Jan 4, 2024 · 1h 32m · news
Jason Lemkin: Predictions for 2024 - What Does a Trump Administration do for Startups? | E1099 · 20VC with Harry Stebbings
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SaaStr founder Jason Lemkin joins Harry Stebbings to dissect the defining shifts in the 2023–2024 venture capital and SaaS landscapes, focusing on late-stage liquidity freezes, macroeconomic software saturation, and the raising of founder standards. They deliver strategic forecasts for IPOs, M&A, and the critical adjustments investors and founders must make to survive in an efficiency-driven market.
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 16.3% of the talking time here. How this is scored →
Harry as informed peer 5.2 Guest teaching 4.7 Guest disagreement 3.2 Harry pushing back 3.1
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 39:48 Unethical founder secondary cash-outs
Jason forcefully labels the Hopin founder taking $140M in secondary liquidity as abusive, unethical, and a sign of bad character.
Hardest push from Harry ▶ 40:50 Defending secondary sales as investor-driven de-riskingHarry directly challenges Jason's moral judgment, arguing that investors begged the founder to sell stock to allow him to dream bigger without financial anxiety.
Biggest teaching moment ▶ 8:32 The partner math behind multi-partner VC fundsJason walks through explicit fund math to prove why rich partners in modest $80M funds barely clear meaningful personal carry across 10 years after fee splits.
Harry holds his own ▶ 1:07:25 Exposing untapped Asian and Middle Eastern LP capital poolsHarry leverages his direct LP relationship insights to correct the narrative that LP liquidity is frozen, pointing to massive active family office deployments from Asia and the UAE.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and SaaStr Origin Story | 3 | 2 | 2 | 1 | Friendly opening exchange recapping standout SaaS companies in 2023. Harry offers Midjourney as a counter-example to OpenAI and highlights HubSpot's ongoing dominance. | |
| Wealth, Fund Sizes, and the Math of a 3x Return in Venture Capital | 5 | 5 | 3 | 3 | Discussion on fund economics and partner incentives. Harry challenges downside protection behavior vs upside maximization, while Jason breaks down partner return math on an $80M fund. | |
| Standout Founders of 2023: Nvidia's Jensen Huang vs. Coinbase's Brian Armstrong | 5 | 4 | 7 | 5 | Jason nominates Jensen Huang as founder of the year. Harry proposes Brian Armstrong of Coinbase, but Jason forcefully rejects the choice, alleging crypto earn products are fraudulent. | |
| The Efficiency Trap: SaaS Market Dynamics and the Struggle to Return to Growth | 4 | 6 | 2 | 2 | Jason explains the divergence between public SaaS stock prices and actual top-line growth. Harry probes whether companies are ready to return to growth or remain in survival mode. | |
| Is Venture Broken? Entry Prices, Bubble Windows, and Rethinking Acquisition Advice | 6 | 5 | 3 | 4 | Harry questions whether venture functions well when seed entry valuations stay high while exit multiples compress. Jason references Bill Gurley's thesis on liquidity windows. | |
| Evaluating the Best Early-Stage Funds: Y Combinator, Kleiner Perkins, and the Power of Fir | 6 | 4 | 2 | 3 | Jason praises Gary Tan's return to Y Combinator. Harry introduces Kleiner Perkins, Bedrock, and Matrix as strong counter-contenders that stayed true to core fund sizes. | |
| Late-Stage Investing Freeze and the Collapse of VC Reserve Models | 5 | 5 | 2 | 3 | Discussion around the late-stage investing slowdown and how excess unicorn valuations broke traditional VC reserve models. | |
| Founder Survival Guide: Honesty, Fundability, and Finding a Catalyst | 6 | 5 | 8 | 7 | Heated debate over secondary stock sales by founders. Jason calls massive secondary cash-outs like Hopin unethical and abusive, while Harry strongly defends the founder's right to de-risk when investors beg to buy. | |
| SaaS Market Predictions and Software Spend Saturation | 6 | 6 | 4 | 5 | Jason voices concern that software spend is hitting overall GDP saturation caps. Harry counters by asking if AI workflows fundamentally redefine software spend categories. | |
| The Shift from Unicorn to Decacorn Hunting | 5 | 5 | 2 | 3 | Jason argues growth investors now exclusively hunt decacorns rather than unicorns. Harry brings up specific valuation data regarding ServiceTitan's private metrics. | |
| The M&A Outlook and Potential Trump Administration Impact | 4 | 5 | 3 | 3 | A look at M&A dynamics, private equity consolidation, and potential regulatory changes under a different presidential administration. | |
| The Evolution of San Francisco's Tech Ecosystem | 7 | 4 | 2 | 2 | Discussion on San Francisco tech density and global LP liquidity. Harry shares detailed market intelligence on new Asian, UAE, and European family office capital entering venture. | |
| Quick Fire: Portfolio Markdowns and Founder Evaluation | 4 | 4 | 3 | 2 | Quick fire segment on write-offs, fund markdowns, and accepting that non-exceptional founders rarely produce venture returns. | |
| Venture Advice and the Imperative of Founder Urgency | 6 | 4 | 2 | 2 | Discussion on founder urgency. Harry reinforces Jason's point by sharing his worst investment outcomes—well-funded corporate execs who lacked maniacal speed. | |
| The Art of Nudging and Jason's Greatest Investment Mistake | 5 | 5 | 3 | 4 | Jason reflects on his inability to 'nudge' or push his way into deals like top tier firms do. Harry questions whether aggressive nudging creates artificial deal pressure. | |
| Taking Venture Capital Personally and Board Engagement | 5 | 5 | 3 | 3 | Jason admits taking venture outcomes too personally and being too deeply involved on boards rather than acting purely as a financier. | |
| The Brutal Truth: Venture Capital as an Outlier Business | 5 | 6 | 4 | 2 | Jason addresses the brutal truth of venture capital as an outlier-driven industry where underperforming managers will naturally get filtered out. | |
| SaaStr's Business Model and Future Outlook in 2024 | 6 | 5 | 2 | 2 | Jason shares SaaStr's business model metrics. Harry highlights the favorable unit economics of media content businesses over traditional journalism heavyweights. |
Statements from this episode (63)
Lemkin: Venture capital market lacked sufficient greed in 2023
“I know everyone said they did more deals, but I didn't see enough greed in the markets in 2023.”
Lemkin: 2023's software market growth deceleration may be permanent
“This is the first year I'm worried. The deceleration That we saw last year. I'm worried some of it may be permanent. You could only spend so much of the global GDP on software.”
Lemkin: 2024 is the year tech companies might as well go public
“I think, twenty-twenty-four is the year of you might as well go public.”
Midjourney reached $200M ARR with virtually zero venture capital
“Mid, mid journey company that's raised next to no money or no money at all. And now does, I think, two hundred million in ARR.”
HubSpot's CRM hit $700M revenue and threatens Salesforce
“And then the fact that now they're doing seven hundred million, their CRM product. There's CRM, which is the first real threat in some, to at least to the low end of Salesforce we've ever seen.”
Lemkin: Pipedrive was my first venture investment and sold for $1.5B
“Pipedrive, which was my first venture investment, right? Which eventually sold for a billion and a half, but lost to HubSpot.”
Lemkin: Long-term VCs must be driven by accumulating wealth
“I really think it, to go long in this business, you, you've just gotta to bleed money. You've got to want to put the zeros and ones in your bank account, or what's the point?”
Salary-dependent VCs focused on downside protection are toxic
“I think there is a category of Lifer VC with no other opportunity that are mediocre investment investors that are, can be inadvertently toxic. They can be so focused on the downside. They need their million dollar salary. There's nothing, they have no other po…”
Lemkin: Extremely wealthy VCs must raise billions to see financial impact
“Now, if you're too rich in venture, you just have to raise billions and billions and billions. That's the only way.”
Lemkin: David Sacks has raised nearly $4B for Craft Ventures
“I mean, David Sachs, who I have a ton of respect for, you know, I, you know, he's raised almost four billion for Kraft since I started investing, right?”
Founders Fund is the multi-billion fund most likely to return 3x
“I said founders fund, and I said it because of something that Brian Singerman told me, which is like, we are unparalleled in the willingness to have extreme revenue, extreme capital concentration on a per company basis, which means we could lose a lot. But if …”
Lemkin: Will not interview founders with under $20M in revenue
“This is why I won't even talk or interview a founder below 20 or thirty million in revenue because they're not honest enough. They don't have enough life experience, right?”
Every crypto company offering an Earn program is a fraud
“I believe every crypto company that has an EARN program is a fraud.”
Lemkin: Coinbase's 10% high-yield crypto program is a pyramid scheme
“And even, I know Coinbase is the good one, but where are they getting this 10%? It's a pyramid scheme. It's fraud.”
Lemkin: Public SaaS stocks gained 41% in 2023 despite 16% growth
“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.”
Lemkin: SaaS customer acquisition costs hit all-time high in 2023
“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.”
Lemkin: Skeptical that AI will drive top-line revenue growth for SaaS
“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?”
Lemkin: Invested in six pre-seed startups now exceeding $200M revenue
“I think I've invested in six companies at the pre-seed states that are now north of two hundred million, ok? And so they're IPO candidates, ok?”
Lemkin: All $200M+ revenue portfolio startups reached cash flow positivity
“And most of them, not all, I mean, I'm not talking about hundreds, so maybe most of the wrong word, I would say a bunch of them are on the bubble, and what I mean is, they're all cash flow positive now, all of them, everyone got cash flow positive, ok?”
Lemkin: Expects to lose $70K bet on 2024 tech IPO resurgence
“And I have, you know, I've got 70,000 dollars with you that there'll be 26 IPOs next year. I think my, I think I may have been off by six months, so I'm going to lose.”
Lemkin reveals 2013 Pipedrive seed terms and $1.5B exit outcome
“When I invested in pipe drive in 2013, my first investment It was 16 pre at 1.2 million ARR. Okay. Growing nine percent a month. Okay. And we argued over the price. Now, pros and cons, but it did exit for a billion and a half.”
Lemkin: Another 2021-level venture boom could take a decade
“I think we're going to see 2021 again, and maybe AI will bring it back faster but it could be a decade until we see another boom of that level.”
Lemkin: Initialized Capital's early funds achieved up to 100x returns
“Initialize ones like 50 X tiny fund, maybe a hundred X and initialize to I bet is 10 X net for a big fund.”
Lemkin: Y Combinator will have another incredible decade under Gary Tan
“I see another, at least a Another incredible decade for YC, and this was a genius move.”
TCV tracks a confined universe of 1,500 near-IPO companies
“TCV is tracking every company that's 24 months from IPO and 24 months after. It's a confined universe of 1500 companies, and they go meet with them.”
Lemkin: Very few non-AI deals exceeded $200M valuation in 2023
“If you take AI, AI deals out of the equation I think in 20, 23, very few deals got done north of two hundred million valuations. Very, very few deals.”
Of 1,000 pandemic unicorns, 200 will die and 100 will break out
“I do think that the sheer number of unicorns that were born in the work from home boom broke reserve models. So I think you have, you took, you have a thousand unicorns. Fine. 200 of them are going to die, right? A hundred of them are going to break out.”
Lemkin: Usually only one investor will step up to catalyze a round
“What I have seen in my, especially the last 24 months, but across my whole career of investing for 11 years, is there's usually only one investor that will stand up for you.”
Lemkin: Hopin founder's $140M secondary cash-out was abusive and unethical
“The hop in story is abusive. I'll take a hundred and forty million out for myself. F you VCs. That's Writer. I know a lot of folks think that's a hero story. I think it's abusive.”
Lemkin: Founder secondaries over $10 million are a bad sign
“If you're putting the rest first, I think taking out more than ten million is a bad sign, even in the hottest round.”
Lemkin will sell all seed shares if founders take huge secondaries
“And I would, if I, if I'm in that situation again, I will sell my shares as a seed investor. If I'm allowed, I would sell all of my shares. All of them. A hundred percent of my shares in that situation.”
Box CEO Aaron Levie says enterprise customers have zero AI budget
“I asked Aaron Levy when I talked to him, when you talk with your biggest customers, what's their AI budget? He's like, their AI budget is zero. There's no AI line.”
Lemkin: Seed SaaS investing will stay vibrant with yearly 1,000x outcomes
“I think the vibrancy of seed is here to stay. There's too many folks that made money. There's too many folks that enjoy investing. There are too many LPs that are still going to search for that alpha. And there will, every year there's going to be thousand X o…”
Anthropic reached over $200M in annual revenue before Menlo's $1B investment
“People sort of just a few weeks ago made fun of Memo and putting, you know, whatever, a billion into Anthropic, but if they're doing 200 and something million in one year, it doesn't seem like such a bad deal, does it?”
Lemkin: Post-seed VC is permanently hunting for decacorns, not unicorns
“What I think has changed permanently Permanently since 2021 is venture post seed is perpetually going to be sourcing, searching for decacorns.”
Lemkin: Box, HubSpot, and Shopify IPO'd under $1B valuations
“Box IPO did eight hundred million. HubSpot IPO did eight hundred million valuation. Shopify IPO did a seven hundred and fifty million dollar valuation.”
Lemkin: Mega decacorns will allow top growth funds to hit 3x net
“I think there are, there will be enough stripes and data bricks and open AIs that some growth funds can do three X net or more, and that will get the LPs to re up and that will rearm the decacorn hunters.”
Lemkin: Stripe will go public in 2024
“I think so. I think 2024 is the year of you might as well go public.”
ServiceTitan is at $600M ARR and growing 40% to 50%
“So today, today it's at six hundred million in ARR selling HVAC software and plumber software growing 40 to 50% cash flow neutral.”
Lemkin: ServiceTitan will be the next tech IPO
“I think it'll be the next one to IPO. Some people think it'll be, it could be in Q one.”
Lemkin: Tech IPO wave delayed until 2025
“If I had to give it honest answer today, I think I say, I think it's going to happen, but it's going to be shifted six months. So I think it's going to happen in. 2025 because it's getting late.”
Lemkin: PE-owned tech companies are actively seeking $20M+ ARR bolt-on acquisitions
“I have seen lots of tire kicking across my portfolio in the last six months. A lot of it, not just from public companies, but a lot of it from ex-public companies that are acquired by PE. They're all looking to bolt stuff on. They're all looking to bolt stuff …”
Lemkin: Tech M&A will see strong bolt-on deals in $100M-$400M range in 2024
“I think there will be Lots of good M&A opportunities to bolt on in like the 100 to four hundred million dollar range next year.”
Lemkin: Tech acquirers will buy adjacent products rather than direct competitors
“There'll be huge appetite for M&A anyone can afford, but people will buy adjacent plays rather than directly competitive plays at scale.”
Lemkin: VCs claim macroeconomic vision but only care about personal returns
“VCs try to claim they're these big macro folks, but they really care about their own pocketbooks.”
Lemkin: Personal tax bill increased 15% under Donald Trump's presidency
“My taxes went up, whatever, 15% under Trump.”
Lemkin: Half of YC founders staying will transform San Francisco by 2028
“Half are going to stay and Gary's going to do this for a decade. That alone will be transform transformational to SF by, I don't know, 20, 28.”
Lemkin: Large international LPs average weak 4% to 5% returns
“A lot of these huge pools of capital you're talking about, especially international, their annual returns are terrible. They're not at the Harvard or Yale or Stanford level. They're not buying like swaths of forests in Scandinavia and weird assets and only inv…”
Lemkin: A single outlier hit like Datadog carries early-stage VCs
“If you had the one, if you had, if you were the lead in Datadog or Stripe or whatever, if you had one true epic outcome, it was just true when I started to say that carries you, because then people, they believe you can do it again, right? That you have the se…”
Lemkin: SaaStr will never again invest in 'pretty good' founders
“I have changed my mind that there is any chance on planet Earth, any chance That a pretty good founder can produce good venture returns. I will never again invest. I only invest in founders that are much better than me. I will never invest in pretty good found…”
Lemkin wrote off all non-performing investments in latest LP report
“So I took every write off in my last LP report. There was, I just wrote it off to the max. Anything that wasn't good for my first time, I just wrote it. I just, I aggressively put the red pen or whatever to it.”
Lemkin: VCs shouldn't invest unless convinced within 20 minutes
“If you don't know in 20 minutes that this is one of the best founders you've ever met with, don't do the investment.”
Slack was acquired for $27B but is worth $2B today
“Slack was worth twenty seven billion when Salesforce bought it and probably worth two billion today.”
Sequoia still uses the lobby-waiting strategy to win competitive deals
“The classic Sequoia playbook, which literally happened to one of my portfolio companies a couple months ago, where they sit in the lobby and just wait, you know, with the term sheet. Sequoia still does it.”
Lemkin: Byron Dieter Sat on My Steps With Term Sheet
“Byron Dieter did it with me back in the day at Bessemer of just sitting on your steps with the term sheet.”
Lemkin: Venture capitalists shouldn't be overly involved as advisors
“I think you can, you shouldn't be too involved with portfolio companies. It's you have a portfolio. I shouldn't be an advisor.”
Lemkin: Founders should accept preemptive inside rounds most of the time
“And I think founders should take inside, like, good inside rounds very seriously now because of the reason you said. This is different than a bridge, but if one of your investors really wants to step up at a higher price, Right? Just eight, six times out of 10…”
Lemkin: Emerging VCs Promised Unrealistic 8x Net Returns to LPs
“Emerging managers for the last four years thought it was so much easier. Every emerging manager promised their LPs eight X net.”
Stebbings: 3x Net Return Remains a Strong Performance Benchmark in VC
“So I definitely think a lot of people forget just how difficult it is to do depending on fund size, but just generally at the early stage, three X net is still a fucking good fund.”
SaaStr generated approximately $27 million in revenue in 2023
“Like twenty seven million the year before.”