Inc - Things Aren’t Bouncing Back Yet

So HubSpot had a great quarter, despite there being many challenges in the sales and marketing segments overall in the past 18 months:

• $2.5B ARR
• 23% Growth
• 22% Customer Growth
• 15% Operating Margins (non-GAAP)

That’s about as good as it gets.  Even as many selling software to tech have struggled, HubSpot has maintained top-tier growth.

But … that doesn’t mean it got easier. HubSpot was clear:  notwithstanding strong results, demand wasn’t any stronger. It’s still tough out there. 

CEO Yamini Rangan noted:

• December seemed to show a bit stronger macro demand, but that evaporated in Q1
• Budget scrutiny remains higher
• More decision-markers in deals, even with an $11k price point at HubSpot
• More demos and proof-of-concepts before buying.  More proof-of-concepts than ever.
• Deals pushing into next quarter
• Deal close and upgrade rates under pressure
• Larger deals are taking longer
• They aren’t planning on it getting any easier through the end of the year

But

GRR and retention is consistent, even if NRR at 102% is down from the 110% peak a few years ago.  I.e., folks aren’t churning or leaving.  But it’s a lot harder to close them. Still, even now.

This is probably what most of you are seeing for pure-play B2B SaaS sales, too.

So we’re almost there!! 

2024 SaaStrEuropa.com is June 4-5 in London!

Join us for 2+ fun-filled days, great parties, 100s of braindates and workshops, 1000s of connections, and so much more!  And meet everyone from Harry Stebbings to the CEO of Gong!

Be in the front row for these top 5 sessions:

1. Lessons Learned from Scaling to Billions with Gong’s Co-Founder & CEO

2. Lessons Learned from Scaling GTM Teams and Ops at Notion, Asana, and Dropbox with Notion’s GM

3. Mastering the Customer Lifecycle: Strategies for Hiring, Retention, and Growth with Retool, OpenAI, and 20VC

4. How to Implement a Customer-First Strategy and Structure with Dashlane’s CPO

5. From 0-50,000 Customers: How to Build a GenAI Company for the Enterprise with Synthesia’s CEO 

Get 20% off LAST CHANCE tickets:

At this week’s Workshop Wednesday, Lucas Price, former SVP of Sales at Zipwhip and founder and CEO at Yardstick, shares his insights on how to hire and build a high-performing sales team.

When he joined Zipwhip, they were at a quarter million in ARR, and he took the sales team to over $100M before it sold to Twilio for almost $850M. During that time, he wasted a lot of money on failed sales hires and decided to learn everything about hiring sellers.

When you go to hire a VP of Sales or even your first sales rep, one of the top qualifying questions I always recommend asking is if they have experience at your deal size, at your ACV (Annual Contract Value).

There are very different cadences, and different skills, in closing $100 vs $1,000 vs $10,000 vs $100,000 vs $1,000,000 deals.

Very different.

There’s obviously a spectrum here, and closing a $100k deal and a $1m deal are more similar than deal sizes another stage away. And sales professionals certainly can learn skills and go up (and perhaps even down) a deal size in sales.

But moving up or down more than one deal size “bracket” is tough.

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

Join 2,000+ peer SaaS finance leaders, such as Jeff Epstein from Bessemer Venture Partners and The SaaS CFO, for this exclusive virtual event on June 5, 2024.

This full-day summit has three different tracks (CFO, Controller, and RevOps) to help you build the processes and teams within fast growth SaaS, AI, and high-tech companies needed to drive efficient growth.

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

Now that we have 40+ acres for the SaaStr Annual 2024 in SF Bay Area, Sep 10-12, we’ve been able to run a new initiative: building an Executive Briefing Center, and letting our top sponsors do their own meet-ups and even mini-events in our Executive Briefing Center.  The benefit was getting all of the vibe and infrastructure of Annual for your own mini-event for 20-100.  It turned out to work really well.

“Doubling Down” is a new series where we hear from top B2B SaaS investors on their most recent activities and takes on the current market. We had a great one last time with Luci Fonseca, Partner at Base10 Partners. Check that out here.

This week we’re focusing on Andrew Steele, Partner at Activant Capital!

The hardest investment rounds to price are seed rounds. They’re incredibly situationally dependent:

• A founder that sold her last company for $400m or IPO’d might be able to raise a pre-seed round at $40m pre (not uncommon).
• A founder with little proof points might be lucky to raise anything at all, and $2m pre might be very generous.

All these pre-money numbers are crazy in the early days because they are all too high based on any sane metrics. There is no way your super early start-up is even worth $1m in the “real world,” let alone $6m! A few thousand lines of code and 1 paying customer is not worth $2m in any rational world. Unless. It’s a hint of something great to come.

Having said that, if you want to dig a layer deeper, what’s really “fair” is a price 1/3rd or less of what the next round investors will pay through about Series B, and 1/2 or less after that.

The first time I worked at a start-up, I was confused. I came in that first Saturday to the office to work, and no one was there.

Right before that first start-up job, I had been a young “grunt” in a services business before that for 22 months. I worked in the office constantly. That’s the way this services business was. We billed hourly in high stress, high paying situations. So it was working in the office from early morning to late nights all week long, then half of Saturday, and a chunk of Sunday. I took 2 vacations, but was called back from both early to get back to work. So really I never got a vacation.

I couldn’t believe I was “working harder” than my bosses when I came in that first Saturday morning at the start-up and they weren’t there.

I didn’t get it, though.

First, they likely were setting a good example by not creating pressure to work on Saturdays.

Second, I didn’t realize then that most CEOs and founders are always “on” and thinking about work.

At least, they are almost always thinking about their companies, how to fix things, do better, create new ideas, recruit great new managers, etc.

Later, I became a CEO myself. I had different cadences. The first time, I was usually the last to leave the office, but never much past 7pm. The second time, I was usually the first in, but usually left the office by 6pm. And I took my vacations always.

But I never stopped thinking about work, like it or not. It’s with you always. It’s what makes being a founder so stimulating, and so challenging.

© SaaStr 2024

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