How to Navigate the Shift to Generative AI

As the kickoff to our first fully digital SaaStr AI Day, Jennifer Tejada, the CEO of PagerDuty, chatted with Jason Lemkin, SaaStr CEO and Founder, about navigating the shift to Generative AI and what Artificial Intelligence in SaaS might look like in the next 6 months, as well as years to come.

Jennifer has been at PagerDuty since 2016, a disruptive company that took automation to the next level before AI was hot in 2024. Before diving into all things AI, Jason asked Jennifer, “How do you keep going long in this industry when so many CEOs have left?” 

My learnings are three-fold.

First, it depends on the team.

Most of the SaaS unicorns have been built on at least some venture capital … but a number haven’t. Atlassian ($30b market cap), Qualtrics ($12B), Mailchimp ($12B) etc. have gotten there without it.

The real question is How Lean Can You Be.

And it really helps to be in a slower-evolving category if you are bootstrapping.

Second, most bootstrapped SaaS companies grow slower in the earlier days without capital to boost them to Initial Traction and Scale.

Atlassian and Qualtrics and Mailchimp took an extra 3–4 years to get to Initial Traction and Scale vs. some of their peers.

But …

Third, once any SaaS company hits $8-$10m in ARR or so … they all grow at the same rate.

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

Stripe Sessions brings together business leaders and builders to discuss the most important internet economy trends. In 2024, we’re focusing on what’s possible—and what’s inevitable—as technological advancements change the world and the global economy with it.

So we’ve covered Klaviyo several times at SaaStr, and we’re super excited CEO Andrew Bialecki is coming to 2024 SaaStr Annual Sep 10-12 in SF Bay to share his learnings!!  (We also have a great deep dive we did a little ways back with Andrew below).

Klaviyo is not only a rocketship, but it’s the only SaaS IPO since Dec 2021.  The only one. 1. That’s. One SaaS IPO in 2.25+ years.

And to IPO in that loooong stretch of … no IPOs … it really had to be a good one.  Which it is.  At $800m it has the full package.  39% (!) annual revenue growth, 16% free cash margins, and 117%.  It doesn’t get too much better, folks.

So a few stories from the past few weeks reminded me of a meta-challenge in managing a sales team in the founder-led sales: so many sales execs need to be micromanaged, at least up to a point.

It’s not just me. Sam Blond, CRO of Brex made a similar point at our SaaStr Miami Super Meet-up. You do have to micromanage reps. A lot. At least if you want high performance. Every metric needs to be measured and met, from meetings to calls to demos.

My #1 tip: Get Zen.

Once you sell it, it is not yours anymore.

And both your upside and your downside are now capped. You can no longer fail or run out of money, but really, you can no longer win in the same ways, either. You now have a much, much narrower role than you did before the deal, in most cases. Even if they tell you nothing has really changed.

You may still have an important role, but the ultimate decisions are not yours. You will have a boss. The product will evolve in different ways than you’d planned, or even, hoped.

For most of us, especially if the acquisition is after years of doing it “our way” — that can be very frustrating.

So the advice I give founders now is:

• Get Zen.
• Plan to stay for 24 Months. Even if you stay less, at least mentally plan for it. This will de-stress your life. And you likely will have strong economic incentives to stay at least that long.
• Get your arms around what they care about. And try to help more there.
• Don’t take it personally; and
• Try to find your replacement when it’s time to go. If you find the person to replace you, odds are much higher your business thrives when, after you Get Zen and Stay 24 Months … someone else runs it.

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

Busra is a security expert and she recently took on all of the security work at SaaS startup, NeonTech.

Day 3 on the job, the CEO tells her "We need to get SOC 2 Type II Certified ASAP. Make it happen."

Well, needless to say, that's a big task. Thankfully Busra had the help of Panoptica to cover all of the TSCs (Technical Services Criteria) that are related to continuous cloud security coverage.

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