{"id":295837,"date":"2023-12-28T06:21:12","date_gmt":"2023-12-28T14:21:12","guid":{"rendered":"https:\/\/www.saastr.com\/?p=295837"},"modified":"2023-12-27T10:58:15","modified_gmt":"2023-12-27T18:58:15","slug":"ai-in-saas-with-saastr-ceo-founder-jason-lemkin","status":"publish","type":"post","link":"https:\/\/www.saastr.com\/ai-in-saas-with-saastr-ceo-founder-jason-lemkin\/","title":{"rendered":"Is AI the Only Thing in SaaS that Anyone Cares About Anymore? Ask-Me-Anything Part 1 with SaaStr CEO and Founder Jason Lemkin"},"content":{"rendered":"<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">At a recent <a href=\"https:\/\/www.saastr.com\/workshop-wednesday\/\" target=\"_blank\" rel=\"noopener\">Workshop Wednesday<\/a>, SaaStr founder and CEO Jason Lemkin answered the community\u2019s most pressing questions about SaaS \u2014 from investor appetites and IPOs in 2024 to managing and hiring a Head of Sales as a solo founder to AI and the future of customer success.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Let\u2019s jump right into part one.\u00a0<\/span><\/p>\n<p><iframe title=\"YouTube video player\" data-src=\"https:\/\/www.youtube.com\/embed\/DR6qoxtq_7g?si=kgXD3adYyWW-aPxf\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<h2><span style=\"font-weight: 400;\">Q: What will the early and mid-investor appetite for SaaS startups in sales look like in 2024?\u00a0<\/span><\/h2>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u201cFor now, there is very little investor appetite for anything that isn\u2019t true AI,\u201d Jason says. Why is that?\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">We\u2019re in a world today where NASDAQ is at a record (great growth), S&amp;P is at a record, but startups have the lowest growth overall. Investors are looking for outliers, mainly in AI, true AI that can grow at such large rates that your jaw drops.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">So, in general, there\u2019s no appetite for &#8220;pretty good&#8221; growth. For folks at later stages, there is absolutely no appetite. Almost every founder who has raised a seed or A round thinks the next round will be easier, which is unrealistic because public multiples are 6x. No growth rounds are happening north of $200M valuations.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">This ripples all the way down except in Seed since there are still optimists who believe they can be a Datadog or Canva. And every year, there will be one of those, which is good for folks.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">But unless you\u2019re growth is crazy, and you\u2019re in AI, there\u2019s just no oxygen. <a href=\"https:\/\/www.saastr.com\/what-to-expect-from-saas-in-2024-with-craft-ventures-david-sacks-and-saastr-jason-lemkin\/\" target=\"_blank\" rel=\"noopener\">Over 80% of investor money is in AI<\/a>. When you add sales and marketing, you can see they were the most impacted category in many ways. We explored this a lot more in the recent <a href=\"https:\/\/www.saastr.com\/whats-new-at-zoominfo-with-ceo-henry-schuck\/\" target=\"_blank\" rel=\"noopener\">What&#8217;s New at ZoomInfo with CEO Henry Schuck<\/a>, but these next two reasons are why sales and marketing were impacted the most:<\/span><\/p>\n<ol style=\"font-weight: 400;\">\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Folks cut every seat that wasn\u2019t being used.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Account utilization has become a way to cut sales and marketing spend (ie &#8211; Cutting back 10 seats for everyone on your team, down to just one)<\/span><\/li>\n<\/ol>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It\u2019s a tough category, and there\u2019s relatively little interest from investors unless it\u2019s AI. Yet the interesting thing about the sales category specifically, is how much interest is in it from a professional and personal standpoint. People build more products in sales, which spurs more innovation.\u00a0<\/span><span style=\"font-weight: 400;\">So, on the one hand, if it\u2019s not AI, it\u2019s tough. But on the other hand, even though sales is an impacted category, so many more people are passionate about it, that innovation will continually happen there in a way that doesn&#8217;t naturally evolve in other categories.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Q: Are folks ready to buy Enterprise-level apps that are pre-tailored to a vertical?\u00a0<\/span><\/h2>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">\u201cVertical software is nothing new,\u201d Jason says. There has been niche software for bookkeepers, dentist offices, and veterinarians. Maybe not a $10B outcome, but they\u2019ve been written for years.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Look at <a href=\"https:\/\/www.saastr.com\/cro-confidential-a-look-inside-saas-success-toast-with-cro-jonathan-vassil\/\">Toast<\/a> doing it for restaurants and <a href=\"https:\/\/www.saastr.com\/shopify-vs-klaviyo-are-the-markets-really-all-that-efficient\/\">Klaviyo<\/a> for e-commerce. \u201cI don\u2019t think vertical SaaS is anything new, but by adding more value and running payroll and payments and doing more stuff for verticals, the categories can be 10x to 100x larger,\u201d he continues.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">HVAC was a pretty small category once, but now look at <a href=\"https:\/\/www.saastr.com\/servicetitan-the-first-great-saas-ipo-of-2024-at-500000000-arr\/\">Service Titan, the next potential IPO of 2024.<\/a><\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It&#8217;s an example that illustrates how every industry with 100k or more customers needs a system of record, a core operating system. If the market is too small, you can\u2019t get enough scale because SaaS is too hard to build. But anything with 100k or more customers, you can support a $10k or more ACV if you add $100k of value to the industry <\/span><b><i>and be number one.\u00a0<\/i><\/b><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There isn\u2019t room for 20 vendors, but there is room for two or one big one with an ACV of up to $10k. Below that, there are not enough customers in vertical SaaS to get there, but 10k or above it&#8217;s a pretty good business.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Q: What are your thoughts on platforms like ServiceNow or Salesforce bringing partner apps to extend that platform?\u00a0<\/span><\/h2>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There are huge power laws when at least ten vendors are in an ecosystem that can build massive ecosystems. It gets confusing when you look at all the folks out there.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Look at <a href=\"https:\/\/www.saastr.com\/re5-interesting-learnings-from-shopify-at-6-8-billion\/\">Shopify<\/a>, for example, with thousands and thousands of Shopify partner apps. The number one is Klaviyo, the only SaaS IPO in two years. <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-klaviyo-at-650000000-in-arr\/\" target=\"_blank\" rel=\"noopener\">They\u2019re coming up on a billion in ARR and 50% growth<\/a>. Klaviyo is Shopify for marketing, and the top ten Shopify apps are continuing to break out.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/www.saastr.com\/10-learnings-on-high-velocity-smb-sales-with-gorgias\/\" target=\"_blank\" rel=\"noopener\">Gorgias<\/a> is Shopify for contact centers with revenue crossing $50M ARR. So number one Klaviyo is around $800M ARR, and Number 10 is at $50M, and number 20 is &#8230; probably getting steak knives. The 100th likely doesn\u2019t have enough oxygen or revenue.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">So, when you look at these ecosystems, you can see that you need to be in the top ten if you\u2019re going broad. Sometimes, you need a Klaviyo to make Shopify work, but you don\u2019t always need support agents at Gorgias on day one. <\/span><span style=\"font-weight: 400;\">The rest will struggle, but it doesn\u2019t mean you shouldn\u2019t do them. They just shouldn\u2019t be everything for you.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Q: So, you\u2019ve hired a great VP of Sales, but you\u2019re still doing a lot of the heavy lifting. How do you handle this?\u00a0<\/span><\/h2>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As a solo founder at a million in ARR, one of the community members had just hired a great VP of Sales. The problem is that there are a thousand aha moments, product opportunities, and pivots at every sales meeting, and just one founder. The question he asked Jason was, \u201cWhat do you recommend for the solo founder getting all of the gems from that first million in ARR?\u201d\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It sounds like the product is pretty complicated and technical, so Jason had bad news.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><strong>\u201cYou have to be in every deal, or you\u2019ll lose them all.\u201d\u00a0<\/strong><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Unless hiring a VP of Sales that was an engineer or smarter than the founder in the industry, the customer will ask questions that the new hire can\u2019t answer. So, if the founder isn\u2019t in every deal, they\u2019ll lose it.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Jason invested in a company that reached $20M last year. They brought in a complicated Enterprise workflow and a seasoned VP of Sales. The CEO stopped doing sales calls and lost every single deal to competitors when he wasn&#8217;t in them.\u00a0<\/span><span style=\"font-weight: 400;\">A VP of Sales can do pricing tables and discounts and taglines on the website, but the morale here is that a complicated product can\u2019t be sales-driven alone.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">The only way to save a founder more time with a new hire is by hiring an incredible Head of Product better than them and, once in a while, an incredible Head of Success.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">It\u2019ll get worse as far as freeing up time goes when hiring the VP of Sales because now, all of the time you spent throughout the deal will be compressed into the middle. And the only way it\u2019ll get better is if you hire a VP of Sales whose last product was harder or more technical than the one you\u2019re having them sell.\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As an aside for solo founders, it\u2019s probably more worthwhile to find a late co-founder or almost founder or someone crazy enough to care almost as much as you to help carry the load. Nearly every founder does this at some point. So h<\/span><span style=\"font-weight: 400;\">ow do you find that partner?\u00a0<\/span><\/p>\n<p style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">By meeting as many great people as you can and building relationships with them. Ask them to introduce you to more great people \u2014 the best Head of Product and the best marketer. It\u2019s 10x more work, but meeting in person is 10x better, too. There\u2019s no magic solution.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Key Takeaways\u00a0<\/span><\/h2>\n<ol style=\"font-weight: 400;\">\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There is very little investor appetite for SaaS startups that aren\u2019t disruptive in the market or AI.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">There\u2019s always room for a vertical SaaS app that is number one or two in the market and can support a $10k or more ACV with 100k or more customers.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If you\u2019re bringing products to extend a platform like Shopify, you need to be in the top ten to have enough oxygen. If you aren\u2019t in the top ten, it doesn\u2019t mean you shouldn\u2019t do it. It just shouldn\u2019t be everything for you.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">If you\u2019re a solo founder with a complicated product and hiring a VP of Sales, you still need to be in every deal, or you\u2019ll lose all of them to competitors.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">As a solo founder, find a great partner at a later stage by building relationships with great people and meeting people in person.\u00a0<\/span><\/li>\n<\/ol>\n<p><iframe title=\"YouTube video player\" data-src=\"https:\/\/www.youtube.com\/embed\/DR6qoxtq_7g?si=kgXD3adYyWW-aPxf\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In the first part of this open Ask-Me-Anything (AMA), Jason shares his thoughts on the current state of sales and marketing, if anyone really cares about anything other than AI anymore, how to hire great partners, and breaking out of a crowded ecosystem.<\/p>\n","protected":false},"author":13,"featured_media":295902,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_selected_social_profile":[]},"categories":[24898,31,29,48,22,20,24894],"tags":[],"class_list":["post-295837","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-blog-posts","category-early","category-featured-qa","category-quora","category-videos","category-workshop-wednesdays"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2023\/12\/Whats-New-Square-Size.png?fit=1000%2C1000&quality=70&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5oib2-1eXz","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/295837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/comments?post=295837"}],"version-history":[{"count":0,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/295837\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media\/295902"}],"wp:attachment":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media?parent=295837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/categories?post=295837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/tags?post=295837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}