Ok the title here is a bit dramatic, but certainly seed investing is in an odd place in 2024. Public valuations are still at a fraction of their 2021 peaks, but seed rounds are more expensive than ever.

Is it sustainable?

Harry and Jason did a deep dive on this and so much more here.

So Salesforce had a rough quarter.  While overall growth met Wall Street’s projections, their guidance for next year was down. For the first time ever, Salesforce projected only single digit growth for next year. I.e., less than 10%.

Marc Benioff and team were clear on the challenges:

• Sales cycles remain longer
• Deal sizes are under pressure, and some new customers cut back projected spend in deals
• Need much more sales enablement in deals
• While the end of the year saw a bit of an upturn in demand, this quarter is back to the same tough dynamics as the past 24 months. HubSpot saw the same thing.

RevenueCat is the dominant solution to manage subscriptions in the mobile world.  Over 30% of U.S. mobile apps with a subscription use their API/SDK, and they have a massive data set.

B2C customers are their bigger base, since that’s bigger on mobile than B2B. But many of the largest SaaS and B2B vendors, from Notion to other leaders, use RevenueCat as well to manage mobile subscriptions.

One key data point I’d missed is … how many paid customers that cancel … come back later?

We all know this happens in SaaS and B2B.  It just takes sooooo long.  The answer:  12%.

So UiPath was early to what we now think of as “AI”, but blazed the path in automation.  Which is what a lot of SaaS and B2B AI is really about.  Automating away human-driven processes.  And its “Robotic Process Automation” did that to an extreme, rocketing it from $1m ARR to $1000m ARR is close to record time.  Growth slowed a bit, but now is re-acclerating.

At $1.6 Billion in ARR, it’s growing an impressive 31% last quarter and 22% year-over-year. And it’s pretty darn efficient, with 27% non-GAAP Margins.

Being early has its bumps, but it pays off if you stay the course.

So job tenures do seem to be shorter than ever, from the SDR level all the way to CRO and CMO. Layoffs are part of it, for sure — but so is voluntary attrition.

It’s super frustrating to many founders. In our quiet discussions, it’s often one of the first things that comes up. “We pay top of market, we have a great culture, we have years of runway, and great logos and problems to solve. Why do folks leave?”

I’m actually going to suggest actually — more folks should leave, faster. Yes, faster.

The world has changed since WFH started. It’s changed I think in more ways than we realized. Our relationships to work are just different.

So as part of a learning experience, I’ve asked dozens of executives who left roles … What Happened?

So I firmly believe you can build an incredible SaaS startup from anywhere now, or at least, any major-ish tech center.  See, e.g., Atlassian, Canva, Cloudflare (CEO now in Park City), Adyen, etc.  Heck, Oracle apparently is moving to Nashville!

And yet … gravity is coming back to the SF Bay Area.

So many CEOs have come back, even if their teams haven’t.  The CEOs of Brex, DropBox, and more have come back. And many senior executives of those leaders are often in the Bay Area now / again. Many French AI startups still try to spend at least a month in the Bay Area now, for example.

And if nothing else, VC funding has come back to the SF Bay.

If you’ve read SaaStr or have been around for the last decade, you might be familiar with some of the repeated GTM mistakes founders tend to make, but the world of hiring, people, scaling, and workplace expectations are significantly different today than they were before March 2020.

SaaStr Founder and CEO, Jason Lemkin, shares the top GTM mistakes founders make today and some cheat codes to avoid them. Some are mistakes we make again and again, and others are newer territory as we evolve.

• SaaStr 740: The Top 10 GTM Mistakes I See Founders Making Today with SaaStr CEO and Founder Jason Lemkin

• SaaStr 739: The Three SaaS Metrics That Matter in 2024 and Will IPOs Be Back? with SaaStr Founder and CEO Jason Lemkin

• SaaStr 738: How Shopify Implements AI Across Sales and Product with Mike Tamir, Head of AI at Shopify

Listen on Apple Podcast, Spotify or Google Podcasts

Is VC somewhat broken today?

Yes Multiples are lower, valuations remain very high at seed,
IPOs tough, M&A rough

But find that Datadog, AirBnb, Wiz, Monday, etc. early and it all still works That’s very hard. That’s the job.

Probably only about 10% of VC backed software start-ups are

growing fast enough to raise another round

Why is the number that low?

Because the top decile of 600+ of them barely hit "triple triple double double"

Anything less isn't fast enough for a VC investment

Anything less doesn't get you to IPO in 7-10 years

A few that >almost< bootstrapped,

i.e. did raise a little but < $10m in primary venture:

The Trade Desk, worth $39B

Klaviyo, let’s watch tomorrow, worth $10B

Veeva, worth $34B

Sometimes the most valuable capital is just that smidge early on

And you can skip the rest

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