s less the point.

AI has already come for post-sales and the contact center. We’re already getting to a point where every contact center wants to automate 50%+ of interactions with AI and automation. That’s radical change, in just 18 months really. From 0%-10% to 50% as the goal.

And that means 50% less humans.

Next up is sales. Yes, here it’s only just begun. Adding AI to existing sales tools doesn’t replace humans.

But it’s going to be the goal. A lot of energy and money will be putting into cutting down the number of human reps, and automating more.

Will it all work? Maybe not. But maybe more at the low end than we think.

So Jamin Ball of Altimeter had a great summary of public company NRR here.

On the one hand, NRR has fallen every quarter since Q4’22, and is now materially lower than Q1’20 (pre-Covid). That’s not great.

On the other hand, it’s still over 110% across the board.

That means at a higher level, the engine of 100%+ NRR for almost all public SaaS companies is still working.  Even 110% NRR is magical.  It’s just not quite as magical as 120%.

You can see it for example in Snowflake’s latest numbers. NRR there has fallen from jaw-dropping (170%) to merely epic (130%).

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So of the beloved leaders in Cloud and SaaS, few have been hit harder than Hashicorp by the “downturn”. At $400m ARR, they were growing 50%. Now at $600m, ARR, growth has radically slowed to 17%.

Some of it may well be some of the challenges in commercializing open source.  HashiCorp’s competitors sell a variant of some of its own open source-based products for less.  Some of it may be that the move from onprem to Cloud has evolved.  But it’s been a lot of change in 18 months, that much is clear.

There’s room for optimism, too. New customer count is up an impressive +19%, and new bookings are up +40%. 2024 might just be a transition year for HashiCorp.

So Redpoint Ventures published some of the slides they recently presented to their Limited Partners (their own investors) here.

There’s a ton of good data there, but this one slide stood out to me, because it was put together in a really clear fashion, better than other data sources I’ve seen.

And what it says is that even though Seed stage investing remains arguably as strong as ever … Series A hasn’t bounced back.

Not at all.

So Carta put out some recent data I found very useful on how many startups raise another round, and how many sort of quietly wind down, in the first 5 years or so after being founded (from 2018 to early 2024).

Almost none IPO’d in the first 5 years, but that just makes sense. It takes at least 8-10 years, on average, to IPO these days. And half the Seed stage startups had shut down by Year 5. That sounds about right to me.

But if an IPO is almost impossible in just 5 years, what about an acquisition?

This is where we have some good data, albeit not enough. About 5% of startups on Carta were acquired in the first 5 years.

What’s less clear is how many were acqui-hires or acquisitions for a very small amount. I’m going to guess based on my experience that at least two-thirds have a very modest exit. And only 1/3 of these have an exit for 3x-10x the price of the last round, i.e. enough for anyone to make any money.

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So we recently did a SaaStr survey on if folks would pick the same VCs if they have to do it all over again.

The learnings aren’t surprising, but they are interesting:  only 23% would pick the same VCs for sure.

Now there is a lot of nuance beyond this poll.  The relationship between investor and founders should be supportive.  Interests truly are aligned, at least 90% of the time.  But there are frictions.

Many are natural, e.g.:

• Some founders are way too wasteful and spend too much, too quickly.  Sadly, this became commonplace in 2020-2022.  The “go down with the ship and spend it all” mentality can lead to a lot of friction.
• Some founders expect their VCs to bail them out.  It doesn’t work that way.  A second (and third) check has to be earned.
• Some VCs just are way too patronizing.  Many.  This rubs almost everyone the wrong way.
• Some VCs are manipulate around outcomes.  Pushing founders to sell, or not sell, or raise more, or not raise more.
• Many VCs now are grinfrackers.  They tell you everything is great, or fine.  No VC wants to be labeled un-founder friendly now.  This leads to tough conversations happening far later than they need to.
• Etc. Etc.

At SaaStr Miami, former Founder’s Fund Partner and CRO of Brex Sam Blond — host of the SaaStr CRO Confidential Podcast — sat down with SaaStr CEO and founder Jason Lemkin for a fireside chat about finding success as a SaaS company in 2024.

They discuss Sam’s learnings at Founders Fund, what the 2024 playbook looks like, hiring and motivating sales teams, and a handful of audience questions. 

Sam just finished 18 months at Founders Fund after joining in mid-to-late 2022. We were coming off an environment where startup funding was as fruitful as ever. With personal experience from EchoSign and other high-growth companies, he was spoiled when it came to those companies raising money from exceptional VCs. 

What he’s learned on both sides of the VC table is that the bar is really high for most VCs. Higher than he imagined in terms of the founder quality bar and, the stage of the business, and growth and efficiency metrics. 

• SaaStr 732: What It’s Like Running a Profitable $400M Public SaaS Company with Vimeo CEO Adam Gross and SaaStr CEO and Founder Jason Lemkin

• SaaStr 731: 10 Things Founders Should Know About Getting Acquired with Brett Goldstein, Former M&A at Google

• SaaStr 730: How to Price and Package AI SaaS Products with Sandhya Hegde, General Partner at Unusual Ventures

Listen on Apple Podcast, Spotify or Google Podcasts

A great sales team can get a prospect to: 

- Buy now vs. later (a big deal)

- Buy from you vs. a competitor more often (huge)

- Buy product that sort of meets their needs (good-ish)

- Buy product they won’t actually use (not as good)

A mediocre sales team can do none of this

For a long while, you probably aren't a great CEO

But you know the customers

The software

The feature gaps

The roadmap

The competition

How to sell it

How to market it

How to build it

So maybe as flawed as you are

You are still the best CEO

It's totally OK to ask a VC at the end of a pitch meeting,

"Based on what you know now, what are the odds you'd invest?"

In fact, it can save a lot of time

© SaaStr 2024

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