Nov 4, 2024 · 51m · saastr
What Really Matters in SaaS in 2025 with Jason Lemkin and Dave Kellogg
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this SaaStr Workshop, Jason Lemkin and Dave Kellogg analyze the macroeconomic shifts defining enterprise SaaS in 2025, exploring AI budget reallocation, elevated exit thresholds, growth stagnation, and sustainable pricing strategies.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Jason holds 53.3% of the talking time here. How this is scored →
Jason as informed peer 7.6 Guest teaching 4.8 Guest disagreement 3.4 Jason pushing back 4.6
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 22:18 Turning Host's Own Book Against His Thesis
Kellogg rejects Lemkin's premise that CS is dead, flipping Lemkin's 'Predictable Revenue' thesis on sales specialization back onto him.
Hardest push from Jason ▶ 34:37 Rejecting Founder Opportunity CostLemkin forcefully refuses Kellogg's framing that founders should worry about opportunity cost, arguing past time is sunk cost and scale cannot easily be replicated.
Biggest teaching moment ▶ 43:32 The Mechanics of Pricing Ceilings and FloorsKellogg educates on why VC advice on value pricing fails in practice, demonstrating how competitor alternatives consistently crush deal size at the finish line.
Jason holds their own ▶ 28:33 Diagnosing the Toxic Squeeze of the Customer BaseLemkin breaks down the exact operational breakdown when logo growth drops below 20%, proving why shifting CS to sales ruins long-term enterprise value.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Navigating Private Equity Acquisitions and Modern IPO Thresholds | 8 | 4 | 1 | 2 | Lemkin articulates clear quantitative heuristics (the 20-30-0 rule for PE targets) and historical IPO benchmarks like Box, HubSpot, and Klaviyo. Kellogg validates and enriches the thesis using his direct experience running Host Analytics and managing a 70-firm PE process. The dynamic is collaborative and analytical. | |
| Evaluating AI's Genuine Impact on Enterprise Software Budgets | 7 | 5 | 3 | 5 | Kellogg cites Battery Ventures spend data indicating sentiment recovery driven by headcount reallocation toward AI. Lemkin pushes back using portfolio evidence from contact centers (Dialpad, Talkdesk), questioning whether AI delivers durable net budget expansion or just cyclical seat cannibalization. | |
| The Degradation of Customer Success and CRO Reporting Lines | 8 | 5 | 6 | 6 | Lemkin passionately attacks the degradation of customer success under CROs, citing clueless AMs and hijacked QBRs. Kellogg pushes back immediately by invoking Lemkin's own 'Predictable Revenue' framework on role specialization, though both ultimately align that folding CS under sales creates perverse short-term incentives. | |
| Strategies for Managing Stagnant SaaS Growth | 8 | 4 | 5 | 7 | Kellogg argues that founders running stagnant 15% growth businesses face massive opportunity cost and must either reaccelerate or hit 20% EBITDA. Lemkin strongly rejects the founder opportunity cost premise, arguing founders rarely get another shot at scale and must instead re-found the company around product-market fit. | |
| AI Monetization and Category Standards in SaaS Pricing | 7 | 6 | 2 | 3 | Lemkin warns founders against over-innovating on pricing in the AI era. Kellogg agrees and provides a detailed pricing breakdown showing value represents the ceiling while competitors' alternatives set the pricing floor, drawing from his battles at Host Analytics against Adaptive Insights. |
Statements from this episode (16)
Lemkin: 2025 Will Be the Year of PE-Backed SaaS IPOs
“2025 may be the year of PEIPOs because folks are giving up.”
Kellogg: The SaaS IPO Bar Has Risen to $500M ARR
“The IPO bar is just spectacularly high right now. I think it's around five hundred million in ARR by my math.”
Kellogg: PE Firms Want SaaS Companies Fixed Before Acquiring Them
“The biggest thing I've learned about working with PE is I thought they were fixer upper people... And I don't actually think many of them like to do that. They want it fixed first.”
Lemkin: PE Acquisitions Require $20M ARR, 30% Growth, and Zero Burn
“My rough rule of thumb today is 20, 30, zero. So what I mean is to get a PE firm interested in you, you've got to hit Twenty million ARR... Now not a hundred percent growth, 30% or higher... And then zero percent has to be your losses.”
Lemkin: First-Check Logikcull Sold to PE for Nearly $300M
“Andy from logical... I was the first investor. It was a rocket ship. Then it had a year and a half of zero growth. And then he turned it around and they were at, they sold for almost three hundred million at 20 something million ARR to P.”
Lemkin: Dialpad Grew From $200M to $300M ARR on AI Boost
“Dialpad went from two hundred million last year to already three hundred million AR this year on an AI boost.”
Lemkin: AI is tactical table stakes and may not increase SaaS revenue
“I believe AI is as much table stakes, more table stakes at a tactical level than it is budget enabler at a meta level, at a high level. I think you have to do it. And it's hard, but it may not actually increase your revenue.”
Lemkin: Scaled SaaS Companies Must Grow New Logos 20% Annually
“If it's scale, if you can't grow your new logos, 20% a year, you're in decay. Okay. 20% a year plus 120% NRR. I know it doesn't totally sum, but that's your 40% growth at scale.”
Kellogg: Customer Success Should Not Report to Sales or the CRO
“By the way, for whatever it's worth, I don't actually think customer success should report to sales. I think that's a stress reaction to save money. I think the company hits a downturn. There's too much sales expense, which customer success is usually classifi…”
Lemkin: Founders Must Re-Found Their SaaS Company Every 5 to 10 Years
“Because every five to 10 years, you have to re-found a company. It's so hard just to keep up with bugs. It's so hard just to keep up with feature requests. It's so hard to build the product you built 10 years ago, right?”
Lemkin: SaaS Growth Slows From Losing Product-Market Fit, Not Macro Downturns
“Because I really think growth slows because you fall out of product market fit. Too many people blame the markets or the VCs or the downturn, but there's no downturn in the US economy.”
Kellogg: Private Equity Can Turn Most Stagnant SaaS Companies to 20%+ EBITDA
“A lot of times founders think it's not possible and give that company to a PE person. And I guarantee you they're going to have 20% EBITDA, maybe 30% EBITDA in a couple of years. It can be done.”
Kellogg: Startups Should Copy Standard Pricing Models Unless Disrupting
“Unless your business plan is predicated on price model disruption, do what everybody else does.”
Lemkin: Customer Support SaaS Platforms Are Converging on Per-Resolution Pricing
“Even in this sort of odd per resolution model in, in post sales support. I think everyone, Zendesk, intercom, customer, gorgeous, dial, even dial pad, even in other areas, I think they all converging on the same model.”
Lemkin: Enterprise SaaS customer churn can be a 36-month process
“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…”
Kellogg: Enterprise software manages pricing friction via consistency or complexity
“There's two ways to solve that problem. One is to have super consistent pricing, which in my experience in enterprise is very difficult. The other is to have very complicated pricing. So it's very hard for them to figure out who got the better deal.”