SaaS

“Everyone gets to that first million in revenue a little bit differently. But the rest of the journey for a given ACV for a given deal size, it's pretty similar.”

“Once you understand that dynamic, then actually the, your growth and your scale of your business is actually most functional to how much you invest in, in scaling it up. So once we figured that part out, and once capital was relatively cheap, we just decided, …”

“I think we're in the world of, like, there are very few SaaS companies that use machine learning at scale, and I think maybe next year we'll be talking about the first handful of them are, that are 10 or fifteen million in ARR, and we're going to be trying to …”

“The ones that I actually think are going to win in the marketplace are those that solve, ah, one problem. They're the best in breed solution. And then what they do is they seamlessly integrate with, ah, other applications that provide a solution.”

“If you're not one of the primary sellers for your company's product in the early days, to me you have no business starting and running the company”

“The single biggest economic business opportunity in Sastom right now is related to the changes that are happening in the data platform or data services space”

“Remembering outsourcing stuff, buying SaaS, you're buying your team focus. It costs more, but you don't have to have humans doing it.”

“You have to pay twice. You have to pay sales for revenue that comes in after the contract is signed, and you have to pay customer success, however you're going to pay them, for the work they do. And when work overlaps over an extended period of time, you just …”

“I would caution you, I would say 92 times out of a hundred, that is a, that is The wrong business model.”

“We're adding a fourth bucket today, which is for the first time, and I suspect many of you in the room, ah, can't even guess what the acronym stands for. Ah, the hardcore technical folks I bet do immediately. It's Function as a Service. There's the emergence o…”

“Seven percent annual churn is good. It's actually very good. 10% is kind of reasonable, but you want to be careful if you start going beyond the 10, 15% range.”

“Two percent is a very good monthly churn for a low touch type business. Five percent is okay. 10% is a problem. 10% basically means you don't have any product market fill market fit and your business is, you know, is not sustainable.”

“There's obviously a hybrid models. Companies try to do both and some of them succeed, but it's actually hard because the DNA of the company is usually either on the left side or, well, either low touch, either high touch.”

“Well 15, it's got to be the new, it's got to be the new number. I mean as market caps keep increasing, then I think the number goes up.”

“Because if you're there and you can build that trust, they'll be there for you when inevitably something goes wrong with your service. And they'll understand that you've got, they've got empathy for you because you were there for them and they will likewise be…”

“And I think it's critical if you're trying to scale a business to start having this service mentality mindset that it's not about the technology alone, and it's not about technology with a bunch of sales people, but it's actually what is the service delivery s…”

“The greatest churn happens in those first few months after you've sold something, because you haven't delivered on that promise.”

“One in 1500. That is the probability of SaaS companies to go from where you are today to more than a billion dollars in revenue.”

“I sort of ballpark it at about 30, 30 VPs of sales or CROs have taken their SaaS companies to fifty million in ARR plus. That's an unofficial number, so you can agree or disagree with that. But that's not a lot of people, and when you talk about hiring, ah, yo…”

“And I think that the big learning with SAS, your internal team will never be able to compete with the SAS product. Never. It's hopeless. Like, if the solution is successful, the team will scale, and maybe today they have two engineers, but in two years they wi…”

“Once you hit ten million in recurring, my recommendation is to take all your generic metrics, CAC to LTV, magic number, all your generic metrics, and then break them out by the three most important segments of your business.”

“I strongly suspect that if you're seeing 50% increase in your customer's monthly act, daily, hourly users, if you have this, you may not be able to tomorrow get a whole bunch more seats, right? Not only because you may not be, you have utility pricing, but als…”

“Verticals aside, you probably have to double the modeling you have for SMB churn, and they'll also be the first to readopt, right? When we bounce out of this, I think.”

“Sales cycles and churn rates are highly correlated.”

“The power for the marketplace in that is as marginal cost goes down, usage goes up, they get more data, they understand preferences better. Once you understand preferences better, you can match and make recommendations better.”

“I'd posit there's a next wave coming in marketplaces, and that is really gonna be the combination of a marketplace company and a SaaS model.”

“Paying them to leave is actually a lot cheaper than keeping them on. This is especially true for salespeople, because salespeople, especially in the SaaS world, if you have a compounded revenue model, if they are missing their number, you are going to miss an …”

“SaaS is a business model, and unless you're Jason Lemkin, it is not your mission.”

“When you're building your SaaS business, think of it like a franchise. Franchise is some of the best business models in the world. It's like software. You just copy and paste it, you know, all around the world. And you can do that same exact thing with your SA…”

“Classic mistake is hiring someone before you have a repeatable process. I don't have a repeatable process. I want to hire Linda to create it for me. Linda will not succeed nine times out of 10. You've got to have a repeatable process.”

“My learning on professional services is you're an idiot if you don't charge for professional services. You know why? As long as it's 20% or less of your revenue, you get full credit for it, and all the customers will pay it.”

“And we just decided at the end of 2007 that we were going to be SaaS only going forward, ah, which actually turned out to be a great decision”

“So I like the CAC ratio very important SAS metric, you know, typically runs around 1.3, you know, below 1.3 is getting to be quite good. Below one is really good. Best I've ever seen was .4. Anything between 1.5 and two people start to scratch their eyebrows a…”

“To me when it's less than 20%, maybe you're not exploiting your expansion opportunity much, as much as you should be. When it's over 40% maybe you're not getting as much new logo as you should be, right? So, so I personally like it running in the twenties and …”

“A good rate is around a 115%.”

“In fact, if you only had two numbers to give you the value of a SAS company, it would be ending ARR and growth rate. I could then tell you roughly what that company is worth kind of a first order valuation.”

“And unfortunately there isn't right now, you know, Gemini accept the counted principles for how to define churn. So I think it's going to be one of those things that as more and more businesses become cloud orientated, SAS orientated, ultimately customer succe…”

“Valuations we originally mentioned or noted the range as being two to six million and now it's eight to 17. So that's basically more than triple the valuation at a typical seed round.”

“So for example, you're a SAS company, you're twenty million of AR, you're selling to enterprise and your retention is 78% gross. Work on your retention, right? Like, yeah, right. But if you're a SaaS company and you're selling to SMB and your retention is gros…”

“You get to 10 to a hundred, With almost no sales team, not quickly.”

“What we would say if we revise this now is that customers churn eventually because they always want more value. They always want more, right? They're not buying your technology for a point in time. They're buying your technology so that you can constantly deli…”

“What I would say today in 2021 is the best way to do that's the product, right? It's one thing to send customers emails and get on calls with them and zoom meetings. It's all great. But the best way to do it is in the product.”

“There's a second funnel that we need to all consider, which is now I've got a customer and how am I constantly delivering more outcomes to them, right? And how am I constantly getting them more value such that they become leads for me because they become leads…”

“Alright, so I would posit that there are three types of growth. One is top-down, the other is bottom-up, and wave three is community-led.”

“Most of the companies rating it as shit tons of money, they, they're not using, like, novel customer acquisition techniques that couldn't have worked 20 years ago. They're just willing to lose more money on it. And then the VCs are willing to allow them to los…”

“The sales cycles go up, the close rates go down, and the one that we don't pick up on is our disruption risk goes way up.”

“And I'll tell you, it's not because of product features. It's not because of your support hotline. It's not because of how much you raised twenty million bucks. It's not because of the integrations you built.”

“At scale, we end up at these three X, four X, five X numbers, right? Which is quotas are an SMB, usually three X, your full, your fully burdened comp, your on target earnings, your OT, up to five X in the enterprise.”

“The toolkit is roughly the same for every startup at a given ACV, at a given price point. So make sure they've sold in cloud, in SaaS at your price point, ok? Otherwise, don't fall in love with them.”

“SaaS is good in that you don't have to change the product like every week, okay? You're not, it's not Clubhouse or TikTok, you know, the competition level is, it's visceral, but it's slower, but you do need to reinvent yourself every four to five years, right,…”

“Basically a hundred X ARR startup has to at least quintuple next year with high quality revenue, at least quintuple, right?”

“I think the SAS model applied to open source is gonna be really disruptive. And, you know, so people, because of this transition period, we had these on-prem open source vendors. People think maybe open source won't work in the future in the cloud, but I think…”

“For sales, marketing, product, and engineering, I would not take, I would not, if I'm scaling, hire someone that does not have a pure SaaS broker. There's too many folks that do. There's no point in hiring a salesperson that hasn't sold SaaS. I ain't gonna tak…”

“Obviously revenue growth, NRR and burn rate, any B to B company can be reduced to, you know, top line growth, NRR and burn. If I know the three of those, I know the physics of your business.”

“I don't think once you get to the next phase, whether it's twenty million or 30 or the next, that whatever your next phase is, I don't see the great VPs of sales wanting churn and burn deals.”

“If you look at every SaaS company at a billion in ARR today, two interesting things. One, they're growing fast at a billion. You know, we used to think that was almost impossible that you could grow 70% at a billion in ARR, but it's almost becoming commonplace…”

“Really people want quarterly innovation in their vendor, and they're expecting it for that check. And you have, the idea that you have to re-earn your customer, right, which is part of retention, sometimes is a little alien to on-prem folks, the idea of re-ear…”

“And so we think that consolidation is definitely, along with digital transformation, consolidation is going to be a big wave in SaaS in the coming years.”

“Renewals are the most important motion in SAS. They are the growth engine. If you don't have a really, really strong renewals motion, it's very, very hard To drive growth.”

“In a land and expand model, we really want to create a system where people can get the 10, 10,000 dollar deals. Obviously, I'm just using those numbers for rounding purposes, but you want them to have as many deals as possible so that you're growing your custo…”

“I think the learning here is that it takes one year. It takes a full-time person who's just going to focus on that. And it pays pretty pretty high dividends, so I would definitely invest in partnerships early if it's a fit for your business, because it's a fly…”

“In terms of sales cycle, interestingly enough, it ends up looking very similar To many other SaaS products, where a mid-market inside sales deal might be a 90 day, 90 day sales cycle, a small business might be a few weeks, and then an enterprise sale might be,…”

“If you've built this growing profitable business and you're able to loan against your balance sheet to go buy, go out and acquire competitors in your space or, Other technology tuck-ins in your space along the way, like that is absolutely, in my opinion, a pla…”

“There's no freaking efficiencies in sales in SaaS. Like, you get engineering efficiencies. Everyone can use your same code base, but you barely get any efficiencies in sales once you hit a billion in ARR, and I don't think too many people here hit a billion in…”

“Every customer you lose in SaaS is sort of a failure. Someone failed. Sales oversold it. Your product let them down, or CS let them down. No one buys SAS products for fun. It's not fun to deploy, test, and roll out a SAS app in your company, and every single t…”

“Once you have a strong enablement team, then ramp up times will be shorter. In SaaS, if it's like enterprise product, generally we are talking about six to nine months. And you can observe that it's going to become like maybe three months”

“So in that case, when you hire a sales representative or salespeople, if they are coming from a non-competitive background, trust me, it's not going to work.”

“That's the basis of your of your growth engine, because at some point, if you think that you are going to grow at scale with just spending more euros on marketing or adding more salespeople in your team, you know, that, that can't scale, unfortunately.”

“Why you should actually pay more attention into your customers than into your revenue.”

“We're never not going to be distributed, right? We have learned these skills the hard way, And we're all global, and it's never going back, and there may be segments that go back fully to the office, and certainly in places like London and Europe, it's more co…”

“There becomes these parody things where marketing is more important than product, but it, it's pretty uncommon, but before 10, 20, thirty million in revenue, and sometimes a lot later, so.”

“Crowded space means there's a lot of buyers and there's a lot of money. Crowded space means that, crowded space also means you don't have to do everything. You don't have to do every single function to still get a customer.”

“Cry me a river that a hundred people want to hire your VP, but at least she exists. Like it's actually better today because the people exist, okay? It is better than it has ever been. And of course it's competitive because there's more startups than ever, but …”

“The problem with small layoffs. Like if you lay off a small number of people, a lot of them are not the best people. So great. Like some company lays off four percent, like there are gems there and go find the gems and hire them. There really are gems in every…”

“My view for what it's worth, I, I'd be curious, your thoughts is no matter what happened last year, I think all the time I've been in SaaS, including the founder, there's been an anchor valuation, which is 10 X AR.”

“Investors are hoping for a hundred percent growth at a hundred million ARR. That's what you can back into. Today, and it's crazy, investors want a hundred percent growth at a hundred ARR.”

“Because it's really hard, just like it was hard to be an on-premise software company and move to SaaS, it's really hard to be a non-PLG sales led growth, growth company, and move to PLG.”

“As a rule of thumb, for earlier stage companies below twenty-five million ARR it's probably not, not fair to still call them earlier, like, let's say early and mid-stage company at less than twenty-five million ARR one to 1.5 is generally considered to be good…”

“Companies are hiring less today. And so the net dollar retention for within a customer base for a company that licenses software and their revenue is sort of directly influenced by the headcount growth or something like that of their customers, that is slowing…”

“I am not seeing much influence on a company's ability to sell their product, to acquire new customers. And I am not hearing, you know, one of the biggest Problems today in our business is that potential customers are cutting budget, and they're not able to buy…”

“Now is the time to focus on those top 25% of accounts that are most likely to close and throw out the other, the bottom 75%.”

“I don't think that this is going away or that this is some inner, this is not crypto, which is going through an internet like bubble for 99 and 2000, because it's not real. These businesses are all absolutely fundamentally real and needed. There's just a bit o…”

“So we look at these four factors and you can have a list of 120 countries, but pretty quickly you'll get to 80% of your revenue comes from less than 10 countries and almost every SaaS company that I've been in.”

“So founders have this investing superpower that money managers don't have, which is they know who's better than them. But if in SaaS and B to B, if you do that pre-revenue, you really can't be sure.”

“Somehow in seven to 10 years, you've got to get to a hundred plus million in revenue. Okay, you just have to, and 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.”

“Categories have more rooms for number one than sometimes VCs realize, right? And that has certainly happened as SaaS and cloud has expanded, especially with vertical SaaS.”

“The only folks that are going to IPO for now in the next 12 to 15 months in SaaS are, A handful of folks will be forced to IPO, and they may have, and they may barely pull it off and have really crappy IPOs, or they'll be profitable or very efficient companies…”

“I don't think there's any such thing as an MVP in SaaS. Yeah. If you want to be a B to C guy, great. I hate that term too. I, the term I use, and I should, I used to talk about it a lot in the early days of Saster, but you want a minimum sellable product, not …”

“The thing is, SAS is not really that interesting without a hundred percent NRR from SMBs and like a 120% from the enterprise, because you can kind of sleepwalk. I mean, not literally, but it's what makes the business model work is that the revenue recurs, righ…”

“Most of our SaaS companies have certain elements of services revenue.”

“In China, when you look at so-called SaaS companies, they are, You know, same thing, trying to address similar issues, but the way the market is set up is that many of the customers are budget-based. They are not SaaS-based. They're not going to pay you per mo…”

“I believe that once if we have got a very strong exit via IPO or M&A and if people have indeed managed to sell the company at a way higher price tag, we will start seeing excitement in this vertical.”

“I think you can absolutely start a SaaS business out of Southeast Asia. But, and you can sell to great companies here. They can be your first users. It's great, like founder to founder sales. But close to series, again, depends. You need to keep your eyes out …”

“By 500 to a thousand at the latest, if you're enterprise, you got to have a second act. And it turns out as you're approaching 5000 to 10,000 for SMB, you just start hitting, it's just kind of the next, once in a while there's exceptions, as you say, right? Bu…”

“For most SaaS companies, this is where the technical moat comes from. Your technical moat is not usually some unique specific piece of technology. It's for most SaaS and just an accumulation of ever more nuanced, enriched, and detailed handlings of all, it's t…”

“Stop Pining for twenty-twenty-one and the late half of twenty-twenty. Those days aren't coming back.”

“It's we're back to three to five X OTE. So if a rep wants to make a 150 grand a year, us great. But if you're enterprise, you better close five times that mid market, four times SMB three times. Otherwise they're not efficient enough.”

“This is the first time in the last 10 years That SaaS has gotten harder, ok?”

“The belief that SaaS is cheap and cheerful and something that's 29 dollars a credit card is being challenged, that now, like, SaaS can go for hundreds of thousands of dollars. And at that point, a CFO does want to get involved, and that's not something that co…”

“At this point, Like, ah, you know, 15 years ago, you could start a SaaS company in any vertical, and you'd be the first one, and it would probably be pretty successful. But now, like, every, every space has got two or three things in it. And so the focus, n…”

“And a simp, a simplistic way to boil it all down is, one, we have to revert back to sales closing three to five times what they take home. Three, at least three X for SMB, at least four X for mid-market, five X for enterprise. And you have to budget in there t…”

“In the lower multiple buckets, like, in the, let's say, in a range of, like, 15 to 25, you would rather end up at the 15 X multiple range if you are growing, let's say, two to three X. So, solid good growth, but not hyper growth, not, like, very fast growth. T…”

“And let's say you in hyper growth and sign a lot of revenue into two or three year contract, you know, you might find out in three years that you have a huge churn wave coming up that you didn't predict.”

“Every, every SAS company I know of that gets to 30, forty million that is profitable or cashflow neutral. Someone wants to buy it because they're going to miss the quarter. Someone out there, it may not be Monday, but some public company or company about to go…”

“You can brute force high NRR with longer term deals. You can brute force NRR if you threaten customers when they leave with an inability to get their data. You can brute force NRR by having out of bound price increases, 30 or 40% a year.”

“After even a couple million in ARR, you can afford any higher if they're accretive.”

“And also you sometimes hear bad advice from the hyper successful. Sometimes the folks that are so successful so quickly also can sort of give you wrong advice inadvertently if you're doing pretty darn good, but not great.”

“And it's generally considered that In the relatively early stage, let's say up to twenty five million in ARR or so, if you are, if your burn multiple is one to 1.5, that's good. If it's even lower, that's great.”

“I think this is probably the first time for many SaaS companies to have significant cogs. Usually infrastructure has become very cheap with AWS and other cloud providers. So usually it's not something that you have to think about a lot. But now if you're using…”

“I think we're absolutely in a cautious recovery in SaaS, and I think folks should be modestly bullish today.”

“You gotta, I think you gotta, I think the, I think it gets less pithy, because it's like, you gotta go multi-product.”

“You need to identify a material cost, a material costs in your books that is going or trending in lockstep with your revenue, and you need to disassociate them in order to see a broadening of margins, and you need to attack that line item in a way that you can…”

“If you can get it to ten million, you have good NRR, and the founders don't quit, Like, even if you're growing 30%, build a spreadsheet. You will go from 10 to a hundred if you're patient enough.”

“What I have learned is if they already know the product, if they're already a customer, if they've already sold it, sure, like they could just be a manager. But I think 80% of VPs of sales today should close when they start. 80 to 90%, they gotta close.”

“Every market has a certain number of buyers and eventually get to the point where you started selling to a lot of those buyers. Now doesn't mean you won't sell to more buyers, but often like the number of new buyers, like the number of new logos grows, grows, …”

“Pretty much every company that is, that has gotten to a billion or more in, in annual recurring revenue has been able to do this successfully.”

“Most folks sort of gravitate to or diagnose the bottleneck to growing faster being the middle or the bottom of the funnel, that they aren't converting deals. And in four out of five instances the real diagnosis is that it's actually the top of the funnel.”

“You do want it to be kind of just healthy to be at a six or eight X revenue multiple, and I make, I'm making up those numbers, but like, but that, you know, that tends to be a safe range if you assume the company's going to get 20, 30, 40% operating margin, gr…”

“At the sort of final, you know, kind of the terminal point of your business, it's to produce a certain amount of cash that goes back to investors. Like, if you just, like, why would you give a dollar to something? It's because you want cash back at some point.…”

“I actually think the best way to segment them is by aspiration. That, that if we could, and nobody offers these yet, but I want you to just consider this concept that we should segment benchmarks by aspiration, which is if I want to sell for 18 times EBITDA in…”

“I competed against the company that did one dollar renewals. And they would juice their churn rate so they could offset their SAS metrics.”

“There's one metric that I've come to really deeply appreciate because it's a single metric that can reflect Market demand and product market fit, how well our go-to-market engine is executing, and the product, the quality of our product. And that is the CAC pa…”

“It's the most important motion in SAS is your renewals motion. If you have a problem there, you can really put yourself into a death spiral.”

“No one on planet Earth needs another SaaS product. They don't. Every company out there, all the Fortune 500 and Global 2000, they seem to work just fine. With whatever CRM, or marketing automation, or ABM, or whatever tool, they work just fine. They don't need…”

“I think it makes sense to create your own community when you have something that is free for everybody, or it's a big portion that is free, or if it's open source, if it's a developer product. But if it's not that, then you have a closed product. People need t…”

“If your new customer growth is not growing half of your top line, your revenue growth, you are shrinking in relevance. You are shrinking in market share and your future is at risk.”

“In some sense, if you think about in the SaaS world, defining what customer success is, they didn't really have a customer success playbook. They were figuring it out as they went along. In e-commerce, everybody knew kind of the standard playbook.”

“You can't cut your way to growth. Cutting does not produce growth”

“Don't hire someone that's a product marketer. You don't need at 2,000,005 million, even ten million air. You don't need 11 pages on your marketing site explaining How different segments of your market are critical.”

“Any area of SaaS where AI is even a smidge helpful today, and let's not be cynical. That's even a smidge helpful. I am just tactically bullish that in a year it will all be better. And we're all gonna benefit from these, as long as your CTO can take advantage …”

“I think what maybe used to be if we take 500 K AR maybe three years ago with a great Walt Disney story and a few great product references would have been in a round that many would have many VC funds would have looked at, which Today, I think the corridor has …”

“Which I think is very unique to AI, is that people are actually very willing to pay to try something out, both in enterprise and personally, much more so than the kind of previous generations of SaaS.”

“I think projections should usually be for around two years. I think one year is usually not enough because you raise a certain amount that should give you runway for 18 months or two years, and so it's good to have a budget for that period.”

“As a rough rule of thumb, a company that has a million or a couple of million in ERR, I think needs to grow at two or three X to really get a lot of investor interest. If you are at five to ten million ERR, I think it's usually still two X year over year growt…”

“If growth has slowed, it is not a downturn or macro. It's a little bit of it. It is that you have fallen out of product market fit. If two years ago you were growing a hundred percent and today you're growing. It is not just the market. It is that you do not h…”

“The number one issue I'm seeing from five million to five hundred million in the companies I've invested in over the last 11 years is being too slow to go multi-product.”

“The second product has to be bigger than the first and it's tough. And you have to sequence it properly too early. You'll burn out the team and you'll burn out the market, but too late and growth will decay.”

“When you hit a hundred million, you just can't sell enough to drive. 40 points of growth. If your net retention is a hundred. It's much more difficult to sell forty million dollars of net new logos And so you get to this point where regardless of how good you …”

“It takes three years to really churn from a business process from one vendor to another. It takes a year to get upset, another year to qualify, and that third year to do change management. We think they're not churning, but it, sometimes it's a 36 month proces…”

“Word of mouth is ultimately the only way you can build a great product in SaaS. HubSpot had a slide they used to put in their investor decks until a million, a billion in revenue. Go to an older SaaS store post for five interesting learnings for HubSpot to a b…”

“You don't have product market fit until you have no cus more customers than you know why. If you know exactly how you got every customer and it's hard and you're not, and you're like our other guy who was great. He said a million, but they don't know how to ge…”

“Sass was in a downturn. There's a Sass. And it started, I don't know when it started, but I think it ended in Q three. If you look at the SaaS company's numbers, see it through Sequoia, see it through all my HubSpot dashboards where I see our customers. It fel…”

“Everyone regrets not going multi-product earlier.”

“Profitability efficiency is great. It may be necessary. It may be necessary. If you don't have capital, if you're bootstrapped, if you've spent all your money, the public markets are demanding that everybody be more efficient, but it's not enough. So profitabl…”

“First, we see that on average, it takes companies about 10 years from founding to IPO. Here we have the average years to IPO hovering around that 10 year mark over this 15 year period.”

“Here we have the average ARR scale of companies at IPO quarter, and you'll see the tremendous increase from 2009, 2010, where companies were going public between 50 to a hundred million of ARR, And in today's markets, more recently, companies are in well over …”

“And you'll see that companies are trading between this seven times to 10, 11 times range, with the exception of 20 20 and 21. And this is also important to note because irrespective of what private markets are valuing you at today, public markets are still lik…”

“I'm going to argue until you're at mass scale, until you're at the Salesforce scale, don't add any friction to the sales process. There is an argument when you're at hundreds of millions of revenue to add friction. There is an argument that friction itself is …”

“Zylo, which It's one of the vendors that helps you manage SAS costs and vendors reported that the average number of SAS vendors is down. It's down. And that's, I think there's a number of reasons, but it's not because spend is down. According to Gartner, spend…”

“And seriously, I am for the first time in many years in SAS, I am scared to buy new apps now, unless it's clear I can leave.”

“And we looked at this year versus last year on average gross attention is down one point. But again, this includes a lot of big companies with more sticky products for smaller companies. Gross attention is down anywhere from five to 10 points year over year.”

“In general, you find roughly in SAS that SMB oriented businesses that sell to SMB have gross retention somewhere between mid seventies and mid eighties. Enterprise oriented businesses that are maybe departmental apps are anywhere from 85 to low nineties. Poor …”

“And the banks always fantasize too, that they can do upsells or cross sells of other services. And generally that doesn't work because they're the end user, the contract from this case, they're loyal to the SaaS. They're not loyal to the bank. They don't even …”

“That orchestration actually is better served in the post-sale environment. Like we should be better in the post-sale orchestration of customer experiences than we are in the front side, because most of us, if we're in a SaaS business, we have an install base a…”

“After a hundred, if you're growing less than 30%, it's big yellow light, right? And if after a hundred million, you're growing less than 20%, you fell out of product market fit. A hundred million. You have so many thousands of customers. They should be telling…”

“If you're triple, triple, double, double, as hard as that is, as hard as that is, maybe only 20 to 30% of the investors that would have been interested, 18 months ago today, 20%, 20, 30%.”

“All these folks on X and LinkedIn claiming they've already created 27 SAS apps themselves for 20 dollars a month. They're all prototypes, my friends. None of them are in production taking money. Now a handful are right. But none of them are.”

“All the software I've associated is garbage because they're crud databases that somebody logs into enters information. Somebody else has a report that measures their performance, but in doing their job and whatever they have to go do, it doesn't help you do yo…”

“Like all of this is because when you delivered the product, it didn't deliver value. A customer would have to use your product and then go do their job. But you have a product now with a what the fuck interface to look at and they realize in their head, oh my …”

“If we think about all the blogs that you read and all the shit about here's how to go do this, it's all predicated in a world where your product kind of changes once a year. But what happens if your product changes every 30 days, which, oh, by the way, if you'…”

“The playbook that some folks are running from 20, 21, of course does not work today or does not work as well. But here's what I say. The plays all work. Webinars inbound, outbound, left bound, right bound. It all still works.”

“These guys are blowing up because the products unlock huge TAM expansion by replacing a lot of humans, a lot of SDR. And none of these guys would be remotely as successful if they had to charge like traditional SaaS companies.”

“Your job is to radically increase the functionality of your product so you can tap into what buyers want to buy right now, not what they wanted to buy in 20, 23, let alone 20, 21.”

“Literally large components of your code base, not all of it, of course, but meaningful components of your code base that work today. That make you money will have to be torn down.”

“Your AI only competitors, they struggle with margins badly. They have a really hard time with margins because they have all their LOM costs are super high. So you get to do something kind of savage. You get to sell the AI products at a lower price point than y…”

“If you have a SaaS company and it predates AI and it's not an AI native company, in other words, you started the company designing an organization for the AI world, you have to change Everything. Your org, your product, your roadmap, how you build, the metrics…”

“Most SaaS companies sold seats. These are seats that humans sit in. Those humans use some kind of GUI, some CRUD type tasks to achieve some outcome. None of these things make sense anymore, right? None of these things make sense. There's no seats in a post AI …”

“So there's no economic justification for software costs to building these apps, right? You can buy them for 10 grand, like it makes no economic sense. So you have to really need something that you can't buy today.”

“If you don't monitor there's each day and you do what, and you do a classic SAS buying process, which is by deploying forget. Your agents will drift. They'll take shortcuts and they'll in their own cute way, they'll live.”

“Now I think it's one of your top, top metrics, because if your usage is falling for your app, you have stealth churn. That is a canary in the coal mine. It's not, this is a real red light.”

“The number one question that we're getting as investors is, you know, is software dead? Is SaaS dead?”

“There's a lot of categories where an AI, an LLM-enabled app is really good, and it's the next generation, and it's obvious what it should be, and customers are going to buy it. But it's not like going to scratch the corporate itch to use, you know, it's not go…”

“And then there's about a third way you're absolutely threatened, where you are typically what we call plain vanilla SaaS. You automate a workflow, and then you either got to move and survive, or you're going to be dead, right?”

“Is that listen, you could buy this functionality exists in other products, or you could buy it for 50 grand or 80 grand a year today, right? But because it is a well-known body of software, Claude knows it. So Claude can just build it for you. Buy, don't build…”

“And the folks with the highest usage may actually have the most incentive to leave. It's not a clear correlation to success, right?”