AI + B2B in 2026: Find the Tailwinds or Get Left Behind | Jason Lemkin

Welcome to the official SaaStr podcast where you can hear some of the best SaaStr speakers. This is where the cloud meets. Up today on the SaaStr podcast. Frankly, if you didn't accelerate growth at all, you get a D because you had a year. You had a year. I, I give everyone a pass for last year. I give everyone a big pass for 2023. All these tools were kind of terrible in AI. No one gets a pass this year. You saw it coming, you saw it changing, you saw all these agentic tools getting better. If you didn't reaccelerate and you weren't in market with a great agent, a great agentic product this year, you get a D minus, but you don't get an F because you got through the year. But you can't get a D next year. It's, you're late. So this is your job to go find it, right? Find the tailwinds.

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Hey everybody, Saster Annual will be back May 2026, the world's largest SaaS and AI gathering for executives. Just this last May, we hosted 10,000 attendees with 68 VP-level and above attendees, 36% CEOs and founders, and 25% were AI-first professionals. It's the very best of S-tier attendees and decision makers that come to Saster Annual and AI Summit each and every year. But here's the reality, folks. The longer you wait, the higher ticket prices get. They're cheap now. They're cheap. So just get them early. Lock in your spot today. Use my code JASON100 for exclusive savings. Get your tickets at podcast.saastrannual.com or just use code JASON100 when you check out. See you there. Saastr Annual and AI Summit 2026. It will rock. The, the theme of this session, so much of what we've done has been tactical. This will be tactical in a different way is What's your job for next year? And I think a lot of folks that have already been here today and yesterday have come out and my job is to bring back a couple of agents next year. My job is to automate GTM. My job is to move faster and use these tools. And that's all great. And the rest of the year, our whole theme will be very tactical. How do the tools work? What works? What are the blockers? But I think the most important thing strategically for folks here, if you have not accelerate this year is you've gotta find your tailwinds. You've gotta find your tailwinds. And, and I'm gonna walk you through this in the next slide that we're almost in a time of a paradox. We, we are in a time of an almost paradox in '26. Some things are much easier and certainly much faster than just 18 months ago. Some things are harder and I want to walk through why that's confusing when you dig into trends, dig into data, and dig in what's happening. And I'm gonna, I want to spend 25 minutes or so walking through what's really happening from buying to funding to VC and more. But your job is to grab some of this AI mojo if you don't have it. We're not all Clay or Artisan or Anthropic or Gamma, and that's okay. But there is budget out there and there is incredible demand. And even if you're not seeing the demand for your own product, You can feel your own demand for other vendors. There is budget there and your job is to friggin get it, to attach to those headwinds for real. I'm sorry, the tailwinds for real, not battle the headwinds, not battle people that don't want to buy your product anymore because it's not native or doesn't do what we want. 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 2023, let alone 2021. That's your job. Your job is to find these tailwinds because they're there, but it's not obvious. So let me kind of summarize this and then I'll dig into it. And I know you may know some of this, you may know a little bit, but I'm going to go to it in some depth, which is one of the things that's most confusing, especially if you're on the social medias, the Xs and LinkedIn, is what the eff is going on in venture capital? Because every day we read about, you know, Supabase You know, Database for AI, $5 billion last week, $2 billion the week before, $1 billion before that. We see Replit and Lovable from $0 to $200 million this year, going from, you know, in some cases nothing to, to $4 billion valuation. It's got to be easy, right? It's got to be easy. I think most people in this room will tell you it's actually harder to raise capital despite these big deals, because a handful of big AI deals are absorbing all the capital. And I'll show you the data very crisply. So it's a weird time if fundraising matters to you, if raising money matters to you, because in some ways the dollars are back to the craziness of 2021, but it is not distributed evenly. Half of all the venture capital this year is going into 4 deals. 4 deals. And 2021 was so different than today. The, the, it was, it was, it was demand. It was being locked down. There were so many things, but beyond all that, it was very distributed. There were basically any SaaS company that could get to $20 million or so ARR back then was going to grow triple digits and it was going to get funded and was going to become a unicorn. Okay. I remember sitting with a leading VC in 2021 and he was telling, going down his portfolio and saying, well, this one will be unicorn in about 90 days. This one will be unicorn in about 110 days. And that, that's just the way it worked. It was very distributed. And there's almost 1,000 of these unicorns from 2021 waiting to possibly never go public. Okay. It is not as evenly distributed today. It is very concentrated in the very top, and it doesn't necessarily make most folks' lives easier. And I'll show you the data. Half put into 4 deals. It's the numbers, the dollars, the same, but half put into 4 deals is nothing like the last, the last wave. This one's really important. I'm going to show you the data. Software spend is accelerating to a record level next year, especially enterprise, a record level. It is re-accelerating the CIO's budget. But in 2021, in 2022, it was evenly distributed. Everyone got some, you know, every GTM tool, every e-signature tool, every Zoom-in tool. Everyone got some of this budget, not the way it's working now. Of this record budget increase, according to Gartner, which I'll show you, half is going into price increases. Right? A few years ago, not everybody increased prices 7 or 8% every year. Now everyone's doing it to fatiguing their base. So half of this record spend is going to price increases. And it's not quite that simple. It's not just raising prices per seat. It's also additional offerings from the vendors, which we'll dig into. So half of this bonanza is going to existing inventors and vendors, which you don't get, and 30% of it is going into new AI tools that they're bringing in. Doesn't leave much left for all the rest. And in fact, what I'll show you is if you're not in existing vendors that are able to increase pricing and you're not in a top AI initiative, the number of vendors is shrinking or flat. It's harder. Your job is harder. So you're only going to get tailwinds if you're in one of these two groups. Okay. We'll show this one. This is a version. The first one interestingly feels like unicorns are back with a passion and then decacorns and centacorns are even more of. But it's concentrated. It's almost as much money in dollars, but not in deals. And IPOs, man, I don't know how many of you guys listen to the podcast that we've done with Harry and Rory for about 5 or 6 months. We started doing it, the IPOs just started to come back. And then we had Figma, which rocketed 4x, right? I think, I haven't checked today, but Figma's back down or below its IPO price. Despite incredible growth, Klarna IPO'd, got out, I think it's down 48% as of today from its IPO. So all this great IPO energy that we had that kind of culminated in Figma, but, but there were others. A lot of them are still up and some of them like CoreWeave that are AI related are still strong, but they're all down from their peak and IPOs are ending the year unfortunately with a whimper, with a whimper. We didn't, we didn't open up the floodgates for IPOs and it might've felt like that. On social media, but the reality is it's not gonna make it any easier for most folks to go public. It is what it is. It's life as founders. We roll on. It's been worse, but this was not as great as it seemed for IPOs. And, and then the last one here, and then I'll dig into the data, but this is the tough one. It's almost a paradox. And it's literally never been easier to scale to $100 million. Quickly as ever, but only for a select few. Only for, again, listen, there were crazy, there were, there were the crazy hop-ins that went up and down. There was the Zoom hysteria. There was a lot of, a lot of stuff that happened in 2020, 2021. But, but we were more on the same journey then. And a gamma will already went from 0 to 100, 1 to 100 this year. RepliKant lovable, 1 to 200 million already this year. You know, I'm, I'm a small investor in a video app called Higgsfield. I, you know, I just found out they did $1 million on Black Friday and already got to $100 million this year doing video. And they have tons of competition. I mean, it's a great app. I love this app. I've been a user since day one and investor, but it's not, they don't own the market. I mean, it's one of the best, best teams, but already $100 million this year. So if you nail this AI product market fit, this 2x2, literally in our lifetimes, has— it's never been easier, in air quotes, to get to $100 million. It's a supercycle, but there's so much competition. Folks are getting cloned so quickly. And, um, there, there's, there's a, there's a friend of mine that, uh, at a company I invested in here that— totally awesome AI app, very disruptive. I think launched about 6 years ago, has 4 clones already. Now, none of them are as good, but again, we talked about a little bit this morning, it's just faster. Everything's faster. So it's Faster to $100 million, less stable and more concentrated. So you could say, woe is me. You could stare at your shoes. You could blame the economy. You can blame everyone else for raising prices, or you can figure out what the fuck everyone else is doing. Go get a little. Your job is to get some of that, to go get some of that. And you had, frankly, if you didn't accelerate growth at all this year, you'd get a D because you had a year. You had a year. I, I give everyone a pass for last year. I give everyone a big pass for 2023. All these tools were kind of terrible in AI. No one gets a pass this year. You saw it coming. You saw it changing. You saw these agentic tools getting better. If you didn't reaccelerate and you weren't in market with a great agent, a great agentic product this year, you get a D minus, but you don't get an F because you got through the year. But You can't get a deal next year. It's— you're late. So this is your job to go find it, right? Find the tailwinds. Okay, so let's dig in. I think it's the whole presentation. If you want to leave now, go do something more interesting, you can. Okay, now I'm just going to— just going to dig into some of the numbers. You don't have to stay, or you can ask questions afterwards. But just to show it visually, these are some charts from Saster, and these two I regurgitated from Crunchbase, but it'll kind of show you I didn't have that. We just ended November, but October 2025 was the highest on the right, the highest valuation total capital raised by new unicorns in 3 years. So, and you, you get it. We're not quite back at 2021 peak for dollars into unicorns. I think we will be next year, but, but it's a number 2. But look at the left, the deal counts like a fraction of what it was. The deal count. This is just a visual representation of the concentration. The money's going back. So many investors that I've known over the years, so many actually classic SaaS and B2B investors that used to do SeedNet, they're doing Anthropic at $80 billion, $100 billion. They're doing Ramp at $32 billion. Like, these used to do A deals and like, why are they doing this? Are these stupid people? No, that's actually where the easy money is. Right. I mean, it just said today Anthropic's going to raise $300 billion. So if you were a VC and you invested in just $60 billion or $80 billion, you're looking like a genius rather than investing in some new startup at the A-stage and you're just hoping your money doubles in 2 years. Like it's just— I know it's air quotes, but it's where the easy money is. And not only is it easy to get— if you get into an Anthropic or whatever, not only is it easy to see your asset appreciate on paper, it's easy because there's liquidity. You can actually sell your shares. And it's easy because, and here's what's happening in venture, you can put so much money in, right? It's great if you put $5 million into a startup at $50 million and then it doubles to $100 million, your $5 turns into $10. That's great. The profit to the whole VC firm is 20% of that, $2 million. If you're able to put $100 million into Anthropic and it triples, right, then you've made $40 million for actually less work because you didn't have to find the company from scratch. So it's less work to make 10 times more money. That's just math today. And you're seeing it here. And so what if you talk to investors here, you listen to the podcast that we do with Harry and Rory, what you'll hear is, um, and you'll see it if you're an investor, most startups are not doing great today. They're not. But the ones that are really breaking out at this crazy level, the investors are just frothing at the gums to put more money in. They shove money down founders' throats. It's just because there's, there's no ceiling to the best of them, right? Anthropic isn't topping out at a billion. OpenAI isn't topping out at a billion. They're topping out at a trillion. And so you can just shove so much money into companies now. That's the game today, you see, and you just got to be aware of it. It almost seems silly to do early stage investing. On our pod, we say seed is for suckers. It's resonating. It just seems so silly when you can just put the money into, into a late stage unicorn, AI company, and it quintuples in a year. One year. One year, why would you do anything else? Why would you struggle to find a startup, meet the founders pre-revenue, figure out if their $3K of MRR is going to go to $30K, learn the competition? Why would you do that if you could just invest in a leader and have your money quintuple? Like, you, you could argue that it's, that it may come down, but if, but if you look at all the data, it sure doesn't feel like this AI supercycle is going to end next month or next quarter or next year. So don't expect venture capital to change. And so don't expect, I've said it a lot on the pod and others are talking about it. Don't expect the classic triple, triple, double, double startup, which is hard to do in B2B. Don't expect it to get more attractive to most VCs unless you're doing even better, because it doesn't make any map. If you think it's just a hard way to make money, we're all kind of lazy. We're all kind of lazy. Like we're not all super lazy. You're here, you came here, but we all want to find the fastest path to A to B. You know, VCs at the end of the day are like sales reps. They get 100 leads, but one of them is a million-dollar deal that's going to close in Q4. Where are you going to put all your time? All you— you put 80% of your time just standing around waiting for the email. Did it get e-signed? Okay. This is a version VCs are doing today. It's just, it's the easy money. And this is just a different one. I took this from Excel's recent analysis. It's up on SaaStr. This is another way to see it on the right, which is that total VC dollars in are projected to be about the same in '25 as '21 according to Excel. And that's great. Excuse me one sec. So in a sense, we're back, right? And, and again, I think '26 will be even bigger. So we'll surpass the dollars of '21. But look at the top 4 deals are taking half the money. Again, Anthropic, x.ai, They're just absorbing so much money because you just put your couple hundred million bucks on the table and you double or triple down on a lot of money. They're just absorbing so much money, like overall dollars back. But again, it's into less, less than half the companies, right? It's the rest of the money is only going into half the companies. So a weird, a weird market when 59.6% of the model companies are taking all the money. And okay, we kicked this one. Actually, I just made this slide like a week ago. It's gotten worse. It will get better. But this is the IPO story. So just because ultimately, listen, one of the great things about being in a startup is you can kind of ignore a little bit of the externalities as long as you have runway, as long as you have time. You don't really have to worry about where Nasdaq is today. You don't really have to worry about IPOs. It seems a while away. It's kind of Startups are harder than big companies, but in a way you're in a bubble and it's kind of comforting to just be in your lane and just do like, the competition's killing you, you don't have enough people, but at least you don't have to worry about all the externalities. But this is, again, I stole this one from the Excel analysis, Excelscape, it's on SaaStr. IPOs came back, but not much. Okay. So there was a point in 2021 the peak moment, I forget when it was, when it was an IPO a day. Okay, it obviously wasn't the whole year, it wouldn't have been 365, 46, but it was an IPO. Actually, I think it was an IPO a day outside of tech. This is just software and AI. So, um, there was an IPO a day in 2021. And then, um, HashiCorp was the last one in December of 2021. And then the door just slammed in 2021. And it was actually really weird because if you were around, if you were in the market back then, 2022, things were actually great for business. Like people kept buying software. So in some cases, growth came down a little bit. 2023, it started to get hard to sell the same old boring B2B products. It was still easy in 2022, but man, the IPO market slammed shut. Zero. Zero. I don't see any zeros going back for more than a decade. That was a crummy year for tech IPOs. I don't know what happened in '23. '24. Oh, '23, Klaviyo. Maybe Klaviyo is not on this. And did anyone know this was Klaviyo '23 or '24? Might have been '23. Klaviyo came out of nowhere. It's the HubSpot for the Shopify ecosystem, HubSpot for e-commerce. Great company, $1.2 billion in revenue, growing I think almost 40%. They IPO'd, and then we had a few in '24. Rubrik and ServiceTitan were great ones. OneStream, an interesting small one. And then it seemed like it was coming back in '25, but maybe we'll end the year at 9 or 10 in tech. It, it's not that much. And worse, on the right— again, this is a couple days ago— This is the— this is the performance from the peak. So Figma, which is for many of us probably the best one on the list, 74% down from its peak. Chime, -30%. Karna is even worse. It's 47% today. So like if you're— if you're a public market investor now, listen, only so many people buy at the peak, right? But this doesn't get you excited, does it? It doesn't make you like froth at the mouth for another 10 IPOs or 20 IPOs next week. It just puts a damper on the market. And so we just have to adapt that 2026 might be a banner year for IPOs, '27 might be, but we— but the data didn't end up being so great like, like we might have thought it was midyear. And this one's a tough one to internalize. This is by— if you talked— and again, ventures, venture is very important, but it's a very small slice of the world. But This is a tough one that I don't have a lot of answers to. Today's about a lot of answers. How do you do AI SDRs, BDRs, AI rev ops, scale your team? We got a lot of answers here. This is the one that's tough, which is that because the new AI companies are growing so quickly, the winners are getting younger. The winners are getting younger. 65% are 0 to 3 years old. Now it's not universal. You know, on the right, I took the screenshot from Lovable. 1 year to $6.3 billion, right? Seems pretty, pretty, pretty crazy. But I use Replit, they're both great. I actually don't really have a horse in the race or an investment. Replit actually I think is almost 10 years old and I think it was 6 years old as an IDE and then it, and then it was around and its timing was perfect when Cloud 4 and everything worked and it blew up equally as well as Lovable. So not everyone is the new kid on the block. There are plenty of folks you have here today and they're, for every, for every Lovable, there's a Replit or Gamma that was around for a long time. And then AI worked and it blew up. But overall, the kids are younger these days, not just in age. There's some truth to that. Certainly if you go like to Y Combinator in the Bay Area, you meet a lot of 18-year-old, 19-year-old founders. Dropping out of Stanford your first year is seen as very cool. It's a change, but really it's that the companies are so young. And why is this kind of a bummer? And it's great if you, if you did the lovable round a year ago, right? But what it means is, and maybe this isn't all bad, if you've been doing this for a while, your VCs are just going to check out on you. They're just, it's just nat— again, like putting all your money into Anthropic, it's just natural. If your company's around 6, 7, 8, 9, 10 years and you're looking at this chart, you know what your job is as an investor? Go find the next lovable. Go find the next lovable. Now it's not all bad. Okay. The flip side is if you're older and you're not a rocket ship, your VCs probably just don't, your investors probably mostly, at least in the US, they just don't care anymore. Do whatever you want, make a little bit of money, run the company how you want, grow 30%, 60%, 10%. As long as you don't need more money, more power to you guys. So I don't see, you know, pre-2020, I think when, when, when growth slowed, when you were older, VCs would get agitated and they'd have meetings and they'd talk forever and maybe even talk about bringing in a new CEO or something. I haven't heard anyone in years talk about bringing a new CEO into a venture-backed startup. They just stopped showing up. I'm a little— first I'm like, can I do the board meeting on Zoom? Then they moved to Zoom and they're just there. And as long as you don't need it, like to me, when I was a founder, I took all this stuff personally. I still take it personally today. If you don't take it personally, it might not be a negative. You might have some freedom, but just be aware when you look at this chart, it's just natural as an investor not just to chase the shiny new object. We're all human beings, but it's just where the money is today. For now, today, it's not that long tail. And so it's complicated. It's complicated. It's also complicated for the 1,000 unicorns from 2021 that maybe aren't quite growing at the Figma level. Because if you go back for a second, if Figma's down 74% from its IPO high, you know how many B2B companies are better than Figma? Like approaching nuns. Okay. Like very few. So many of the unicorns in the pipeline are very, very, very good companies. They're just not quite growing at the rate Figma did at a billion. Who's going to be excited about them? Unfortunately, it's got to be you. You've got to find your own excitement because your investors and the markets for the moment are not going to be excited. Okay. Let's come back. Let's, let's dig into this dichotomy. This is the latest Gartner report I could find. Folks sometimes make fun of Gartner. Don't. Don't. Because yeah, sometimes it feels kind of like a scam when you have to pay for the— to show up in the report and everything. But honestly, I don't know anyone that talks to more CEOs and buyers of software than Gartner. Okay. Do— are their predictions always off a little bit each year? Yes, but so are mine. No, even a lot of your plan— you are— a lot of your plans on 12/31 were not exactly where you thought they'd be at the end of the year. No one talks to more buyers. So I think the trends and the, the rough data they see is about as good as it gets, just because they talk to the most. And this is pretty crazy— software spend slowed for a while, it reaccelerated in '25 because of AI to 11.9% at $1.2 trillion. That's a lot, okay? That's a lot. That's not growing 12% at your ARR, but Okay, this is an insane amount of additional buying. Okay, this is— and if they're predicting it's going to reaccelerate to 15.2% for software, 9.8% overall for IT, that's a lot because for a million reasons, including the fact our overall global economy is not going this quickly, right? So we're going to put more and more of an ultimately a fixed amount of revenue in the world and in, in companies into software and into technology. That's the good news. This is a lot, 11 to 15% at this level. That's an almost unprecedented level of additional investment into software. That's the good news. The bad news is unless you do something, you ain't getting any of it. Okay, so let's— let me— I tried to summarize all the leading analysts. ISG, 30% of the budget increases into AI. Deloitte said 36%. McKinsey came in low at 20%. That's still a lot. BCG, Boston Consulting Group, AI is the number one being reallocated from other categories. Gartner, top 1 to 2 priorities across almost all its CEOs. They're saying their, their incremental budget though is only going up 2.79%, and they're budgeting 9% price increases for next year. 9% price increases. So what does all this mean? You got to steal this budget from some of these people. You got to steal it from other AI native— we got to be a top 3 AI initiative, or steal it from the price increases, or you're not going to get it. So I said steal or be stolen, it's up to you. But you can't just stand around like in past years and build a great product, a great product that optimizes workflow, that has an ROI calculator on your website, that makes your team more productive. There's just no friggin budget for it. Okay. AI is about more than being productive. Ultimately, it's about replacing or augmenting humans and delivering relatively rapid and massive ROI, much more than traditional workflow and database software. So you either got to be in this game Or the budget's going to be stolen from you for price increases and to free up money for AI, because there's only so much. So here I collected it a little bit just to show it to you in a different way. Even though spend into software is going to be a rec— was a record this year, growth of 11% and 15% next year at this scale at over a trillion, the average public Cloud companies' growth is coming down. You know this, but it's worse than this because they're not grabbing the budget. Palantir is, uh, securities, other things are going well. Klaviyo is tying to the great growth of e-commerce, as is Shopify. Figma's got some of it. These are the winners. These are the like 5 of the top winners with the best ARR multiples that are public companies. But overall, we're, we kind of get a D minus. The leaders, the public companies get a D- for this year too. It's not just a few of us. A D- because they didn't tap into all that great budget. Where's that acceleration? You see it in this chart? I don't see any of it. I see consistent deceleration. There are examples. MongoDB tapped back into it this year. They reaccelerated. Even Twilio came back a bunch, but no one really crushed it. They, they let all this money go to newer entrants. Okay. It's more power to our investments and our friends that made money from it, but pretty bad job by incumbents, not just some startups and unicorns, but the public companies. There are some exceptions, obviously Snowflake, Databricks on the private side, Palantir is crazy, but we really didn't get it all. And so you gotta do it next year. And you guys kind of know this, but I wanted to break out, actually, if you go to Saastr.ai, our newer site, not.com, we're still maintaining both, we can talk about it if you want. But we have market data where we pull all these top companies and we show you exactly what's happening every day. If you want a real-time, you can even get a real-time newsletter. We show you multiples. It's just for B2B. It's pretty cool. So I literally just copy this from sastr.ai/market and we update this every day live. But it just— so, so not only are we sort of in an AI and non-AI world in many cases in B2B, like there's this massive multiple divergence in today's world. Now, this has always been true. Faster growing companies are worth more than slower growing companies, but it's just, it's very divergent. So these are public companies. Um, you've got to scale these numbers up for startups. Obviously small companies have to grow faster than big companies, all things being equal. But if you look at the left, if you're in the top bucket, the ones at a billion plus that are growing 30%, Rubrik, Palantir, Figma, and others. Figma is actually the low trader in this group. They're still trading at 23 times ARR. That's pretty damn, pretty damn good. Now it's kind of Palantir warps it as this rubric a little bit, but the growth, but they're growing 43% as public companies, public companies. That's a lot at that scale. The most actually the ones in the middle are holding up surprisingly well. The ones that actually we saw a lot of deceleration, the ones that aren't decelerating. That are growing 24% are growing almost— are almost 12 times ARR. That's a pretty high multiple. And then you're just getting crushed at the bottom. You're getting crushed when growth is less than 20%, 4.9 times ARR. I wrote up PagerDuty this week growing 4% and now profitable, trading at 2 times revenue, $500 million in ARR, worth $1 billion. Eventbrite today I think sold at 1 time revenue. The bending spoons. Okay. So like the markets, the public markets only expect pretty good growth. And actually it's, you get a great deal. You actually don't have to grow at 2021 rates to get really high multiples, but you've got to grow. This will help you triangulate the buckets, huge premium for growth. If for some reason, even after this year, you think being profitable is enough, it may be if you're bootstrapped and you're making a lot of money and put it in your own pocket. If you know, if you're Val, or something like that, you know, and you're bootstrapped and you just bought yourself a $500 million yacht last month, more power to you, right? I don't know whether it really matters how much Steam and Valve grow when you're making $4 billion in profit a year, $4 or $5 billion, $6 billion, you want to grow, but maybe $4 billion in profit's enough with 300 employees. Okay. I don't know. But most of us are not like that. We have to grow. And so listen, a lot of folks had to cut or get fit because their runways were shortened. They can't raise another round for the reason we talked about. But profitable is not enough unless you're utterly insanely profitable like Zoom. For every dollar Zoom brings in, 50 cents goes to the bottom line. Okay. PagerDuty and others don't do that. You've got to grow. And otherwise you're going to be worth 2x like PagerDuty or 1x like Eventbrite. You don't want to be in that box. You just don't want to be in that box. Massive split in valuations. Here's another one that looked good at first. If you didn't dig in, this is from like a week or two ago. Adobe. Trying to get into the AI game on the marketing side, buys SEMrush, SEMrush, because they wanted to be into GEO, LAM, LLM optimization. So even though SEMrush is, it's actually bootstrapped, kind of a cool story. Even though they're older, they do have a lot of good instrumentation to sort of see where you show up in, in, in the LLMs and ChatGPT and, and, and Claude and all that. And, and Adobe needs something today because actually 30% of Adobe's revenue is selling to marketers. It's not, it's not Creative Cloud and others. It's the whole marketing, more enterprise side. So they buy them for $1.9 billion. Sounds like a lot, but it's only 3 times the next 12 months sales. Even with a huge premium, this is pale because when you buy a public company, 9 times out of 10, you have to pay higher than the public stock price or most folks won't sell. Like even with Eventbrite selling at 1x today, I think it was still like a 50 or 60% premium that Benyamin Spoon said to me. A lot of people just won't— they won't fill in their proxy form or sign the deal. So even with Adobe paying a huge premium, it's only 3x revenue. No, We don't want to sell for 3x revenue, guys. Okay, we don't want to do it. So, and there's just a massive split in valuation for growth. Okay, let me summarize a couple other things. I know this might seem obvious to some folks, but I still think 90% of folks don't get this. Even if maybe don't get it, that is the wrong thing. Maybe they want to believe something that isn't quite true that they want to believe. Folks I've talked to here, today and yesterday. They get it. They're here. They're obsessed with AI for B2B. And, um, they're a little behind. They didn't build Gamma or Replit or, or whatnot. And they want to build a copilot. They want to build a little AI that makes your product better. And listen, those are great. And all of us should have a copilot. I personally, honestly, if, if there is a B2B app and I can't talk to the app and solve my problems, if I have to like figure it out from a clunky UX or like a help menu, I don't even want to use those apps. Apps to 2025. I want to talk to the app. I want the app to tell me how to use it and be better. But I'm not going to pay you 2 or 3 times as much because you have a cool copilot or a nice chat. That's not enough. It's not enough. Like, AI features don't count. They're necessary but not sufficient to grow. And we just— I don't want to pick on PagerDuty, but $500 million, only worth $1 billion. Look at PagerDuty's website right now if you want. PagerDuty.com, it says AI all over it. They've got AI monitoring, AI uptime monitoring, AI this, AI that. It don't matter unless you're replacing a large part of DevOps humans with AI. It doesn't count 'cause there's no extra budget. So where is this budget coming from at the end of the day? You know, I break it up into 3 groups and which one are you? A copilot is none of them. A feature alone is none of them. Where do you get this budget? The part that Gartner's talking about replacing humans. It's brutal but true. You know, 2 things took off quickly in AI. Um, software development, we all know Cursor at a billion and all the rest. We could talk about it if we want. But also, if you, if for some reason you don't follow it, and you probably do, contact center blew up, support. You know, the existing investors, Zendesk reaccelerated even though it's private. Uh, Sierra went from nothing to $100 million in one year, Decagon, lots of others. Intercom was just here, Finn. Their AI product's at $100 million right after the company growth slowed. We just, we used to have him chief product officer today. And is it because the AI is cool? No, honestly, they're cutting half their support teams. You know, Marc Benioff said even at Salesforce, they're growing, they're adding more headcount in sales and marketing. But I think he's— I don't know the numbers. I think 3,000 or 4,000 folks in support they already replaced with AI and their own AI and support coordination force. But that's thousands of humans. Now they reskilled some and moved them into other departments and moved around the headcount. Salesforce is investing. That's a lot of change. Okay. And people didn't buy this AI support software because it was cool or because it was a copilot. They bought it to get rid of headcount. And that is going to accelerate next year. And there's, if you can, if you can get rid of $100 million of headcount, there's probably room for a couple hundred thousand dollars a year of your tool. Okay. Two, and these are different. If you truly augment humans dramatically, I should have put dramatically in the color, not augment humans dramatically. You know, I don't know, how many folks here use Cursor? Okay, enough, or similar, right? I mean, I'm more, I'm not that, I'm not technical enough, I use Replit, but it makes you so much more effective, so much more effective. People, if you guys haven't used any sort of live coding tool or Cursor or for non-technical folks, Replit or Lovable or something, you might not get it. Like when we, even in May when we were at SaaS Annual, people, you know, the idea was, oh, I'll make my developers 30% more productive with these tools. These tools, okay? Like, like, okay, I'll spend a couple hundred bucks a month, maybe $500 a month, and they'll magically be more productive. Like, they'll just create more features. And there's truth to that, but it's much more than that. Like, if you're deep on Cursor or other tools, you're never going back. It fundamentally changes the way we build software. Like, Cursor and all these other tools we're upping the level have ingested every piece of open source and probably a lot of closed source software it, they have all of it. So anything you want to build that has been built before can be built in minutes or moments. So, I don't know if you were here yesterday, I, yesterday morning I built a game called vaporsale.ai, try it right now. It's super cool, it's got cool music. You sell a product that, that should exist but doesn't. You've got to convince prospects to buy something that's AI and trendy, but it doesn't work. It's kind of a fun little game. I mean, I built this in 1 hour. I actually built it in less. And why? Because honestly, it's just stealing someone else's code. It's got a fresh skin on it. I gave it the right prompts and the right ideas, but it's already in the code. And so why would anyone go back to like writing this code from scratch like you had to do a year ago? You wouldn't, right? So this is radically augmenting humans, these types of tools. I mean, you know yourself, even if you don't ChatGPT or Claude, you're not going back, right? You're not going back. But this is radical augmentation. Or 3, an incredible level of productivity. So when we, when we talk about our stack, we talk about a bunch of these, but like, and I don't mean to keep going back to the well, but like we use Gamma to make all our sales collateral instead of Google Slides or PowerPoint. It's not like a little bit better. Like in 5 minutes it pulls all of our data from our CRM and otherwise, it knows everything about the prospect. And it creates a beautiful dynamic presentation, completely customized for them in 5 minutes. We pay $100 a month. That's like one of the best deals on planet Earth. We're not going back. But most folks, classics, they're just not going that far. They're only making their products better. I'm sorry, that was enough in the old days. It ain't enough. You've got— this is where the budget is. It's not enough for AI to make your product better. You gotta replace humans, turn us into like cyborgs, I guess, I'm gonna rename section 2 cyborgs. I'm human AI hybrid and Claude or Replit, maybe even Harvey, arguably we're hybrids, right? We work together and more insane productivity, order of magnitude more productivity before. Honestly, sit down and ask yourself, are these the tools you built this year or do they just make your product nicer? If you didn't, if you've spent this whole year building AI tools for your B2B product and you didn't see any additional growth, I bet you're in the fourth bullet and not, and not the first three. And you, okay. Another way to think about this, okay. And maybe this is my penultimate point. People call this a supercycle. The VCs call it a supercycle. But why, why is this a supercycle? This is an important point. I've talked about this a couple times in the 20VC pod that we're gonna do live in about an hour. And, but this is the, this is why you got to be in market with an AI product A and B, because everyone's in market at the same time. So why did SaaS blow up in 2020 and 2021, right? It wasn't just that for a few months everyone worked at home. Okay. It wasn't just that because half the US economy was essential workers. Half the folks still had the same jobs. They still went to Starbucks, they still went to the hospital, and they still do all these things. And that ended in a lot of red states by the end of the year. Okay. I was split. I don't know about you in 2020. I was split between blue and red. Okay. I'm not political. Okay. Up in the Bay Area, it was like a sci-fi post-apocalyptic. Half the time because of family reasons, I lived in Orange County in Southern California. It was like it never happened. People were playing, taking school buses, they were eating inside in restaurants even though it wasn't even allowed. It wasn't what happened, wasn't just this, it was what it drove a thing where everyone who was in market at once, every enterprise decided they needed these tools. Every enterprise, there was so much change. They needed a contact center where you didn't have to come to work for a while. They needed e-signatures. They needed— Zooming was the most crazy one. They needed all of it. And what happened was instead of the traditional 5 to 6% of prospects being in market a month, which is a way a lot of marketers think about things, right? I'm gonna, I'm gonna try to reach everyone in my, in my universe, but the only 20% are really in my ICP. And of that 20%, maybe 4 to 5 to 6% are in market, right? So if you start doing the math, you're lucky if 1% of your list, your database, actually is gonna buy this year. Right? Because you think about how many folks are in market, you know, because, you know, if, if your tools are working great, it might take 5 or 8 years to even decide to switch them out. When I was back, when I was at Adobe and we moved to Salesforce, it took Adobe 5 years just to move to Salesforce. A big company. How long would it take you? They're never moving off, but if you were gonna move off, it would be like a decade, right? So folks are rarely in market, but in 2020 and '21, everyone was in market. Now it's happening again with AI. And there, some of it is productivity, but a lot of it is just, it, you know this from your customers, CIOs on down have a massive initiative to drive, to bring AI innovation to the company and have massive productivity gains. And so everyone's in the market, but you've got to be in need. I need, and I just kind of wrote this up to myself. I need, we've heard this today, so many sessions, so many folks I've talked today need an AI GTM tool. Do they really need it? Will their companies die without it? No. But they want a Clay or Qualifier, Artisan, or other folks you've talked to. They need it. They'll find it. They want to bring this tool in. I need it. I need AI support. We talked about I need AI legal review. I need AI coding. I need AI security. Not only Rubrik and Instagram, we had Akido Security this morning that's blowing up because they need this for AI. So are you this? Are you one of the categories of products that buyers feel, right or wrong, Just like we didn't, maybe we didn't really need all these products during 2020 and '21. The world with hindsight was more normal than we thought. But do they feel like they need this product right now? If not, you're not going to get any budget. So how do you be, I need this for AI? That's what you've got to build in the first half of next year so you don't become obsolete. Another couple points. Why some of the best ones are blowing up and why others are struggling. The best B2B AI enables TAM expansion. TAM expansion. So a lot of those public companies, they've reached TAM saturation often because they're only single product or double product. They don't really have a suite. They can't build as much as Datadog. They can't build 12 products or 20 products. They've saturated. They've gotten to double digits of their market. But because the best AI products do so much more, they can charge more. So Gamma at $100 a seat, which are the, our PowerPoint AI tool, like $100 is not that much money compared to what a lot of you charge, but it's a lot more than Google Slides or Canva, which are basically free. We already pay for G Suite. It's free. You may already pay for Office. That's free. Can— you get everything for like $9. Okay. And we're still paying $100 a month. That's a lot more TAM. Cursor@All, Cursor, all, all the rest, Windsurf, all these other tools. It's so much. Think about it for a minute. Atlassian got incredibly successful selling Jira and other products for $5 a month with discounts to folks at companies. Now folks will spend $400, in some cases $5,000 on Cursor. That's why it goes to a billion. It's so much TAM expansion. It is so much more than a project management tool or a bug tracking tool. It is so much more TAM by that productivity. And we've talked almost ad nauseam here about AIs, SDRs, and BDRs. These products ain't all cost a lot more than one seat of sales of HubSpot or one seat of Salesforce or one seat of Zoho CRM or pick your seat. I mean, do you know any any CRM that costs $50K to $100K a year for, for one, I'm slightly exaggerating. It's not really one seat, but these, these guys are blowing up because the products unlock huge TAM expansion, 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. You know, if all these folks out here had to charge $5 a month like Notion, they wouldn't be here. Most of them, they couldn't afford to be here. They couldn't afford to fly anybody out or come out here because of TAM expansion. And so this is the way the game has changed. And so if your copilot isn't really letting you charge more for your product, it's not because your sales team isn't good enough or your product marketing. You don't have the right gerunds and vowels and colors on your website or the right, or the right fonts. It's because you have added so much value that you unlock so much TAM, so much TAM. Some of these guys, their software is better than you, but it's not like they're so much better at sales and marketing than you. They just unlock so much TAM. So you've got to be honest. Does your AI product for 2026 enable you to charge 5 times or more than what you're charging today? And earn it, not shove it down people's throats, but earn it, earn it. That's, that's the unlock here. Charging for your Copilot that no one wants. No one wants— Microsoft learned no one wanted to pay an extra $20 a month to talk to Word. Okay? That was the great innovation. And even Microsoft couldn't get people to buy that. Okay? It doesn't work. No one wants a mediocre Copilot. And a couple more points. I'm talking about 2026, because even though— listen, you guys all get a pass. We all get a pass. But even though some folks are getting D-minuses or Cs for this year, I'm sorry to be direct. I'm just trying to be helpful with love. It's all said with love. There isn't infinite time, but there's still time. There's, we are early here. I don't know if we can all catch Cursor. Okay. It might be a little late, but there is time. I picked two examples. Cleo, Jack Newton, old SaaStr OG from the beginning. Legal tech, really, they added fintech into Workframe and they raised $3 billion and then they added AI to their product in the last year and legal for legal case management, $5 billion. Founded in 2008. 2008. Gale, I've talked to her too much, but founded in 2020. Didn't really work before AI. Now $100 million and with just 50 employees. So, and those, there are a few of you who were, who probably no one here, you wouldn't have come. There are a few of us in the broader SaaS community that have already lost to AI, to so-called AI native folks. You've lost the game. Woe is, woe is us. I don't think it's true for most folks. You have time. You don't have infinite time, but it's early. It is early. What I can tell you, the Salesforce team is here with AsianForce. What I've learned and, and, uh, is that learned it from Mark and lots of others is like, yeah, there's a segment of Salesforce's $44 billion of AR, whatever they're at, that needs these tools tomorrow. But a lot of the traditional industries haven't even started, right? I'm not telling you to go buy public stocks, but I'd be long on Salesforce even if the market wasn't true this year because it's just getting going with the spike. The demand is just getting going. So find— like, don't go and directly compete with the folks that already did a couple hundred million this year unless you know you're on the better engineering team than them. But so much of this is still early. So many folks are found their wind this year. This should be you next year. It is not too late. But eventually, if you don't catch up with your agentic product, with your native AI product, if you don't catch up next year, your direct competitors will, and then you will lose market share. You will lose market share. And the one thing, the honest thing to ask yourself, and if you're founders, maybe not even to share with below your management team. At the end of each year, you have to be honest. Did we gain or lose market share this year? Did we gain or lose market share this year? Even if you grew 50% this year, if your competitor grew 100% and you, you know, you're at the same ARR, sorry, got normalized, you lost this year. Okay. Did you gain market share? Every year that's important. But in the world of AI, it's even more important because it can sneak up on you. Be honest. There was one startup I worked with that has just crossed $100 million. Pretty good year, pretty good AI product. Couple quarters ago, they started deleting the competition slide from their board deck. Where did it get— first time it was a hidden slide, you know, went from shown to hidden slides, and then it disappeared. Why? They weren't gaining share anymore. Okay. Now I kind of gave the CEO a pass. I brought it up between me. I wouldn't bring it up from the team. You got— if you're not honest about gaining share, You won't gain it next year. You'll lose it in today's world. So, so ask yourself honestly, figure out who your direct competition is. Find a way to track your share. Figure out their ARR, figure out their growth. Go on the internet, figure out every metric you can find out. Number of customers, scrape it, use tools. Even if you have to use, uh, web traffic as a, a crummy proxy, but make sure in the age of AI you are gaining share and don't hide behind it if you're not. Okay, maybe a couple other paradoxes and then we really will wrap. This is just a trend to think about as we— for 2026. It's complicated. Leaner teams are real. Now Gamma just said— I'm not, I'm not going to Gamma, but I just noticed the last, you know, $2 billion valuation, $100 million ARR, 50 employees. Uh, Lovable and Replit, both under 100 employees, Perser, I think. It's a little bit confusing, but whether they're under 100 anymore, they were under 100, they'll be under 300. These are very lean teams, but some of them have 100% inbound and dramatic demand and no sales team. Okay. So if you have no marketing costs and no need for a sales team temporarily, you can, and you have one product, you can actually be pretty lean, right? One product, no sales team, no marketing expense. It is easier to be a little lean than a traditional B2B company. But everyone is getting leaner. And this isn't about layoffs or, or just getting more profitable because as we just talked about with PagerDuty and slow growth, just being profitable isn't enough. It's not going to give you, you know, selling for 1x your revenue is not worth it. You've worked— you've all worked too hard to sell your companies for 1x revenue. So this isn't just about getting fit. 2022 and 2023 was about getting fit because Now you can say this without getting your head cut off. We were way too, we were, we had way too many employees running around in 2021 doing nothing. We had too, way too many marketers spending 90 days doing an infographic. Okay. We just were, everyone was bloated. Okay. Everyone was bloated. There's a million things going on now. Some of it is replacing humans with AI. Some of it is, is other things, but we're just all going to get leaner and leaner and leaner in terms of employees. ARR per employee. It's not going to reverse itself. There is no trend to reverse itself. So the new guys are getting more efficient, but everybody is essentially getting much more efficient. What— there's a little too much chart going on on the right. It's showing up more in early-stage companies than late-stage companies where there's more bloat, but it's still happening. And then just briefly, I don't want to go too much into this, um, because we've had a lot of time. I guess I didn't need the whole hour, but A weird thing being, this is just this turn to the right. I've talked a little bit about it before, but it's something important to not be, to not accidentally be arrogant about or pat yourself on the back. Yes, are a lot of AI companies burning a lot on tokens, burning a lot on inference, burning a lot on AI? Yes. But, but their burn multiples are lower than traditional companies because they're growing so quickly. Now you've got to keep that, that wheel going. But if, oh my God, you're like, oh, let— you can make fun of this AI startup. Those guys burn a million bucks a month on inference. Okay, that's not sustainable. Their margins are 40%. Yeah, but if they added $50 million of ARR, it's wildly efficient. Okay, if they slow to 10%, you get crushed. But another almost paradox: the fastest growing AI companies are burning more, and their gross margins are lower, but they're Burn multiples are also lower because they're adding so much revenue. It's worth it. It's worth it to win this AI war, at least for the next couple years. And here's two versions of this. Here's HubSpot and Salesforce. Obviously, probably every single person in this room uses HubSpot or Salesforce, so I picked them. Since 2021, this is their efficiency ratio, their, their revenue per employee. HubSpot up 2.6x, even Salesforce up 2.2x. Microsoft, old Microsoft has passed peak employee and is coming down. Not only is Microsoft's efficiency going down, its absolute number of headcount is going down and trending down. I mean, it can't go down to zero. I mean, Microsoft's a pretty big company. Everyone is, it's not just the startups, it's not just gammas and cursors. Everyone is getting radically more efficient. And what that all means, how you all do it, I don't know. But this is not, again, this is not about layoffs and it's not just about, agents, this is just how we're building software today. We're building it radically more efficient. And honestly, the toughest thing, the most honest thing I can tell you for 2026 is if you go into 2026 and you still have folks on your team, and I still see this at startups, and you want them to double next year and they need to triple their team, move on from that executive. If they want to double next year and they need to increase their team 50%, sounds good to me. Okay. I'm still in too many conversations where the excuses I hear from CROs, from CPOs, from CMOs is I just don't have enough headcount. Like, these are companies that are not that efficient. They're not running out of money. They're not that efficient. And why aren't you growing quicker? Well, I need another 100 people. I need another 200 people. I need another 40 product managers and another, another 30 people on the marketing team. Just kindly thank them, give them a package and move on for them. It's not the wor— that is the past. They're still living in the past. So my summary, and then we will break. The growth is there. Gartner says it's going to be record software spend next year, almost record total IT, record software spend and reacceleration. It's going 50% faster next year, software spend. That is an epic amount of dollars to go capture. Hundreds of billions of dollars going into software. There's hundreds of billions of new revenue. Can't you get a little bit of $100 billion? Just, you don't need all $100 billion. You just need like some millions. It really is a rounding error. You could earn it. So the dollars are there. This should have— this is the best of times, but not, not for, not for all of us. It was the best of times for almost everybody in 2020 and 2021. Almost everybody. It really was. You just needed a CRM, a call center. I got a support desk, an e-signature tool, and you were a genius. It's only for the AI beneficiaries. So guys, in 2026, be one. Thank you.

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