In the latest installment of SaaStr Workshop Wednesday (sign up for FREE here), SaaStr CEO and Founder Jason Lemkin did a vibe check into the state of SaaS, AI, venture funding, and the rollercoaster of building and scaling a business in 2025. Here’s what you need to know.

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Founders will be able to demo their innovations LIVE in front of the SaaStr Annual audience of leading SaaS CEOs, founders, and investors this Annual, May 13-15, SF Bay Area.

And who knows? You could be the one to take home the giant check for $500k - $5M in funding from the Mayfield AI Garage. 

Want to know what it really takes to go public today?

Meritech Capital’s Alex Clayton and Cathy Choi came to SaaStr Annual to give us the answers — and real data.  They’ve helped guide dozens of companies through successful IPOs over the past 25 years.

First, let’s address a common misconception: while many founders dream of going public, the reality is that only about 20 SaaS companies manage to IPO each year. That’s a pretty exclusive club! But what makes these companies special enough to make the cut?

The difference between a Good, a Great, and a Mediocre VP:

A Good VP Maintains Velocity in Their Functional Area. This is hard enough as it is. If you grew 100% last year, growing 100% again this year is more complex. It’s not the same amount of work. You need more people, more process, more training, more or everything. Most VPs can’t even do this. A Good VP keeps the ship sailing on the same course, at the same pace.

While A Great VP Increases Velocity in Their Functional Area. A great VP goes even further and increases velocity in her area. She brings in even better reps, and the revenue per rep goes up. Or she brings in more leads for the same budget. Or drives the engineering team to ship more features per quarter. A great VP of Customer Success in just a quarter or so decreases churn and increases account revenue growth. This is hard. It’s hard enough just to maintain KPIs and metrics as you scale. But the great ones increase them. And quickly. Usually in one quarter or less.

Now … a Mediocre VP Oversees Slowly Decelerating Velocity. This is the risk you take when you settle. Sales growth slowly declines as she struggles to bring in enough reps. Leads stall out as the channels start to get fatigued. Churn slowly increases. These changes don’t happen overnight. But they slowly build. Often on the back of a lot of excuses. She will tend to blame a lot of external factors (which likely are actually true). And then 4, 5, 6 months later — you end up in a deep hole. But it can take 6+ months for everyone to agree it is happening, and align on the root cause.

And a Bad VP Oversees Rapidly Decelerating Velocity. Things are often worse in just 60-90 days. Worse than before they joined. Be honest when you see this. This does happen more often than you’d think. Take say, 100 leads a month spread across 2 great reps, then you bring in a new VP of Sales that hires 4-6 more weak reps that never learn the product. All of a sudden, those 100 leads are stretched across 6-8 folks, most of which can’t close, and only 2 that can. Your new bookings can plummet 50% almost overnight.

This edition of the SaaStr.AI Daily is sponsored in part by Prismatic

Not every integration request may make sense for your team, but they all make sense
to your customers. Saying "yes" more starts with the right integration strategy.

Over the past 10+ years, the SaaS community has blown us away with your energy and passion, and has been the driving force in helping us expand from our humble roots of a few hundred Founders at our first meet-up and 1,000 or so at the first SaaStr Annual in 2015.

Fast forward to 2025 and we’ve had over 3,200 VCs who have attended SaaStr Annuals over the years(!). At least 800 every year!

So there’s lot of debate on social media of just how big you need to IPO in SaaS and Cloud these days. All 4 of the IPOs since 2021 were at $500m+ ARR: Klaviyo, Rubrik, OneStream and Sailpoint.

But you can IPO at lower levels. It’s just, if nothing else, it’s much tougher to get attention if you do. Many institutional investors avoid IPOs at less than a $3 Billion valuation to avoid illiquidity issues.

And so small IPOs can happen, but they are tougher in many ways.  Similarweb is one good example. They IPO’d at $190m ARR and today are at:

• $260m ARR
• Growing 16%
• 112% NRR
• 11% Free Cash Flow Margins
• And trading at $841m … or about 3.2x ARR
• Today it’s worth half of what it was at IPO in 2021 ($1.6 Billion)

$841,000,000 is a big success by any standard! But … it’s trading at just 3.2x ARR and is growing at sub 20% rate at that scale.  And so the  markets don’t love it.

It’s also a reminder that being more efficient alone isn’t enough. The markets want efficient growth, but they value growth more than efficiency.  At least 2x more. At least.

I.e., usually much, much earlier than you might think.

Why? Assuming you are growing reasonably quick, a head of demand gen at even $20k in MRR can be accretive over the next 12 months. I.e., she can more than pay for herself.

In a recurring revenue model, you want to make every accretive hire you can. Don’t wait. Each $1 you bring in this year may be worth $10-$20 over the lifetime of a customer.

So if you can hire a VP of Demand Gen today and they can bring in even just $200k in additional revenue in the next 12 months from improving the funnel, BDR management, demand gen campaigns, webinars, events, whatever … hire them today! Just breaking even is great to start.

What I see today … is the opposite. I see too many founders hiring a VP of Sales early, but waiting years in many cases to hire a true VP of Demand Gen. Or just hiring a junior marketer to start to save a few dollars. Or hiring someone that does Product Marketing or Corporate Marketing but that can’t hold a commit to lead / opportunities / revenue.

That’s just starving sales. You have to feel the sales engine. Even when you hire a VP.

So if growth is strong today, but not quite where you want it to be, recommendation #1 is to step it up. Go faster! Go harder! Go into beast mode, into founder mode.

Recommendation #2 is to build a second, bigger product than the first. This always works on paper — if done right. But it’s hard, and it can often feel too late.

So one way to do #2, to get their second big product, is to merge with another start-up, and get that big second product that way. Faster. And Now. Sometimes, merging with a partner. Sometimes, a competitor (this is how ZoomInfo scaled). Sometimes, an adjacent player you can both sell to.

One interesting example from the other day is Harness + Traceable.

Look, we all obsess over NRR and NPS. And yes, those metrics matter – especially when you’re raising that next round or reporting to the board. But here’s the truth that 90% of SaaS companies miss: if you’re running Customer Success, those trendy metrics aren’t enough. Not even close.

You Mon Tsang, CEO of ChurnZero, and CS leader Kaylin Law came to SaaStr Annual to dig into the metrics that actually move the needle for CS teams. Not the vanity metrics. Not the board slides. The real stuff that drives customer retention and builds sustainable growth.

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