SaaStr APAC AMA with Jason Lemkin, SaaStr CEO

Well, look, it was interesting, especially that last VC panel we had was really great.

It was really high-powered.

And it was interesting how critical the team was from GGV and Vertex and others of some of that being behind. I do think it's true. I don't know if that's the question you're asking, right? Having said that, I may be drawing— it's tough to draw analogies. You have to be careful about drawing analogies from different cultures and different communities. Again, when I started investing in Euro to US companies in 2013, 2014, 2015, people said a lot of the same things. That the teams were not driven, they didn't have big enough exits, they didn't have CEOs to look up to. It might have been different in that I think the engineering cultures in some ways in software were more mature.

But there weren't the tons of startups in Europe like there were in the US.

But what I found is the best CEOs find a way. The best CEOs would blend the best of the US and the West with Europe, and typically they would end up with hybrid teams. Back in the day, the CEO, one of the co-founders, and some of the VPs would often be in the Bay Area, and they would leave a lot of core engineering in Europe, right? I'm not saying that APAC and Asia is the same model, but I don't see any reason it can't be. And in fact, I think In some ways, I think things should be easier today because we're all running distributed teams. We're all running— we don't— we're all used to it now. And yeah, it's hard. And I was talking with a great VP of Sales just before this, saying how hard it was to recruit from Asia. Well, let me tell you, it's hard to recruit in the US. It's hard to recruit in the Bay Area. It's hard to recruit in Palo Alto. It's always hard. But at least if you build something amazing, you may be able to convince someone anywhere across the world to join you. And I'll tell you, in 20— Before COVID before March 2020, there was 0% chance a great CEO— okay, what, less than 1% chance a great CEO in Singapore could convince a US VP of Sales to join them. They just wouldn't do it. They'd be like, I'm an— that's a death sentence. I need to be sitting 5 feet from my CEO. I need to be in the office with her. The dumbest thing in the world as a VP of Sales would be to join, to be the, the, the, to join somewhere where I'm not 5 feet That world has changed. I'm not saying it's easy to get her or him to join you, but I think people underestimate how powerful it is that we're all running distributed teams. And that should be an asset to anyone there. Not easy. Not easy. No one wants to join something growing slowly in a boring space. That's always a tough sell. But I don't see why it's not better. And I don't see why over time that Europe to US thing just can't be reproduced. And you find a way. VC stories can be really annoying, but you do hear certain truisms of the best, which is they relentlessly recruit. The best CEOs recruit 20 to 30% of the time, constantly. 20 to 30— if you're not spending 20 to 30% of your time as a CEO recruiting after a million or two in revenue, you're not getting the job done. Like, it's that hard. You gotta be interviewing 30, 40, 50 people for every position. You gotta have in-house recruiters, external recruiters, right-hand recruiters, left-hand recruiters. You gotta be networking with everyone in the world. You gotta be asking everyone Great, you meet, you happen to know anyone free? Do you know anyone great? I'm looking for a VP of sales. I'm looking for a director of customer service. Do you know anyone? Constantly, every hour, all the time, every Zoom, every meeting. You should have asked 40 people here if they know anyone great looking. And even if you come up short, that's just part of the job. So a rambly answer to say, I don't— yeah, it clearly the talent pools here are more limited than in the US and more limited, but I don't see why in this world you You can't build a world-beating team from anywhere with a certain amount of density. You need a certain amount. It really helps to have a certain amount of founder density. I do think it's hard to build a successful SaaS company if you're in a geo where you know no one, where there's no one like you, right? Um, I mean, personally, like, I mean, I mostly live in the Bay Area, which is the best, but for family reasons during COVID I spent about half the time in Orange County, which is in Southern California near LA, but a different environment where there's no tech. It is the lamest community for technology I've ever, it's beautiful, it's on the beach, there's Laguna Beach, the waves are nice, the sky is shining, but I, and it was uninspiring in tech, right, to know no one, right? The CMO of Calendly just moved there by coincidence, so I now have one friend, the ex-CMO of Calendly, that's it. But no one else, it's all just real estate people, surfers, retirees, somewhat wealthy people. It's unclear how they make their money. And, uh, you know, that makes the restaurants fun, but it's not inspiring. But if you have enough critical mass, if you have a Miami or an Atlanta, or I think a Singapore, although I'm not sure, I'm learning, um, and I don't see any reason, any reason at all why from Bangalore or others you can't build a world-beating company. I don't see any reason. I, other than time zones, I don't see any, any reason. I know I don't see why it can't be done from Tokyo. I don't see why it can't be done. That's just me though. Anybody else have, can I help with a question?

Hey Jason, I have a question. First of all, I just wanna say that I followed your journey for a very long time. So when Sester APEC was here, and I've been telling everybody I'm here on my own payroll. I'm not on my company's payroll. So Oliver Price, I purchased it myself and I just said, and I don't want to be on my company's payroll so I don't have to own them leads or anything, right? I just wanna come here and learn. So that's it. I'm going to grab a photo with you later on, but I have two questions. So number one, how did the idea of Sester APEC came about and why Singapore? So I'm born and bred in Singapore. I would love to know why you chose Singapore and how did this APEC planning came about? And secondly, what do you think based on your understanding of APEC, what do you think is something good that we have that we should double down?

Yes.

And what do you think is something that can be improved? And I know it's a tricky question because APEC is so diverse, but I would just love to hear your thoughts.

Well, look, the first one, I mean, not to spend too much time on, on nichey things, why APAC? We wanted to do it in 2020. COVID set us back and we had to focus on, when we came back, on US and Europe. I mean, look, the, the, you, you can't— everyone needs to be cognizant of SaaS buying patterns, right? You know, the majority of SaaS spend is in North America. The majority. Europe is number 2. It should be equal by GDP across the world, but it just isn't.

It just is—

it doesn't make any sense to me at some level. I mean, we all run in the cloud. Spend to me should be proportionate to GDP or something, but it simply isn't, right? It's a maturity. And the average enterprise company in the US has over 400 B2B apps, and the average SMB has over 100. It's just a level of maturity that I'm not sure we have in other markets. I know we don't. So I kind of got a little distracted in your answer, but nevertheless, APAC for B2B is the distant number 3. Okay, for most. There are exceptions. It's usually you start off, most folks start off in North America typically. Then these folks in Britain and Australia speak English, so they start buying your product if it doesn't have regulatory or border issues. So you start getting a little traction. Especially, you know, Britain is still the largest market for software in Europe, so you get a little bit going and maybe you get a little more traction in France, and all of a sudden it's 10% of your revenue or 15% of your revenue. So actually I think most folks wait too long to have an EMEA office. You at least want to do it by the time you have a couple million in revenue to service those customers, right? But then think about it, how long does it take to get a couple million in revenue in APAC for a North American-centric company? You might have to get to, I was thinking about this outside, you might have to get to $50 million in revenue until you naturally have a couple million of revenue coming in through APAC, unless you force it, right? Unless you make it happen. So, but anyhow, you know, so it's a distant 3, but obviously it's the number 3, and so we wanted to do it for a while. We picked Singapore because it's the easiest. I've been here. I knew parts of Singapore. Most of the team had never been to Asia, and while most, much more of Saastr is based in India, We had to pick somewhere, and this stuff's hard to do with a team of 10. So we picked something that I thought people would think was fun and that logistically we could pull off. And it also helped— it would have been fine in Bangalore, probably, but even though Singapore itself is not a huge market, you do want the VCs here, right? We had so many of the best VCs here, from Sequoia to Bessemer to Lightspeed. To Capital B, to on and on. And there's just so many that are either in Singapore or frequently coming that that makes it easier than trying to cajole people, right?

So hopefully that answers both the questions.

The second one, what about the— what, based on the interaction with people here, what do you think we are really good at that we should double down? And what do you think there are things that maybe Our culture-wise, we need to improve to kind of catch up to our better counterparts.

Well, listen, I'm going to say something kind of crazy, okay? So forgive me. We're among friends, right?

Okay.

So this is very different than when we're in Paris or Barcelona or London where we do events, right? Honestly, I could be in San Jose, California right now. Now we are indoors, so I don't know, there's no windows.

We usually have better natural light at our venues.

But I know this sounds crazy, but I can't tell. When I'm in the Bay Area, I see Bessemer, I see Excel. Who did I see today? I saw Bessemer, Excel, I see Sequoia. I saw Bessemer, Excel, and Sequoia today, right? You know, it's very different, and I don't mean to make any to compare different cultures, but the Bay Area is probably— the South Bay where we are, it's probably 20%, 30% Asian-American of all different types. If I was in the San Jose Convention Center where the SAS training in 2019, it looked a lot like this. Everyone here is speaking English, right? It's a huge advantage in SAS to be a native English speaker, right? Everyone has different degrees of fluency in English. I'm just being specific. I know this sounds silly, but I don't see a lot— to challenge everybody, I don't see a lot of gates to success here. It doesn't feel— I don't— the quality of entrepreneurs I've met is very similar to the $1 million, $2 million, $5 million, $10 million ARR folks I meet in the US. The capital markets are much smaller, but the same names are here. The checkbooks are here. If you break out, you can raise capital here. Is it harder than being in the Bay Area? Sure, but it just— The one thing I can tell you, if it's helpful, is it doesn't feel very different here. It felt very different being in Barcelona last summer for SaaS Europa when everyone's partying and the tech community is very small. I mean, I love Barcelona. I've been many times. But boy, it feels familiar. So take it as a challenge to not have any excuses. Go find those people. Go find those customers. People buy products over the internet today. You gotta visit your customers in person, but people buy over Zoom. People want best of breed software. And again, not to accidentally have any cultural malapropisms, but all the top US tech companies are run by Asian Americans or Indian Americans, all of them, right? Are there any that aren't? AMD, Microsoft, Google, who am I missing? Like, I just think we are, there is no, I know it's not the same, But I just don't feel like anyone should feel there's any barriers to global dominance here. I don't personally see them. I haven't been doing this for a long time. I don't feel it. I don't see it. And it feels to me— again, I feel like I could be in a US tech community right here. It wouldn't feel any different.

All right, thank you so much for that.

Hi, Jason.

Hi.

Looking at your own Saastr's marketing strategy, what's top of mind for you this year?

For Saastr itself? Yeah. Do you mean that we have a strategy?

I don't know.

You tell me.

Strategy. Well, boy, that's an awfully niche topic. But if you're curious, right, as I guess as a stakeholder in the community, I mean, I don't know that we have a— we don't really have a marketing strategy or even a marketing team. The goal for, you know, community actually is an area that's much more of interest to people today, right? Building community around their products, building a community, it's become a marketing buzzword and hotspot. How can I build a community, right? And Saastr is an early example of a successful organic community, so it is interesting for marketers. So the way I think about community is, and a lot of folks that have developer-centric products think a lot about community too, right? Your community of developers. Is job number 1, 2, and 3 is to add value to your community each year. A community will either organically grow because you will network with each other, you will go home and bring someone else next year, you will bring 2 people, you will be 3 people, you will share SaaStr content in your Slack or by email, and it will naturally grow if you nurture it, or it will slowly degrade over time, right?

We've all seen communities or a random Facebook group that we don't check in on anymore, it just wasn't viable, right?

This marketing strategy is each year to add at least one significant piece of value to the community and one number, minor but important piece of value for the community. So probab— this might count as our number 2. Like, this is not— this is important enough, right? And that if we can make APAC really big, that would be a contribution to the community, right?

That would be a number 2.

In terms of number 1, the most important thing, and we're a little bit behind on it, although I guess it's only February, is we have a bunch of ideas about how to radically improve CEO and VP matchmaking, and CEO and VC matchmaking, and we do a bunch of it at SaaStr Annual, and we do a little bit at Europa, and we know how to do this programmatically. I just need to hire one other person to help me, but hopefully by the summer, we'll be able to do a much better job matching VPs passively to CEOs and matching VCs to CEOs. And I think for folks in a distributed world or folks that are all across the world, I think it'll be even more helpful than folks that can bump into people on the street. So those are kind of the goals. And then in terms of strat— boy, that's as far as strategy gets. But ultimately, If you really want too much niche insights, I think if SaaStr grows about 70% bigger, and it depends what metric you use to measure it, then we kinda enter the stratosphere because SaaStr is like, it is a huge deal for founders and executives. It's where Eric Wan learned SaaS and Stewart Butterfield learned SaaS. That's why we get so many great speakers because They were part of SaaStr so early on. But it's still elective, right? Being part of SaaStr is a special community. People opt in, right? In terms of the kind of value that we want to add, having the feeling that if you're at, that you have to be part of SaaStr, if not as a founder, as an executive. If Salesforce people feel like they have to be there, Oracle. I know it sounds silly, but we want to be something that every part of the ecosystem wants to connect with founders. And we're getting there, but we're still kind of an elective opt-in community events and things. We're not mandatory, and that's kind of the goofy goal, but for everyone to feel like some part of SaaStr they have to be a part of. Like, not maybe the way the folks in this room are, but anyhow, that may be too much information for you, but that's kind of the ultimate, the ultimate goal.

Awesome, thank you.

Thanks.

Hey, Jason. Big fan.

Thank you.

Thanks for coming.

The question I have is slightly on product growth area. So we have— we are a SaaS business. We have customers in about 80, 90 countries. And number one question—

That's most of them. Yeah, 80, 90.

Yeah.

No, as in—

All across the world.

Yes. But these are mostly English-speaking countries. And we have lots of requests coming in from— non-native English-speaking countries in terms of localization. And we've been putting that off because it's not just localization of the product itself, but it's also content and marketing. And it looks like a big effort to commit to more languages and more resources.

[SPEAKING HINDI] But yeah, I get it.

I understand.

Yeah.

So my question would be, what have you typically seen in terms of companies are like $1 million, $5 million, like in terms of ARR.

Yes.

Where do you see companies committing more to like specific locales, specific languages when it comes to growth?

Well, I'm shocked. I'm shocked. I do ask a lot of CEOs that I—

I don't do that many CEO interviews, but I do ask them. And I found that I'm shocked how late a lot of SaaS companies localize at all levels.

Back in the day when I was running Adobe Sign, EchoSign, and we were competing with DocuSign, we fully— and it was a pain, right? It was full— we fully localized the 2-byte app all across every piece of it in every language under the world. And we did it around $3 to $4 million in revenue. And the reason we did it, I had to push the team to do it as a CEO.

The team didn't want to do it. They didn't see it.

But when I started meeting with our top customer, when I start—

we had a lot of tech customers back in the day. So we had Facebook and Groupon and Google. And Twitter, and their sales teams were using us back in the day. And they said, I'm sending contracts to India, I'm, or maybe not India, I'm sending contracts to France, I'm sending contracts to Germany, I'm sending contracts to Korea, and it would be great if all of the interface was localized, okay? And we quickly realized we could win tons of deals in tech if we did this. So I forced the team to do it, and then we went on a run where we won like every sales team that was tech-focused that had a global sales force. We just won every deal.

So I thought that's what everybody should do sometimes around $3, $4, $5 million. Now I realize folks are waiting until $100 million sometimes to do it.

And I'm shocked.

I'm shocked because, listen, I know a lot of folks miss— they don't architect their apps in the early days to be localized.

And it's a lot of work. But it's also sort of well understood. And there are tools and niche tools and platforms to do it. And it doesn't have to be perfect. You know, you can outsource all the translations in the libraries and how it all works, and you can start off with something that's like 85% and not perfect, and that won't let you compete with the native vendor, but it might be enough for you to do what you want to do, and you can make it incrementally better. And then we hired a small team that did it, of 3 in the beginning, and their job was just to continue this process forever, right? We had like a designer, an engineer, and then like sort of a PM, and just every, every release they had to improve this process.

And we archi—

even though we didn't architect it initially, it then became abstracted away from our other release process so we could continually improve every piece of it. And it was just a winner. So I don't know if those stories are helpful, but I think we wait too—

I think we wait too— there's a whole bunch of things that we wait to do. We wait too long to enterprise our apps. We wait too— we've got Vanta here. We wait too long to do SOC compliance, we wait too long to do HIPAA compliance, and we look back and we're like, "The team was whiny, but why didn't we— we lost 4 deals for not being SOC compliant." It was like we had to do the work anyway, and I think for a lot of us we'll find that localization, we're like, "Ugh." Like, you know, yeah, it's a pain and everything's a pain, but you know, we just wasted our life not doing it earlier. So I don't know, those are the best learnings I have, and I— I'm shocked how many folks wait so long today and look back, and they're like, it just gets harder. So if you can do it in single-digit millions, I think that's my challenge.

Try to fully localize your app in single-digit millions. OK.

Thanks a lot.

Hi, Jason.

Hi, Jason.

Thanks for coming.

Pleasure. I like that about you. Thanks for coming. So I'd also put a note on my LinkedIn saying that if you have to truly learn customer success, this is what— thank your customer, thank your community. Okay, my question, uh, Jason, is, uh, what are the top 3 SaaS metrics? I mean, we've been speaking about North Star metric, etc., but what according to you are going to be the top 3 metrics? Do you see that, you know, the SaaS metrics also evolve in the times to come and there is a shift in, say, from NRR or CAC, LTV by CAC, etc., to a different metric, what is your, you know, guess or vision or futuristic outlook?

There's too many metrics. The internet is too many people talking about too many metrics.

What according to you could be the top—

How quickly do you— how quickly can you grow and how efficiently? That's all that matters.

Okay.

Right? Now, nothing else matters. It doesn't matter what your CAC— like, if your CAC is terrible and you're profitable, who cares? Like, I mean, we could dig into the weeds, right? There are companies with great CACs that are burning millions per month.

They're measuring CAC wrong.

They have too many people. There are folks with miserable CAC, but they're not blending their viral and free customers, and so actually it's fine, right? All these sub— they're all— All these submetrics are great, CAC, CLTV, blah, blah, blah, blah, blah, but really what matters is can you grow quickly, efficiently? And there are different ways to get there. There are folks that do it with a very limited sales team, like Atlassian back in the day, right? There are folks that do it with relatively lean product teams. There are folks like, and that's really what Zoom did. Zoom is a great team, but had a relatively tight, small engineering team. And a viral app. So Zoom was profitable almost from day one. Okay? There's others like ZoomInfo, which we talked about earlier. What Henry did, who's great, is he was scrappy. He just did everything less. 20% less in product, 20% less in sales, 20% less in marketing. Not perfect, and he's selling data, so it helps, but if you spend 20% less than average, like, you're gonna be— that's what matters. And I remember I interviewed Ben Chestnut at SaaStr Annuals here from Mailchimp, which was bootstrapped. I asked him what his CAC was and his NRR, he didn't know. It's the funniest thing, go watch this session. I asked him all the acronyms. I asked him who his, you know, he didn't know any of this. He's running, he got this company all the way to a billion in revenue. He didn't know any of these things, right? He didn't know who his ICP was. He didn't know any, 'cause it didn't matter. He didn't even know his NRR. He looked at the top line and the bottom line. It's an extreme example, right? So I illustrate that by saying, look, all these metrics matter, okay? Especially for managing your team and for managing departments. But don't get lost in the religion of them like they're going to solve your problems, right? You can go amok by— you can run out of money with a great CAC, right? Okay, now having said all that, as you scale, assuming you have a good team, And assuming you have product market fit, what we all learn as we scale as leaders, as founders, is the only one that matters is top tier NRR. It solves for everything else, top tier NRR. You have other issues to deal with on a daily or weekly basis. If your NRR is not top 25%, invest in it, figure out what's wrong, figure out what your product is missing, figure out why it's not expanding enough, figure out what's going on. We can't all be in the top 1% or 10%. But be worried. And another great session from SaaStr Annual this September, if you want to watch it, I did it with the founders of HubSpot, Brian Halligan and Dharmesh Shah. And HubSpot had horrific NRR for a long time. It was 75% at $30 million in revenue. Horrific. Horrific. And eventually they got it up to 100% and then finally to 110% after the IPO. And it was always their north star. They knew it wasn't good enough. They had product market fit. And the point for the learning from HubSpot, it's not that we can't— tolerate some mediocre metrics for a while, but you have to have this plan to get them up. They knew that for the type of SMBs they were selling to, it was gonna be a while to get to 100%, but it was always their goal. So this is, the thing is SaaS is not really that interesting without 100% NRR from SMBs and like 120% from the enterprise. 'Cause you can kinda sleepwalk. I mean, not literally, but it's what makes the business model work.

Is that the revenue recurs, right?

So it just, and every startup I've worked with that doesn't have top quartile NRR, it just, sometimes you don't know in the early days, right? But it just gets hard after $10 or $20 million in revenue. It just gets too hard and they slow down and they get bogged down. And so that's why I think most founders will tell you it's the magical metric, right? Is the NRR. But know your comp set, know your peer set, know who you're— we're not all Snowflake, right? We're not— you can't compare yourself to some random Morgan Stanley or Goldman Sachs. Understand your peer set and who they are and what top quartile is and force the team to build the software and build the customer success team to achieve it. Thank you.

Thank you. Hi, Jason.

Hi.

My question is, so there are some successful bootstrap companies like Zoho, Atlassian, and Ahrefs who are here. And I want to understand, as a bootstrap founder myself, what about the startups, bootstrap startups who have not done so well, and what are they missing out, or what are they not doing well? To become so successful as the other successful bootstrap companies?

What are the good bootstraps doing versus the less successful ones?

Yeah.

Well, look, first of all, I really think this bootstrap versus venture-backed thing, it is an important line, right? Because capital helps, but I think it's almost misdiscussed, right? First of all, most startups At least for a while, cannot raise venture capital or only raise a little bit of seed funding. Two, outside of the Ben Chestnuts of the world and Atlassians or Zohos, it's rarely a choice. People talk about bootstrapping like a lifestyle choice. Sequoia offered me $100 million, but I decided to bootstrap. Like, it's not really that. Very few people turn down $10 million or $20 million to bootstrap. I do know a few. And I get it, and they're very purposeful and intentional, but usually it's just bootstrapping is forced on us. And I remember we asked Michael Cannon-Brookes from Atlassian at SaaStr Annual way back, I think in 2017, what he thinks about bootstrapping versus venture-backed. And his point was, "Look, when we started in 2000, the world was pretty slow. I don't think it would work today." I think Ben Chestnut said the same thing from Mailchimp when I asked. And so a lot of folks either were forced to bootstrap and they often, and the ones that were successful often started in categories where there was time. There was time. And again, not to use my own category, but in e-signatures when it was just us and DocuSign, shit, it was 4 years until there was $10 million of revenue in the category. So it sucked those 4 years, but we had time. We had time. It was kind of slow. We had time to do it. Other categories, if you want to compete with Figma or Notion, Dude, you don't have time. You can't make a product that's an eighth as good as Notion or Zoom. There's no, there's no time, is there? So it's very context sensitive. Um, so I know I'm giving you a lot of data, and then let me tell you what I've learned. And this is where I think the Atlassian, Qualtrics, and others are interesting. Um, is somewhere between $10 and $20 million in revenue, depending on your sales motion, the models converge. The models converge. So if you have $20 million in revenue and you're bootstrapped and you're willing to spend all $20, right, you can basically hire as many people as a venture-backed startup can. Now you may be stingier and you may not throw money away, but basically you end up with $20 million a year to invest at $20 million, right, if you're bootstrapped. Most venture-backed companies can't, you know, yeah, maybe they burn a little bit more, but you end up having the same amount to spend on the team on marketing and it normalizes, right? So, the most successful bootstrap companies find a way to get to $10 to $20 million and then, then they become as competitive as the funded ones. Then they become, but they're often not. They have to get to that $10 to $20 million, you often have to be in a less competitive category or a quirky category or a category that stays longer to survive. And if you bootstrap in an ultra-dynamic category, man, it's tough. Right. It can, it can. It's tough, right? There are examples. So you got it in every— founders got it. You got to, you got to pick your battles in the early days and you have to find categories where you can win. You have to find— I talk a lot about how you have to build a 10x feature to beat a company. You can't beat Notion today, but you might do one thing Notion does 10 times better than Notion does to beat them or Figma or whomever you want to pick here or Asana. One thing you could be 10x better, but you might also need a business model that supports that, right? And a space that is evolving just slowly enough that bootstrapping works. And bootstrapping in a hyper— you better tilt to a space that people are overlooking. Maybe a vertical in your industry, right? Or a segment of your industry that they're overlooking, or maybe all the energy's in tech, or you could do what Monday did, right? Not that Monday was bootstrapped. Monday was like, hey, we'll do normal people. For project management. We're not going to, we're not going to compete with— and to some extent, ClickUp bootstrapped to $25 million the same way. They both came into collaboration and said, we're not going to sell to tech so much, especially Monday. We're going to sell to ordinary businesses. And it was harder, but it also meant they didn't need to compete with all the tech leaders, right? It's another way to do it. So hopefully that's helpful.

Thank you.

Yeah.

Yeah. Go ahead. Oh, well, whoever first.

We'll go one, two.

OK. OK, hey, Jason. So my question is, while we are doing Braindates today— so excellent forum— but what I realize, talking about SaaS metrics and revenue booking, so there are various ways in which different companies calculate or compute the formulas they use for particular— For bookings? Sorry, for revenue booking, because there are multiple elements. They can be one-time. There can be customization, there can be, there can be multiple, you know.

I'm hearing your question, there's a reason I'm frowning, but keep going.

So, okay, and the other thing is, so one is on the revenue booking.

There's only one way to measure GAAP revenue though.

Though, okay.

GAAP, Generally Accepted Accounting Principles, one way. How much revenue came in this month that I'm allowed to recognize that came in this month?

The further you go away from GAAP The more fracked up your business is going to be.

Now, when you come out of a Microsoft or an Adobe where I briefly worked or others, there's a lot of reasons they move away from GAAP financials. Okay. I can tell you a funny story in a minute, but don't listen to those numbers. How, how, like all that really matters is how much did your ARR grow or your MRR grow?

Nothing.

Everything else is a subordinate metric, but, but keep going.

Right.

Yeah.

The question is what all should go into that MRR because, you know, we have revenue. Yeah, revenue, but what does that—

All of it.

All of it. OK, what about customization? What about one-time? Do we spread it in 3 months? Do we spread it in 36 months?

That's a different question.

Yeah.

Let me slow down. All revenue— let me simplify all this kookiness. All your revenue should go into your revenue. Your number one metric each month should be revenue.

That's right.

And your revenue should have all your revenue.

And if all of your revenue is not software or recurring, You build a stack chart or a pie chart and you segment it. 70% of our—

do what's—

take a look at Shopify and we summarize it on SaaStr. Shopify is like 30% of its revenue is from SaaS, like 60% is from payments and 10% is from other stuff. So Shopify says, hey, we're doing $4 billion or whatever they're at and here's our chart and here's how to segment our business. Right? Where we got into trouble in 2021 was when fintechs and others would claim a lot of 10% or 20% gross margin revenue was software revenue at 80% margin. They would obscure these things. Just break it down.

Just forget about recurring revenue. Just start with revenue like we have since the Middle Ages. Okay?

Revenue. What's your—

and get first— start with first principles, which is get your revenue right each month, your actual revenue.

Revenue. Two, If you're not sure what to spread out and what not to spread out, you don't have enough financial help. You need a part-time controller or someone with experience with recurring and non-recurring revenue. So they have the answer. It's not discretionary how you do it. Generally speaking, if you sign a 12-month software contract, you have to recognize a 12th of it each month. In terms of professional services, there's like slightly different approaches. Sometimes you do it ratably over—

and it's changed the last couple years—

sometimes ratably over the course of the contract. Sometimes you have to recognize it when the services are delivered, and sometimes it's upfront. But your financial person comes up with a policy and you stick with it. You don't change it to make the quarter. You don't change it to make the VC that looks good. You start with revenue and a consistent way, and you segment it honestly in a consistent way to approach it. That's the real answer. Okay. And then the further you start talking about things like bookings, the more you're getting into trouble. Okay? The more, I want credit for a 4-year deal. I want credit for all this stuff up front. I want credit for a pilot that may or may not happen. That's a bookings. You can do that if you want, but that's a big company construct that gets small companies in a lot of trouble. What matters in small companies is cash, and then cash, and then revenue, and then all the rest, right? So just don't go too far from it, right? I mean, I'll give you the last example. Like, after my, you know, my— after EchoSign, my old startup, was acquired by Adobe, Adobe used their processes on us. And they said, forget about— I only paid my reps on ARR, on new ARR, net new ARR, and I paid them a lot of money. Adobe said, hey, we'll pay you a full commission on all bookings, whether there's any cash or not.

And so immediately—

and they also said discount as much as you like. So the reps immediately went out and discounted every deal 50% and did a 4-year deal that was cancelable at any time.

They made so much money.

They made so much money. Their bookings were so high and our ARR fell in half.

You couldn't stop them.

The incentive system. But boy, the bookings. We hit the bookings plan. You know, we gotta, we wanna go, we gotta do 5, 10 million in bookings this quarter. And so yeah, hey, what if you sign a 20-year cancelable contract for an 80% discount? They didn't do that, but they did for these 3 to 4 year deals left.

They were fake.

They weren't lies, they weren't fraud, they weren't FTX. But this is what happens when bookings corrupt got too abstracted away from revenue, right? A true story. So hopefully that's a little bit helpful. Start with revenue and segment it and be honest about the different categories and just get a controller or someone with real— the key is with real B2B SaaS experience to just decide how to recognize these categories. Absolutely right. And then the last point is just as a founder, you just have to decide, are you gonna compensate all these categories of revenue the same or not? Right? And if most of the revenue is recurring, don't worry about it. Just don't— you gotta keep sales plans simple. The more complicated you make a comp plan, the more people are just— you're gonna have those crazy stories like at Adobe. Like, the crazy stuff's gonna happen, right? So keep it simple.

Yeah. Sorry. Absolutely answered that question. In terms of SaaS matrix, because when I do benchmarking within the firm, I can continue to report the way I do. But when I benchmark and I try to see because same SaaS metrics somebody can do it monthly, somebody reports on a yearly basis, is there a—

Yearly?

That's pretty—

On an average, so I mean the way you compute LTV by CAC or LTV or gross margin, do you take only revenue or you multiply by gross margin? So if I search on net there are different answers for one single matrix, how do you compute it? Are we looking at some standardization somewhere down the line? Are we approaching that?

I think it's not as confusing as you think.

I think people are playing games or they have immature controls, but at the end of the day, top line growth and bottom line burn are all that matters, right?

Everything else is— how much of customer success should go into gross margin versus not going to gross margin? Like, yeah, you can play games there. People, you know, until recently people would put all of CS in basically sales or sometimes product and engineering or split it so that they would have like 75% or 80% gross margins.

Now we've gotten more nuanced and what a lot of companies do is they're like, okay, the piece of customer success that's long-term will go in product and engineering and the piece that's like upfront will go in COGS or vice versa.

But there's no FASB answer.

There's no perfect answer to this stuff. You just gotta be consistent.

Consistent.

Consistent.

Yeah.

Thanks, Jason. Thank you.

Hi, Jason. I was at one of the first Saastras in the Bay Area.

Oh, thanks for coming.

All those many years ago. 3 quick questions. I hope you can cover them all.

I'll try.

I'll try. Will you ever make it to Sydney? There's great things happening in the ecosystem in Sydney. It's really, really cranking. And I know—

It's just the language is tough. The accents are so thick, I sometimes I just don't know what they're talking about.

Actually, we're so international there these days, so it's—

There's Sydney.

But yeah, Sydney.

Number 1 is Sydney.

Question number 2, have you ever thought about a spin-off conference that's kind of a little bit more intimate? I think I went to some sessions today that were a little bit smaller.

Yep.

And they were really—

Intimate conference, question number 2.

Really great.

Nichey sassy questions. What's the third one?

Third one, a little bit left field. The Bay Area, particularly San Francisco, I've spent quite a bit of time there and I know it's had its challenges in terms of safety and other issues. What's— I haven't been there for a couple of years. I'm curious to know what's the sentiment and what's going on in San Francisco Mission.

So let's spend some time on the third one because I think I can be helpful.

Will we come to Sydney? Probably not. I mean, we have— the simple answer is like we have to pick one city for APAC. We can't do 50 Saastrs. Not only would it kill a team of 10, but it just dilutes everything. Once you get, like we've done 4 events in Miami, and we love Miami. I mostly do it 'cause I like Miami, right? And the last one we had the CEO of Salesloft, which was bought by $2.5 billion. We had the CEO of Brex, which was worth $12 billion, and we had the head of demand gen for Snowflake. So that's a pretty good lineup, right? But it's hard, and it's hard to get good speakers, and it's hard to get critical mass, And we're sat— we don't really want to do an event for 300 like in Miami. This is the smallest size event we want to do. So as soon as we start breaking things up and fracturing it, it's like you building too many features. We break. Everything breaks. The constituency—

for us, everyone's DNA is different. So we want to attract the best of the best. The best of the best want to go to Number One.

They want to go to SaaStr Annual. They want to go to SaaStr Europe.

Maybe we can make that happen in SaaS or AIPAC.

The best of the best don't go to number 2 or number 3 or number 4, right?

Even though it sounds good.

Long-winded way of saying, if critical mass was Sydney, notwithstanding the language barriers, I would go for sure. You've got great leaders there, right? But my guess is— Asia's complicated, but my guess is that we stick to Singapore and that that's all we can do, even though there's arguments for for other things.

But it could change, right?

But we'd have to move.

We'd have to pick one. We have to pick one center of excellence, I think.

The second one, the third one was SF.

The second one was intimate events. No, we won't do intimate events.

The reason is, first of all, lots of people do intimate events.

Every Sequoia does it, Best Summer, everyone here does intimate events.

People do dinners and they do curated small things. We're a community and we don't want to do intimate events. We will do the Brain Dates you saw here.

When you come back to the barrier at London, there we've really nailed it. We had 1,000 at Saastr Annual. We had an aircraft hangar worth of Brain Dates going for 3 days this year and we had them fully segmented.

They were all super high quality. They were screened.

They were awesome. So we can get some of the benefits of that intimacy in a large event, but we're not gonna do dinners for Write.

We're not a bespoke community. We want to be number 1 for $2 through $200 million in revenue. That's our goal. Number 1 for $2 through $200 million. But we will do this mentorship Braindate stuff.

You'll see tons of it. And we do weekly Workshop Wednesdays on the internet.

We took 1 week off. We do 52 a year of like 20 or 30, 40 people online. They're free.

They're awesome.

They're amazing speakers. But we won't do the steak things.

Not this team. Not this DNA.

In terms of San Fran, other people do it and they do it well, but no one can do this. It's another way to look at it is a lot of people can do get 20 founders together, but the skill set it takes.

SaaStr Annual will cost $12 million. SaaStr London will cost $5 million.

SaaStr Annual takes 18 months to plan. No one else, other people could do it, but no one else has the scale or the capabilities.

So we want to do what we're good at.

In terms of SF, like don't believe the Twitter. Don't believe the, if there's no other lesson you can get today, is like, there's like elements of truth of everything on Twitter, but everyone's biased, right?

Hopefully not me, but everyone's biased.

The San Francisco of 2019, we ran, we had a 40,000 square foot coworking space. Things were crazy. I couldn't walk one block without bumping into a public company CEO. The day before lockdown, I saw the president of Atlassian, the week before, the CEO of Twilio on the street. Those days are never coming back.

The other thing that's never coming back is that every B2B company had 500 sales reps in the Bay Area. They're never coming back. We're never renting 20 floors of SoMa.

SoMa, South of Market, where everyone had 20 floors, it's crickets. It is empty. Today because no one, no one's going back to having all of their SDRs in the Bay Area. It makes no sense. The genie's out of the bottle, right? They will have local offices.

And I think, I do think a lot of folks are coming to the conclusion junior sales folks benefit from the office.

A lot of folks believe that, but it will not be in San Francisco. But half the VCs and half the founders never left. and people are streaming back. And I think one thing, and what is interesting is that it may not be the folks from the Bay Area that are coming back. It's folks from the rest of the world that want critical mass. And I don't, I haven't, there's not a lot of APAC, Southeast Asian founders I've invested in, but I've invested in a ton of European founders.

And the time difference from the Bay Area to Europe is brutal as it is to here, right?

So I was just shocked that a lot of them never left, that all the Americans left when COVID hit from the Bay Area.

They all went, I'm going to go live with my parents in Ohio. They all scattered across the country.

The Europeans stuck it out.

They stuck it out when San Francisco was awful, when it was locked down, when it was even filthier than it is today. And I kept asking, why?

Why? You're French, you're German, you're— why are you staying? And they're like, There's no founder community like this, right? And it's still true today. So I think you can build a startup from anywhere. I'm not one of those people that says you can't, but there in B2B, it is— it will never be like 2019. So all the folks that say San Francisco isn't coming back, they're right in the sense that there will never be— no one will ever have 1,000 sales in San Francisco. But if you, if you can go anywhere and you have a generic B2B product, you don't have a reason to be in a certain geography. You don't have a reason to be in New York or LA or somewhere else.

You will never find the density of founders you find in the San Francisco. You'll never be challenged. You will never go to events and parties like you see there.

You will never see that. And you don't need it to win, but it's powerful when you have it. It is powerful. And so that's my— I think people get it wrong, but it is. Is it dirty?

Yes.

We had a— we had our SaaS office. Our smaller one, our original HQ, is in an old 19th century distillery. It has 20-foot ceilings and it's a corner office with natural light.

And it looks like it's out of a startup TV show, like beautiful whitewashed brick and everything you see in TV.

But it's at the outskirts of San Francisco.

It's in an area called the Design District, which sounds cool, but it's really barely in San Francisco, OK? And the reason we picked it is because I lived on the peninsula in Palo Alto, and it was also the closest place to San Francisco. So I could get there without blowing my brains out in a commute. March 2020 was at the outskirts of SFA, was vibrant. Okay, today there's no one left except Sensara, which IPO'd.

There's no— there, it's all gone. The core is strong, but the— these—

and so we let our office go. Like, we let our office go. So if you came to the Design District where the Saastr office was, which we moved out of just prior to this event, you'd be like, ah, San Francisco's dead. Like, why? It's dirty, it's not clean, it's weird, the restaurants are half closed. But go to 2nd and Howard or go to other hotspots of entrepreneurship and you'll see something that's—

it's— I miss it.

Like, I didn't miss it in 2021 and I didn't miss it in the second half of 2022. And I'm not sure I even missed it until our last couple times in the Bay Area. But it is just that there's something about density that it's been true since Rome and it's true today. So it's still special, but The old one's never coming back.

If that's helpful or not, that's the real vibe check in SF. Yes?

We're a B2B SaaS platform for higher education, and we want to connect professors using our software with the community. OK. And have you seen examples of other companies that have created a great community of either users or advocates or even what we're doing in SaaS? Because we keep looking around trying to find Oh, this is a great way to do it, or that's a great way to do it. We just haven't quite seen an example where I can say, great, this is the way.

I mean, look, everyone tries to take shortcuts in community and buy a piece of software and tell people to sign up for a website or join a circle or a Facebook group. That certainly doesn't seem to work, right? Or join our Slack channel that no one moderates.

You gotta go all in. I mean, look, the best— I don't know a great, the couple of examples that stand out, older companies, obviously Gainsight and HubSpot invested heavily there.

Gainsight, Nick believed in it from day one. Built, you know, he joined at a million in ARR as CEO and built a huge community around customer success very early. It was seen as a very strange strategy at the day, but it worked out very well for them, right? That's one you can look at. In terms of the more digital side, HubSpot did it from day one. They did it from day one from a content side, from all the rest, and they did it from inbound, which is a huge in-world community. And they haven't done all of the pieces, but I can't think of a public, non-developer-centric company that has invested as much as HubSpot is.

So, so the playbooks evolve, but it's at least one to think about, right? Um, and then again, and then I don't have all the perfect examples. And, and, and the third one that comes up, which, you know, I'm always—

community is an amorphous term and people claim they have more community than they do.

But if you have passionate users, I really think you can copy a lot of what Notion has done. And Notion is interesting because it took Notion 8 years to take off.

Notion seemed like an overnight success story around 2019 or 2020.

It was around for a while.

I don't know when it was founded, 2012. It took a long time, right?

And but, you know, what Notion calls community in some cases is just users, which is an issue.

But I would look at everything they claim as community and just try to copy as much as you can, right?

Those are the ones I know. You know, the one that I need to study for— sorry, I should have brought a drink. That I need to study more is, and I should do a, I'm gonna write it up on Saastr, I just keep forgetting, is there is the one, what's the LinkedIn for physicians that IPO'd?

And they're huge, they're worth billions and billions of dollars. That's all the physician community built on top of community.

No, no, no, no, okay, dude, you're dating yourself.

I should, I kept, it's on my list of 5 interesting learnings to write up.

But hold on, let's just look what it's called.

But they really did it. And I'm embarrassed. What's that?

Viva?

No, not Viva.

What's it called? It's called, it really should be, I'll read it up.

Doximity.

Let's see what Doximity's valuation is today.

Quiet IPO, barely burned any money at all. And today, they're worth— hold on. Well, $6.4 billion.

It's not bad. I mean, it's not $7 billion, but $6.44 billion is pretty good.

So actually, Doximity is on my list to study and track.

But that's another one that was—

Very intentional.

They wanted to build a LinkedIn for doctors. They connected, and people thought it was pretty weird in the early days, but they built this closed, regulated community, and it's worth $6.44 billion.

Doximity, D-O-X-I-M-I-T-Y. Yeah.

You'll learn something from the examples.

They're never perfect, but you can always learn something from them.

Yeah. Thank you.

Hey Jason, two questions. Oh, okay. I think the first one's answered. I was asking, I want to ask you what drink do you need? But the second one is, I mean, looking ahead, right? You know, you were talking about differentiation and so on. There's this whole idea of there's a platform shift, generative AI, and there's going to be like category creation. And I'm just going to ask you, what does a category-creating MVP look like in 2023?

Category creating MVP?

Yeah. Like, is it going to be— does it need to be monetizable or monetized from day one? Does it have to have— because it's not competitive, so you can't really have it 10x better. You could.

I think the whole term of category creation is a stupid VC-ism.

Okay.

VCs are trying to simplify investing landscape and look for patterns of success, and they're looking for folks that were category creators.

Right.

I don't know too many founders that decided on day zero they wanted to be category creators.

Mm-hmm.

They decided, hey, we need a LinkedIn for doctors, or we need to build enterprise customer success software like Gainsight, or I think this is a manufactured term. What about like— I think you have to be careful with manufactured terms that you take the right lessons from them, right?

Like Peter Thiel's Competing is for losers and things of that order.

Yeah, well, good for him.

So, you think it is one of his creation, like his and his folks?

Peter Thiel, you know, I mean competition is part of SaaS.

Right.

Yeah, so I don't think it's for losers. I do think there are— I do think being number one in your category, in most cases in SaaS, you get— you do get most of the economic benefits. There's no question. But I just don't think category creation— let me put it differently. I don't think category creation is a strategy. What great founders do is they see white space that is real, that will become big, that others do not see. That's not category creation. They see white space. They see a gap in the marketplace. That others, because they're too big, it's not worth their time, right? Or a market shift is happening that other people don't see. That's what great founders see. They have the personal experience, they work there, they know the problem, and they see something that to them is actually clearly there. It's fairly obvious and other people don't see it. So that's my one answer. The other thing is I don't think there's any such thing as an MVP in SaaS. Yeah, if you want to be a B2C guy, great. I hate that term too. I— the term I use, and I should— I used to talk about a lot in the early days of SaaStr, but you want a minimum sellable product, not viable product. MVP is a crappy, uh, pre-milestone on the way to the only milestone that matters, is a product a customer will buy. And if you stop for a V on a way to an S you may never monetize your product.

Right.

So what will it take to get the question in SaaS? And again, we don't— SaaS, we try to be a little bit early. We don't try to be too early stage. So maybe that's why I'm pushing back a little bit. But you got to get to 10 paying customers in most SaaS. There are examples of folks that build it off the back of free and freemium, and I've done a little bit of it.

But most of the question is, how are you going to get 10 paying customers, right?

Right. Okay.

Thank you.

Anybody else got a question or two?

We probably got about 10 more minutes or I don't know when they'll kick us out.

Yes.

Hi, Jason M. Lemkin. How are you doing?

Thanks for coming.

Very great first Sasha event in Singapore. So I have a question. So I read one of your articles about late-stage startup, especially B2B, and it seems like VC care more about rule of 40 and magic number rather than just growth in 2023. So can you share—

Sort of.

Yeah. Can you share some of these examples where a company used to grow at all cost, but then they kind of changed the way they operate and they be able to optimize their rule of 40 or magic numbers either savings or spending? I don't think any of that stuff's true.

Yeah, um, again, I think this is where Twitter does founders a disservice. I don't think VCs care about the rule of 40 per se. I don't think they can. What VCs want today, and they did not want in 2021, is they want very strong growth that's capital efficient. They want companies at a minimum burning less than their booking. Not that— I know we talked about bookings But if you're gonna go from 40 to 80 this year, um, and add 40, they want you to be burning 20, right? Um, and, and it's not really so much the rule of— rule of 40, like, it makes sense, but those metrics are really for public and very mature companies, right? They're still true, but rule of 40 kind of implies that mediocre growth is okay if you're profitable, and that's the disservice.

It's—

no VC is interested in mediocre growth that's profitable.

We started this early.

No one's interested in the rule of 30. We really— VCs want rule of 100.

Okay, that's true.

And, and so again, going back, we started this morning with kind of a venture AMA. It's bad advice to the internet. VCs do not want—

are not going to invest in slow-growing profitable companies for the most part, at least US.

There may be local investors that are okay with small outcomes, but It doesn't work. You've got to get from $1 or $2 million to $100 million or more in 7 to 10 years, and slow growth doesn't get you there. Rule of 40 doesn't get you to $100 million in revenue, right? And so, no one really wants that. It's just everyone wants growth, growth. I don't know what— I don't mean to ramble because I do get tired at the end of the day. It's a crappy, crappy, crappy, crappy, crappy, crappy time to raise a Series A, B, C, D, E, F, or G round.

It's a crappy time.

The growth markets are back. Folks are willing to invest now, but they're still mostly frozen because valuations are low and folks want capital-efficient companies. It's hard, right? It is hard. And it is— and people want folks— anyhow, ask that follow-up to the question because I want to make sure I fully answer it.

But I know— I think people take false comfort that slow growth and profitability is interesting to investors.

It's not necessarily a bad path. Like, if you can get—

and you talked about growth, right?

If you can get to even $10 million in ARR— I really just wrote this up the other day on LinkedIn, it had like 2,000 upvotes— you get to $10 million in ARR, let alone $20, and even be growing at 30% a year, and you don't quit for 10 years, you get pretty big. You don't get to—

you don't get to become GitLab or Zoom, but You can get to $100 million in revenue growing 30%, compounding, if you don't quit and you don't burn a lot of money, right?

30% to 40%.

But it's very hard to attract venture capital.

Yeah. And I guess to follow up, let's say a company is going to IPO, right?

Yes.

And they have great growth, but efficiency is not there.

Why are they going to IPO?

I mean, I'm just curious, what should we optimize?

Is it sales?

It's not even a choice. Here's the thing. Let me, let me, let me say, there's a lot of stuff, we can chat more about it. Let me just tell you, basically every, the reason that that's not gonna happen, I mean, there will be a few that IPO, right, like that, but they'll be destroyed in the public markets today. Basically everyone that has raised a large growth round in the last 2 years, their KPI is get to cash flow positive.

Exactly. They're all—

everyone— I have multiple investments I've made. I didn't invest in like a ton of crazy unicorns, but I have several that were a couple that raised north of a billion dollars in valuation with double digits, uh, millions in revenue. Okay, and hooray, they have a lot of money in the bank. None of them are ever planning to ever raise another dollar of capital. It's unavailable to them. They will never be able to raise in the current market ever again.

And so it—

there's no There's no efficiency. There's no rule of anything.

It's an allowance.

This is like the last allowance you get from your parents.

Here's the last $100.

This is all you're getting.

It's all— You got to make it— How can I make it last, Mom, Dad? How am I going to— It's not my problem, kid.

You're 18. This is your last allowance check and you're going to have to get to cash flow positive on the last check.

That's what's happening, right?

And And it just, there's a, and anyhow, you can ask one more follow-up if you want, 'cause I just wanna make sure, it is an important issue, but I just think this is, and folks to IPO, and listen, as we chatted about in the kickoff session, if multiples get higher, there will be less pressure on efficiency.

There'll be less pressure on the market, and the IPOs will change.

Folks that, the only folks that are gonna IPO for now in the next 12 to 15 months in SaaS are a handful of folks will be forced to IPO, and they may barely pull it off and have really crappy IPOs, or they'll be profitable or very efficient companies that no one else will IPO.

The ones in the middle will slug it out.

Thank you. Yeah.

Anyone else? We could probably do 2 more questions. I don't mean to keep people over. No? One last question? Hmm?

Hey, Jason. Yes? First of all, thank you for hosting this event.

Thank you for coming.

This is the last question.

Thank you.

Yeah.

And I'm Nikhil from trimpixel.com. My question is, there are things that people should do in this environment.

Yes.

But there are things that people would do. And for us as SaaS companies, I think it's more important to figure out what people would do and target that rather than what people should do.

Okay, I'm almost with you.

Right.

What's the question?

The question is, I would like you to sort of explain, given experience, I would like you to sort of just focus a bit on what people would do in these scenarios, given the habit of human nature, rather than what people should be doing. So that way, all of us here can sort of focus and cater to that, to our customers and prospective customers. Are you with me till now?

I'm almost, I know, but I'm going to try to be with you. I'm going to reframe the question so that I'm with you.

Thanks. I'm not very good at articulation, but thanks for that.

I think what many people are doing, I wrote this up a couple months ago and I should update it. Not that long ago, but too many folks are doing a strategic retreat. Too many folks are saying, "Woe is me. The world is terrible. I'm gonna batten down the hatches. I'm gonna not grow, but I'm gonna get to cash flow positive." There are times, I think most founders, I wrote an old SaaS to Post-Production Update called The Year of Hell.

Almost everyone has a terrible year. Not everyone, almost everyone has a terrible year.

Usually it's not actually tied to macroeconomics. It's tied to a phase transition, terrible hire in sales and revenue, a market change. My year of hell was not during a global meltdown. It was during a rough VP of sales transition. But people have it, and sometimes in a year of hell, you have to make a strategic retreat. You have to say, listen, I got to survive, so I got to take a couple quarters to get my act together.

Maybe move on from a few folks on the team that are destructive or not doing it.

I got to get my burn rate under control.

And that's fine, but you can't change the ultimate goal of building something big and real.

So you just got to be very careful what the strategic retreat is. You have to be very aware of going back to our kickoff session. What, what's my public comp?

If my public comp is ZoomInfo or Monday or Doximity or Cloudflare, why am I not growing at their rates? Because it's you, not them.

It's you. There's something wrong with you. But if you have a great team, you can fix it. We can build software. We're all building software. We can ship more code. We can't— we never get enough features. It's always too slow. It always takes too long.

It's always frustrating.

If you're a non-technical founder, it takes even longer. If you're a technical founder, they don't understand. They don't— they just don't understand. They never understand. And they're supposed to sell what I built.

A great team can always build. It's never too late for a great team in SaaS.

They can always build more software and catch back up to the market, but if you settle, if you settle in tougher times, I don't see those founders recovering. That's different than taking a quarter or two to get your house together.

It's not the same as settling.

Settling is saying, "I can never find a VP of sales." Settling is saying, "I'll grow at 30% forever." Settling is saying it's the VC's fault. Settling is saying they didn't give me more money. Settling is saying it's the macro environment, right? Settling is saying my competitor raised $400 billion. Well, Atlassian raised nothing. Well, Qualtrics raised nothing. Well, Zoho raised nothing. So, sure. But maybe, maybe it's—

what you need is a friggin' kick in the ass.

I've needed a kick in the ass from time to time. I go through, and maybe we can end with this story if it's helpful. I've invested in about 32 founders. About 4 don't like me. Now, I'm not cuddly, okay?

I'm not kumbaya, but I'm about the most honest and earnest person you're gonna find, okay?

I'm not trying to screw anybody over. I'm just trying to help. And of those 32 founders, 30 have gone through a year of hell. Okay? And usually, I'm the one that has to give the kick in the ass.

I'm the one that has to say, look, it's been a quarter, it's been two, time to, it's like, stop feeling sorry for yourself and go build some fucking software and go get on a plane and go sell something.

And the best founders do it. The best founders listen. Sometimes they get mad at me because no one else is honest. Everyone else is sucking up to them. Everyone else is scared of them. A couple founders hate me for it. They wanted to hear it's okay to quit.

They wanted to hear it's okay to settle for mediocre growth.

They wanted to hear that it's someone else's fault. They wanted to hear that it's too hard, that it's not my fault our market segment's too competitive, that our ACV is too low, that our churn is too high.

Like, it's not my fault our churn is too high.

But the best founders go and fix it. They go and fix it. And I'm not exactly sure how I got completely on this tangent at 6:05 PM. But in terms of should and would, if you ever had product market fit and you have a great team, you can get it again. If you ever had a time of good growth and you have a good team, you can get it again. If you ever, you can get it back. If you have a mediocre team, Once in a while mediocre teams get lightning in a bottle and they grow really quickly and then they fail. It does happen. It's more common in B2C than B2B, but it does happen. But usually if you want it badly enough and you have 100 happy customers, you can find another 100, and if you have 500 happy customers, you can find 500 more. Do you want it? And in tougher times, do you want it badly enough? And once in a while I'm the guy that has to kick them in the ass and tell them you gotta want it. And what I usually tell them is what my investors didn't tell me. I tell them, hey, you're at $22 million in revenue, or $6 million, you're at $6 million in revenue growing 70%. You're at $22 million in revenue and you have 1,000 happy customers. You wanna quit? You're just getting there. It's supposed to be a little bit hard. It's not as easy as 15 months ago, So what?

Cry me a river.

Go out and, you know, find another happy customer just like the one you have. Go out, find another one just like your biggest customer. And that's the— I may be screwing up your should versus would question, but if you've ever had a good run, go find it again.

Go find your groove again if you have a great team.

It's just some bits.

It's just some bits and bytes. And you know how to sell it and you know how to make customers happy. And get your mojo back and go do it. That, that's my should or would.

So anyhow, thanks everybody for coming. This was really great.

We really appreciate it.

Um, maybe we'll see you in London or the Bay Area this year, or we will, we'll, we'll be back for APAC next year. So thanks for being at the first one.

We really appreciate it.

Thank you.