Overbuying & Honesty: The Market's Harsh Truth

Name: Overbuying & Honesty: The Market's Harsh Truth
Uploaded: 2025-01-08T13:05:26+00:00
Duration: 35 s
Channel: Jason M. Lemkin
Description: In this brief conversation, Jason M. Lemkin and a speaker analyze the recent SaaS market dynamics following the pandemic. Lemkin attributes the recent…

8 Jan 2025 · 1 min

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In this brief conversation, Jason M. Lemkin and a speaker analyze the recent SaaS market dynamics following the pandemic. Lemkin attributes the recent slowdown to an overbuying cycle driven by zero‑interest‑rate policies (ZIRP), where companies purchased excessive software during the pandemic and are now cutting back, leading to a correction. He emphasizes that founders experiencing weak Q3 and Q4 results should not blame the market but instead be honest about their performance and recognize that the overbuying phase is largely over. The dialogue also notes that growth retention has begun to improve, with Q3 showing signs of loosening after tighter Q1‑Q2 periods, suggesting a tentative rebound.

growth retention for people were low and I think we're just getting back into a better spot.
That's what I think. It wasn't, they were just, one of the frustrating things, there's so many, like ZIRP, it's interest rates. I think people just bought too much during a generational pandemic. They bought too much software and so they dialed it back maybe too much because that's what we do and we're through that, right? We're through the overbuying cycle for the most part. I think it's that simple, isn't it? I think it's that simple. Yeah. And we're seeing it.
So, so if you're out there and you're listening and you got a shitty Q3 and Q4 is not looking good, it's not the market.
That's the message I try to say. You can't blame the market anymore. If you got a pass in 2022 or 2023, like you gotta be honest.
Yeah. Even Q1, Q2, I think we're still tighter. Q3, it finally loosened up. Yeah.
And look, this is a, this is, this may be a question where there's no good answer, but especially as you're looking at stuff in Sequoia, if someone isn't seeing any rebound at all now, and let's say growth is weak, let's say it was great in 2021. Okay. It was 100% and now it's 22%. Or what's your advice? Is there any advice? Not if it's fallen from 100 to 80, it's one thing, but if you have fallen far and look, there's a lot of companies north of $100 million in ARR where growth is in the teens now or lower. Right. Any meta advice that you see yourself or at Sequoia?