Jul 14, 2023 · 51m · saastr
Why You're Unfundable Today: The Cold, Hard Truths About SaaS Part 2 with SaaStr CEO Jason Lemkin
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this SaaStr Europa Q&A session, SaaStr CEO Jason Lemkin provides SaaS founders and revenue leaders with actionable advice on scaling sales teams, managing revenue splits, maintaining business integrity, and cultivating the tenacity required to survive macroeconomic downturns.
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 86.7% of the talking time here. How this is scored →
Jason as informed peer 8.2 Guest teaching 0.5 Guest disagreement 1.0 Jason pushing back 4.7
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 7:44 Guest brings up past Twitter argument
The audience founder openly brings up having previously clashed publicly with Lemkin on Twitter over DocSend fundraising etiquette.
Hardest push from Jason ▶ 0:06 Host rejects 'between rounds' conceptLemkin immediately cuts off the founder's intro to declare that 'between rounds' does not exist and everyone must assume they are unfundable.
Biggest teaching moment ▶ 2:08 Guest explains high-margin medical services mixThe founder clarifies that their 50/50 services-to-software mix in medical research maintains strong 70% blended margins, shaping the host's subsequent advice.
Jason holds their own ▶ 34:26 Host dismantling failure statisticsLemkin dismantles the question about luck by calling standard 90% failure rate metrics 'Sony baloney' and citing extensive founder survival case studies.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Balancing Software Revenue and Services in SaaS | 9 | 1 | 1 | 7 | Lemkin immediately challenges the founder's assertion of being between funding rounds, insisting founders are unfundable until proven otherwise. He demonstrates deep industry knowledge by breaking down historical software-to-services revenue splits for Veeva, Qualtrics, and Palantir. | |
| Managing Underperforming Sales Leaders and Playbook Evolution | 8 | 1 | 3 | 4 | The guest mentions a previous Twitter argument with Lemkin over DocSend before asking how to handle an underperforming sales team. Lemkin offers structured mathematical and operational frameworks for evaluating mediocre versus failing sales leaders and managing team topping. | |
| Effective Outbound Strategy and Sales Personal Branding | 8 | 0 | 0 | 3 | Lemkin gives concrete data points and historical anecdotes on why high-effort outbound emails succeed where automated cadences fail. He uses heavy sarcasm to mock inexperienced SDRs spending hours building personal brands on LinkedIn rather than hitting quota. | |
| Integrity in Business and the Positive-Sum Startup Mindset | 7 | 0 | 0 | 2 | When asked about business integrity, Lemkin shares personal stories of betrayal and unreturned loyalty to argue that while karma doesn't exist, startups are fundamentally positive-sum games. He then grounds the junior AE on how much VC awareness is truly relevant to her role. | |
| Founder Tenacity, Overcoming Near-Failure, and Technical Leadership | 9 | 0 | 1 | 8 | Lemkin outright rejects the premise that luck determines startup failure, dismissing standard failure statistics as misleading. He cites numerous portfolio examples and personal near-death experiences to argue that relentless tenacity and elite CTOs virtually eliminate failure. | |
| Scaling from One to Three Million ARR and Marketing Integration | 8 | 1 | 1 | 4 | Lemkin calculates the headcount requirements needed to scale from one to three million ARR sequentially. He pushes back on relying on a freelance marketing consultant without integrating them into the executive leadership meetings. |
Statements from this episode (18)
Lemkin: Iconiq Growth Did Zero Deals in 2022 and Five in 2023
“Iconic growth... Did zero deals last year. Zero. One of the best growth funds. They did five this year”
Lemkin: Software Companies Need at Least 70% Software Revenue
“At some point that means, At least 70% of our revenue has to come from software, not services. Ideally, 80.”
Lemkin: Veeva and Qualtrics IPO'd with 70% and 80% Software Revenue Splits
“Viva went public, which is at thirty billion. 7030. Qualtrics was like 8020.”
Lemkin: Palantir Flipped from 18% to 70% Software Revenue Year Before IPO
“Palantir was like 18% software until the year before their IPO, and they flipped to like 70 in one year.”
Lemkin: Do Not Prematurely Cut Services If They Enable the Software Solution
“I would actually, and this is different advice from some, I would keep that mix as long as your funding allows it. Knowing almost nothing about your business, but pattern matching. Because when you make the solution worse, you lose some of your magic.”
Lemkin: A great VP of sales increases sales within one quarter
“A great VP of sales is in one quarter you're selling more, ok? Whether you're selling 10% more or a hundred percent more, that's a sign of a great, that in one quarter or less or one sales cycle, it's materially better.”
Lemkin: Firing an okay sales VP without a replacement leads to spirals
“What you usually find is if you get rid of the good but not great VP of sales, And don't have a plan. Don't have someone to replace her or him. Don't have a strategy. I see companies go into a spiral they often struggle to recover from.”
Lemkin: Performance improving immediately after a sales VP leaves indicates bad leadership
“And the sign of, another sign of a bad VP of sales is it gets immediately better when they leave. Because the rest of the team steps up.”
Lemkin: Founders should be 90% transparent when layering sales executives
“The answer is always be 90% transparent, and do what the business needs to be done, and be open about it. And sometimes they will quit, but it's ok. Like, it sucks, but it's ok. You, don't hide the ball, don't try to do a stealth search”
Lemkin: Enterprise CEOs Check and Open Problem-Solving Emails
“The weird thing about CEOs, Even of huge companies, is almost all of them open all their emails. They sit in front of their phones, and their computers, and look, they don't open the dumb emails, and they don't go to the promotions tab, ok?”
Lemkin: Top sales VPs spend 25% to 30% of their time recruiting.
“You know, the best VPs of sales spend 25, 30% of their time recruiting”
Lemkin: Karma does not exist in business; unethical actors often succeed
“I don't think there's any karma out there. I've decided after all these years that the people that mistreated me, many of them did pretty well.”
Lemkin: Learning deep VC mechanics is wasteful until you are fundraising
“You want to learn just enough. To know how the world works. You want to learn how fundraising really works, why companies get funded, what the bar is to raise... You want to get that smart, but any smarter is not a good use of your time until you're raising mo…”
Lemkin: Zero percent of truly great, persistent founders with great CTOs fail
“I think that all the metrics on startups that fail, that 90% fail, I think these are Sony baloney metrics. I think, Truly great founders, truly great, that have a great CTO and CTO, or a CTO that can be both, that can build amazing software, that do not quit, …”
Lemkin: Salesloft abandoned $7M in revenue after LinkedIn threatened litigation
“His first product, before Salesoft was the product that it stayed, a different product called Prospector that had seven million in revenue. LinkedIn threatened to sue them, and they had to abandon seven million revenue and start from scratch.”
Lemkin: The number one reason SaaS startups fail is an inadequate CTO
“The number one reason I see these failures happen is when the CEO's like pretty good, they're committed, they'll do it for 10 years, they'll run up the hill, they'll, they'll hustle, they'll get the sales, but the CTO isn't that good.”
Lemkin: Most founders underestimate sales hiring capacity needed months ahead
“What most folks do wrong, almost all COs I remember I actually did it with Sam and Parker in the early days of Zenefits, and then they got it right, is they just don't calculate
Just the amount of human capital it will take to hit these numbers. And they usua…”
Lemkin: Founders over-index on sales over marketing due to lack of trust
“Almost all founders
over put more energy into sales and marketing for a variety of reasons. They don't know demand gen. Sometimes they don't trust it if they haven't done it. They think it's too soft. So that is an issue. Also, there's another reality that i…”