SaaS

“I think it's I think it's fine, but I think it's too clever. I think it's trying to justify slow growth, medium growth, high growth businesses and different burn rates.”

“I define a market by its current growth rate. I believe that if you can, I believe that if you can hit a million in revenue, and I invest before that, but if you can hit a million in revenue growing 15% month over month, you're inherently at a nine feet. You c…”

“Ours would be for a SaaS business, for example we want to see a business that's, you know, doubling annual recurring revenue run rate year on year, at least approaching fast approaching, you know, a hundred thousand pounds a month in revenue or kind of about t…”

“Specifically for software as a service where you, you're essentially online or cloud software company, it's super important to have great product people and great technical people, right? Because at the end of the day, it's about really differentiating with th…”

“So at .9, for instance, we're very focused on, on SaaS and marketplaces, right?”

“Software based on customer needs, from needs that we identified when you ran, when we ran our own catering business. And that's in stark contrast to others out there who have been developer-led and very focused on, well, this is a good piece of kit, someone's …”

“If you see a business growing at 20% month-on-month beyond beyond, beyond two million annual revenue, Then, you know, something must be going on right in there. There's, it's really difficult to achieve that if other things don't work well.”

“Certainly at the late stage, if you have your metrics, you will just have your funding. It really comes down to that. If you're a fast growth, my experience has been SaaS, that's because I'm actually a SaaS business, but you know, if you have a fast growth rec…”

“In five years, I don't think we're going to be using the terminology SaaS the same way we do today.”

“There are a lot of companies that have raised a lot of money at very high valuation, and I don't think that's going to work, and that's very clear in SaaS. Not all, not every company has the growth rate of slack. But many companies have the valuations that are…”

“The first is a technology innovation that translates to go-to-market advantage. One example of that is, You figure out the mobile app store better than anybody else in a particular category. All of a sudden your cost of customer acquisition relative to your co…”

“Search Is moving from on-premise to SaaS, and it's going to accelerate in the next five years. And so I believe that in five years SaaS will be actually much stronger than on-premise.”

“The key metric in all SaaS or subscription businesses is churn rate. The lower the churn rate, the easier it is for the company to grow.”

“A typical, back in my day, to get to a million dollars of ARR, you might have spent 10 or twenty million dollars. Now, companies are getting there on a million or two million dollars more typically.”

“Even today, only fifteen-ish percent of total software is delivered as SaaS, so we're still early in that transition”

“I would say that there's a lot of advice that says just go do one thing and do it really well, and I've found that not to be true, at least in the kind of business that we're building. Just focus on your product and just do one thing well, and while I understa…”

“In the U S the transition to the cloud and to SaaS applications is pretty mature, right. And started in the early 2000. So there's a retirement now, the perpetual license, right. And even upon premises that I think is still much, much earlier in China.”

“Somewhat tied to lower willingness to pay is the reality that you have to price things differently, and you have to grow to a hundred million dollar revenue business without just relying on pure recurring SaaS, right? And so it could be a combination of transa…”

“If you're a SaaS company and a decent economics and you're north of a million dollar ARR, that's probably one way of looking at it. If you have more than eight direct reports, it's probably, you know, attempt to make the move from a generalist hire to a more s…”

“And in the past, Mixmax has achieved the almost impossible in SaaS, true viral growth, and a zero dollar CAC.”

“I think for SaaS companies, moving fast and breaking things, you can't break things for your customers. You don't get many opportunities. You've got to deliver a great customer experience from the onset.”

“One of the most common things we see in SaaS these days is that sometimes a company that gets started selling to SMB realizes they need to go up market to mid-market and enterprise, because that's where you can actually get to multi-hundreds of millions of dol…”

“I think a second thing that's changed or a third thing that's changed is I think we're seeing less investment in consumer hardware and fundamental technology companies. In years past, and a greater focus on business models that really complement the VC filter,…”

“So I think first and foremost, there will be a consolidation of many of these different SaaS apps. Two, I think there will be incumbents that see an opportunity to better integrate these things together and sort of have an all-in-one solution.”

“Every modern SaaS product understands that the experience has to be good for the end user nowadays, or else a startup just like us could come in and disrupt your access to the end user and ultimately reduce the value that your product adds.”

“In SaaS, you're competing on features and integrations, and they're easy to copy, and it's just a rat race. And in AI-first companies, you can get this runaway advantage very quickly because the system compounds in value itself, like without it, without any ef…”

“The answer is almost never going to be it's too expensive or is lacking some feature I want. The answer is almost always going to be I have no idea what that does, and so the problem is almost always comprehension, but we treat it as if the problem is friction…”

“So I do think that you need to have price discipline, and so you need to think about, does this have the ability to run to a huge outcome? Does this Show the potential to be a winner takes most or winner takes all kind of business. If that's the case, and you …”

“One SaaS company will have a 50% cash flow margin. The other will have a 20% cash flow margin. One is going to be theoretically in the long term, this is my Wharton education kicking in, two and a half times more valuable than the other.”

“You do need to reinvent yourself every four to five years. And the only way you can do that is if you kind of reinvent the team and your mission, not your mission, but your strategy every four to five years.”

“Wherever you would value like sort of a singular SaaS company a company that produces like a meta company that produces, you know, that produces SaaS businesses, you know, probably should command I think a higher multiple.”

“I think that the way companies go to market is really inefficient and is that growth is solved by adding more heads and not adding better processes and systems for go to market.”

“And the world of SaaS, I think, is back to really fast paces of growth or rates of growth.”

“Really today it probably has to be closer to two hundred million because that's when you can really IPO, right? Approaching two hundred million. So you've got a decade to get to two hundred million”

“In the old days, the rough rule is we could raise, including A, B, C, D, E, F, G H I and J rounds. You could raise a hundred total, right? Then that kind of grew to like three or four hundred million as the IPOs got bigger at the peak. And now we're probably b…”

“Most of the value of, like, of a SaaS company is, like, extraordinarily hard to value from a GAAP perspective. Like, Shopify's ability to hire the best engineers in the world. Like, what is that worth? Like, it's, I think it's tens of billions as a competitive…”

“Putting too much in free early on is dangerous, because you can't really take it back. And ah, that, I think that's where open source slightly differs from SaaS, SAS, because in SaaS SAS, you can just take it back. And in open source, as soon as you've put it …”

“One mistake I've seen is assuming that best growth practices and experience in consumer will translate to SaaS and the other way around. That risk was taken on me when I started at Airtable. I actually came from Meta, and so I was jumping from consumer to SaaS…”

“I find that in consumer growth, there tends to be an over-focus on very small detail changes. Whereas in SaaS, it's more important to make bigger or bolder changes that really react to the user's intent so that their behavior will change.”

“I think for the existing startups, what you''ve got to look at is it probably isn''t going to be UX and there''s probably going to be consolidation because we''ve over verticalized things by going after every like bit of the software with a slightly better UX …”

“I'm not spending a lot of time on SaaS these days, I think partially for the dynamics you're talking about, right?”

“With the freedom of information today, with the transparency of podcasts like this, the availability of SaaS materials, basically, That's not an acceptable thing, I think, if you're gonna start building a SaaS company. This is the core mechanics of any busines…”

“And I think it's this idea of this more all encompassing change in architecture and business model that AI enables in the way that the internet really enabled a total, you know, enable SAS one point or enabled a totally different architecture of product model …”

“SaaS metrics should be this, and this should be your margin, and rule of 40, and all of this. Like, are you aware that none of this existed? 14 years ago. People, we were making it up as we went along. It's like, what should be great metrics for a SaaS company…”

“Venture is just like, is incredibly competitive. It's way more competitive than any type of SAS business that's out there. It's one of the most competitive, you're basically selling a commodity. You're selling money.”

“I don't think it'll change how people price in specific industries. Like if your market does per seat pricing, that'll probably stay. If your business and product does consumption pricing, that'll probably stay.”

“So what I suggest you do is that you actually deploy your customer success and your field and product marketing folks There first build that Brown, get the groundswell going with the referenceable customers, then put your go-to-market team in afterwards to cap…”

“So a hundred percent, I think the software is going to look a lot less like tables, graphs, and dropdowns, and a lot more like a conversation Where I release a UI that is extremely dynamic, that abstracts the data that you actually would need to see, and just …”

“In my lifetime as a founder that we know of, it cost the most to acquire a new customer last year because we sort of hid in our existing base.”

“I think AI can create some efficiency, but growth? Growth? Let's see if it can create growth. I'm skeptical it can create growth, right?”

“The average public SaaS company was up 41% last year, even though growth plummeted. Growth was at all time lows in SaaS, all time lows in 2023. The average public SaaS company only grew 16% last year.”

“The low-hanging fruit on efficient growth is a dispassionate, calm analysis of what sectors do we sell to.”

“An ICP, ideal customer profile. ICP starts out as an aspiration, and over time it becomes a regression, right?”

“Once you see that, what I typically try to do is each of those clusters is one of the plans, but I always remove one or two features that are very useful from one cluster and move it to the next as an excuse for people on like, okay, I start to use the product…”

“There's a thousand companies competing for attention from one buyer. When, you know, you go back 15 years ago, and that was five for 10 companies. And so, how are you gonna, like, mass produce some sort of out, quasi-personalized outbound go-to-market model th…”

“Gartner just did a report the other day, and they slightly upgraded actually the amount of spend in SAS this year to 20% growth this year.”

“It is all being taken. There is no net new. There is no net new.”

“I don't think it's a more risky play than a SaaS thing. I'll argue that SaaS is way more risky. One, because of the competition and price erosion.”

“I think you'll see a lot of companies build their own software. Or you have tools that create kind of unique business processes software for a lot of these companies. I don't know if it's tomorrow or in five years, but I think there'll be more of that.”

“I think 2025 will be the year of SaaS AI parity. Everything's gonna be parity in 2025. Not total parity, but close to parity, right?”

“Look, in the old days of SaaS, we all kind of grew at the same rate, so we used AR multiples, ok? But now you have to use forward AR multiples, forward revenue multiples.”

“People love software because, you know, sort of the marginal distribution costs are zero. Perhaps what people need to realize is also that the marginal returns are zero as well, because there is no moat, because two Stanford kids, especially with today's AI, c…”

“Most investors, they just don't understand this business model. They confuse it with SaaS, and they're making very wrong conclusions because of that.”

“To think that you can just replicate a SaaS business because you can tell an agent what it would do, I think is I think is silly.”

“I think what we consider SaaS will change, right? In the sense that the next era of SaaS will be replacing entire services, right? You know, whether it's the end-to-end process of a recruiting agency like Mercor or another, you know, different service or that,…”

“Hey, if you want to ship the first version of your SaaS and start making money, it's all you. It's not a team. Like a team just slows you down.”

“One of the cases in traditional SaaS is you're selling a product to a very diverse audience. Who's all using it for different things. And so you think like, oh, I've got product market fit, but the reality is like someone's using your thing for this over here …”

“And now my timeline is more like five years and 15 years before it's going to be like really relevant.”

“I think it's a balance that will really start tipping, right? Like where today, if you're a company and you have a specific business need, hiring a development team to build, deploy, operate an internal application just for you to solve that business need, the…”

“Respectfully, I think it is a very small customer segment that will be doing that in the next 15 years.”

“And we have companies like Klarna who are saying, oh, we're replacing all of our SaaS with AI. They're not, they're absolutely not. And they won't.”

“SaaS was a moment in time where, like, rule-based investing worked really well. You know, like, you get to ten million dollars in revenue, like, you're a category winner. I think this is no longer true.”

“One to 10 and five quarters or less is S tier. One to 10 and five quarters or less. And so that's, I think I copied that with attribution. I used that as my investing yardstick for years, right?”

“You didn't actually need to know what the company did in SaaS for a while, right? That, and so I think that is dead, right?”

“The SaaS trajectory is lock in, and Jason knows it so well, trouble, trouble, double, double, and that steady thing. The weird thing now is once you lock in, as you say, in 90 days, you go from maybe, to be fair, a year, six months, a year, you go from this co…”

“That's why those 10 years of SaaS was such a good business, because it was predictable, because the input of sales and marketing to the output of revenue was predictable because the revenue was sticky. In retrospect, it was the golden years of just apply capit…”

“This whole SaaS is dying is bullshit. It's changing. And you better be AI forward or dead. But if you are, I'm very certain that if you do the right, make the right moves, you can grab hold of this thing and can, you know, not just grow, but reaccelerate growt…”

“Because that wave is going to last them the next 30 years. In much the same way, you know, you started out in, if you think back, starting out in SAS in 2002 thousand, or whatever, four or five, great call, gives you a 20 year horizon.”

“I think AI is the new, new thing, and to some extent, from a economic perspective, the cursor dollars in software development or any other of these things aren't directly taking away from the SAS dollars. I think it's time expansion”

“Which is the reason why I think it's utterly ridiculous that we think that companies will create their own internal products and have a 170 internal products and that you won't buy SaaS anymore.”

“When people have the sass is dead story and the markets buy into it and these things start trading at, you know, five and a half times revenue. And suddenly it's not like you, as Jason, it's not like you grow nine X, but you beat expectations by a couple of pe…”

“Metrics, pre-product market fit, I think the only metric you care about In consumer and SaaS is retention. Like, that's the only metric that you should care about, is do you create a product that people keep using?”

“AI doesn't work the way SAS does. In SAS, you have a bunch of engineers who go out and build a product, and the quality of that product is determined based on what those engineers did. That's not the case in AI. In AI, I can improve the quality of my product b…”

“We used to catch up around 10 or twenty million ARR. And actually in some cases in SAS, you would lose your capital advantage around twenty million ARR because you would catch up, right? Like in the last year in our Qualtrics. I'm not sure that's true in the a…”

“I don't think defense is a category. And you're like, what? A category is enough that can support an ecosystem with its breadth and depth. I don't think defense is. I think there is your andrills and maybe two to three more in the U.S., and I think there's, yo…”

“Your operating assumption should be that for mature companies, SaaS transaction type, whatever, right? It's not just SaaS. It can also be non-recurring revenue companies with decent margin profile and 30% growth. We are back to six to seven times NTM, right?”

“And it's such a better intellectual exercise than trying to compare it to SAS, which is just a very, very different business. And it has a very different pricing and business model that, that isn't going to be as relevant, I think over the next 10 years.”

“But if your average gross profit per customer Can be four or five X that of a normal SAS company, then you actually have much more absolute dollars of gross profit per customer and potentially a much, much larger market than you do for SAS companies as well.”

“I don't think the sources of moats have changed from SaaS to AI necessarily. Like, the seven powers are still the seven powers. All the same ways to build differentiation are there.”

“SaaS as we know it, I think is over. I think it's completely over.”

“In SAS. You could use this following rule of thumb with a high degree of accuracy. The growth rate for any year was roughly 85% of the prior year's growth, right?”

“I definitely think that we've been able to save ourselves a lot of SaaS requests that asked us for millions of dollars, and I can give you names of specific products after, and just build it internally.”

“For most of these companies that we've backed, these winning apps, they're growing faster, three X faster, you know, than predecessor SaaS and cloud companies.”

“That is my view on where, where this whole industry goes, is you move from SaaS, out-of-the-box SaaS, to much more hyper-personalization using the specific data of an individual customer”

“I think you could kind of argue that out of the box software has always been a lie to some degree. Ah, it's a weird thing to say, but they always had a ton of configuration and they just dressed it up to some degree.”

“In fast land, you could compound for seven or eight years. Now there's existential risk every six months. And if you can't live with that, you probably need to find a different job.”

“The kind of extraordinary growth has vanished from SaaS and has now reappeared in AI land.”

“SAS is not dead, and now SAS has an army.”

“When we talk about is SaaS dead, or what's going on, I worry this is the next final act. I think it's the final nail.”

“I don't think so. I mean, I think that a lot of it is dependent. It's calibrated to your part of the market. So product velocity plus business velocity. I do think that you have to be top quartile compared to your peer set, right? I think there are some market…”

“But if you look at utilities, normal companies that are more utility, They may trade at one to two. So I, from that perspective, you would argue there is still some unfortunate potential to come down even further. Is it going to be, look at Chegg in the US, ri…”

“The kind of winner of the future is much more likely to be extremely broad. They're kind of coming with a Claude bot or Claude bot of companies like those services. That's how I think the future of that kind of thing is.”

“And what we realized when we looked at SAS and all of these things already two years ago, which is why we started closing down SAS for us was because We need to provide our AI the best context.”

“Now we exist in a world where if you have a product that the market likes, it is going to absolutely yank you into that market, right? It's not going to triple at the earliest stages. It is going to scream, right?”

“There's this notion that like the triple, triple, triple, double, double, double is dead and these companies suck and all this stuff. I don't think that's true. There are great companies. You can drive real margin from them. They make incredible businesses.”

“For the first time ever with this AI wave, people are questioning the terminal value of SaaS, right? These were supposed to be like insurance companies, you know, annuity streams that just have revenue streams and profit pools forever and ever and ever. And fo…”

“But in an AI world, if we actually think that we're augmenting labor, if we think that we can address A lot of these really big markets, if you move from human inputs to tokens, Then you're gonna have much bigger outcomes, and the math works.”

“I was talking to my dear friend Jason Lemkin the other day, and he's like, fuck this. I've had enough of this. I just want to do an anthropic SPV and go home. I don't want to pick the winner in a SaaS company.”

“Because like, otherwise, like I said, all of the SaaS functionality is getting commoditized and democratized, and it's just like anybody can do everything now.”

“And the truth is SAS pixie dust credit expired in 2025.”

“But I think in a couple of years, we'll look back and we'll laugh at the SAS apocalypse and say, my God, the explosion of B to B applications were like nothing we've seen before.”

“Working in this world is, is completely insane and unhinged and it's over, it's all consuming.”

“Every tech cycle has a set of industries that for the, once in their life, get valued on prospects and futures. It's like being 21. It literally is like being 21, and people will believe everything about you. Five years ago, that was SaaS. Today, it's AI. Once…”

“I think selling SaaS to tech companies is gonna be the toughest, because we can build stuff for ourselves.”

“Everyone selling seats for the most part is getting crushed. Everyone selling variably one way or the other is winning.”

“In the past, it requires tens of very strong product engineers and PMs to convert from idea to implementation to production scale. Multiple quarters of years of investment. That's a deep mode. And today, one person, a few weeks, can possibly launch their ideas…”

“During SaaS time, product market fit and the durable business almost are equivalent to each other. The hardest thing is find product market fit, and then once you find it just scales as fast as you can. Because CPU is a commodity. The infrastructure you build …”

“The more embedded you are, like the more difficult you are to dispense because real time, Thousands, billions of orders are being run in your system, or like mission critical biotech research is being run in your system. The more embedded you are, I think the …”

“My philosophy is that the Ecom playbook Is the right playbook for SAS? Because if you look at e-comm, you have every single cent needs to equal a purchase or an ad to cart. You have hundreds of UGC creators, variety of creative, and you also have a ton of chan…”

“For SaaS, Completely different world because you have to have an engineering team that builds this from scratch, right? When it comes to analytics, there's a DB, there's a BI layer. So maybe you're using click house and hex last click, you know, first click at…”

“X ads don't work. And, like, that to me just means the platform is still... I have yet to meet a SaaS head of growth or performance marketer that says that X ads print.”

“I don't know if it'll be three years, maybe five, but This will come back.”

“I won't be surprised to see a huge wave of M&A of these businesses, because they're still good businesses fundamentally, or you can make them good businesses, And they just aren't going to be, like, Stripe, or these massive things that capture fundamental piec…”

“Contemporary SaaS businesses are more like movie studios now, where you have to hit a blockbuster, and you have to keep hitting blockbusters in order to keep the attention of the world”