There’s a bit of a malaise hanging over the SaaS world today. AI excitement obscures it a bit, but it’s there.

A feeling that:

• Growth has slowed everywhere (true overall. The average public SaaS company is now growing less than 20% a year!)
• Sales is so much harder, and the old playbooks aren’t working well
• Folks don’t want to work as hard anymore
• There are even more competitors than ever
• Every leader is competing with each other, trampling on their turf (Gong v. Outreach v. Salesloft v. Zoom, or Rippling vs. Deal vs. Gusto vs ….)
• Layoffs have become normalized
• Customers are angry from endless price increases and upsells
• Budgets are being cut to find budget for AI (true)
• Every renewal is not just a battle but a downgrade
• Profitability is all that matters
• VCs have checked out in a lot of non-AI SaaS
• A feeling we’re in a massive “downturn”, even as the overall U.S. economy still is booming
• A feeling products have fallen out of product-market fit, or at least, become more “nice to haves” vs. must haves
• Even healthy customers scrutinizing budgets in ways they haven’t in many years
• Happy customers churning simply because they have to cut apps
• A feeling things actually won’t ever get any better or easier in SaaS

Ok, get EXCITED for SaaStr Europa 2024, we’re back time in London!  We’re looking forward to hosting 4,000 SaaS founders, execs, and VCs in hip East London at Tobacco Docks across 2 packed days, 4-5 June.

About 70% of our sponsorships are sold out, but we’ve got some good stuff left!

• 1 Super Gold
• 2 Gold
• 1 Platinum

And some really, really good ancillary and related sponsorships are left:

• Registration (this is a good one — do this)
• Braindates and Mentorship (this is a good one)
• VC Lounge (get in front of the money people!)
• Espresso Lounge (high impact, little work)
• VIP Reception

So much has changed in recruiting in the past 4 years:

• Folks do far more Zoom interviews than they ever did IRL, often with zero research
• Reference checks aren’t taken as seriously as before, or even done at all
• Many don’t even plan to stay for a year
• Many are working 2 or more jobs at the same time, and multiple side hustles
• Layoffs are up
• SaaS companies have to be far more efficient than before
• Folks want bigger teams, and to do less work themselves

And with that, I think across my portfolio of 30+ investments, I think we’ve all gotten a bit worse at hiring. Hiring is always tough. It never gets easier. But in general, I’ve seen folks lower the bar, hire faster, and do less diligence on hiring than we used to.

So it’s been a long IPO drought since HashiCorp was the last IPO of the Boom Times in December 2021. Since then, we’ve had just one — Klaviyo.

But now a second SaaS security leader has filed to IPO, Rubrik. They’re still transitioning from onprem / appliciance model to cloud, which makes some of the metrics a touch confusing.

But they are ar $780,000,000+ in ARR, with an 86 NPS and strong revenue growth at 29% overall and 49% in subscriptions (yes, it’s confusing).

Is this the new bar to IPO in SaaS? $500m+ ARR, with ~50% growth?

If so, it’s a mighty high bar.

Disalignment.

• A truly great salesperson is a resource. They help you:
• They educate you on the product.
• They honestly answer your questions.
• They address your concerns, seemingly patiently.
• They help you pilot / test the product first, in a way that drives things forward without too much pressure.
• They push the learn, buy, deploy process along, but don’t pressure you to buy if you aren’t ready.
• They ensure you get a fair price.

The best sales reps, well they are your agent. They help you make a buying decision. And yes, it benefits them. But they provide so much value during the process, you are appreciative.

Now …  How often have you felt that way? Especially these days?

Not that often. When sales incentives and training aren’t aligned to deliver the value above, it’s just … uncomfortable. And low value-add.

But the best sales execs in SaaS make you feel that way.

And that’s why enterprise buyers are happy to “talk to sales”. They’re looking for this sort of help.

This edition of the SaaStr Weekly 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.

How do you reverse-engineer your first million as a SaaS startup founder? SaaStr founder and CEO Jason Lemkin chats with Sam Parr on the popular YouTube channel and podcast My First Million about what’s required to make it on the map for a $100M exit and then reverse engineers the steps to get there.

To the OG software people who read SaaStr, Jason is “the guy,” Sam says. He’s the person that the founders of Hubspot and companies that make tens of millions of dollars want to learn about software from.

If you want to build amazing stuff, you can reverse engineer it to figure out the rules of the game you need to play and optimize for those rules. So, what does it take to get to a $100M outcome?

A little while back, Harry Glaser sold his SaaS analytics startup, Periscope Data, for $130M. It was a difficult, punishing, and rewarding experience. At a recent SaaStr Workshop Wednesday, he shared a behind-the-scenes look into what this process looks like and five key takeaways for other founders who want an inside look into the process.

Harry was the co-founder and CEO of Periscope Data, which raised a seed round before finding customers, yet didn’t run out of money before becoming an overnight success 3-4 years later. They grew like crazy when they found product-market-fit and raised a big Series A and B. 

When you’re growing fast, everything can feel like it’s breaking constantly, and you’re hiring and rehiring people fast. During those rapid growth years, someone would reach out every once in a while and ask if Harry would consider selling. He always said no.

• SaaStr 735: How to Navigate the Shift to Generative AI with PagerDuty’s CEO Jennifer Tejada

• SaaStr 734: The Latest in Series A Rounds, AI Growth Rates and More with SaaStr CEO and Founder Jason Lemkin

• SaaStr 733: Advice Every SaaS Founder Needs to Know in 2024 with Sam Blond and Jason Lemkin

Listen on Apple Podcast, Spotify or Google Podcasts

A truly high performing team gets brought down by even one mediocre player The better the team, the faster you have to root the mediocre out

Many SaaS companies that sell to SMBs take a while to get to 100%+ NRR

Many like Toast, HubSpot, etc. didn't hit it until IPO

You start with the smallest customers,

You start with a simple product,

You start with easy

Then you learn how to make it even stickier + higher value

It's OK if only 50 people listen to your podcast

If: 15 are prospects

15 are customers

20 are potential hires

© SaaStr 2024

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