Inc - For Years, SaaS Outperformed Nasdaq

So it’s strange times in SaaS.  On the one hand, many top leaders are growing at epic rates at scale:

• Databricks is growing 60% at $2.4 Billion in ARR
• Canva is growing 40% at $2.3 Billion in ARR.
• Klaviyo is growing 39% at almost $1 Billion in ARR

But overall, SaaS is in a bit of a rut.  The average public SaaS company is predicting growth below 20% for the first time, ever.  And Salesforce is predicting single-digit growth going forward. Despite Gartner predicting overall, SaaS spend will grow 20% this year.

What’s going on?  It may not be as clear as Twitter / LinkedIn think it is, but a few things are clearly happening:

• Tech customers remain in a cut, cut cycle.  They are still looking to cut seats, cut spend, and still cut vendors in SaaS.  Non-tech customers are as well, but it seems particularly acute with classic tech “B2B2B” buyers.  Even after several rounds of cuts, they are still looking to cut more.   I would have though we’d be past this by now, but we aren’t.  Salesforce, Asana, ZoomInfo, and other leaders are clear it isn’t getting any easier for them yet.  Salesforce has been clear even there, customers are looking to downsize spend.
• Budget being repurposed for AI.  AI spend has to come from somewhere.  It’s coming from even more cuts — to free up budget.
• Price increases and inflation eating up budgets.  Existing vendors aggressively raised prices in 2023 and into 2024.  This eats up budget.
• Post-ZIRP and high interest rates — maybe.  To some extent.  Does the downfall in SaaS multiples correlate with the rise of interest rates?  For sure.  But does this truly account for the stress in spend?  Maybe.  That’s not as clear.  Nor is it magically clear that eventual cuts to interest rates will automatically lead to more spend.
• Deployment fatigue.  Many enterprise are still clearly trying to just digest and deploy all the apps they bought from 2020-2022, often at unprecedented rates.

Up Next: Wednesday, July 10th @ 10AM Pacific

Topic: 9 Signs A StartUp Isn't Going to Make It ... and 5 Things Not To Worry About So Much

Speaker: Jason Lemkin, CEO and Founder, at SaaStr 

Workshop Wednesdays is our popular series where we be bring some of the best SaaStr speakers to you LIVE, every Wednesday. 

Each workshop will be hosted in a live, interactive 45-minute format at 10am Pacific each and every Wednesday. This workshop will be 100% LIVE, not pre-recorded, and will be hosted in an, interactive format, including Q&A.

Add value in the first interaction.  This is so rare.

There’s nothing more frustrating than getting a random email, “Hi, Tony is gone from the company. I know nothing about you, but I’m your new rep. Can we schedule a call?”

Find some way to add value. One great way is to demo upcoming features / an upcoming release.

“Hi, I’m Jason, your next account exec. I’d love to find a way to help even more. Can I show you or anyone on your team the new AI features we’re launching shortly? There’s no additional cost for them and based on what I can see, they may radically increase your efficiency.”

Not perfect. But much better.

A second, albeit riskier, way to add value is to set up a call asking for “honest feedback on how we’re doing.”

This works, too.  Customers often just want to be heard.  The “problem” is you might have to do something about it.

We’re gearing up for our biggest, best-est SaaStr Annual 2024 (Sep 10-12 in SF Bay again!)

As part of that, we’re taking a look back at some of the best sessions ever. When both of HubSpot’s co-founders came to Annual to share their top learnings with Jason … that was something special.

Like any partnership or business venture, being a founder or co-founder takes a lot of communication and planning upfront to increase the likelihood of success. The most decisive founders have a solid grasp of their industry and are ready to take a risk to achieve something big.

HubSpot co-founders Brian Halligan and Dharmesh Shah describe what they learned along their journey, from creating their business to scaling it, and what you can do to be a successful founder in today’s economy.

© SaaStr 2024

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