In this interview, Jason M. Lemkin and the Sequoia‑affiliated chair of HubSpot discuss the recent volatility in the SaaS market. They agree that a SaaS recession did occur, likely ending in Q3 2024, and that the market has begun to rebound after a period of over‑buying during the pandemic. The conversation highlights how interest‑rate narratives (ZIRP) and excessive software purchases created a sharp correction, but the correction is now stabilising. Lemkin stresses that founders can no longer blame the macro‑environment for poor performance; internal execution and realistic growth expectations are now the key focus. The speakers then turn to practical advice for SaaS companies whose growth has fallen dramatically—from double‑digit growth in 2021 to the teens or lower today—offering meta‑strategic guidance on managing the downturn, reassessing go‑to‑market, and aligning expectations with the new market reality.
Chapters
But I just like to do a vibe check these days because it, I think the vibe has been so volatile the last 24 months since SaaS, right? A negative from folks thinking we're in the greatest downturn since the tulip crash to exuberance in AI. Like this just, it's a whiplash time. So you're, you've seen it all. You're chairman of HubSpot, you're at Sequoia, you're seeing an entirely different category, right? In clean tech. So are we, were we in a downturn? Are we in a downturn? What's the vibe check as we talk today?
SaaS was in a downturn. There was a SaaS recession. Yeah. And it start— I don't know when it started, but I think it ended in Q3. If you look at the SaaS companies' numbers, see it through Sequoia, see it through all my HubSpot dashboards where I see our customers, it felt like we came out of the recession in Q3 of 2024. And I also just think it's like the universe like slammed SaaS down and then splashed it way up. And then slammed it down again. Yeah. And it's flashing back up and it's like the sine wave that's working through. And I think the size of the sine wave will get down over time, but I think we're in a different place in Q4 of this year than we were in Q4 of last year economically. So people overbought, people had too many employees.
Yeah.
And the downgrades were high. The 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're just, one of the frustrating things, there's so many people 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, but if you're out there and you're listening and you get 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 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, 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? Any ideas for that tough position?
I'm worried about that whole cohort of companies that's $120 million in revenue growing 18% and raised a crazy round at a crazy, crazy price in 2021.
