Jun 3, 2024 · 1h 20m · news
Jason Lemkin: PluralSight S*** the Bed & The Next IPO Candidates | E1160 · 20VC with Harry Stebbings
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In this in-person episode of This Week in SaaS, host Harry Stebbings and SaaStr founder Jason Lemkin analyze the severe growth deceleration facing B2B software giants, the mechanics of the venture capital liquidity crisis, and the disruptive impact of AI on corporate budgets.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 17% of the talking time here. How this is scored →
Harry as informed peer 6.2 Guest teaching 6.0 Guest disagreement 3.8 Harry pushing back 5.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 3:41 Jason reframing PLG as rebranded freemium
Jason explicitly rejects Harry's premise that Canva's success is due to early PLG adoption curves, arguing that PLG is simply freemium with better analytics.
Hardest push from Harry ▶ 1:05:40 Harry challenging Jason on why he still runs eventsHarry aggressively questions Jason's decision to continue running SaaStr physical events, pointing out that media and fund investing offer vastly superior time ROI.
Biggest teaching moment ▶ 47:11 Tomas Tunguz statistics on $50M+ software exitsJason educates Harry with data from Tomas Tunguz showing that $50M+ US software acquisitions have remained flat at 57 per year for a decade despite massive venture expansion.
Harry holds his own ▶ 59:10 Harry rejecting wide $2M-$5M fundraising rangesHarry pushes back firmly against founders giving wide target ranges when raising capital, asserting that operating on $2M versus $5M requires entirely distinct plans.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcoming Jason Lemkin to the First In-Person "This Week in SaaS" | 3 | 5 | 1 | 1 | Harry introduces the first in-person 'This Week in SaaS' segment and asks Jason to unpack Vista's write-down of Pluralsight. Jason explains the debt mechanics behind PE buyouts and operating margin constraints. | |
| The Contrast of B2B2C and B2B2B in Software Spend | 5 | 6 | 5 | 4 | Harry asks whether Canva's growth is due to early PLG adoption curves. Jason rejects the PLG framing, defining it as freemium with better analytics, and contrasts broader economic strength with tech-specific cuts. | |
| The Future of Private Equity Buyouts and LP Sentiment | 6 | 5 | 2 | 6 | Harry challenges the thesis that PE will be the main buyer of software companies given recent multibillion-dollar write-downs. Jason explains PE debt service math and discusses LP sentiment across asset classes. | |
| Defining "Crazy AI Deals" and Valuing Perplexity | 7 | 6 | 4 | 5 | Harry cites specific firms doing massive AI deals like Perplexity at $3B and asks whether AI budget is net-new or taken from existing spend. Jason emphatically states it is entirely substitution spend, citing Gartner data and portfolio company churn. | |
| Enterprise Sales Strategy: Asking "Is This Budgeted?" | 7 | 5 | 3 | 7 | Harry presses Jason on his conservative AI investment strategy and asks if taking LP money too seriously hinders risk-taking. Jason candidly reflects on his anxiety around capital loss and agrees it can be a flaw in venture. | |
| Salesforce's Growth Collapse and the Death of the NRR Playbook | 6 | 6 | 5 | 5 | Harry brings up Salesforce's 20% stock drop. Jason clarifies that the market reacted to single-digit growth guidance rather than a quarterly miss, pointing out that the traditional 115% NRR playbook is failing due to seat cuts across tech. | |
| The "New Norm" for Mature SaaS Giants: HubSpot, Box, and Dropbox | 6 | 6 | 2 | 4 | Harry links Salesforce's decline to HubSpot's growth and asks what happens when mature giants settle into 5-7% growth. Jason analyzes multi-product execution strategies across Samsara, Toast, Klaviyo, and Box. | |
| Is AI Driving Net-New Revenue or Just Table Stakes? | 6 | 6 | 5 | 5 | Harry asks if incumbent SaaS leaders will capture pricing power by embedding AI into document and workflow data. Jason counters that early evidence shows AI features act as table stakes rather than revenue accelerators. | |
| SaaS Multiple Compression and the Venture Capital Math Problem | 7 | 6 | 3 | 5 | Harry cites compressed multiples for Box and UiPath and asks Jason about market cap realities. Jason breaks down the venture math problem, noting that late-stage deals require 30-40% multiple reflation to generate returns. | |
| Google's Rumored HubSpot Acquisition and Regulatory Hurdles | 6 | 6 | 4 | 5 | Harry asks about Google's rumored $33B acquisition of HubSpot and potential regulatory roadblocks. Jason draws on his Adobe M&A experience and leaked target lists to evaluate antitrust risks. | |
| Adobe's Competitive Threats: Figma vs. Canva | 6 | 7 | 5 | 5 | Jason argues regulators misdirected focus toward Figma when Canva represents the real existential threat to Adobe Creative Cloud. Harry probes on systemic liquidity solutions for venture funds. | |
| MongoDB's Shocking Deceleration and the False Bottom | 6 | 6 | 5 | 5 | Harry highlights MongoDB's 23% stock collapse and Twilio pushing out founder Jeff Lawson. Jason criticizes public boards for removing iconic founders and analyzes Twilio's low-margin structure. | |
| Unicorn Fatigue and Rebuilding Management Teams | 7 | 6 | 4 | 6 | Harry queries Notion's $10B valuation against its ARR and shares personal fund ownership dynamics. Jason explains why secondary share sales under $1B valuations do not meaningfully return venture funds. | |
| Portfolio Markdowns and TVPI Valuation Critiques | 6 | 7 | 5 | 5 | Harry asks how aggressively Jason marks down his portfolio. Jason describes cutting valuations back to the bone and cites Tomas Tunguz data showing $50M+ software exits have remained flat at 57 per year for a decade. | |
| Micro-Brands and Customer Acquisition Cost (CAC) Dynamics | 7 | 6 | 2 | 6 | Harry references Jason's past quote regarding micro-brand CAC reductions. Jason explains that while organic inbound increases at $2-5M ARR, VC growth demands re-inflate total CAC. Harry challenges Jason by betting Stripe remains private. | |
| Positive SaaS Growth Leaders and Founder Resilience | 6 | 6 | 2 | 5 | Harry asks for bright spots in SaaS. Jason highlights non-tech SaaS successes including Toast, Samsara, Monday, and Klaviyo, while praising ZoomInfo founder Henry Schuck. | |
| Fundraising Traps: Asking for Too Much Capital | 7 | 6 | 4 | 7 | Harry cites Jason's tweet on fundraising asks. Jason explains how requesting $10M disqualifies founders from $4M check-size funds. Harry strongly rejects wide ask ranges like $2-5M as sloppy execution. | |
| Managing Deal Flow, Outbound Pitches, and Cold Emails | 6 | 5 | 3 | 6 | Harry asks Jason about his meeting cadence and teases him about missing out on top founders who cold-emailed him in the past. Jason admits cold emails can be exhausting to filter. | |
| SaaStr's Revenue and the Reality of running Physical Events | 7 | 7 | 3 | 7 | Harry asks directly what SaaStr generates in revenue. Jason reveals $25M, down from $30M after losing 60-80 unicorn sponsors. Harry challenges why Jason runs physical events when content creation is much easier. | |
| Why Keep Building SaaStr? Jigsaw Puzzles & Time ROI | 7 | 6 | 5 | 7 | Harry continues pushing Jason on whether physical events offer a good ROI on time compared to pure venture investing. Jason defends running SaaStr using Aaron Levie's jigsaw puzzle framework and details event margins. | |
| Near-Death Event Stories and Industry hiring Hurdles | 5 | 7 | 6 | 4 | Harry prompts Jason for operational near-death event stories. Jason recalls losing $10M during the March 2020 COVID shutdown and an event director who forgot to reserve the convention center. | |
| Evolving CEO Strengths: Team Rallier to No-Bullshit Transparency | 6 | 6 | 4 | 5 | Harry asks if Jason has improved as a CEO over time. Jason responds that he has gotten worse because he cares much more about employees but can no longer cheerlead artificial goals. | |
| Quick-Fire Questions: Zenefits, Ideal Board Members, and Quiet Quitting | 7 | 6 | 5 | 5 | Harry conducts a quick-fire round covering Zenefits, ideal board members (Tobi Lütke), and early signs of founder quiet quitting. Jason defines quiet quitting as covering for mediocre VPs. | |
| Valuation Multiples Bet and Friendly Banter | 6 | 5 | 3 | 6 | Harry and Jason place a $20,000 bet on public SaaS valuation multiples returning to 8x by the end of 2025. Jason takes the over while Harry takes the under, closing with banter about 20VC's team. |
Statements from this episode (66)
Lemkin: Salesforce lost $50 billion in market capitalization overnight
“Salesforce lost fifty billion dollars in market cap.”
Lemkin: Salesforce reported permanent slowdown to single-digit growth
“The issue is that Salesforce said we have fallen to single digit growth, and we're not coming back.”
Stebbings: Vista wrote down its $3.5B Pluralsight acquisition to zero
“So the Pluralsight news was that Vista wrote down their three and a half billion dollar buyout of Pluralsight last week to zero.”
Lemkin: Product-led growth is just freemium with better analytics
“PLG is just freemium with better analytics.”
Lemkin: Canva is growing 40% on $2.3 billion in accelerating revenue
“And so Canva is selling to normal consumers and small businesses, and they're growing 40% at 2.3 billion in revenue, 2.3 billion revenue. It's essentially accelerating.”
Lemkin: Zoom and ZoomInfo are still cutting tech spend to the bone
“Tech companies are just continuing app layoffs. We thought it would be over. They're still cutting, cutting, cutting, cutting, cutting, cutting to the bone, right? We see it at Zoom Info. We see it at Zoom. We see it at so many others. They're still cutting, a…”
Lemkin: Highly leveraged PE deals generate returns even when companies underperform
“The real goal of PE is if you use debt correctly, even when you lose, you win. Because you have, you've taken so much out, right? Or you've put so little equity, and if you could put in 10, 20% equity and leverage it up, like you win, even if you lose, you win…”
Lemkin: OpenAI scaled to over $2B in ARR in three years
“Open AI literally essentially in three years went to over two billion in ARR”
Lemkin: The AI market could yield ten $100B outcomes
“Maybe there is room for ten hundred billion dollar outcomes, right?”
Lemkin: AI enterprise spending is entirely taken from traditional SaaS budgets
“It is all being taken. There is no net new. There is no net new.”
Gartner upgraded 2024 SaaS spend growth forecast to 20 percent
“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.”
Lemkin: Top enterprise salespeople ask if software purchases are budgeted on first call
“All the best salespeople ask that question. On a first discovery call, Harry, when I'm meeting an enterprise customer, so tell me, is, is this purchase budgeted for this year?”
Lemkin: 2024 Brings His First-Ever Venture Investment Write-Offs
“This will be the first year I've ever had any investments that I had to write off was this year, but the funds will still do fine, right?”
Lemkin: VCs Should Take LP Capital Less Seriously and Take More Risk
“No, I do think you should take your LP's money less seriously than I do. I genuinely think it's a bad thing.”
Lemkin: Founders Shouldn't Stress About Losing Single-Digit Millions for VCs
“But I worried too much as a founder. I remember about losing single digit millions for my VCs. I shouldn't have worried about it. It was bad for them and it was bad for me. I should, I stressed it too much. Like they can survive. You know, a four hundred milli…”
Lemkin: Fastly grew 15% in one year without adding net new customers
“Like, Fastly last year grew 15% with no new, zero new customers. They didn't close a single net new customer.”
Lemkin: HubSpot NRR dropped from 110% to 100% despite 30% growth
“And HubSpot is still growing almost 30%, right? At two and a half billion, but HubSpot's NRR is down too. It's down from a 110 to a hundred.”
Lemkin: Sales Cloud is only Salesforce's third largest cloud product
“And Salesforce has five clouds and sales is not their, is, is I think their third biggest cloud. It's not even their top product.”
Lemkin: Dropbox and Box have settled into low single-digit growth
“I think we are seeing some great companies like Dropbox and box settle into that and just feel that they without, unless they have a huge market cap and then go buy something that it is the world, right?”
Lemkin: Klaviyo Is Growing 50% at $750M ARR
“Look at Klaviyo for a minute. They're growing. I mean, the growth's come down a little bit, but they're growing, I think, 50% at seven hundred fifty million in ARR.”
Lemkin: Salesforce now requires 3x pipeline coverage, up from 2x historically
“Salesforce also just said that now they need three X pipeline coverage versus two X historically. So in other words, if they want to close a billion dollars, they used to need two billion dollars of deal in flight. Now they need three because it's just 50% har…”
Lemkin: Box and Dropbox Were Very Late to Go Multi-Product
“When we look at the boxes and the drop boxes, and I think both Aaron and Drew are honest here. They were very late to go multi-product and arguably drop boxes and multi-product at all. Arguably it's one product boxes kind of getting there, but I would say it's…”
Lemkin: SaaS incumbents see no revenue boost from AI features yet
“So far the evidence is no. So far it says the incumbents are gonna, they're gonna do great things with AI, great, great things. The product's gonna be much better, but it's not clear they're gonna get any revenue boost from it. No one's saying that none of the…”
Lemkin: AI revenue impact on SaaS will take 24-36 months to clarify
“So it is where it is worrisome and there is an experiment budget and it is a substitution budget. And I think it's going to take us another 24 to 36 months to figure it out.”
Lemkin: SaaS founders who ignore AI are on a path to destruction
“If you resist this, you are going to get steamrolled because the customers expect it. They're looking for it. How they pay for it is a different question, but I see too many founders still hiding or running from AI or mocking it or making fun of it. And I thin…”
Lemkin: Only two SaaS companies have gone public since late 2021
“I'm concerned that we've only had two SaaS-ish IPOs since twenty-twenty-one. We've only had two since HashiCorp was the last one of the bubble of December of twenty-twenty-one, right? Just got bought for IBM. If only had two, we've only had Klaviyo and Rubrik.”
Lemkin: VCs can't profit on >$100M valuations without multiple reflation
“I think for the math to pencil out in venture, we do need a rebound. The math. And this is, forget about the unicorn rounds and the crazy. We just, we do need some, we do need a 30 to 40% multiple reflation, or we just can't make any money on any round north o…”
Lemkin: Salesforce and MongoDB stock drops were justified by lowered growth guidance
“I think that the Salesforce crash was merited based on the projections, not on the miss, based on the projections. I think the Mongo crash was merited based on them saying, hey, we're only gonna grow in the teens.”
Lemkin: Canva is an existential threat to Adobe Creative Cloud
“I think Canva is an existential threat to the whole creative cloud.”
Lemkin: Marketing software no longer forms majority of HubSpot revenue
“A lot of folks do think that HubSpot is primarily a marketing company, which is no longer really the majority of the revenue.”
Lemkin: Canva, Not Figma, Directly Threatens Adobe's Core Creative Revenue
“Well, it's what, I mean, Adobe, the majority of Adobe's revenue is still from designers designing assets in creative cloud. And that is exactly what Canva does. It's not prototyping products, which is what Figma is great at.”
Lemkin: Regulators Made a Mistake Blocking Adobe's Acquisition of Figma
“I think, I do think the regulators got this one wrong, and maybe even they got it wrong, who knows, because of, this is why the Google HubSpot thing might be worse, and maybe it's how they were lobbied or manipulated, because I don't think it's competitive.”
Lemkin: Individual Investors Should Never Invest in VC Funds
“This is why I tell almost every individual do not invest in venture funds. It's dumb for individuals.”
Lemkin: MongoDB is no longer a growth stock as growth hits teens
“Competitive position, despite a lot of competitors, stronger than ever, but then saying, Hey, growth has plummeted to the teens. It's not a growth stock anymore.”
Lemkin: Demand environment is worsening for Salesforce, MongoDB, and Workday
“Yamini got on the last call a couple of weeks ago and said, yeah, we saw a little bounce at the end of the year and HubSpot had a great quarter, but it's not any easier. She said, it's not one lick easier right now. So HubSpot, not any easier Mongo worse. Sale…”
Lemkin: Twilio Has Failed to Profit From Segment After Multi-Billion Acquisition
“It hasn't been able to make segment, make any money. Which it's paid billions of dollars for.”
Lemkin: Late-Stage Unicorns Must Rebuild Management Teams to Survive Market Pressures
“And you know, you, I mean, I can't speak to Gong in particular, but I think all of these folks, they're gonna have to rebuild their entire management teams if they haven't already. You need, you just, it's too much for the team. Folks that I know that work at …”
Lemkin: Seed investors should not sell secondary shares before a $1B valuation
“I think that there's no point in even as a seed investor selling before a billion. It's not enough money.”
Stebbings: 20VC holds a $60M stake in a $3B foundation model startup
“I was laughing with our CFO this morning, because we've got a company where we did the first round for when it was a SaaS company, pivoted to a foundation model, and now it's worth three billion. You can't get fucking liquidity on it, Jason. So like, we own tw…”
Lemkin aggressively cut his venture portfolio valuations at year-end 2023
“At the end of 1231, I marked, I took a Big red marker, and I went overboard. I cut everything that needed to be cut. In fact, I just had a liquidity, I mean, an extremely minor liquidity event, and it's, you know, it's three times what I marked it down to in D…”
Lemkin: TVPI Incentivizes Artificial Unicorn Extensions
“So that's why it is TVPI is corrupting for this because you wouldn't, If you didn't value companies like this, no one would do endless extensions on unicorn rounds to prop up valuation. That's bad. That's bad.”
Lemkin: US software exits over $50M have stagnated at 57 yearly
“The number of fifty million plus software exits in the U S that can be tracked and some aren't tracked for a variety of reasons. It's averaged about 57 or so for a decade and it's stuck at 57.”
Lemkin: Venture math requires 570 annual $50M+ software exits
“I think it needs to be 570 for venture math to pencil out.”
Lemkin: SaaS micro-brands get 50% free leads by $2M revenue
“Well, I actually find it happens by a couple million in revenue. You often will get half of your deals from not just inbound deals, but folks that heard about you. Folks that in your little niche that have not, not in the grand scheme of things, no one's heard…”
Lemkin: Customer acquisition costs in SaaS never decrease with scale
“One good thing we learned in SAS is until the Salesforce decline, we learned that generally high NRR lasts forever. It lasts to a 1,000,000,02 1,000,000,010 billion, but we also learned the CAC never comes down. And actually the public SaaS companies have the …”
Lemkin predicts Canva will go public at $3B revenue
“Canva's going to IPO at three billion in revenue.”
Stebbings predicts Stripe will remain private for another four years
“I think Stripe will still be private in four years time.”
Lemkin claims Palantir raised gross margins from 20% to 70% before IPO
“Palantir ran that playbook, their metrics were atrocious before the IPO. They weren't even SAS. They had like, 20% gross margins. Forget our profits. Then magically their margins were in the 70 the year before the iPhone, and they've done pretty well.”
Lemkin: I would buy ZoomInfo stock because of founder Henry Schuck's commitment
“Generally speaking, when you have great founders that are committed, I'm a buyer, so I would buy. There's negative things, but like Henry's a great founder who's done this from scratch, basically bootstrapped all the way here, totally committed to the space, w…”
Lemkin: SaaS companies must sequence product 'next acts' early
“I think that the tough thing is we've learned that we've learned you've got to sequence these next acts. Like HubSpot did. And if you don't it's just, it's so hard to do it later. It's so, it's not impossible, but it is so hard.”
Lemkin: VCs Only See One Exceptional Startup Deal Per Month
“Two good ones, really good ones a week, and if you're lucky if you get an insane one a month.”
Lemkin: I have never made a successful investment from a cold email
“No, but that might be my flaw.”
Lemkin: SaaStr will generate around $25 million in revenue in 2024
“This will be our first crappy year, but like twenty five million.”
Lemkin: Field marketing represents 40% of total marketing budgets
“Field is still 40% of all marketing spent, field marketing, ok?”
Lemkin: Box Generates Over $1B Annually With $800M Gross Margin
“Box is doing a billion-ish a year, a little bit more, right? So, twenty million goes to, two hundred million goes to COGS, to servers and support, and he's got eight hundred million to play with each year.”
Lemkin: Events Businesses Need $20M Revenue To Be Profitable
“Basically you need to get above 20 to make money. And then, or Coachella, but once you're above 20, it becomes, I'm way oversimplifying. Then you get, start to get very high margins, but it's very high. So when you look at the public companies in the space, th…”
Lemkin: SaaStr lost $10 million when COVID cancelled 2020 event
“We did lose ten million dollars in March, 20 20. We were the first major event shut down by COVID. RSA got done and then San Jose shut us down. When there was one case off the coast. So we lost in those ten million.”
Lemkin: Almost everyone in the events industry is terrible
“When you're in tech it's if you're relentless, you don't have to work with mediocre people, but in the events industry, almost everyone's terrible, literally terrible.”
Lemkin: I have become a worse CEO over time due to impatience
“Because I'm not, I care much more. I care like 20 times more about my team than I used to. But I can't bullshit anymore. I can't tell people it's great. Great job. Great. I know we showed up on a Saturday and no one was here, but great job team. I can't, I'm t…”
Lemkin: VCs should never invest unless they can see the future through the founder
“You should never do anyone where you can't see the future through the founders.”
Lemkin: Shopify's Tobi Lütke is the ideal board member over founder-friendly VCs
“I think I'd pick Toby from Shopify. Cause I think he'd frigging kick my ass. We have too many founder friendly Yahoo. Great job. Harry's on boards. I I'm just so sick of it. Toby just seems like he just doesn't suffer fools. And maybe you don't want to work. M…”
Lemkin: Founders covering for mediocre VP performance in board meetings have quiet quit
“When you've acquiesced to having a mediocre management team, it's over. How are you ever going to regrow if you're with a mediocre management team? So when you start covering for a mediocre management team, I'm not saying fire them. That's a more nuanced topic…”