Inc - A Pretty Good Week in SaaS

So this was another Pretty Good Week in SaaS:

#1. Shopify Blows Out the Quarter, Accelerating at $8B+ ARR

A bit of strong news from the leader in e-commerce platforms. Shopify is re-accelerating at $8B ARR. It’s growing 21% now and predicting even faster growth in the coming quarters. Don’t Call It a Downturn at Shopify.

#2. Datadog Blows Out the Quarter Too at $2.6B+ in ARR

Datadog also saw growth re-accelerate, at 27% at $2.6B ARR. NRR stayed strong at 115% and it raised guidance going forward.

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This 2024 SaaStr Annual Sep 10-12 in SF Bay is ending up with our highest concentration of Product leaders ever. Just some of the epic ones presenting, speaking, and/or doing braindates, workshops and/or mentorship sessions:

• SVP Product, GitHub
• VP Design, Ramp
• CPO, Calendly
• CPO, Rubrik
• Head UX, Calendly
• CPO, Procore
• CPO, Skyflow
• VP Product, Dialpad
• AI Product, Figma
• SVP Emerging Tech, Cloudflare
• Head of Product, Loom
• Head of Pricing, Miro
• Head of AI, Zoom

And that’s just. a subset! It will be an epic line-up for us all to learn how to build the best of the best products in SaaS and Cloud! And we’ll have tons of small hands-on workshops and braindates here too.

Probably the biggest challenge in vertical SaaS I see is scaling the sales team.

It’s pretty easy to hire SaaS sales execs to sell … a SaaS sales product. That’s what they know.  It often takes little training, and they already have a lot of domain expertise.  And frankly, they can shoot from the hip a bit in sales.  Even make a few things up, and often not get into too much trouble.

But who do you hire to sell a very complex piece of vertical software? That playbook just doesn’t work, folks.

In vertical SaaS, most customers demand to talk to a domain expert. So if you hire reps for standard B2B companies, they often literally close nothing. They never really understand.

At the same time, it’s very hard to turn a domain expert that doesn’t know sales into a great SaaS salesperson. I’ve almost never seen it work out. They are great middlers, great at helping out. But they never close all that much.  It’s tempting to hire consultants in an industry to do sales for you.  I do think they can help.  But if they haven’t truly done software sales — I see them struggle when turned into SaaS sales execs.

The reality is I see most vertical SaaS startups that sell to a complex industry … basically stay founder-led to $10m-$15m ARR.

They find a way to hire a few great sales reps, and once in a while stumble into a great VP of Sales before then.

So just when HubSpot CRM was scaling up, we grabbed Dharmesh Shah, CTO and co-founder of HubSpot, to talk about what it really takes to build a second product. Fast forward to today, and HubSpot CRM is now at $600m+ in ARR (!). Wow.

It’s a great time to take a look back at the Why, When and Where of that decision.  As going multi-product is one of the toughest challenges for most founders, even as early as $10m ARR.

In B2B, it’s pretty simple.

Can the company get to $200m+ in revenues in 8–10 years?

Sort of … period. That’s kind of it.  That’s the bar to building something that can truly IPO or being acquired for billions.

If it can .. then:

• the CEO is probably great
• and can recruit a great team where
• the market and market pull are real and
• the company has, or will have, a dominant or partially dominant market position
• in a new / changing / evolving category.

Getting to $200m+ from $1m or less in 8–10 years is what breeds True Unicorns and Decacorns.

True Unicorns and Decacorns are what make VC funds profitable.

Whatever stage you invest, you’re really just trying to back into if this will happen. If at least there’s some chance.

A big week at SaaStr Fund!  As a reminder, the SaaStr Fund is investing $170,000,000 in seed and late-seed investments. $750k-$4m checks for SaaS, Cloud and B2B startups at from $10k-$200k MRR. More here.

Some great news this week:

#1.  Algolia and Legacy Investment Talkdesk in BVP Cloud 100!

Great to see for these pre-IPO leaders! We led the U.S. seed in Algolia, and were the first VC investor in Talkdesk!

#2.  RevenueCat Launches First App Growth Conference, Sep 25th at Shack 15!

RevenueCat is the market leader for managing mobile subscription apps, with over 30% of U.S.-based mobile subscription apps using their SDK and API to manage mobile subsriptions.  SaaStr Fund was the first investor in the company. They’re hosting their first App Growth conference just after SaaStr Annual in SF!

The best outcome by far is to talk about it calmly, give plenty of notice, and quietly agree to move on. In 30 days, in 10 days, in 1 days … whatever is best for the company.  

Even if you really want to move on today.

Quitting feels good, but everyone will remember you as a quitter. They will always remember when you just up and quit.  Always.

Fired isn’t the end of the workld but … you’ll have to explain at least once later in your career what happened.

Instead, if it isn’t working, stop blaming them, stop blaming others. Let it go.  Talk to your boss, just say objectively it’s not working out and you feel bad about it, and it’s best to calmly transition out — in whatever time frame works best for the company. Say the latter part and mean it.

Almost nobody does this.

But it goes so, so far. And you’ll see those folks again. There’s even a tiny chance you’ll want to work with them again in some capacity at least.  Stranger things have happened.

Dear VP of Sales: No One is Out to Get You.

I did a podcast with Kyle Norton CRO of Owner.com the other day, coming out soon, and it will be great. One of the themes is how many VPs of Sales and CROs think CEOs and Boards and VCs are essentially out to get them. That the goal is to fire them 7-8 months in when they miss an impossible plan. We see this all over LinkedIn, in fact.

Does this end up happening sometimes? Yes

Does any founder I know >want< to fire a VP of Sales? Heck No. No.

The amount of energy that goes into a VP of Sales search is huge. If often takes the better part of a year, and often after an initial misfire or mishire. Everyone wants that VP of Sales to work. Anyone sane knows starting over will take the better part of the year. Almost no CEO or VC firm has a magic, superstar VP of Sales just waiting to gladly take your job.

What I see today is actually many VPs of Sales often given almost too much time. With “macro impacts” and “the downturn” a built-in excuse for many founders today (as long as you aren’t running out of money), I see many CEOs actually wanting to shield and keep underperforming VPs of Sales. Not fire them. Why? Because they just don’t have a better idea.

First, you have to get Zen. You cannot force 9 month sales cycles into 9 days. You can bring them in a bit — but not that much.

You cannot force Fortune 500 companies to buy six and seven figure deals in the same way SMBs buy a $10/month product. In the first 2 years, this will create a lot of stress. But later, you won’t care as much. You’ll have enough deals in the pipeline, that they “hatch” in various orders, and you’ll get predictability around it. This is why “pipeline” doesn’t make any sense to start-ups, not really, but makes total sense for BigCo sales executives.

Second, embrace the parts of long sales cycles that take extra work:

Embrace getting good at RFP. Instead of running from them.

Embrace doing all the compliance requirements (SOC-2, HIPPA, Two-factor authentication, etc)

Embrace selling to multiple stakeholders. Force yourself to sell to 3-4 folks per deal.

Third, go visit them in person.

Then you’ll actually learn how to get it done faster.

© SaaStr 2024

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