So SaaS and Cloud are stronger than ever — overall. Per Gartner, SaaS spend is still growing +20% with an estimated total spend of a stunning $300 Billion in 2025.
And yet … price increases, AI, and the Cloud leaders are taking up more and more of that budget. So times are also harder at the same time.
For the first time, the average public SaaS company is now growing less than 20%.
That’s crazy down from 2021. In 2021 into early 2022, the average Cloud leader was growing +67%. That’s so high, it’s almost unimaginable today. It almost sounds like fiction.
|
|
|
We’ve talked a lot on SaaStr over the years about how to hire a great VP of Sales — and how to course-correct if you’ve made a mis-hire.
The two fastest-to-surface signs of a mis-hire:
No one great joins them in the first 30 days. Every great VP of Sales has 1 or 2 folks that want to follow them from their last role. And also has been quietly recruiting a few great folks anyway to join them at their next role. Great VPs of Sales, even stretch VPs, are constantly networking to build the team they need both now — and later.
Nothing gets better in 1 sales cycle. You don’t always need to see magic in your VP of Sales, especially at first. Revenue doesn’t have to double in 1 sales cycle. But you do need to see things get better. OK, but some of you will still give them … more time. Even if they sort of fail the above test. Your investors will probably encourage you to give them more time. You may not have the energy to deal with it.
So let me tell you the #1 sign a VP of Sales just isn’t going to make it: It’s when they Hide from a Miss.
|
|
|
SF Bay Area, May 13-15, 2025 |
|
|
If you want leads, you want brand exposure, and/or you want to connect with your customers -- the SaaStr Annual is the #1 non-vendor event in the world. Period.
10,000+ in-person attendees. The highest concentration of both CEOs and VPs of Sales and Marketing at any non-vendor B2B event in the world
61% of attendees are VP-level and above
We have designed the event so you will not just be exhibiting at the #1 event in the industry, but just as importantly, will have constant traffic.
|
|
|
So it’s been a sloooow time in SaaS IPOs since the boom times ended in December 2021.
There have been just 3 SaaS IPOs since December 2021:
|
And all were strong ones, at $500m+ ARR or so, growing ~50% or so. And that’s it.
But it doesn’t mean there aren’t plenty of good ones waiting.
From Stripe to Canva to Databricks to Dialpad and more, they are plenty at $300m-$3B ARR with strong enough growth to IPO. And plenty more at $200m+ ARR with maybe less strong growth, that still want to IPO:
The clock in the end ticks on liquidity, and it ticks faster for Private Equity-backed SaaS players. VCs want to get their money back in 10-12 years, ideally. Longer is suboptimal, but OK. Bootstrapped founders can be as patient as they want to be.
But Private Equity hopes to make their profit in 4-5 years ideally.
And so, Private-Equity backed SaaS companies may finally in 2025 say It’s Just Time. It’s Just Time to Finally IPO, even if valuations haven’t back. It’s just time. OneStream was arguably one of these, and PE made a big gain on the IPO. Others will have to accept much lower returns, at least for folks that invested in 2020-early 2022.
Genesys may be the first of a flood of these PE-backed SaaS IPOs in 2025. It just filed to IPO.
|
|
|
Here are my 5 simplest ideas to quickly improve sales performance. They don’t solve bigger problems, but they usually work — and work quickly.
Concentrate leads in those who can close. If you have a rep or two that just can’t close, that doesn’t work in the early days. Leads are too precious. Let them go. Not to save money, but to concentrate the leads you do have in those that can close them.
Be more involved with sales. Prospects and customers love to talk to the CEO. They love it. If you get more involved, at least in bigger deals, you will close more. A top mistake I see CEOs make is to scale back the amount of time they spend in sales once they hire a few reps. It doesn’t work that way. You never get that time back. It’s just, the reps now do more of the grunt work. But you still have to be out there. Zooming with prospects and meet in person with the bigger ones. Stewart Butterfield did.
Listen to their calls and Zooms. And join more of them. You will be shocked how poor many of the answers are from mediocre reps.
Build them better collateral and get them more air cover. Most sales reps are pretty bad at building sales decks, tear sheets, etc. Most sales reps don’t know how to put on a webinar for prospects and customers. Do more marketing for them.
Put an SLA in place. Make sure every lead is called back — fast. Prospects inbound when they have a need. Deploy Intercom. Get back to them ASAP. Get back to them right now, ideally. Time kills deals, on all levels.
Pay more — per deal closed. Are you paying enough per deal? It’s OK to overpay per deal in the early days, when sales is harder. As long as the sales rep is profitable, or even break-even, that may be enough. Everyone needs to build up their confidence, and earn a fair wag
|
|
|
What are the most common mistakes I see first time SaaS founders make? Second-time SaaS founders make other mistakes. They think they know more than they do. They spend too much. They often struggle to do things a new way.
First-time founders have many positives. But they also make mistakes we tend not to make with experience.
Here’s what I see most often, the Top 6 Mistakes First Time SaaS Founders Make:
- Incomplete understanding of business model, and how it will scale. Many first-time founders have a decent understand of how to charge for their product, but haven’t really rolled it up into a strategy to get to $10m, $20m, $100m in ARR. Focus and model often change as what it takes to get to the first $10m gets figured out.
- Too cheap — once you have something. Cheap is good. Capital is precious. But then a time comes at $1m, $2m, $4m ARR when you have to let it go. You have to pay folks market. You have to hire those extra few reps that we don’t really have leads for today. Do that extra trade show. Hire those extra engineers. It’s OK … it resolves itself over time. But first times tend to lose a chance on the road from $1m to $10m ARR to grow even faster.
- Tough transition from micromanager to “macromanager”. Most second timers have evolved into macromanagers. They know to hire the best folks they can, and let them run. Most first timers these days are such amazing founders, they can code, sell, support, upsell, and even hack marketing. That they can and do continue to do everything. Even once they hire people to do those functions. But once you hire real VPs, you have to stop micromanaging. Great VPs won’t be micromanaged. They won’t stand for it. Mediocre ones are OK with it, even prefer it, however.
- VPs a Stretch Too Far. Related to the prior point, stretch VPs are great. But hiring folks that haven’t done it at all doesn’t scale past a few million in ARR.
- Capital “Hubris” (if angel / seed rounds are easy). I don’t see this always, but I almost never see it in second time CEOs. But first timers that have an easy time raising after Demo Days, don’t grock that the bar goes up for each round. They also assume their existing investors will bail them out. And they often don’t budget enough time for fundraising.
- Too much social-media based pattern matching. I know Palantir, Facebook, Datadog, Figma, Toast, Box etc. are all great companies. But it doesn’t mean an exec from there is a good fit for your 16-person company today. We can’t help this. But get more advice on your senior hires (and then ignore it if you want, but just get it).
- Still.
First-timers do just as well, if not better, than second-timers. And they are much more capital-efficient. Not always, but often. And they lack the biases of second-timers.
Basically I only invest in first-timers.
|
|
|
So we’ve covered HubSpot more than any other SaaS leader on this 5 Interesting Learnings series, in part because so many of us use HubSpot ourselves, and in part because its metrics and use cases are so like many of the apps we build and sell ourselves.
They recently did an Analyst day though that had some more great data that I thought was super interesting, and worth a deep dive.
|
|
|
Right now is one of the hardest times of the year for marketers. Most CMOs will be heads down wrapping up a year-end assessment and figuring out what to pitch for next year’s budgetary spend to drive revenue, all while navigating an ever-changing environment of inconsistent metrics, lower conversion rates, and a rapid rate of change with the adoption of AI in SaaS.
A CMO panel consisting of the CMO of Snowflake, Denise Persson, CMO of Carta Nicole Baer, and the VP of Marketing at LinkedIn for Sales, Gail Moody-Byrd all answer Carilu Dietrick’s questions, CMO and advisor formerly at Atlassian, about all things growth for 2025.
|
|
|
We’re obviously written up a lot about Fundraising and Investing here on SaaStr.com, but time and time again, SaaStr CEO and Founder Jason Lemkin has seen so many Founders sign a bad term sheet based on gut instinct, VC celebrity or vibes, and while that may be fine, it’s not enough.
It’s not enough because if nothing else you’re stuck with your investors for decades — for better or worse.
A bad investor doesn’t come off the cap table until you sell the company or years after an IPO. And so much happens in that time, in that decade or more. So here are 8 signs to help you avoid bad investors.
|
|
|
The Official SaaStr Podcast |
|
|
|
New Episodes of the SaaStr Podcast with Snowflake, LinkedIn, Carta , Theory Ventures, and More!
|
|
|
|
© SaaStr 2024
644 Emerson St. Suite 200, Palo Alto, CA 94301
If you'd like to stop receiving the SaaStr Weekly, click here
|
|
|
|
