{"id":300180,"date":"2024-06-26T05:44:42","date_gmt":"2024-06-26T12:44:42","guid":{"rendered":"https:\/\/www.saastr.com\/?p=300180"},"modified":"2024-06-26T09:24:24","modified_gmt":"2024-06-26T16:24:24","slug":"the-saas-theme-of-2024-is-just-build-with-jason-lemkin","status":"publish","type":"post","link":"https:\/\/www.saastr.com\/the-saas-theme-of-2024-is-just-build-with-jason-lemkin\/","title":{"rendered":"Forgot the SaaS Gloom and Doom on Social. &#8216;Just Build&#8217; with SaaStr CEO and Founder Jason Lemkin"},"content":{"rendered":"<p>The message in 2022 was to keep going. You couldn\u2019t raise at 27x ARR anymore because that era ended. Last year, the message was that it\u2019s harder, so what is the theme for many SaaS companies this year? Just build. SaaStr founder and CEO Jason Lemkin shares his take on the current SaaS landscape midway through 2024 and what might be coming next in 2025 at the opener to this year\u2019s SaaStr Europa.<\/p>\n<p>There\u2019s a lot of doom and gloom on social media, so it\u2019s important to look at the facts as much as possible. Many people are doing great, even private companies like Netskope, which are growing over 30% at $500M in revenue. <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-canva-at\/\" target=\"_blank\" rel=\"noopener\">Canva<\/a> is growing at 40% and has a revenue of $2.3B. So, yes, things are hard for some people, but companies are all over the place, and all you can do is keep building.<\/p>\n<p>You can\u2019t control public multiples, but you can control your competitiveness. You can control becoming more customer-centric, and you can keep building. Things ebb and flow, and if you keep your head in the game and increase your competitive position, things will come back.<\/p>\n<p><iframe title=\"YouTube video player\" data-src=\"https:\/\/www.youtube.com\/embed\/00_mp6k7zQI?si=FItW6cvXEdNKrZgr\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<p><iframe title=\"Spotify Embed: SaaStr 744: A Tale of 3 Worlds: Where SaaS, Cloud, and AI are in 2024 with SaaStr CEO and Founder Jason Lemkin\" style=\"border-radius: 12px\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen allow=\"autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture\" data-src=\"https:\/\/open.spotify.com\/embed\/episode\/6SvYtg4amtscTjp31YrQcJ?si=f9a4cdc28bf74442&#038;utm_source=oembed\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<h2>The Three Worlds We\u2019re Living In Today<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300178 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_5946.jpeg?resize=600%2C337&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"337\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/337;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300178\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_5946.jpeg?resize=600%2C337&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"337\" \/><\/noscript><\/p>\n<p>\u201cI don\u2019t know if B2B2C and B2B2B actually exist, but I\u2019ll use them going forward,\u201d Jason says. B2B2C folks are selling to the real world, not tech companies, and they\u2019re doing pretty good.<\/p>\n<p>The three worlds are:<\/p>\n<ol>\n<li>B2B2C<\/li>\n<li>B2B2B<\/li>\n<li>AI<\/li>\n<\/ol>\n<p>And then there are folks in impacted categories like <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-zoominfo-at-1-3-billion-in-arr\/\" target=\"_blank\" rel=\"noopener\">ZoomInfo<\/a>, where things haven\u2019t really improved. And there\u2019s AI. Jason tweeted WTF because many things are happening in AI, like 200x ARR rounds. This is warping a lot of what people think. A lot of the funding rounds for AI feel like 2021 again, but only for this subset of people.<\/p>\n<h2>B2B2C<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300177 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0202.jpeg?resize=600%2C337&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"337\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/337;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300177\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0202.jpeg?resize=600%2C337&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"337\" \/><\/noscript><\/p>\n<p>The folks not selling to other tech companies are doing pretty well. You can see the list on the left-hand side of the above image:<\/p>\n<ul>\n<li>Canva is growing 40% at $2.5B.<\/li>\n<li>Toast is selling to restaurants and growing 32% at $1.3B.<\/li>\n<li>Samsara is growing 39% at $1.1B.<\/li>\n<li>Klaviyo is growing 42% at $750M, coming up on a billion in revenue, and number one in the Shopify ecosystem.<\/li>\n<li>Monday is on its way to a billion in revenue, growing at 34%.<\/li>\n<li>Zscaler is growing 32% at $2.2B.<\/li>\n<\/ul>\n<h2>B2B2B<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300176 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0203.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/332;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300176\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0203.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" \/><\/noscript><\/p>\n<p>B2B2B had a rough week a couple of weeks ago. <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-mongodb-at-1-5-billion-in-arr\/\" target=\"_blank\" rel=\"noopener\">MongoDB<\/a> was down 23%, a great Cloud stock consistently growing in the 30s. They said they\u2019ll only grow 17% next year. UiPath saw a huge drop of 30%. Growth is still good for them, but they had no net new customers last quarter.<\/p>\n<p>Think how different that is from Canva or <a href=\"https:\/\/www.saastr.com\/cro-confidential-a-look-inside-saas-success-toast-with-cro-jonathan-vassil\/\" target=\"_blank\" rel=\"noopener\">Toast<\/a>. Then <a href=\"https:\/\/www.saastr.com\/5-interesting-learnings-from-salesforce-atbillion-in-arr\/\" target=\"_blank\" rel=\"noopener\">Salesforce<\/a> lost $50B in market cap. What happened? They missed the quarter by a little and said they\u2019ll only grow in the single digits next year. Why is that bad? Because if you have 115-120% NRR, you\u2019re supposed to grow at least 15-20%. It\u2019s a sign something is broken in the system.<\/p>\n<p>Deals projected closing are taking longer and are smaller than projected. Deals are contracting, not because of layoffs, but because people are managing budgets so tightly. It won\u2019t be like this every week, but the contrast to Canva is visceral.<\/p>\n<h2>It Takes Time To Bounce Back<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300179 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0204.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/332;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300179\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0204.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" \/><\/noscript><\/p>\n<p>Jason was the first investor in <a href=\"https:\/\/www.saastr.com\/revenuecat-12-of-paid-subscribers-that-cancel-come-back-later\/\" target=\"_blank\" rel=\"noopener\">RevenueCat<\/a>, a company that automates mobile subscriptions on your phone. 30% of all mobile apps with a paid subscription use RevenueCat to manage it.<\/p>\n<p>Why is that interesting? Because they have over 10,000 B2B2C apps. That\u2019s a pretty good slice of the mobile ecosystem. Consumer happens faster than B2B because you can cancel a subscription in 60 seconds vs. signing 3-year contracts with Salesforce.<\/p>\n<p>What this graph shows is that there is no downturn in the mobile economy. It\u2019s a rocket ship. An early thing Jason wrote on SaaStr is that B2B lags B2C by about two years. That still holds true today. If B2C rebounded back in 2023, that means 2025 might be a little easier for a lot of folks in classic B2B.<\/p>\n<h2>B2B2B Isn\u2019t There Yet<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300175 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0205.jpeg?resize=600%2C335&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"335\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/335;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300175\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0205.jpeg?resize=600%2C335&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"335\" \/><\/noscript><\/p>\n<p>Both <a href=\"https:\/\/www.saastr.com\/hubspot-we-had-a-great-quarter-but-things-arent-bouncing-back\/\" target=\"_blank\" rel=\"noopener\">HubSpot<\/a> and Salesforce saw a bump at the end of the fiscal year, but it didn\u2019t last. Even though HubSpot grew 23% at $2.5B, there was weaker demand and longer sales cycles, and they had to do pilots with CEOs and CIOs.<\/p>\n<p>They\u2019ve done well, but it\u2019s not easier for them. HubSpots NRR has fallen to 100%, so to grow 23%, they must add 23% net new customers. In 2021, they had 110% NRR.<\/p>\n<p>ZoomInfo\u2019s tech NRR is about 85% right now, down from triple digits, and non-tech customers are still growing north of 20%. Folks are trying to figure out how to use less ZoomInfo through aggressive spend cuts rather than canceling outright.<\/p>\n<p>Then, MongoDB lowered to 12% growth from 57%, and even though there isn\u2019t more logo churn, people are trying to use it less to manage spend. It\u2019s hard to believe this will last, though.<\/p>\n<h2>It\u2019s 50% Harder Than Before<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300174 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0206.jpeg?resize=600%2C339&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"339\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/339;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300174\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0206.jpeg?resize=600%2C339&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"339\" \/><\/noscript><\/p>\n<p>During an analyst call, Salesforce CEO Mark Benioff said they\u2019re an AI company now, but it didn\u2019t lift their revenue. He said around 18 months ago, they needed 2x pipeline coverage. So, for every dollar they wanted to grow, they needed 2x in their pipe.<\/p>\n<p>It was 2x, and now it\u2019s 3x, which means they need 50% more pipe to hit the same number. If Salesforce is experiencing this, you probably do too, if you\u2019re in classic B2B.<\/p>\n<h2>Gartner Says SaaS Is Accelerating<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300173 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0207.jpeg?resize=600%2C331&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"331\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/331;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300173\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0207.jpeg?resize=600%2C331&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"331\" \/><\/noscript><\/p>\n<p>Here\u2019s where AI confuses everything. On May 20th, <a href=\"https:\/\/www.saastr.com\/gartner-saas-spend-is-actually-accelerating-will-hit-300-billion-in-2025\/\" target=\"_blank\" rel=\"noopener\">Gartner<\/a> raised the estimate for the amount of SaaS spend this year. The chart estimates spend will grow 20% to $675B. If we\u2019re adding 20%, where is the money going? To some extent, it\u2019s not clear. \u201cMaybe endless price increases,\u201d Jason says.<\/p>\n<p>A lot of it is moving to versions of AI.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300172 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0208.jpeg?resize=600%2C329&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"329\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/329;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300172\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0208.jpeg?resize=600%2C329&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"329\" \/><\/noscript><\/p>\n<p>You can see the growth on the platform side with Azure, Google, and AWS and how much it\u2019s accelerating in AI. How does a startup benefit from this? Salesforce isn\u2019t benefiting from it even though they\u2019re building the applications. Dell fell 15% last week. So, it\u2019s a little murky who benefits.<\/p>\n<p>One thing we know is that VCs are all over it.<\/p>\n<h2>The Hunt for Riches<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300171 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0209.jpeg?resize=600%2C330&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"330\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/330;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300171\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0209.jpeg?resize=600%2C330&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"330\" \/><\/noscript><\/p>\n<p>AI is where VCs are deploying, and it\u2019s a hunt for riches. They\u2019re deploying into three places:<\/p>\n<ol>\n<li>Seed<\/li>\n<li>Existing portfolio winners<\/li>\n<li>AI at 100x and 200x deals<\/li>\n<\/ol>\n<p>Why could Elon Musk raise at $18B with no revenue and a brand-new product for xAI? Or Scale AI securing $1B. What\u2019s going on here? If they\u2019re the next OpenAI doing $2B in 18 months, that\u2019s a bet you want to make. But you might lose on all the others.<\/p>\n<p>Are brand-new companies that seem epic with no revenue really worth $1.5B in 12 months? Maybe if you have the ex-CTO of Github, but that\u2019s still a super speculative bet. Why does 2024 in AI feel like 2021?<\/p>\n<p>Jason surmises that in 2024, VCs have become decacorn hunters. In 2021, it was just unicorns. Zendesk IPO\u2019d at $800M, and now it\u2019s got to be $8B to get out of bed. Their Series A was $3M then. Today, it would be $30M or $50M. If everything\u2019s 10x, the exits have to go up too.<\/p>\n<p>So, VCs are looking for $10B exits, which puts a lot of pressure on folks, but it\u2019s the only way a VC can make money. In AI, people will lose so much money on these deals when they\u2019re permanently focused on $10B outcomes. \u201cNo one\u2019s a dummy in venture, but they are making bets,\u201d Jason says.<\/p>\n<h2>You Must Have AI Parity<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300170 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0210.jpeg?resize=600%2C328&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"328\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/328;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300170\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0210.jpeg?resize=600%2C328&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"328\" \/><\/noscript><\/p>\n<p>No one knows what C3 AI does, but it\u2019s been AI since the beginning and is down 45% this year. Being AI doesn\u2019t necessarily lead to riches. As a founder, you must have AI parity with the competition, or you\u2019ll lose deals.<\/p>\n<p>Changing your URL and adding a slide may trick an investor or two, but it\u2019s not enough to make you an AI company. Everyone that needs to be an AI company should be one. There is a hunt for riches, but people aren\u2019t stupid, so it has to be real AI.<\/p>\n<p><iframe title=\"AI Revolution: Stay Ahead of Your Competitors\" width=\"1080\" height=\"608\" data-src=\"https:\/\/www.youtube.com\/embed\/WJOJRKimrsY?feature=oembed\"  allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<h2>Where Is AI Budget Coming From<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300169 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0211.jpeg?resize=600%2C334&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"334\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/334;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300169\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0211.jpeg?resize=600%2C334&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"334\" \/><\/noscript><\/p>\n<p>Where is this AI budget coming from? Some say it\u2019s experimentation budgets, but that\u2019s not really true. People say there are no AI budgets, only current budgets being repurposed. How do you reallocate your current budget? By cutting core apps or cutting back on extra products at Salesforce.<\/p>\n<p>There\u2019s no magical AI line budget, so stuff is being cut to fund these initiatives. A little is fear of being left behind, and most of it is based on huge efficiency promises. Look at Gorgias, the largest contact center in eCommerce, with about 16,000 Shopify customers and $100M in revenue.<\/p>\n<p>They\u2019re very SMB and just closed their first $750k TCV deal. How? It turns out that because of AI, they could lay off 400 folks in support. The human impacts are brutal, yet AI is positive for many companies that need more efficiency.<\/p>\n<p>The takeaway is that you will lose the deal if you don\u2019t have feature parity with your competitors.<\/p>\n<h2>IPO Market and Multiples Are Still Meh<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300168 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0212.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/332;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300168\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0212.jpeg?resize=600%2C332&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"332\" \/><\/noscript><\/p>\n<p>There are a few things making everything harder, one of which is that the public markets suck on a bunch of levels. Multiples are low, and we\u2019ve only had two real IPOs from really good companies. Everyone else is waiting, like Stripe, Plaid, and Canva.<\/p>\n<p>This is a drag on every type of fundraising from Series A or later. It won\u2019t last, but it is tough out there. There\u2019s very little liquidity in the system, creating subtle stress. If you have to get to $600M, growing 50% to IPO, that\u2019s an intimidating bar.<\/p>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300167 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0213.jpeg?resize=600%2C329&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"329\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/329;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300167\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0213.jpeg?resize=600%2C329&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"329\" \/><\/noscript><\/p>\n<p>A simple way of thinking about multiples is that the median public SaaS company trades at 6x ARR. Some are struggling, and some are higher. The best ofs, like Samsara, are trading at 15x. This makes it hard for VCs to make money.<\/p>\n<p>Things won\u2019t get easier until about 8x, with a 20-30% reflation of multiples.<\/p>\n<h2>VCs Want To Invest, But There\u2019s Stress In The System<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300166 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0214.jpeg?resize=600%2C336&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"336\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/336;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300166\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0214.jpeg?resize=600%2C336&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"336\" \/><\/noscript><\/p>\n<p>As a community, we over-talk about venture capital, but it\u2019s important if you\u2019re fundraising and to understand the pulse of the system. Every VC wants to invest. On the left, you see the rolling IRR rates of returns for VCs.<\/p>\n<p>In 2021, VC returns went wild. The real problem is thinking that 80% returns were here to stay. Real IRRs, when blended, are negative. It\u2019s crashed since then.<\/p>\n<p>Use Squarespace as an example. They\u2019re going private in a $7B transaction but at $1.3-1.4B, growing 20-something percent a month. Going private is a sign of stress in the market.<\/p>\n<p>Low multiples put insane pressure on public companies to be very profitable today. It\u2019s too much. Salesforce is pushing toward 40% margins, but where will you invest if you can\u2019t hire anyone? Public SaaS companies are in a quiet decay state because they aren\u2019t hiring anybody, and there\u2019s too much efficiency.<\/p>\n<p>Everyone wants to deploy money, but there\u2019s stress across the system.<\/p>\n<h2>Maybe Only 10-15% of VC-backed Startups Can Raise Another Round<\/h2>\n<p><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300165 lazyload\" data-src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0215.jpeg?resize=600%2C336&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"336\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" style=\"--smush-placeholder-width: 600px; --smush-placeholder-aspect-ratio: 600\/336;\" \/><noscript><img data-recalc-dims=\"1\" decoding=\"async\" class=\"alignnone size-medium wp-image-300165\" src=\"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_0215.jpeg?resize=600%2C336&#038;quality=70&#038;ssl=1\" alt=\"\" width=\"600\" height=\"336\" \/><\/noscript><\/p>\n<p>Emergence got data from 600 venture-backed startups and redid the data to answer the question of how many are fundable based on the top decile. If you squint, this is the top 10% of all VC-backed startups by top-tier seed funds. How are they growing in today\u2019s macro market?<\/p>\n<p>From $1M-$5M, it\u2019s 166% in the first group. From $5M-$20M, the best are still doubling, and after $20M, only 42% growth. VCs still need triple triple double double double to make money.<\/p>\n<p>So, you have to be doing 166% in the first group, 100% in the second, and probably closer to 60% in the growth stage to be fundable. Maybe 10-15% of these top companies can raise money and meet the venture bar.<\/p>\n<p>If you\u2019ve raised a seed round, your next round will most certainly be much harder. Assume the next round isn\u2019t coming, and ask your VCs if you\u2019re fundable. Put them on the spot. Most startups aren\u2019t fundable every single year, so don\u2019t waste energy or overspend your cash if you\u2019re not in this top decile.<\/p>\n<h2>Key Takeaways<\/h2>\n<ul>\n<li>Just build. B2B2C came back, and B2B2B will likely improve in 2025.<\/li>\n<li>IPO and liquidity sucks, but some good ones are coming.<\/li>\n<li>Multiples are meh, and fundraising is hard.<\/li>\n<\/ul>\n<p>A lot of this you can\u2019t control, so keep building. It takes ten years to get anywhere good in SaaS, so keep going and be better than the competition.<\/p>\n<p><iframe title=\"YouTube video player\" data-src=\"https:\/\/www.youtube.com\/embed\/00_mp6k7zQI?si=FItW6cvXEdNKrZgr\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n<p><iframe title=\"Spotify Embed: SaaStr 744: A Tale of 3 Worlds: Where SaaS, Cloud, and AI are in 2024 with SaaStr CEO and Founder Jason Lemkin\" style=\"border-radius: 12px\" width=\"100%\" height=\"152\" frameborder=\"0\" allowfullscreen allow=\"autoplay; clipboard-write; encrypted-media; fullscreen; picture-in-picture\" data-src=\"https:\/\/open.spotify.com\/embed\/episode\/6SvYtg4amtscTjp31YrQcJ?si=f9a4cdc28bf74442&#038;utm_source=oembed\" src=\"data:image\/gif;base64,R0lGODlhAQABAAAAACH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==\" class=\"lazyload\" data-load-mode=\"1\"><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>SaaStr Founder and CEO Jason Lemkin shares hot takes on 2024 and discusses what the theme for many SaaS companies this year is &#8211; just build. <\/p>\n","protected":false},"author":13,"featured_media":300503,"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":[24898,31,29,106,30,3522,109,34,111,105,38,28],"tags":[24957,24956,18213,12859,10711,15500,6445,13694,3607,13069],"class_list":["post-300180","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-blog-posts","category-early","category-fundraising-topics","category-growth","category-leadership","category-metrics-topics","category-product-role","category-saastr-events-topics","category-sales-topics","category-sales-role","category-scale","tag-b2b2b","tag-b2b2c","tag-growth","tag-jason-lemkin","tag-saastr-europa","tag-salesforce","tag-slack","tag-stripe","tag-venture-capital","tag-zoom"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/www.saastr.com\/wp-content\/uploads\/2024\/06\/youtube-thumbnails-AI-53.jpg?fit=1000%2C563&quality=70&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p5oib2-1g5C","jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/www.saastr.com\/wp-content\/uploads\/2024\/06\/IMG_5946-600x337.jpeg","fifu_video_url":"https:\/\/www.saastr.com\/wp-content\/uploads\/2024\/06\/YT-Thumbnail-1-Speaker-8.png","_links":{"self":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/300180","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=300180"}],"version-history":[{"count":0,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/posts\/300180\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media\/300503"}],"wp:attachment":[{"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/media?parent=300180"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/categories?post=300180"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saastr.com\/wp-json\/wp\/v2\/tags?post=300180"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}