Enterprise SaaS

“If you were just selling the same software, you're probably not going to be around.”

“I knew I don't want to build enterprise SaaS. I knew I don't want to go and like build like a GPT wrapper that does something fun. I wanted to solve a meaty difficult problem in a regulated industry and legal just perfectly fit those criteria.”

“So in a way, I would say not only is it fair because of the risks that exist, I'm not sure it's actually done yet. You know, again, I'm not a trader of businesses, but I do think we're going to go through material changes in the market, especially when it come…”

“Gartner says, 40% of enterprise SaaS shifts to outcome based by 2030. So seat base is going to decline from 21 to 15%.”

“Like if you're going and asking for a 100,000 budget or a 500,000 budget, except AI, there is no spend happening in any other software category.”

“Now, if that's how your products actually are, you are, now it's you are going to get fucked. Like, and this is going to happen so quickly.”

“So I think it's not going to be immediate change, which is why I think the SaaSpocalypse is a bit overblown, but like, it's definitely a real risk.”

“That promise has not been true for enterprise. It might be true for consumer SaaS products, right? Like, you know, if you call Gmail a SaaS product or you call Zoom as a SaaS product, right? Sure, it's true. But, I mean, that's not the bulk of the SaaS product…”

“The potential risks of using, like, a vibe-coded product, like, far outweigh the cost of just paying for the product and having something that's reliable, trustworthy, battle-tested.”

“So if you're doing enterprise with procurement and marketing expertise and C's, Like to me, it's a minimum 35,000 dollar a year contract. That's USD.”

“Yeah, yeah, for sure. I think more like 20 plus.”

“When you think like Figma has been like shipping features every single day for a decade now. And even if you knew exactly which features mattered and how they all work together it would be very difficult to create a one-to-one clone.”

“I mean, I would say humans are AGI and we still invest in enterprise SaaS.”

“Would it be easier to start Instacart, Amazon, or Coupang, or would it be easier to start an enterprise SaaS software company? Definitely the enterprise SaaS software company.”

“Right now, it's less around pain, it's less around, like, standard enterprise SaaS cycles, and probably more around FOMO, around missed upside, around value cases that are really hard to define.”

“But I think there's a near future, I don't know how about the future where Enterprise to enterprise communication will be through APIs, where another enterprise consumes another API to do the work, which means AI will be able to consume another company or leve…”

“Look at Y Combinator, 90% of the startups are basically doing AI as enterprise SaaS.”

“For these enterprise SaaS companies, that's all the value that there is, right? At some point, the everything's commodity. And so the entire battleground is sales, right? Like anybody who runs an enterprise SaaS company knows that, right? That like, once you'r…”

“Getting every customer who will add half a million dollars in revenue it's much easier to scale than scaling, adding 5000 dollars, 200 dollars customers.”

“And the whole game in enterprise SaaS is high gross retention. Let's just be clear. The whole game is high gross retention. You look at a lot of companies, if they're in the, you know, seventies, eighties, good luck. I don't want that business.”

“And now we're shifting to the personal software era where people can build their own software for their own use case. They can build it for their friends, their groups, small groups, and you don't have to depend on an organization to build you everything anymo…”

“See, the most hated products in a company are the most difficult to replace.”

“In today's world, if you go into a bake-off, a competitive bake-off, and your competitor is making real or fake promises with AI, and you cannot compete, you're going to get slaughtered, especially in the enterprise.”

“The more people become, you know, multi income, multi job, the more we're going to be treating ourselves like businesses. And so tools like mercury, Which is basically like, I want business banking for myself. I want business email for myself. I think there's …”

“I mean, it's like an enterprise SaaS product, and they can have a really successful product because they're solving the right needs for an enterprise customer, another company that they're selling to, but I don't know if that product was designed from the grou…”

“I'd say a 1.5 or less is in enterprise. I mean, here we are back to your question. The bigger the deals, the more permission you have. So an enterprise, I might go one five. In SMB, I might go one O.”

“Carbon accounting isn't necessarily a market that needs 200 or 300 players. And also I think a lot of them end up being a bit more consulting advisory based than traditional enterprise SaaS like generalist investors understood.”

“The moment someone says procurement or custom terms of service, or I want single sign on, or I want, you know, whatever enterprise features to be able to this and that. All right, cool. Minimum, 30 grand a year. That's it. I'm not going to do, go through the p…”

“There is so much demand for AI, even if it's not fully understood that if you go into, especially in the enterprise or more sophisticated parts of tech, if you don't have parity with AI, you're gonna lose deals.”

“You know, SaaS is still gonna grow 18% in spend this year, and another 18% next year. People are still gonna spend almost two hundred million dollars in the U.S. Alone on SaaS, just in the enterprise, 200,000,000,230 billion next year.”

“It's a new category, has a potential of landing in, even into large enterprise. In this case, even inbound might work. There's a potential wherever you're sitting globally because you're solving a problem, which is actually people are trying to solve with the …”

“If you're being realistic about enterprise, like look at the benchmarks, it says 12 to 18 months. That's the best case scenario, right? Like it's really three years, depending where it's like, you know, 18 months to three years.”

“As a rule of thumb, if you're selling to enterprises, you have a long customer lifetime, you might have a net dollar retention rate or in the hour of a hundred percent or maybe even more. 15 to 18 months of payback is probably okay, probably quite good.”

“In true enterprise, like real enterprise, the founder is often the VP of sales until ten million.”

“So in my own personal investing, It's caused me to double down on people who are working on really interesting and challenging projects, because I think it's better to find great talent for people who are working on something on the frontier, where you've got …”

“Long sales cycles don't matter at scale north of 20, thirty million in revenue. You're lining up so many deals at the same time that long sales cycles don't matter because if you have a hundred deals in flight, it actually starts to happen very predictably, ri…”

“I've found that in true enterprise, like real enterprise, the founder is often the VP of sales until ten million.”

“COVID has actually helped because what required enterprise sales earlier required you to be there in person and meet people and because of COVID all sales have happened remotely and virtually. So I think it has actually helped to accelerate the growth of enter…”

“Sort of the other half of them, or probably three quarters of them, are enterprise SaaS, workflow, two-sided networks, marketplaces, digital transformation, They're basically continuing in the curve of deployment of ideas that people in tech were obsessed by 1…”

“So I think you need really if you want to slowly move into the enterprise, be Less than two percent month over month to be in some setting where you can have a sober growth.”

“And a 40% discount at 60,000 seats is still, in my opinion, probably not enough. Like I've heard of enterprise deals that have 80% discounts at massive scale, right? They really bring it down.”

“So, so therefore that is also one of the reasons I don't do a lot of software, right? So I don't do SaaS. I don't do enterprise SaaS or I, Don't do B to B SaaS. It's not like I don't like those businesses or they are not, they can't make money. They can make m…”

“Where it's a six month or 12 month sales cycle, and you're charging a 10th of what you should be charging, right? These should be, you know, I don't know what exactly your product is, but these should be 50 grand, a hundred grand a year contract values, or els…”

“Also in an enterprise company any customer facing mistakes have longer sales cycles, which you are working with customers who will want to grow at 20 to 40%. While as a company, your growth target is 200 to 300 or 400%, right? So you need to parallelize your e…”

“The big learning from Yammer you know, we learned this at Yammer from 2008 to 2012 is that enterprises don't self-serve, right? They don't self-close. Bottom up, SAS products are phenomenal for generating top of funnel, basically generating leads, but you have…”

“We learned really quickly that when you have one key stakeholder that's a champion with your software inside of an enterprise, that's a good thing, but it's not a good thing when they turn over. So we learned that we got to get really deep, really fast when we…”

“So you're willing to, you know, pay twice as much as what the value would be in the first year. Cause if a customer is staying for five years, you're doing pretty well.”

“In enterprise SaaS businesses in general, because you sell, you have a longer sales cycle and you have to build a sophisticated product. Typically they do take a lot of money because you have to spend a lot of money up front and you get those customers to pay …”

“If you don't do that, if you're not solving a real business problem, and you're just solving something that the end user wants, but that's it, you're not going to be able to build a true enterprise company.”

“I mean, you want to, you know, as a SaaS company, you know, playing in enterprise space, if you're more than 10%, losing more than 10% or below 90% overall, you know, from a gross retention, you have a problem.”

“We actually recently came across some analysis that showed that all the enterprise SaaS M&A deals done since 2015, the average revenue multiple of those deals was three and a half to four X.”

“Never agree to show them your financials if you're at this stage. Instead, offer them an escrow agreement. Absolutely, 100%.”

“The idea of move fast and break things really doesn't work if you need to be SOX compliant, and if you're asking your customers to trust you with their financials.”

“We went after larger customers early on, and that's allowed us, it forces you to build a bigger product, right? There's pros and cons to it, by the way. There's lots of companies that get killed by going after larger customers, but by, for us, we built a very …”

“Like, I won't look at a pre-launch sort of like enterprise SaaS company. I want to see something in the range of 10 to sometimes 50,000 dollars a month in recurring revenue.”