Aug 3, 2023 · 1h 3m · saastr
The Most Important SaaS Metrics with Monday.com Co-Founders and SaaStr Founder 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 masterclass, SaaStr founder Jason Lemkin and Monday.com co-founders Eran Zinman and Roy Mann deconstruct essential SaaS metrics, exploring unit economics, retention mechanics, cash flow management, and the vital balance between short-term optimization and long-term compounding growth.
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 62.9% of the talking time here. How this is scored →
Jason as informed peer 8.1 Guest teaching 2.5 Guest disagreement 1.6 Jason pushing back 2.9
speaking balance: gold is Jason, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 31:45 Roy defends 14-day trial optimization against Jason's skepticism
Roy firmly rejects Jason's assumption that shortening trial durations damages customer centricity, arguing empirical testing proved conversion stayed intact while drastically accelerating media-buying attribution.
Hardest push from Jason ▶ 31:56 Jason challenges Monday's decision to cut trial lengthsJason refuses to accept the standard growth playbook, explicitly questioning Roy on whether reducing trials from 30 to 14 days was actually better for users rather than just short-term marketing metrics.
Biggest teaching moment ▶ 9:03 Roy reveals Monday achieved scale without customer marketingRoy educates Jason by explaining how Monday relied on day-one machine learning attribution and consulting-style sales assists rather than maintaining a dedicated customer marketing team.
Jason holds their own ▶ 32:41 Jason proves the generational risk of short-term product decisionsJason demonstrates deep operational expertise by recalling how EchoSign surrendered 50 percent of its market share after new management killed long-cycle viral conversion loops to hit quarterly targets.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Jason as informed peer | Guest teaching | Guest disagreement | Jason pushing back | Why |
|---|---|---|---|---|---|---|
| Evolution of SaaS and Welcome to Jason Lemkin | 7 | 3 | 1 | 2 | Jason provides an in-depth breakdown of non-GAAP SaaS metrics and warns against relying blindly on CAC and LTV without tracking net burn. Eran complements this by detailing how Monday.com prioritized actual cash collection and highlights that modern SaaS spend goes heavily toward ARR retention rather than initial acquisition. | |
| The Dangers of Short-Term Marketing Metrics | 8 | 3 | 2 | 3 | Jason argues that shifting to short-term marketing metrics starves enterprise pipeline and asks how Monday approaches customer marketing. Roy surprises Jason by revealing Monday barely had a formal customer marketing team, detailing their bottom-up media attribution model and balanced test budgets. | |
| Deconstructing ARR and the Risk of Margin Dilution | 9 | 2 | 1 | 2 | Jason unpacks how hybrid hardware/services models like Matterport dilute software gross margins and creates dangerous pseudo-ARR. Eran and Roy strongly agree, noting how usage and consumption fluctuations corrupt ARR and NDR definitions across the market. | |
| Contract Durations, Retention Behavior, and Customer Centricity | 8 | 4 | 3 | 5 | Eran questions multi-year commitments turning ARR into perpetual licenses, prompting Roy to argue long contracts blind vendors to churn risk. Jason challenges the room by pointing out widespread vendor price gouging and data lock-in across the SaaS ecosystem. | |
| Balancing Quarterly Pressures and Long-Term Product Experiments | 8 | 4 | 4 | 6 | Jason criticizes the SaaS trend of cutting free trials to boost short-term numbers, only for Roy and Eran to admit Monday shortened theirs from 30 to 14 days to optimize ad spend. Jason repeatedly presses them on customer impact before illustrating how EchoSign lost market share when long-tail viral conversion loops were terminated. | |
| Analyzing NRR, Gross Retention, and Metric Segmentation | 9 | 3 | 1 | 2 | Jason explains the primacy of GRR over NRR and emphasizes why multi-product expansion is mandatory for SMB SaaS companies to cross 100 percent NRR. Roy and Eran validate this by sharing how Monday built layer-cake cohort animations for their IPO to explain their rapid SMB growth dynamics. | |
| Managing Cash Flow with the Last Four Months Model | 9 | 1 | 1 | 3 | Jason shares his practical L4M cash forecasting framework and warns against spreadsheet manipulation by consultants that obscures true cash burn. Roy and Eran validate the concept, recounting the motivational 'live forever' threshold sign they posted on their first office door. | |
| Key Takeaways and Concluding Advice for Founders | 7 | 0 | 0 | 0 | The conversation concludes with final advice: Jason urges founders to make decade-long commitments if their NRR is healthy, while Eran and Roy emphasize immediate, persistent metric tracking to uncover structural product opportunities. |
Statements from this episode (28)
Lemkin: Total SaaS spending is 100x larger today than in 2014
“But SAS is literally, we should do the math. It's gotta be a hundred times bigger in terms of spend, right? Just think about that's a decade of 20 to 30% annual growth compounding.”
Lemkin: Public SMB SaaS companies exclude their smallest customers from NRR reporting
“Almost all public companies that sell the SMBs, like exclude their smallest customers from NRR.”
Lemkin: Startups with great CAC and CLTV can still go bankrupt
“You can also have pretty good CAC and long CLTV and go bankrupt.”
Lemkin: SaaS marketers miss goals without organic attribution credit
“Most marketers in SAS will never hit their goals if you don't give them credit for the free ones for word of mouth, because it's everything to marketing is expensive, right?”
Zinman: Monday.com bases marketing efficiency purely on cash collection speed
“And the way we've measured it as a company since day one, we didn't care about you know, like gap return on, on CAC. We cared about actual cash in the bank. So How much we spend, when do we actually spend the money, and how fast we get it from customers in ter…”
Zinman: Mature SaaS companies spend most S&M budget on retaining existing ARR
“As companies have become more mature. Most of their S&M expense Is not spent on acquiring customers. Most of what they spend on is retaining their existing ARR.”
Lemkin: Monthly marketing targets create myopic behavior and dry up sales pipelines
“What's happened is marketers are now being judged on results this month rather than this year. And it is leading to super myopic marketing, right? Only stuff that gets me leads and even closed revenue this month. And it, what it's leading to, and founders shou…”
Mann: Monday.com still conducts almost no dedicated customer marketing
“We're not doing it almost at all right now. It's like a huge place for us to grow into”
Lemkin: Healthy SaaS needs a 2:1 revenue-to-new-customer growth ratio
“I track this with SAS companies and it's a niche metric, but it's super interesting in terms of long-term health, which is the ratio of revenue growth to new customer growth on a percentage basis. So I like to see at least a sort of a two to one ratio. Like if…”
Zinman: Monday.com's SMB retention proved more stable than enterprise during the downturn
“In the last, You know, 12 months since the economy changed is that we actually found that our SMB budget was more stable than our enterprise segment. So the SMBs NRR, yeah, was actually more stable.”
Lemkin: Matterport gross margins stay in the 40s due to hardware reliance
“Half their revenue is from services and cameras, so their gross margins are in the forties, right?”
Lemkin: If reported ARR fluctuates downward, it is not true recurring revenue
“My rule is if your ARR ever goes down, it's not ARR. ARR may grow slowly or more quickly, but when you see a startup where the ARR has gone up and down, I'm like, okay, I gotta dig in here, because whatever it is, it ain't an ARR, right?”
Lemkin: My two worst venture investments falsely claimed non-recurring revenue was ARR
“The two worst investments I've made, I haven't made very many bad investments, but as time went on, I made more bad investments, not less because we kind of let, let the bar expanded the box. Those were folks that claim stuff was AR that wasn't.”
Zinman: Multi-year contracts can mask looming churn waves in hyper-growth SaaS
“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.”
Lemkin: How SaaS companies unethically brute-force high Net Retention Rates
“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.”
Mann: Monday.com uses Weekly Active Paying People to catch early churn
“I can share our metric, like our top line metric, and the one we kind of like, I think after like a few years we kind of went to that from new paying customers to WEP, weekly active paying people.
so we cared, like we said, we don't want to learn about a cus…”
Mann: Monday.com shortened free trials to 14 days to optimize media buying
“We switched from 30 to 14. And I'll tell you why. So we'll have a shorter input cycle towards media buying.”
Lemkin: EchoSign's viral free-to-paid conversion cycle averaged eight months
“In the early days of Adobe sign, Echo sign, where we had a truly viral product... I measured in the early days how long it would take someone that first got a contract to sign to convert to paid... It was eight months.”
Lemkin: Adobe Sign lost 50% market share after removing viral free conversion
“And when we, almost a week after I left after acquisition, that got ripped out of the product, the whole free thing, the whole free conversion. And because it didn't help anyone there, But then over the next three years, there may be a variety of reasons, mark…”
Lemkin: Stressed SaaS startups are seeing CSAT plunge while NRR rises
“This is something I hadn't seen ever in my history of SAS, but I see it all over the place now is CSAT and NPS down, but NRR up. This is reaction to stress.”
Lemkin: Gross retention is more important than net retention for revealing churn
“At the end of the day, the metric everyone's going to talk about is NRR, going to a Ron's point. Every public company reports it, but GRR is more important.”
Lemkin: No single-product SMB SaaS company has ever exceeded 100% NRR
“There may be an exception or two out there, but from my knowledge, for folks that sell to SMBs, I do not believe anyone got past a hundred that is single product, right? And HubSpot's the biggest example. HubSpot was stuck at 85% through 40 or fifty million, a…”
Zinman: Mature SaaS companies generate up to 98% of revenue from existing customers
“Eventually as you mature as a SaaS company, the majority of your revenue, majority of subscription is actually coming from existing customers. Even to the point where it's 95%, 98% of the revenue. Is from existing customers.”
Zinman: A mature SaaS company's revenue growth rate eventually converges to its NDR
“When you reach that point NDR basically represents your growth rate. If you got a 130% NDR and 95% of your revenue is coming from existing customers, your revenue is going to be about 30%. Just the law of nature. Your new customer is going to add to that, but …”
Lemkin: Founders should model operations on a rolling Last Four Months average
“This is my number one tip. It always works. It always works. You have to constantly every month do an L four M analysis. Okay. You do not need 20 people in finance or operations or planning to do this. Any founder can do this. Take your financials, and all you…”
Lemkin: Founders should avoid relying on consultants for financial modeling
“The biggest danger I see with founders is they get a crap model from their finance team. I see this all the time. It's worst of all, the worst of all mistake is a lot of founders these days, wait to hire a VP of finance or director of finance, let alone a CFO.…”
Lemkin: Profitable SaaS startups at $30M ARR always get acquisition offers
“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…”
Mann: Monday.com had poor initial NRR before adding a sales team
“We didn't really have a good NRR in the beginning. Cause it was like very small customers and we kept improving the product all the time, but we looked to Iran's point. We looked at the metric and we saw where the problems were and we added the sales team. We …”