Inc - The SaaS Era of 2013-2022 is Over

So is AI taking over everything? Will $1B SaaS companies be run by 1 person teams?

I mean … maybe. Across the SaaStr Fund portfolio, I’ve seen multiple portfolio companies lose $1m customers to new, in-house AI initiatives.  But I’ve also seen others grow even faster as AI rebooted and enhanced their products.

What I do know is many of the billion+ SaaS companies I invested in a decade ago would not be remotely competitive today. And that’s how it should be. Software, innovation and time marches on. And if you can’t keep up, you’ll get left behind.

Many today have been unable to keep up, and have fallen behind, and seen growth slow to 20%, 10%, even 0%.

What I really think is happening is customer expectations have gone way up.  AI is part of it, platforms are part of it. And promises are part of it.

So we’re already off to the races for planning for SaaStr Annual 2025, especially because we’ve moved it back to earlier in the year (where it always was pre-2020), to May 13-15 on our 40+ acre campus in SF Bay!

Tickets aren’t inexpensive, but compared to any other 2.5+ day for SaaS execs in the SF Bay, with food and entertainment and parties included, it’s the cheapest event of its peer group. We try.

Still, it’s not dirt cheap. So if you want to go for the least possible — now is the time. You can bring the team for as low as $549 each now! That will double by the time we get to May 2025.

So I’m back full time-ish to the SF Bay Area. As, often quietly, are so many leaders and execs I’ve known for years.

I spent about 60% of my time since lockdown in SoCal, 30% in Palo Alto, and the rest in Misc. It wasn’t to work at the beach, it was for family reasons. But still, I like many of us went from someone who never felt they could leave the SF Bay, to someone who well, did.

The SF Bay Area is back.

It’s clearly the center of the AI Boom, even if many are based outside of it, in Paris and elsewhere. YCombinator is having a renaissance, with 4 batches of 100s of top tier startups being hatched in Dogpatch in SF. Most will stay. Even top European accelerators like EF have come to SF. Many VCs that for whatever reason left, have returned.

New York is great, SoCal and Miami are great places to live and OK for tech, and certainly there are segments of SaaS and B2B where SF isn’t as compelling. Vertical SaaS and parts of eCommerce may well be so focused on other geos, for example, it’s not worth it to be in SF Bay.

But we’re all kind of back. At least most of us.

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I don’t think in SaaS being a founder or senior exec or early key hire makes you a better investor per se.

Why not?  I mean … it’s pretty easy to invest at $1m ARR growing 300% in a hot space.  It’s really not all that hard.

Now founders may prefer an ex-CEO or operator on their board or cap table.  That’s different. 

Founders often feel non-operators are zeros on their boards and cap tables.  So this is better — when it’s better.  When it’s better.  But they can also give crappy advice.  We all age out, and all startups are not the same.

I try to model 3 overall plans for the year: C-90, C-60, and C-10, not just for the sales team, but the whole company.

The C is for “Confidence”. The odds you think you can hit it, from the CEO’s perspective. Here’s how to build them.

The base plan, the plan I use for the overall sales and revenue goals, is the C-60 plan. A plan I as CEO/founder/etc. have a 60% confidence we’ll hit.

And if we hit the C-10 plan, everyone should make serious money.

The C-90 plan (the one you should make almost certainly, unless you really screw up) I only use for financial planning with the CFO.  We use that for worst-ish case cash planning … so we don’t overspend.  I don’t directly share that with the team or externally.

Kyle Norton CRO of Owner is kicking off a new podcast for Pavillion with revenue leaders, and we were lucky enough to be guest #001 here.

It’s a great convo on many SaaStr themes — but from the perspective of a VP Sales / CRO.

From Kyle’s summary: 

Here are eight takeaways from our conversation.

It can feel that way at times. I’ve felt that way at times, even today! As both an investor and a somewhat successful founder.

But it’s not that simple. VCs never work as hard as the best founders, and even when they do, it’s not the same. Everything is on your shoulders if your startup doesn’t make it. For a VC? They just make less money.  It’s not remotely the same.  And that adds to the vibe.

In the end, what happens is VC look at most founders and startups as products. Their own LPs do the same with VCs. 

That’s what you are seeing. 99% of startups are just an investment for their VCs. Sometimes, though it’s more special. Sometimes, they are the only ones actually on the journey 100% with you. Sometimes.

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