ICONIQ 2024 State of Go-to-Market Benchmark Report

Live from Schenectady, New York, it's SAS Talk with the Metrics Brothers, Growth and CAC.

And I'm Growth, better known as Ray Reich, founder and CEO of Benchmarkit.

And I'm CAC, better known as Dave Kellogg, EIR at Balderson Capital, independent consultant, and the author of Kellogg.

And together we are the Metrics Brothers.

And we go together like metrics and benchmarks.

Oh my, I really like that combination, CAC. It's a little bit like chocolate and peanut butter for me.

Oh, I see, Growth, but you wrote the script this week, so you put that in there. So you— I'm confused now because you really do like our food metaphors.

Well, this is the backstory, right? It's a nod back to my childhood because when I was reading the back of baseball cards and memorizing their batting average and metrics, I would always eat a Reese's Peanut Butter Cup. So that's how it goes together, Dave.

There we go. You're getting a little misty here, Ray, and a little nostalgic when today's focus is not on nostalgia, but in fact, the very present tense. We're going to be looking at the iconic 2024 State of the Go-to-Market Report. I think it was released just in June, so a little more than a month ago, that provides some benchmarks on several of the topics we've covered in the last few episodes, specifically the ones where both you and I did our take on GTM troubleshooting.

Okay, I agree, Dave. Let's get our focus back on SaaS metrics. But let's start by hearing a word from our sponsor.

The Metrics Brothers is proudly sponsored by Benchmarkit, the B2B AI and software industry's largest, broadest, and most contextualized benchmarking index. Dave Kellogg and Ray Groth Wright have put the Metrics Brothers podcast on hiatus for the remainder of 2026. All episodes we have ever recorded are still available on your favorite podcasting app. You can reach Dave @Kellogg and Ray on LinkedIn @RayReich. Thank you so much for listening to the Metrics Brothers podcast.

Okay, Dave, so you mentioned it, we're going to focus today on the iconic State of go-to-market in 2024, and just at a high level, I thought it was a a pretty good report. They had 150 SaaS companies, primarily their portfolio companies participate. It had really nice company size distribution, Dave. It was you know pretty evenly split between companies less than 25 million, 25 million to 100, 100 to 250, and above 250. So I really. Like the distribution and the population. I don't know if you have anything you want to add there.

Yeah, I think this is a good benchmark. I mean, look, I like ICONIQ's work. They've got a big team producing a lot of great reports. So if you're not looking at them, I would recommend looking at the ICONIQ website for all their resources. I think you're right. This one has a broad range of sizes. I would say if I was less than 25 million, I'm not sure I'd go here because they take everything less than 25 million and dump them in one bucket. And as you know, there's a lot going on between 1 and 5, 5 and 10, 10 and 20. And, but other than that, yeah, I love the breadth on this one.

Yeah, totally agree. Now, the one thing they do, Dave, which is a caution to the readers of this report, is almost every one of the charts and benchmarks they present, they show the top quartile. So right there at the 75th percentile and above. And I do wish sometimes they would show the medians because To me, that gives a more holistic perspective, not just your top performers out of top VC firms' portfolio.

Yeah, I mean, you raise an interesting point here, Ray, which is whenever we're looking at benchmarks, we need to make sure we understand who's in the set. And it is not uncommon for VCs— look, some VCs just survey their own companies. I don't think that's true with Iconiq. You tell me, are these just Iconiq investments or are these Iconiq investments plus other companies? But you're tending to see first a really good cross-section of companies, like when they do look at their own companies, it's kind of like surveying Ivy League applicants, right? Or Ivy League acceptees. And then they often use a high bar because all the children are above average in venture capital, right? Just like Lake Wobegon.

Well, it says that it contains data from their portfolio companies, but nowhere does it explicitly say it's only iconic Growth portfolio companies.

Yeah. And if it is these— that, because I know who Iconiq invests in, it's basically top-tier growth companies, right? So, so they're later-stage companies and they're all top-tier because they're, they're kind of a classic quality growth investor in my opinion.

Well, since I am growth here in the Metrics Brothers, I'm going to take their first topic, which is, um, I believe it was a slide on page number 12 of their report And they break down the year-over-year ARR growth between 2023 and 2024. And what was interesting here to me, Dave, was, baby, it's still cold outside, using one of your famous phrases, where under $25 million ARR cohort in 2023, when they did this report, they said they had a top quartile was a 253% growth rate.

Wow.

And this year to get into the top quartile, it's down to 168%. And even when you go all the way to the top cohort of $200 million AR and above, it went from a 35% growth rate to be in the top quartile last year to 30% this year. So 2024 continues to challenge even top-tier SaaS companies as managed or measured by growth.

So 2 things, Ray. One, as your metrics brother, Ray is doing something that Ray occasionally does, which is mixing up the word segment Most of us want to use cohort to refer to kind of longitudinal studies where we take a cohort of people, the customers signed in 1Q of 2020, and analyze them over time. Ray's talking about their segmentation here. So I agree with everything you said. I would just call these segments personally, but, but agree, you know, it's yet another benchmark, Ray, that says, you know, baby, it's cold out. Uh, there's a big hit in growth rates. I would say on average 20 points across the board, except in the largest bucket.

Yeah.

And obviously more like 100 points in the smallest bucket below $25 million.

Yeah. The one thing that did kind of jump out at me, even with that 30% growth rate in the $200 million AR and above segment, that's still over, I think right now, public SaaS companies, which is, we talked about as at least $400 to $500 million and above, they're growing at median of about 18%. And at the top quartile, it's 27%. So it's interesting that the companies here are growing a little bit faster than the top quartile in public SaaS companies. Just jumped out at me.

Yeah, I mean, again, saying that if these are— if this study is dominated and/or exclusively iconic investments, you are looking at, you know, these are some of the brighter stars in the, uh, in the sky. And that would reflect the fact that they're growing faster than other benchmarks. So just be careful. Like, look, as an entrepreneur, if a founder, you know, hits you with these numbers and goes, the median company in our size bucket is growing 54%, well, first, it's not median, it's top quartile. And second, you know, who's the dataset? And these— this is ICONIQ's benchmark, so these are going to be great companies. Um, and, and not just great, but if you're bootstrapped or if you're PE-backed, you have different financial objectives than some of these companies here, which by and large are kind of Yeah.

Now, if we go to the next slide on growth, I need your help here, Dave, because there's 2 charts in this whole report that I question whether there was a mistake made or not. But this one is about logo acquisition velocity. It's page number 13, and it breaks down into the same segments, right? Less than 25, 25 to 100, 100 to 200, and greater than 200. And it shows that new logo velocity grew by 165% in 2024 for that smallest segment against 50% in the previous year. So I look at that and I'm like, wow, that's great. That's 3 times faster. But Dave, I cannot figure out whether this is logo count or the ARR associated with those new logos. When I look at the footnotes, I think it's ARR. from new logos. But that's what jumped out at me was I didn't know if it was count or ARR for sure.

Okay. I had the same question, Ray, and I was relying on you as my rigorous metrics brother to know the answer. I was going to ask you that one. It looks like, because the footnotes are awful small, it looks like it's year-over-year percent change in new logo ARR. So this is an ARR-based metric. Which frankly, if you call something new logo velocity, I literally, up until you said that, thought it was a count-based metric. So I was kind of viewing the numbers skeptically. So now I'm confused because this is ARR, new logo ARR.

Yeah, it says to change new logo ARR. So that's something for the listening audience. It's not number of logos. It says in a footnote it's ARR. So I'm going to take them at their word. And then I was really shocked, Dave. Let's just take it that it's ARR growth.

from new logos.

And that $25 million to $100 million ARR segment, it's actually down 10% year over year. It was 20% growth rate from new logos last year, and it's negative 10%. I don't understand that. Can you help me try to—

Yeah, I mean, well, I mean, taking it at face value, it basically says, you know, if they sold 100 units of ARR a year ago, of new logo ARR, they sold 90 this year. Uh, and not units, but I want to say units being dollar units, currency units, not, not count, not logos. So if they sold 100 units of ARR a year ago, they sold 90 this year. Even more confounding is they managed to grow 54%. So it means— does it mean that more than 100% of new ARR is coming from expansion? That, that would be the implication, which I think is not supported by the expansion stats later on. So frankly, Ray, I didn't put as much thought into this slide. I was hoping you did because— I don't look at new logo velocity. I didn't know what it meant. And I find this slide confusing. Yeah.

I find it very confusing. And they only showed the percent growth. I'd love to see the amount of new ARR in 2023 from that segment. And then the amount of new ARR at 75th percentile in 2024. At least it would give me more confidence in the numbers.

So that's what I wanted to call out on this slide.

It can be confusing, Dave.

Yeah, yeah. As we go to the next one, Ray, can I take the lead on this one? Because I think it reveals an interesting thing.

Oh yeah, because this is one of your passions. Go for it.

Yeah, I'm the pipeline coverage guy. So the next chart, which is labeled, I think, and again, this is so small, I have maximum zoom and can't see the page number. I think it's 20— 21.

3?

21. It's either 23 or 21. You have 2 old guys with glasses trying to read a very small number. What is your organization's average pipeline coverage ratio for account executives? Which is a weird way of looking at it because that, as written, and Ray can read the footnotes while I'm talking, that would imply that I calculate pipeline coverage on a per AE basis and then to get the average of those coverage ratios, which is a weird way to do it. Weirder if you used Median, I think, because it might be the mathematical equivalent of what I think most people do, which is you just take pipeline, total pipeline, and divide it by plan. Now, the other issue is when you look at AE level as written here, I should be comparing to quota, not plan. So there's an overallocation question because if, as written, average pipeline coverage for account executives, to me it goes, you get it on a per AE basis and take the average. I think that'd be the same as doing it in aggregate, frankly. But the sum of the AEs' plans does not equal the company plan. Most companies have somewhere between 20% and 40% overallocation. So we need to understand what we're looking at here, as always. And by the way, that's only going to exacerbate the real problem I see with this chart, which is— and this is where I sometimes have trouble with these benchmarks, right? I always kind of somewhat tongue-in-cheek consider these homework assignments, because if you look at who writes them, it's usually a bunch of relatively bright young people, fairly out fresh out of business school. And I always think, oh, they're doing their homework assignment. And I'm always like, hey, they did a pretty good job on their homework, right? I'm always impressed with the— when you view them as homework assignments, like, you're like, wow, this is pretty good quality job. Now, we discovered one problem on the prior slide, um, but the problem here is their conclusion from this, because I draw a completely different conclusion, right? Rather than just present the data, they say when looking at pipeline coverage ratios split by growth motion, Uh, no, no, no, sorry, the one above. They say pipeline coverage ratio stayed the same over year over year, landing at what we believe is a healthy 3.9x. So first, 2 issues here now. One, 3.9x what? The sum of the reps' quotas or plan? And they typically vary about between 20% and 40%. If it's plan, this is more like a 4.4x coverage ratio relative to— uh, sorry, if it's quota, this is more like 4.4x coverage of plan, right? And Ray, do you think it's healthy to have that high a pipeline coverage? Is more always better?

Well, you know, when we talk about pipeline coverage, right— and, and I'm sorry, I don't mean to confuse anyone— but it's you take the qualified pipeline and, you know, in a period, you divide it by the amount of closed won ARR, and you typically are looking for something around 3x, right, Dave?

I would define it a little different. I would say current quarter open pipeline at the start of the quarter divided by the plan for the quarter. You, you, yeah, 3x is good, right? So you said closed one and the quarter hasn't happened yet, right? So, so, uh, so, so I'm trying to say if it's a forward-looking metric, we do it on, you know, day 1 or week 3 as discussed previously. But, but yeah, you want to enter a quarter typically with around 3x coverage. I hear you.

But then when they go to slide 24 where they break it out by sales-led growth motion Versus product-led growth. The sales-led growth motion pipeline coverage ratio went from 3.8 last year to 3.3 this year. And I've always been at the school of thought that if you decrease your pipeline coverage ratio, you're doing better. And they're saying that they're doing worse this year.

Yeah, you're hitting on the point I was trying to get to, Ray, which is I, I know that neither one of us thinks pipeline coverage is a more is better metric. Like LTV to CAC is a more to better metric. We don't love it as a metric, but the higher the value, the better, comma, ad infinitum, right? Pipeline coverage is more of a Goldilocks metric. You can have too little, you can have too much, you can have just right. And just right is somewhere between 3 and 4x. As I've talked about before on the podcast, I've met companies with 99x pipeline coverage that still miss their numbers, by the way. So, so more is not better. More generally means weak sales management. weak pipeline discipline. So, so their comment— and this is where, you know, I like what the homework people do in getting the data, some presentation issues— but that little healthy shoved in before 3.9x, I'm not sure 3.9x is healthy. It's in, it's in the range, but, but to me the better statement is just it remains stable at 3.9x. And of what? It'd be nice to know. And that's on the high side of healthy. You can have too much pipeline. If you've got 5x, you spent too much money.

Right.

I need to understand why you can only convert 20% of it, or is 20% of it just junk that shouldn't be there, et cetera, et cetera, as we've talked about probably at too length in other episodes.

But the other thing on this chart is there's a product-led growth pipeline coverage ratio, and it's at 4.1x, right? But if this is for account executives, I'm like, I can see it in aggregate where you don't have as much qualification, so it takes a little more pipeline to get to your plan. You know, 4.1x basically says what, about 24% of qualified oppies will close, right? But I don't know why they have a product-led growth pipeline coverage ratio for account executives.

Yeah, look, I, I think they just named it badly. I think my strong guess is this is pipeline coverage, period. Um, it's the starting total pipeline divided by plan. Not quota, which it would be. So, so I think somebody who didn't really know what they were talking about potentially added the word for account executives. But, but that little addition implies a lot of things that I'm not sure are true. Um, one, that it's done off quota. And by the way, the reps would be happy because they want 3x their quota, not 3x plan. I would argue the company wants 3x plan, right? Because it costs money to generate that extra 20% of coverage.

Yeah.

So yeah, so I just think this is pipeline coverage, Ray. I think it's probably done off plan. And I think they split it between SLG companies and PLG companies. Or are they actually splitting by motion within the same companies? I didn't get that deep in.

Because most companies are hybrid. They did this for pure sales-led versus pure product-led.

Oh, okay. Okay. Thank you.

Yeah.

In fact, I can't believe we're 20 minutes into this already and we didn't get into pipeline conversion. Dave, you want to just look at the pipeline conversion kind of chart and what jumps out at you there?

Yeah, let's just go through this quickly. First, I like how they do this, which is they do what I call hops, because many companies will measure intermediate steps on these. And when you're doing benchmarking, executive-level reporting, some boards I am on, they show up with every single hop, and there's like, you know, 15 hops, 15 conversion rates, and it's just overwhelming. Or every single step. And I do— I like what I call hop-based rates, where we hop over some of the steps and Look at, you know, MQL to SQL is a very important step. Typically SQL to Close One, very important. New lead to MQL. These are the right hops in my mind, even if you have internal steps within them. So I like how they do it. The rates to me for benchmarks, I don't know. I like to get more of a sense than watch the numbers move here because I'm not sure. I don't know. I'm not sure it's that comparable. So look, I like this. So I think you could benchmark off, hey, about a third of new leads go to MQL. About a third of MQLs go to SQL. Also about a third of SQLs get won, right? About 40% of demos get won. So I think it provides good, easy, memorable rules of thumb for conversion rates, but I wouldn't drill too hard into the deltas like they're doing.

Yeah, well, the thing that did jump out at me though was in that segment under $100 million ARR, the efficiency of each hop went up fairly materially in 2024 versus 2023, which I extrapolated into more efficient investment of sales and marketing measured against qualified pipeline and closed won ARR. But in the $100 million ARR and above, they actually for the most part became less efficient in pipeline conversion until they got into the demo to close won, which went from 35% to 41%. So more efficiency, it looks like, in the $100 million and below, Dave.

Ray, I know we got to pick up the pace. You want to quickly go through Sales Motion, then I'll do partnerships?

Okay. With Sales Motion, they looked at the percent of companies with PLG, and basically it said, hey, last year when they did this, only 40% of companies that they surveyed had PLG. This year it's 54%. And conversely, the people who had SLG only went from 60% last year to 40%. And then the next thing they show is how many have a hybrid motion. And that went from— well, let me stop there on PLG versus sales-led growth. People are investing in PLG. Bottom line, Dave.

Yep. The last chart we're going to talk about here is the one on partners and channels, slide 30 in the iconic deck. And it's splitting out ARR by kind of channel/motion. And across size bands, the takeaway from this slide to me is pretty simple. It's about 3/4 direct sales, 1/4 channels/partnerships. So first lesson, if you're not investing in channels or partners, you're probably missing out because I think startups should, and this data supports that. I'd be real interested in other benchmarks that segment below $25 million when they start to do this. I think it should be around 5 or 10 in my mind in ARR, but it'd be interesting to know when they start building up to this 20%, 25%.

Dave, we did do that research. You're exactly right. It's about 5% under $10 million, and it goes up to about 8% from $10 to $20 million.

Got it.

Thanks, Ray. And the last thing I'd say is that channels and partners are actually quite different, uh, because the fundamental difference being that I use partner as the capstone term, and then, uh, alliance as somebody who doesn't resell, and channel as somebody who does. But in this case, they're using slightly different language. But let's put it this way. There's people who sell your software and take paper, and there's people who don't, and they're pretty different. And I'd love if people segmented by that, because working with a regional SII on a co-sale model is very valuable, relatively easy. It is not a channel sale. It is a partner sale, but it's kind of an alliances co-sale, to use the lingo. Whereas channels, where other people actually sell your software for you, are a different thing.

Yeah.

But all we can say from this slide is about 3/4 is kind of direct unassisted and about a quarter is either channels or with partner assists.

And I think, you know, in summary, Dave, I think what I took away from this report, yeah, it's a good report, but reader beware to really understand what each of these charts and the associated benchmarks are saying. Know that most of them is that top quartile, that it's top-tier portfolio of iconic. And some of it, like pipeline coverage, could be interpreted differently, and they didn't do a great job of telling us exactly what it meant.

Yep.

And, uh, the slide we didn't cover— I'm gonna do it in 2 seconds, I know we're at time here— is just they continue to show this heavy reliance on expansion ARR. I would say in 2024, for example, it looks like on average people are doing 50%, you know, 50 to 60 at best new logo. And about 40 expansion. And if you combine that with NDR, what it basically means is people are working really hard to expand customers, but still NDR has gone down by around 10 points, right? So we're working very hard to offset a kind of shrinking new logo business. And I do believe as the economy turns, that'll change.

Yeah. So a lot of great data in the report. We highly encourage everyone to read it. And Dave, thank you so much for going through this one with me.

Yeah, thanks, Ray. See y'all.

The Metrics Brothers: AI, SaaS, and More is a production of the Metrics Brothers Growth and CAC and a member of the Benchmarket Podcast Network. By accessing this podcast, you acknowledge that the Metrics Brothers make no warranty, guarantee, or representation as to the accuracy or sufficiency of the information provided or the humor content of the jokes told. Ray, information, opinions, and recommendations presented are, according to our spouses, probably wrong and provided for information purposes only. This podcast should not be considered professional or for that matter, unprofessional advice. We disclaim any and all liability for any direct, indirect, indirect, misdirect, incidental, special, ordinary, consequential, inconsequential, or other damages arising out of any use of, or God help you, reliance upon the information presented here. Ray Grothreich is based in New York City and available on X @rayreich. Dave Kellogg is based in Silicon Valley and available on X @davekellogg. Kellogg. Schedectity, which is French for unspellable, is not our actual production location. Thanks for listening.