The Bar Has Gone Up in SaaS. The Era of HyperFunctional SaaS is Here.

I wanted to, I hope you guys were able to hear the last one last week. It was with Loren Padelford, who was CEO of Slice. I thought it was really great. It ended up being a very informal deep dive on sales and really just running a vertical SaaS company. He's CEO of Slice, which has crossed $100 million in revenue. So if you sell to small SMBs or vertical SaaS at all, watch the one from last week. It was pretty good. I've known Loren for a while. He used to head Shopify Plus, which was their enterprise division for years. And he's kinda like a student of revenue and scaling. So it was a good one. What I thought I would do this week, and I think next week we'll start bringing back some of the best guests from SaaStr Annual this year to do some of their sessions updated and live. But I thought I would do the same thing myself, which is I did an opener. Obviously, most of the folks that are here today or will watch later were not at SaaStr Annual. Come next year. Tickets will never be cheaper. They're like $549 today. So buy your tickets at sas-triangle.com. You can always get a refund if it doesn't fit, uh, if you can't make it. Um, but, uh, I did this opener on the new era of hyperfunctional SaaS, and I tried to synthesize all the things I've been thinking about and learning for the last year, from AI to what's going on in public multiples to, uh, why some SaaS companies that are unicorns are at $100, $250 million are not growing at all today, why so many folks are grouchy on LinkedIn. I don't know if anyone's noticed, but a lot of the revenue folks we know are really grouchy on LinkedIn. Like, what's going on? And there's a lot of things going on which I want to get to. But what I— it's not just AI and it's not— it's not that there's no money out there. If you look at Gartner or anyone, SaaS spending overall is accelerating. It's up 20% this year, which is more than last year. On both a percentage and, and of course an absolute basis. So it's not that there's not money out there, but, and it's not just AI. AI is great, but in B2B, sticking an AI on your website doesn't magically change a lot of business products. Um, you know, in fact, a lot of the public leaders aren't even all that AI. If we look at the SaaS IPOs we've had, there's only been 3 since 2021, only 3 IPOs All-time low, the 3 IPOs have been Klaviyo, which is marketing and more for e-commerce for Shopify. There's a little bit of AI there, but not all that much. There's OneStream, which is a great one. We'll do more on that. A pretty obscure one for CFOs that IPO'd just recently at $500 million in ARR, growing almost 40%. They said our CFOs are scared of AI. And there's Rubrik, which is a cybersecurity leader, which is partially fueled by AI. But if you actually listen to so many of the leaders in cybersecurity, AI is important, but it's not fueling a lot of their budget. For— in some cases it is, in some cases it is. But so what's, what's going on? And I thought all of it is just the bar. The last couple years have gone— has gone up radically. It's gone up radically. Buyers are expecting much more of products. AI is accelerating this. Buyers, for a variety of reasons, are probably over-indexing on budget, but they're— they want their platforms to do everything. They don't want 200-point solutions anymore. So the bar has just gone up on all of us. And I want to talk about how and why, because it's hard. Because as hard as we all had to work 2 years ago, we actually all have to work much harder today to earn the same dollar. And a lot of folks don't want to do that. A lot of folks kind of want to quit. A lot of folks complain about it. A lot of folks, but the truth is the bar goes up every 4 to 5 years. The world changes and the world is changing. We, you guys, we all have to either step up or step aside. And that, and, but I want to, rather than just talk about simple platitudes, I want to dig into what that means today. And then with whatever time we have left, we can ask questions. I'll stay on as long as, as Amelia and the team lets me. Okay, so let's, geez. So just to highlight, I put this together last month. It's still pretty accurate. But I did the one thing before we talk about hyperfunctional SaaS. I want to kick everybody in the arse who talking about a downturn. I can't attend one more meeting here, one more woe is me investor update, read one more LinkedIn post about how we're in this, the largest downturn since the 1700s in SaaS and cloud. We're not. In fact, I go on LinkedIn now and there's like, don't want to hear any more for that person. There's like a little function you can get. I do that one when I hear these Debbie Downers, because it's not that they're wrong. Listen, if you talk to any VC out there, they will tell you a third, a half of their investments that were growing at epic rates in 2021 are barely growing today, are barely growing today, but not all of them. And so I've talked about this a little before. I broke it into two sides just to simplify this for folks, and then we'll dig into more. Overall cloud spend still up 20%. Non-tech, and this is where it's confusing. Non-tech remains very, very strong. Toast up 29% at $1.5 billion in ARR. Restaurants are doing— there are a few challenges, inflation and others, but restaurants are doing pretty well. Monday.com, sort of workflow management, CRM, and more for non-tech folks. Over 70% of Monday's customers are not tech. They're selling to churches and normal businesses. They're growing 34% in a billion in AR, while Asana, which mostly sells to tech, if you see on the right, is only growing 10%. Okay. Shopify has reaccelerated. Shopify at almost $10 billion, over $8 billion AR, is growing 21%. That means it's adding $1.6 billion of new revenue per year. So if you're vaguely in that space and you're not growing, it's you. It's a you problem. How do they say this on TikTok? Help me out. It's a you thing. It's a, it's a whatever that, that slightly toxic phrase is. Because Shopify is adding $1.6 billion. Go grab a little bit. Klaviyo, Andrew Bilecki. We just put this up on YouTube and the SaaSter blog. CEO of Klaviyo. You might not know about Klaviyo, but Klaviyo is the number one partner in the Shopify ecosystem. They are the HubSpot of Shopify. They're at almost a billion in revenue, growing 35%, and The first question I asked Andrew when I interviewed him on stage a couple of weeks ago was, are we in a downturn? And he's a great guy, fairly seriously just laughed. He's like, there's no downturn in our space. So listen, Samsara, we're going to do a great podcast with the CEO soon. You know, SaaS for fleet management for trucks and more, growing 36% at $1.26 billion. So non-tech is strong. We know AI is strong. Is there a bubble? Yes. Does it matter? Who knows? But Google Cloud, Azure, GitLab benefiting just a little bit, on fire. And we talked about security compliance. There is no downturn in security compliance. Is there some pressure? Yes. But Zscaler, CrowdStrike, Rubrik, all of these folks, security compliance, there is no downturn. But it, but it is on the right. And then I wanna dig into what I mean. But Salesforce is profoundly struggling for the first, it's fallen to single-digit growth for the first time. And it's complicated. Folks are still building an epic amount of software fueled by AI. We see GitLab up 30%. That's a, that's a derivative of building more software. But Mongo's down 13%. Mongo, which is, you know, you know, perhaps the leading, the leading standalone public database platform. They're in so many workflows. They're seeing pressure. Folks are reducing spend. But interestingly, we just wrote this up in Center. Mongo said just a couple weeks ago, there's pressure on workflows. Folks are trying to spend less per application, but net new customers are growing just as fast as ever. Net new customers are growing just as fast as ever. Elastic and Asana similar. So listen, it's just a new normal. And the tough part for folks on the right, which is probably folks like you, is you have to do more. You have to maybe either sell to different customers, you have to build more software, you have to be more AI. You have to be hyperfunctional, which we'll talk about. And let me summarize it and then, and then go into a little bit of a deep dive. This is how— this is what I— synthesizing all the startups I work with, talk to, have invested in and know. And it's tough. And this is tough. This is a B2B slant, a SaaS slant of everything we're reading in the media. Number one, and this is a tough one for folks even today, I think most folks have internalized this. But AI is now table stakes. It's table stakes. Uh, uh, 18 months ago, we didn't know what AI would do to a lot of SaaS applications. Yeah, I can make funny videos and avatars and stuff, but, but what would it mean for B2B? What would it mean for automating support, for automating sales, for automating marketing? Now everyone has it. Everyone has it. A lot of it isn't good. Some of it's great. Some of it's emerging, but it's table stakes. And what this, Why, why is this hyperfunctional? Well, if you have 10 engineers, 50, 100, or 150, you may well need 20 more folks to build this AI stuff to make it any good. Tough. I have empathy, don't get me wrong. But when everybody has it, you gotta do it. And we'll, we'll, I'll show you an example on support next. It's table stakes. And two, the product has to be much better for it. Customers, AI has meant fair or not, true or not, in some cases, the customers are expecting so much more from us. They're expecting so much more. They're expecting everything to do more. They're expecting onboarding to be automated. They're expecting the emails to be automated. They're expecting outreach to be automated. They're expecting everything to be pre-populated. Your product has to probably be 2 to 5 times better than 24 months ago. It's stressful, but it's too late. And not only that, your competitors are all promising it. Your competitors are promising AI and automation will do all this for them. So if you can't step up, you're gonna lose deals. I see it all the time across my own investment portfolio. I see folks losing deals again and again and again when a competitor will come in and make a lot of promises that are 70% true, 50% true, 30% true, but you're not at parity or you won't make that commit. You just lose the deal. You lose the deal.

Okay?

The good news is AI, you have to do what everyone else is doing AI. There's no excuses anymore. Your product has to be better. But the good news is the third point, you have to do it with less money. That's the good news. You get to do all, build more software. It has to be better and you have to do it for less money, which we'll talk about. Not, not necessarily in the early stages, but I, I just, what I call it radical efficiency. All the public companies are radically more efficient than 2, 3 years ago. So at first everyone started to get fitter. They started to get fitter, more profitable. In 2021 when the market forced us to. But I don't think the products got any better. In fact, they might have gotten worse. We just did layoffs in 2022, right? Everyone got— there were no layoffs in 2021, and everyone's going to lay off. And that's how we got efficient at first. We just laid people off. But that doesn't build better product. In fact, the leaders are all rehiring quite a bit, just not at the same pace as 2021. They're rehiring because it's got to get better. But you've got to find a way to make your dollar go 50 further and build 100% more software. That's not easy. Automation everywhere. It's not just AI. It's not just— it is everyone wants things to be automated. I shouldn't have to spend a month onboarding. I shouldn't have to spend, uh, figure all this stuff out myself. AI is for— in SaaS is automation in many cases. It can be automation on steroids, but it should be everywhere. If your product is full of manual work for your customers, they're going to leave for one that automates everything for them. They're gonna leave for one that automates everyone for them. And then two other points I wanna dig into as much time as, cuz this, this is like, this is like tough news. This is like, I know you've probably internalized a lot of this, but it's tough. It's harder. It's not just, it's harder cuz you have to build better software. The last two points, multi-product has become the new normal. And I, I think I have a post on this coming out in the next week or two. I've written quite a few in the Cube cuz I have so much to say these days, but What I'm looking across CEOs that I know and my own portfolio of 30 or 40 bigger investments, what's the number one real issue for SaaS companies today? The number one issue is not AI or change, or even that there's now 200 competitors in their space that there wasn't a year ago. This is not the number one issue. The number one issue I'm seeing from $5 million to $500 million in the companies I've invested in over the last 11 years is being too slow to go multiproduct, being too slow. Uh, uh, you know, YC is great. Focus, focus, focus. But, and I love YC, but YC, the average startup's at $5,000, $0,000, $10,000, $20,000. Of course, in the early days you've got to focus. But what I'm seeing again and again is that these days, as the products have to be better and as there is more comp, even more competition, is folks are missequencing this and they are slowing down somewhere between $10 and $500 million in ARR. Because they never developed a real second product. They never developed a real one, and it's not enough. They exhaust their TAM, they exhaust their buyer, and we'll dig into this a little bit. But the most important thing is that your second product, your multi-product, you do it on time before your, before, um, your initial market decays too much. And that the second one has to be bigger. It has to be bigger. I've said this before, but I don't think I can say it enough times. Building another multi-feature is not multi-product. CRM is bigger for HubSpot today than marketing automation. If you don't know this CRM, CRM, which didn't exist a decade ago, it is now bigger than the core HubSpot product of marketing automation. It has to be bigger or it won't contribute enough growth. If you're at $10 million, $50 million, let's call it $100 million to keep it simple. If you're at $100 million growing 30%, which isn't enough to IPO unfortunately, But you finally got, God, I finally got a second product. But that product at best will achieve $100 million in 5 years. It won't do enough. The second product has to be bigger than the first and it's tough and you have to sequence it properly. Too early, you'll burn out the team and you'll burn out the market, but too late and growth will decay. You have to layer these products on top of each other. And the last one is, which is tough, this is the one that I think folks are struggling with on LinkedIn. Most, even if they don't realize it. Customers are demanding more than just another point solution. There is finally massive point solution fatigue. I just wrote up Zscaler today on SaaS 5 Interesting Learnings. If you read it, and Zscaler is seeing no downturn at $2.5 billion in revenue in cybersecurity. But, but, but it is harder out there. And what they said is, listen, one of the things we're most benefiting from is at this point, Zscaler is a full platform and people just are exhausted of all these point solutions. And it is tough. And of course, you have to start as— very few, few of us get 5 years in isolation to build a massive platform and then hit the market. We almost all start as point solutions, but it's tough because customers do want their platforms to do more. And I think this has been accentuated by the scrutiny on buy from procurement, from CIOs, from others. Companies have wanted to, in some ways irrationally, in some ways rationally, cut their SaaS spend And, and they're pushing their existing vendors to do more. And you've gotta find a way to be more of a platform. You cannot last as a point solution in many cases. It's just hard. So I call this hyperfunctional. We have to do it all. We can't stay a point solution as long. We have to go multi-product earlier. We have to automate everything. We have to be more efficient doing with less. The product has to be better and AI is table stakes. And I know it's hard, but if we want to do great things, this is the bar for the next 5 years. So a couple of things to dig in on. I used this table stakes notion I pulled together a couple of weeks ago. Zendesk, Salesforce, and Intercom's support products, right? We all know Zendesk is for support. Many of us have used Intercom. We certainly have at Sastrat in the past. You might not realize that Salesforce, the support post-sales is actually bigger than CRM. It's actually a bigger cloud than CRM. And look at what do you see? The same stuff. AI for Zendesk is AI first. This 20-something-year-old, slightly creaky piece of software. Intercom, all AI from Owen and team. Mark Benioff, all here. Okay. If you're a customer, I don't even know if you can tell the difference unless you do a bake-off, right? So no more. Hopefully you're past this at this point in the year, at this point in the cycle. But no more complaints about AI. No more complaints about how hard it is to build. No more complaints that it doesn't work well. No more complaints that it doesn't change your space. Everyone's— if Salesforce is doing it and Zendesk and Intercom doing it, it's parity. You have to find a way to do it. Even if you don't have any more money, even if you don't have any more engineers, it's life. It is parity. And this is what's going to happen. It's already happened in B2B is I do not believe in core B2B that AI going to this point now and certainly next year is a differentiator. Your implementation, maybe you might be the best. But how everyone, everyone is going to have pricing page, check the box, function app feature parity on everything that is A to I and B to B. Everyone. So you better, if you don't, if you haven't built it yet, find a way. Find a way. Okay. And so next thing that I think is even harder is that customers' expectations, they might have even gone down in 2020 when we were all locked up at home. We might have been, oh my God, if I can just talk to people on Zoom or just spool up a call center, Without humans, it was great. Now the bar is way up. And, and AI is the accelerant here. And what is it? It's taught customers to expect more from us, which is tough. I think this is number one. If you're not in, if you, if you, if you are in any way involved in post-sales or support, you will see this first bullet point viscerally. Everyone in post-sales, Salesforce, Intercom, Zendesk, Or just on and on and on. They are promising you can eliminate 30 to 50% of your humans in support with AI. They're promising it today. They're promising it today. Sales is going to, is beginning to promise this. Even Marc Benioff is beginning to promise that you can eliminate portions of your sales team with AI. Folks are prom— marketing, I, I actually think is struggling more than social media suspects. But marketing is promising you can eliminate parts of your marketing team with AI. They're— so customers are expecting this. They're expecting to literally replace humans efficiently with AI. If your product can't do it, if your product can't do it, they're not gonna buy. The most recent investment I made is a company called Mangomint.com. They're, they're coming up on $20 million in ARR, growing 100% with 110% NRR from SMBs. In a very small space, actually in a very small and crowded space for salon spa software. Why is it growing so quickly, right, in a small space? Well, it does a lot of cool things. The software does automation really well. It's really slick. It's a next-generation product, but it actually lets you automate away your front end of your office where you can't find anybody to work and automate away your back end. It's getting— it's dealing with the fact that 34 to 50% of the workforce in these small businesses is gone. It's making that promise and it's earning that. So this is what your customers are looking for, not an ROI calculator, or a smidge of this. They want to get rid of humans with your product. Can you do it? They're expecting it and your, your competitors are promising it. The next one, and this is more subtle, but I think this is a threat to a lot of B2B products. This is why Box is so excited about AI. It's why we're trying to figure out what's going on with leaders like Perplexity and others, but You know, AI has taught B2B customers to expect that all unstructured data will be instantly structured and searchable. They'll, they're expecting it. And the fact that if your data cannot be found, if you are stuck in dated, painful dashboards, if you do not find a way, going to the next point, that your product can more or less work like a plain English prompt to extract data, I think you're going to fall behind. I think you're going to fall behind. Obviously, we see this in a lot of folks trying to apply more AI to BI, business intelligence, so that I don't need an engineer anymore, that a plain English prompt will finally get me the, the BI I need. But they're expecting it from every application.

Okay.

This fourth one I think is the most important for SMB and mid-market. I've done— I've worked with and invested in a lot of folks in the SMB space. And if you guys are in SMB or the bottom of mid-market, you know that for complex products, actually one of the biggest problems is onboarding. SMBs have no time and they have no people and they have no IT department and they have no one to implement anything. So if they actually make the time to buy the product, the good news is they might buy that day, right? Owners don't have time to do massive bake-offs or to spend months. But the problem is if you don't get them onboarded that day, they often disappear. They often disappear. And, you know, for many folks I've worked with, the, you know, then the goal is, hey, can we get these SMBs onboarded in the first week, the first 15 days, the first 30 days? That's been a traditional goal for SMBs. Now with automation, customers are expecting it to be automated when I end the Zoom, when I end the meeting, they're expecting it even when it didn't seem possible. This is what AI is expecting, right? I'll, I'll give you a small example. So I invested in it. I'm on the board of a company called Owner, which is like a marketing platform for restaurants. We've done a lot of fun stuff with their CEO, and somewhat their CEO. They're coming up on $30 million in revenue, growing triple digits, growing double digits per month. It's fast growth, but onboarding is hard in their space. I know this sounds niche, but it's an example, which is with restaurants, one of the biggest headaches, I know it sounds a little silly, is the menu, because you've gotta figure out a way to get a menu, which is often not online for a, like a tiny little restaurant. How do you get that? And it changes all the time. How do you get that dynamically input in the app? The buyer is not gonna input that entire menu themselves, right? And the classic And it's a, it's a meta issue in the space for Toast and others is behind the scenes, people are doing it, whether they're doing it at the restaurant or whether the vendor is doing it, they're doing it now. Customers just expect it to be done automatically. They don't care. AI will do it. AI will do it. So this whole cheat, this whole thing of SMBs tolerating weeks to go live, I think is dying right now. So I would challenge you if that's you. Think about how you can eliminate onboarding in your app, even if you think it's impossible, even if you think it can't be done, even if your team is telling you it can't be done, your engineering team is telling you it can't be done. Someone's gonna find a way. Are your competitors gonna find a way to reboot your space so that the automation is instant? They're gonna take all the customers, at least for small businesses. Enterprises have time for deployments. Small businesses don't. And then the final point here is just, this is just tough. Core platforms are HubSpot was early here of doing more stuff, but they're all gonna do the work of 20 add-ons and point solutions. And the one that, you know, I've talked about a little bit, um, is, you know, at first I thought it was crazy, was, was watching and learning from what Parker Conrad was doing at Rippling. And you can watch his presentation from SaaS Europe about a year ago on YouTube. It's pretty great. Um, it's on building, I think they had 20 products, then they have 50 products today. And it's like, that's great, but we haven't all raised a billion and a half dollars. We can't all build 50 products like Rippling. We don't have a billion and a half dollars, but, but we might have to do some of this. We might all have to build more products, more functionality early because that's what the customers are expecting. They don't want these 20 products anymore. They're being promised all of this. And if Rippling is out there and has 50 solutions and maybe not all 50 are great, nothing against Rippling, but probably some of the 50 products they have are better than others. That's the reality. But I'm already on the Rippling platform. It's pretty compelling when Rippling can, can ship another 10 products per year. It's pretty compelling when we look at Datadog a little bit later, how compelling that platform is. Do people now think Datadog is way too expensive? Yeah, you see those complaints, but it does everything. It does everything and people love the core product. Why not buy more from them? And the final point here, and then I'll hit the next one, is just AI has taught everyone this is easy. The internet has, social media has, the Wall Street Journal, everyone, everyone thinks that You know, it's this— it's great that Sam Altman's talking about a one person's going to build a billion-dollar company. And there's positives and negatives in that. But, but, but, but everyone's talking their game. Everyone in the AI industry is talking about how easy it is. Everyone has an AI SDR app that in 30 seconds will get you a million qualified leads. They're all talking about that. All the, all the support folks we talked about— Zendesk, Salesforce, Gorgeous, Intercom— they're all promising you can eliminate 50 to 60% of your support team overnight. Right or wrong, customers now expect this. When the leading vendors in the world and the leading luminaries in the world are all telling you that AI makes this all easy, customers are gonna demand it. They've heard it too many times. Now, now they believe it. Now they believe it and they're demanding it. Okay. Just a couple, a couple few other things, and then we can, we can certainly open it up to questions. I'll try to just go maybe 10 more minutes and wrap this up. I just wanted to highlight this one. I think most people get this now, but on this thing of hyper-functionality and hyper— you have to be hyper-functional, you have to be multi-product and maybe have 50 products like Rippling and achieve AI parity and do it all. But you have to do it with less money. And the mistake that founders are still making today, even at this point in the cycle, is They think it's an excuse for slower growth that like profitability comes above growth. Whoever's data you look at, SaaSter, Meritech, which we've written up, Bessemer, whomever, everyone that analyzes the data, um, they all come to the same conclusion. Jam and Ball, uh, they all come to the same conclusion. If you crunch the data from all the public SaaS companies, efficiency matters. State did not matter in 2021. No one cared how much money you were burning in 2021. Boy, they care today. Wall Street cares, and they care for your cash burn, and they also now care for your equity burn, your stock burn, which will run out of time but becomes a big stressor later. You just can't issue that much equity anymore. I mean, Zoom says they're almost stopping issuing follow-on grants because Wall Street won't let them do it. But you also have to grow at top-tier rates. You don't get a pass on growth for efficiency. And I just pulled up the Monday example here. Monday, again, is growing almost 40% at a billion in ARR. But look how their efficiency changed. In 2020, when no one cared, minus 25% free cash flow. Then they started to care. Then in 2021, they sort of broke even into 2022, '23. Now they're at 28% free cash flow and going up. 28 cents out of each dollar is going to the bank. That is radical change. Is Monday growing quite as fast as it was when the Monday when the markets were bananas? No, but it is still growing at top 5% rates and that's why it's one of the top plays. So you got to do it all. I know it's not tough. It just at the end of the day, it means we have to hire fewer, better people. That's the answer. Fewer, better people. Monday did go through a layoff to get to this efficiency. I think it was their first real one and it was tough. And co-CEO Ron and I chatted about it last year at SaaS. It was a great one to watch. They did go through layoffs. It was to do to reset. But then pretty quickly they rehired. Here's the thing, they just rehired slower than they were growing. You know, if they're growing— what are they growing? Sorry to flip back to it to get it exactly. If they're growing 34% at a billion, if you just increase your headcount spend 24%, you will get more profitable. Even 30% at their number, you'll get a little bit more profitable this year by growing headcount less than revenue. So we've kind of been taught, you know, unicorn math in the last few years taught us to grow revenue faster than headcount, faster than revenue. And maybe you can do that for a little while when you're venture-backed, but at some point you gotta pay the piper and headcount just has to grow slow, slower than growth. You have to get the efficiency that is promised by software. And if you wanna back into it, I wrote, I wrote this math up on SaaS a while ago. I don't think enough people internalize it cuz it's, it's pretty specific. But this is one to think about. When I look at all the companies I invested at years ago, um, that are now at $200 million or beyond, and there's a group of them now, I can watch them and and I can look at other ones that I know where I know the CEOs well or others. You basically got to have 700 people when you get to $200 million ARR. And that may sound— hey, what does that mean for me? I'm not at $200 million in ARR today. Roll it back to where you are. You can bridge some of the gap with capital, but at the end of the day, to be efficient, to survive in today's market, you're going to have to have 700. Does that mean 350 people at $100 million ARR? Does that mean, you know, 175 at $50 million, maybe? Maybe, maybe you can afford more if you've got folks in, in Eastern Europe or Latin America and others, but this is the rough math to think about how many folks you're gonna be able to afford to make it happen. Okay, just a couple more things that I see as part of this hyper-functionality. I'll just do 2 more and then I will take a break. I just wanted to highlight if you aren't seeing this, because I'm seeing this everywhere. It's not just AI. It's, again, it's automation everywhere that You know, I think SaaS through 2023, 2020 was workflow and dashboards. That was all we were doing in SaaS, workflow and dashboards, build workflow to connect some data, build workflow through triggers, through emails, and then the boss gets a dashboard. Okay, that worked pretty well, I think, from the '70s until, you know, 2023 or so. But automation, AI is just, AI is automation on steroids. And I grabbed an example here from Gorgias, which has about almost 20,000 Shopify customers for support, just 'cause I'm on the board. But Intercom, Zendesk, Salesforce, they're all the same. Just, this is, look at this flow on this image. This is when you sign up, you go from help desk to automate, to buying. Okay. Automate is this middle piece and they're picking What percent of support do you wanna automate? 20%, 30%, 50%, 80%? You're picking automation. This is what customers are expecting to dial in the amount of automation that they want. One way or another, you're probably gonna have to do this in your product as well. Is it gonna be the exact same way as support? No. But think about this. People want a slider, a dial. This is the AI promise that is still, no matter what the media says, it's still hard to deliver. They wanna dial a slider in every app. Where I can dial up how much of human-led functions will now be automated. This is what everyone on the internet is promising. This is what OpenAI is promising at $150 billion valuation. This is what everyone's promising one way or another, that we can automate up on a slider this amount. You're going to have to build it. And I do think the AI bubble is going to pop. I think everyone thinks this just because the amount of spend going into AI can't increase forever. We will just run out of GDP. There just isn't enough money in our entire economy to allow AI spend to increase at the rate it is today. So the bubble's gonna pop and so be it. But customers are gonna expect this forever, this level of automation. So my challenge to you, I'm sure you've seen it in the markets, but if you're not, think about, okay, if what can we automate more and how can we accelerate this? And because there's parity, beat out the competition here because customers are just gonna expect that they're not gonna tolerate a lack of automation anymore. And at this point we hit— so I'm just going to say it again because I think it's the number one issue as you scale. So I'm just going to say it differently as per the slide. Oh, those will again go into the very beginning. A lot of folks are talking about a downturn on LinkedIn. Oh my God, it's great to just grow 15% a year now. It's so hard, blah, blah, blah, blah, blah. But when you peel the layers back in the onion, yeah, one, some of the reasons that they've slowed down is because they're They're too focused on tech or B2B2B for sure. But you really peel the layers back. Did they really escape the single product trap? A lot of folks complaining. I don't wanna single out people, but a lot of the folks I know at $50, $100, $200 million that are seeing growth less than 20, in some cases zero, in some cases zero. Yeah, they built a feature. Yeah, they built a HubSpot integration. Yeah, they added something in, but they stayed single product for too long. I think it's the number one tactical issue that I see across my portfolio. And I know it's tough. I'm only saying this between friends. I'm almost giving up on startups that have hit scale that have not become multi-product. It's almost too late if you don't start. It takes too long. If you're at $50 million and want to develop another $50 million or $100 million of product from your second product and you haven't even started or you're screwing around, it's all— it's not too late. If you're— if your NRR is over 100%, it's never too late. But the founders better want it. You better want it. And I've had this tough conversation with a few folks over the last month or two, and I hate tough conversations. You might surprise you. I hate them. But folks that I've seen in this, in this pickle where they have a good product, but growth has declined because they didn't build a second product in time. I just— it's like, how badly do you want it? Because building a real second product that's bigger than the first It's not like a second startup, but it might be 20 or 30 or 40% of the work of what you've already done. You've gotta want it badly or you're gonna stay growing more slowly and slowly and slowly in single product land. It's, it's like, I think it's the number one issue I see across SaaS today. Okay. And then just, you know, again, one more point and then we will open it up to questions to Amelia and the team. This is one I don't have all the answers to. I think again, a lot of folks have, seen whiplash the last 18 to 24 months when their point solution stopped selling. Right? And some of this was budget shock. Some of this was budget shock when, when everyone in 2020 and '21 added 100, 200 more sales apps and the CIO said, now you gotta cut 50. Now you gotta cut 80. So there's a lot of whiplash there in the industry. But it's not just that. It's not that we overbought apps because if they all delivered and performed, we wouldn't be seeing the whiplash now. It's that the leading vendors are doing more. And I just, you know, I pulled two extreme examples on the right for Datadog and Canva. You know, even Canva, Canva you might think is single product at $2.5 billion in ARR, but it sure does a lot more than when I started using it. It sure, it, it, it sure eliminates the need for about 10 or 20 other tools, in my suite. So I don't have the answer here, but, you know, you one way or another, you've got to probably expand beyond being a point solution faster than we had to 2 or 3 years to go because again, customers are expecting this hyper-functionality. Will they stitch together 20, 30, 40, 50 apps if they have to? Sure, if they have to. Will they do it if nothing else exists? Always. When something completely changes the market, you know, they will buy it. But right now, the, they're gonna open up Canva and they're gonna say, does Canva do it or does Datadog do it? So you gotta, you gotta be this, you gotta be this. Okay, one other, one other point. Which makes our jobs even harder. This one, I have— the last ones are challenges to step up automation, step up, do multi-product earlier, automate onboarding, have an onboarding, have an automation dial in your product, all of this. This one, this one's just tough. I don't have the answers here, but I'm sure you've seen it. AI hasn't just raised the bar in terms of product functionality. It hasn't just raised the bar in terms of what customers have expected Slightly unexpectedly, not, not really unexpected, but slightly unexpectedly, it is taking categories that were sleepy and uninteresting and 100x the vendors. I mean, you know, a couple years ago it seemed like in, you know, in like sales engagement, it was Outreach, Salesloft, and then folks doing some of that functionality. Now there's 200 folks because of AI. Now there's 200 folks doing this. Legal. No one wanted to build a legal app a couple years ago. No one in their right mind wanted to be a legal app. Now there's hundreds and hundreds of AI-based legal apps. And the contact center, my God, when I, I, I did a lot of investing in contact center, Talkdesk, gorgeous front, Intercom, Maestro QA, a lot of them. And like, no one wanted to invest in contact center. It was a tiny sleepy space. Now there's like 200 folks in the last YC batch that are doing bots and others to automate contact center, to automate support. It's exploded. And they're all promising 10 times better functionality than exists today versus AI. Mathematically, there's no room for all these vendors, 95% of them will explode. But it just means for us, for anyone that is sort of pre-point solution explosion, the bar has, the bar has gone up again. I think I'll leave it at that in terms of hyperfunctional SaaS. I'll, and I'll leave it maybe the, with one more I don't have the answer for, and then I'll leave it with a, a slight challenge, and then we will open up for questions. This one I'm worried about. This one I'm, I, I need help from you guys. I don't have the answers. This is the one I'm spending a lot of time on, which is we have to do more. We have to be more efficient. We have to be AI first. We have to have AI parity. We have to do automation. But who's gonna do the work? Who will do the work for us? Founders, I find, for the most part, are as driven as ever. My God, they're so driven. But what about everybody else? What about the VPs of sales on LinkedIn that are so grouchy that they got fired, or so grouchy they had to hit plan, or so grouchy? What about the marketers? What about the A's and SDRs that don't want— the sales folks don't want to travel? Who's going to do the work? And this, this may sound— this may sound like grouchy pants. I'm a little grouchy pants about that. And said, I just don't know how we're going to do all of it. And I'll give you two examples. And I just think this means we need to be relentless about not lowering the bar on hiring, be relentless about only hiring pirates and romantics, be relentless about when we're getting tired about making the hire, just not making the hire rather than settling. Settling works worse today than ever. And I'll give you two examples. One I just wrote up on Saastr. We, you know, Amelia and I offered, we felt we wanted to help folks. We, all the folks that we thought were in the Bay Area that had done booth duty for the last 3 years at SaaStr Annual, we identified 813 people in our database that had come to booth duty. And we said, you know, come to SaaStr Annual for free as our guest this year. Meet, meet, you know, every CRO there is hiring. Every CMO is hiring. Everyone's hiring that's at SaaStr Annual. Everyone in the world isn't hiring, but every single CRO I talked to backstage or at an event is hiring. Like maybe not as many, maybe as many, but they're all hiring. And there's, there's no better place to get a job or just meet C-level executives And how many of these 813 AEs and SDRs that did booth duty wanted a free VIP ticket on us?

4. 4.

4 took an opportunity of a lifetime to hobnob with the best of the best. Even worse, I'll give you a tough thing we were talking about this morning. So this is just— I know it's using SaaS and SaaS Annual as a proxy for SaaS, but, you know, for years we've been doing the SaaS Annual for— we've done 10 of them. It's a lot. But we've learned a lot because we have a lot of data. And I would say until 2 years ago, then when we go and talk to our sponsors, there are a lot of— a lot of— we love them. We love all of them. We love them all like our friends and our children and our partners. But they're pretty grouchy a lot of times on the calls. You get used to it. You got to develop a thick skin. And until 2 years ago, the number one complaint was we didn't get enough leads. I'm like, and we, we pull up the list. We're like, you got 582 leads, you got 681 leads, you got 281 leads. We didn't get enough leads and we push them. And it was just— there was maybe there's some truth to it. It was just the common complaint and it's okay. You got it. You got to hear it in sales. Ultimately, that's what we'd hear. And then last year started to change and this year changed a lot. And this year we heard from startups, scaleups, and public companies, massive public companies alike, of our sponsors. We got too many leads. We got too many leads. And we're like, what do you mean you got too good? At least we, at least we, at least we got you your leads. At least we accomplished our decade-long goal. Like, literally, we heard this on two conversations this morning. I can't get my sales team to follow up on them anymore. They won't do the work. Now, I know this. I'm just— just among us, SaaS friends, okay? I don't mean to be grouchy pants, but we heard this, you know, 20 times so far. I can't get— it's too many leads. It's too many. We had one partner we've worked with for years, a great one in the compliance space. They got over 700 folks leads and they got over 150 folks that weren't just leads that said, I'm interested in buying this product. Over 150 folks said that one in China, they said they just couldn't get the sales team to follow up. It was too much. It was too much. They didn't want to do the extra work. So do we need to fix our processes and systems? Yes. I don't have all the answers, but we have to be relentless about this because I'm worried that our sub-productivity is so much lower than it was pre-March 2020, even 2 years ago. And I don't have the answers, but we've got— hopefully automation will solve it for us as well. Um, because I think it's an existential issue for founders. So my last point, and then we'll open up to questions, you know, look, I know for some folks it's hard out there, but Monday just crossed a billion in ARR, growing 34% with 110% NRR from SMBs with 22% free cash flows. Like, go find your Monday. And what do I mean by that? To close on this, then take questions. I mean, like, We can't all be Monday, but if you're still feeling sorry for yourself, if you still think we're in a downturn, or if you're still feeling a little bit of a Debbie Downer, as we're seeing on your team, like, go find your Monday. Go find the areas of your industry that aren't seeing a downturn. Go sell outside of tech. Go more enterprise. Go more SMB. In some cases, lean into compliance, lean into security, lean into AI budgets, like, go find the money. The overall— and then I'll bring us— the overall budget for SaaS is at all-time highs per Gartner. It's growing faster this year. 20% at hundreds and hundreds of billions in revenue. Go find your little piece. And if your growth has slowed, if your growth has slowed dramatically, it always means one thing. And, and as founders or as leaders, you have to internalize this. If growth has slowed, it is not a downturn or macro. It's a little bit of it. It is that you have fallen out of product market fit. If 2 years ago you were growing 100% and today you're growing 20%, It is not just the market. It is that you do not have the, the product the market wants anymore. You don't. It's a fact. You have fallen out of product-market fit. And be honest, it doesn't mean your product is terrible, but the world has moved on and evolved. The budget is there. It is just not finding you. So step it up and rebuild your product so that it is the product the market wants today. Is it hard? Yes. But if you have decent NRR, and your customers aren't quitting, at least you have time. At least that's a beauty to SaaS. If you have 100% NRR and you want it badly enough, you always have time. You always have a couple of years. But be honest, you've probably fallen out of product market fit. Okay, so go build some hyperfunctional SaaS. That's what I had to say. And then I'll stop and people can ask questions on anything even like remotely related to this.

Yeah, we've got a lot of questions in the chat, so I'll try and observe the order of questions for folks that are still on. So Vicky, I think you're first. I'm gonna add your pin if you want to come off mute and ask your question to Jason M. Lemkin. I was just wondering, we're talking about automated onboarding and AI as onboarding, but where does come the relationship, the customer success, the—

because does people still want that? Which measures should they take? I don't think it's an— listen, I don't— I think customer success hates doing onboarding. Do they like— they hate it. They hate it. And in fact, I wrote a post, you know, maybe a year ago saying, you know, customer success and SaaS has become just a bunch of firefighters. They're stuck doing onboarding that doesn't work properly because the software doesn't really onboard itself. And then they're stuck plugging holes in feature gaps or using other parties or widgets to solve problems the product doesn't. Customer success is— and I mean, this is the good customer success, not the types that are trying to rip us off on renewals. I mean, the ones that are actually trying to solve our problems. They've become firefighters. Automation, if it really works, is a gift for customer success because they can go higher up the value stack. I don't have to do, I don't have to spend half my time with onboarding or 30% of my, you know, if you look at a lot of, like S and B SaaS folks that require onboarding, you'll often actually see that the CS team is larger than the sales team by headcount. You won't see that that often in the enterprise, but you'll see, and why, why would the first time I saw this, I'm like, why, why would this be the case? It's because this onboarding is so critical for SMBs. You need to in-house it often half the time. So if you can automate it, it's a gift for CS. They can add more value. And if they don't see it, they'll quickly see it because they don't really wanna do that work. But thanks for the question.

Awesome. Okay. Min, I'm gonna bring you up next to ask your question for Jason, if you're there. Yes, I am. I was just curious, you know, you talked about multi-product becoming the new norm. Yes. For, you know, I was just curious.

It might be the new necessity is probably what I should have said though. The new necessity, but keep going. Yeah.

Yeah. Yes. So I was curious in terms of, you know, when you're first landing a sale, the customer journey is, it looks a little bit different than, you know, someone that's already an existing customer. So when it comes to multi-product sales and how it flows into your go-to-market, do you actually Do you see that working better in terms of like a customer you initially land where they buy multi-product initially from the get-go versus, you know, the land and expand model?

Look, I don't, I don't actually have the answer there. I can just tell you what I've observed from the public leaders and all the 20 or 30 or 40 companies I'm closer to or have invested in, right? The, the, the, the bigger you get, the more established your brand, the easier it is to sell a suite from the get-go. Right. That's the simple answer. That's a simple answer, which, you know, right. Having said that, even if you look at a lot of public company leaders, they talk about sequencing in more products over a 3 to 4 to 5 year journey. So I wouldn't sweat this one to death. I think the bigger stressor is how are you gonna sell a second product at all? Because the sales team only wants to do what gets them the easiest commission. That's problem number one.

Yeah. True.

Problem number two. Problem number two is, and here's the bigger problem with the second product, is do you sell to the same buyer or a different buyer at the company? This is a complicated question. Did a deep dive on this with the HubSpot co-founders 2 years ago at SaaS Training, a really good session. Watch it because we went deep on this question. It's tough because your instinct is to sell to the same buyer, right? Let me sell another marketing product to a HubSpot customer or whatever you do. The problem is you're gonna exhaust the budget, right? And in fact, it may, may not even see it as a second product. They may see it as a feature, right? Now, if you go, if you're HubSpot and then you go sell to sales, the CRM, you're unleashing brand new budget, like brand new budget, huge budget. But where's the synergy? And how is the sales team gonna sell both? Right? You often need two different sales teams and you need to pay the new sales team differently. And it's the more it's a different buyer, the more budget you often unlock. Not always, but often, but the harder the new product's gonna be. And so when I asked Brian and Dharmesh, wasn't it crazy being a marketing platform, then going off and trying to sell a sales product, sell to— they said, yeah, it was crazy, but we had to do it to grow. Like, We knew to, but it was crazy. It was much harder than selling another marketing product to marketers. So, uh, lots and lots. This is why it's hard and this is why founders are too slow here.

Yeah. Okay. No, thank you so much. Yeah.

I'll, I'll check it out.

I'm, we're, I'm in a verticalized SaaS business, so I'm trying to understand that customer profile composition to get that, that understanding a little bit more. So I think we just need to do a bit more looking.

We did. And again, I just did two great, and then we could bring on this week. I did two great deep dives with the CR of Slice last week, which we talked about, and the CEO of Manglement, both vertical SMEs. I think we dug in on these issues, especially with Manglement. It was pretty good. So I listened to those ones, but thanks for the question.

Thank you. Cool. Okay. Um, there's a few Chris's on the call, but I'm gonna bring up Chris Maritz if you want to ask your question to Jason.

Yeah, thanks. Hey Jason, I, I'm just curious. So we, we have the ability and we have, um, some go-to-market motions already. Where we're embedding into other people's products to make their platforms richer as we are also, you know, building out our own product that customers are buying direct. And I'm just curious with your thoughts on, you need to be a platform in order to survive and have lots of capabilities. Yes. Would you recommend, you know, if you can't make it yourself, like trying to be one of those indispensable tools that every other platform needs? For sure, for sure. I don't— listen, I mean, we all start as a 10x feature and evolve into some sort of point solution and then maybe figure it out from there. And for sure, be that indispensable, be the glue, be the Stripe, right? I mean, certainly a lot of API or developer tools can certainly do pieces of that. I don't have all the answers on how to build a platform. I think as leaders, as founders though, you, I think especially as we come into the end of the year, there's, there's some planning we should do, which is what product does the market want? And I think if it was a couple years ago, we'd be like, ah, the market doesn't really want a platform. That's an old, that's an old school SAP, Oracle, even Salesforce way of thinking. 2021, you'd say no, we want to be the, the, the, the best, the best in our, with our 22 competitors in our little point solution who are all 6 of whom are growing at great rates. You gotta ask yourself, what does the market want? What does it, what does it want? And go do the work. In fact, I find a lot of founders and executives the last 18 months have slightly fallen out of not, not just product market fit, but knowledge market fit. They, they think they know it. They're so down in the weeds trying to sell the same playbook and sell the same product to the same leads. They've lost track strategically of what the market really wants. And you got to start over again. Start at the top with your biggest customers and just ask, do some, do some discovery and just say, guys, what do you want over the next 24 months? Just tell me, take notes, listen. And they won't describe— they may or may not describe it as a platform, but you'll start to hear if you just give them the time, especially if you go in person, you'll start to hear an outline of something not exactly what you have or we're planning. And go do that. Go do the last couple months here. Go visit with 10 of your biggest customers in person if you can, maybe another 10 on Zoom. And just ask them, what do you want over the next 24 months? And just listen. Give them the room to talk. Don't interrupt. Don't interrupt. And just listen and try to figure out what this platform is in your space and then figure out, can you build it? And then back in, back, back into it. That's the best advice I got. I appreciate it. Thank you.

Awesome. Okay. Question from David. I don't know if he can ask it because he's on his iPhone. We'll see. David, are you there? If not, I'll ask your question for you. Okay. I will ask David's question for him since he's on his iPhone. Jason, he wants to know your thoughts on AI's impact on agency businesses. I know you always have hot takes on this. So specifically though, if you have any thoughts on AI's impact on marketing agencies' businesses over the next 3 years.

Well, look, I don't, I don't, I actually think, and this is my, I have strong opinions on a lot of things that are data-driven, that are experience-driven. This is just my limited experience here. I think, I genuinely believe that AI will make the best agencies better and may put a bunch of mediocre ones out of business, right? I mean, you know, let's use an extreme example. All these folks that have been charged, trying to charge folks $2,000 to $4,000 a month to make them a couple reels a month. Like that seemed like a tolerable marketing trade-off in 2022, right? I like, yeah, I mean, it takes a while to produce a video and like my boss said, I gotta do, get, do more on TikTok and I don't really know the TikToks, but $4,000 a month, I, that's in my marketing budget. Fine. I get, oh, I get 5 reels a month like that, that, that, that's less than $1,000. My team can't even do this in a year. Like that seemed like a good deal. Now, like you go to Opus that we use, Opus Clip, You know, you get, you'll get 15 better than that in 20 minutes for like a dollar, right? So I don't need an agency for $3,000 a month to make me late reels that are like a month after my YouTube or podcast comes out, right? I just don't need it. So I don't need that crummy agency anymore. It's funny, I, those pitches are finally starting to, to, to, to, to dry up in my inbox, but I still get a few, hey, for $2,000 a month, I can give you 5 reels or 5 TikToks. Well, I already got my Opus picked up on autopilot. I don't need that now. And I love Opus. I invested in the company. I use it all the time. It's one of my favorite products, Opus Pro, Opus Clips. If you do video like we do. Now, having said it, it's not perfect. And I would pay an agency a couple thousand dollars a month to take that output from Opus and make it epic and make it, take it from a 9 to a 10. The best agencies could do this. The best agencies could use Opus as a tool and they would schedule it better and they would actually even, even though it's AI edits, they would edit even better. They would pick the ones, they would know who Saster is and who our audience is. And they would all perform. Because when I throw these clips up, you know, I'm not that into the reels and YouTube, but I throw up and I see, you know, some of the good ones will get thousands and thousands of views, but some of the ones I think are good will get nothing. They'll bomb. An agency I think could quadruple the performance of these shorts, but only the best ones. The ones that are gonna hire a kid fresh outta college and, and tell them to rip me off, like, there's just, I, those are gonna, those will in part be decimated by AI cuz I'd rather use a tool than work with them. I'd rather use a tool. So that's my thought. But I think for the elite ones, we'll be able to take, and this is like an elite engineer, like, you know, every, every, every 5 years or some paradigm change and we'll say we don't need engineers anymore. Right? That's the dumb, maybe that's the dumbest thing in the world. Every time we, we, we make it easier to write code, we write better code. It's that simple. The best engineers just get so much more efficient when they can't, they don't have to do 80 or 90% of their rote work, right? They get so much better. That's why one of the reasons we build better software is because the engineers can do higher and higher value things and the best agencies will add more and more value on top of AI. The rest will just try to rip people off that don't know AI, but that market will decay as it becomes a switch in HubSpot. Thanks for the question. Thank you. That's great. Cool.

Okay. You've got a few more questions here. So we'll try and do as many as we can. So Jason, I have extra time. So whatever you want, I mean, Jason Nadoff, I'll bring you on.

Hey, Jason. Jason from Sherpa. So do you see in off the top of your head any specific SaaS categories you can call out where the table stakes AI is becoming way more prevalent? And then the secondary to that question, the companies that are starting to introduce it as table stakes in their industries, are they spinning it off to the dedicated multi-product that you're talking about? Well, look, I don't mean to be redundant. I really think if you just want to study, I think looking at the support industry is the best one to learn from. I actually think in B2B it is the furthest along. It is the furthest. It is way ahead of sales. And no matter how it may look, it's way— it may not be ahead of marketing and consumer, but it's way ahead of B2B marketing. The entire industry from Zendesk again to Intercom to Salesforce to others to gorgeous front, smaller one. It is Talkdesk, which I invested in early. These products are nothing like they were 24 months ago. The entire industry is pulling it. It is demanding it. It is. So we can talk about others, but literally, and I just did a deep dive with Henry Shuck, the CEO of ZoomInfo. It's up on their podcast today where we talk a lot about this too. Just, I would, if you want to understand what's happening, take a pause and just do your own tour of all the leaders in support, go to their homepages, do their product tours and see this is what your industry is gonna look like in 12 to 36 months. So support industry, sales industry, right? No, sales, there's a million automate AA, AA and SDR tools, but I wouldn't say the leaders are truly doing it. If you go to Salesforce or even Outreach and Salesloft and others, they, they add this functionality, but it has not disrupted their product. In support, the products are completely different than 18 months ago. It has utterly disrupted the space. Sales is still early. Sales is still figuring itself out, right? Are there exciting applications out there doing tens of millions in sales? Yes. But support is where billions and billions of SaaS looks nothing, in many cases, nothing like it did 24 months ago. I can't think of another space that has been changed overnight-ish by AI. So that's where I would start. Look at, just look at all of them, do a tour, and that's where the world is going in, in the rest of the spaces over the next, between 12 and 36 months. Probably finances last based on what I've seen. And, you know, marketing and sales is trying, but it may be another year or two. But support, boom, it's just night and day. And is the potential guidance to maybe support a basic helpdesk product from 24 months ago is unsellable today. Unsellable. $0 in revenue you're going to get. I'm exaggerating slightly, but not much. Not much. Implementing that in our products though as table stakes within our own niche or vertical SaaS? Maybe. Thank you.

Okay. Um, cool. Thanks for the question, Jason M. Lemkin. Um, we're going to go to Coleman if you're still with us to ask your question here.

Great. Thanks, Jason. I was curious to know what your perspective was on public cloud stocks. Um, I look at, uh, Bessemer's index and I see that it's grown by roughly 10% over the last 3 years compared to like 36%. So I just, I think about that in conjunction with AI. Is that a reason that it's going to accelerate, or is it going to be a technology that disrupts those already public cloud stocks? Next. I don't know. I don't usually talk about public cloud stocks for a whole bunch of reasons, but look, I go back to the first slide from this presentation, right? If you look at the folks on the left, the Toast, Samsara, GitHub, I mean, sorry, GitLab, all the folks, even CrowdStrike after their bump, there's no deceleration there and they're not being disrupted by anybody. So I'd be, I would be, I don't think that this, I think at the moment and we can all see this in our 401(k)s too at the moment, you know, in the aggregate, notwithstanding the unicorn deals, AI is benefiting the bigger guys and the incumbents there. They're leveraging it. And so I think I'm not going to tell you how to invest in public markets, but I would not bet against any cloud leaders. These are run by the smartest people in the world. And if you, you know, I do this for our Five Interesting series every week on SaaS. I listen to every public company CEO out there, and these are the best of the best. They all have their teams implementing the best AI into Box or Samsara or Rubrik or wherever it is. They're all— they'll have 100 of the best engineers working on this. And a startup will find an area that is underinvested in. Or misunderstood and will break out and build a multi-billion-dollar company. But few times in my career have we all seen the big guys as focused on this as, as we have. So I'm not betting against any public leader and the best ones are still growing. They're not growing at 2021 rates, but they're still growing at pretty darn good rates. So that's the best I can help. Great. Thanks.

Awesome. Thanks, Coleman. Okay, I'll bring up Alex next. You want to ask your question?

Hey, Jason, I was curious if there's any pros and cons. Oh, is this the right Alex?

It's okay, you can do yours and then we'll do the other Alex.

Cool. I was curious if there are any pros and cons that you see versus of going multi-product via acquisition versus homegrown. You know, it's actually an interesting question. I have learned a lot. I used to think that It was totally stupid to go multi-product by acquisition. I remember back in the day as a SaaS founder, we looked at doing one of these mergers and I'm like, oh my God, we'd have two different code bases and two different teams. We never merged the code bases. We never, I'm just like, this is the dumbest idea I've ever heard. It will lead to endless debt and headaches. It'll make, you know, two clunky products with a lot of feature gaps, you know, four times harder to But I think I was wrong. I think I was wrong. I think that, you know, the more I've had a chance to talk to folks that have built multiple products, the more I realize that no matter what they say to the public markets and other people, the platforms are not really one code base and they're not really unified in the way that you might hope. You know, certainly you're going to have at least your internal APIs that connect your products Sometimes they really are the codebase. Sometimes they're pretty darn different. So I think as long as you have a great VP of Eng or CTO that can handle two different codebases, I say go for it. I don't, I don't see a big problem acquiring it and it will save you a lot of time. And to be specific, when I actually want the companies I've invested in that are north of $50 million, I challenge them all this year to go find someone to buy for this reason. Go find someone that can accelerate your multiproduct. It's hard. M&A is hard. Startup to startup's hard. Everyone wants There's a million reasons to say no, but I, my first principle is forget about all that. Go make a list of the 5 companies that are smaller than you, but are great that you'd like to own their product. And think about, is there any way you can make a deal work? So I'm a fan today, but I used to think it was too hard. Now I think we're all managing multiple code bases anyway. Great. Thank you.

Go ahead, Alex.

Yeah. Hi, Jason. So I have a small small agency, marketing agency. We are doing demand gen, basically cold email marketing, SEO, paid ads. And I'm wondering, because we're quite new, what opportunities do you see in the space, especially working with startups? What opportunities do you see for marketing companies, agencies especially? To manage— sorry, I don't quite understand the question. To manage what? So basically we help them generating new leads through PPC, SEO, email marketing. And I'm wondering What do you see like the opportunities in the next like 12 to 18 months in order to like to develop the business? I don't know the answer to that question. I think that marketing agencies, first of all, and don't take this personally, I think 70% of them are a ripoff because they're taking advantage of ignorant customers that don't understand marketing. That's their business model. But the 30% that actually deliver genuine ROI. I think it's the same as we talked about with the Opus Clip example. Like, you'll figure out how to leverage AI and other tools to deliver— like, your goal should be to deliver higher quality leads because of AI, not just more. There's too much more. We're focused on more. We should use AI to better qualify them, to better understand them, to understand their behavior, to better interact with them, um, to better score them, right? So one of the— one of the biggest headaches with outdoor— out outsourced marketing or outbound or SDR, the biggest headache is, yeah, they deliver you these leads, but they don't really know the product or what you do. They're low-quality leads, right? If you can use AI to increase the quality of the leads, you might be a much, much more valuable partner. That'd be my challenge. How can you use AI to make these leads? Because, you know, the, the, the worst agencies rip you off. The mediocre, the, the mediocre ones give you 100 leads, 500 leads, 1,000 leads, but they're so crappy Like, don't take this personally. You asked the question. They're so crappy. I don't want them. Like, I don't want them. You know, even for our own little team, when we've done little experiments with very high-end outbound, like BDR functions, we don't do it anymore because just— it's just too much energy to deal with their crappy leads and the amount of energy they take. Right. But if you can level it up, I think you make more money out of it. Be a higher value. If you can use AI, I'll I'll break this. Maybe, maybe we can take one more question to break. If you can use AI as an agency to add more value to your clients, I believe you can charge more. Thank you. Agencies are too expensive for what they charge, but anyone with budget can give any agency more money if they deliver more value. They always wanted to give— you always want to give more money to your best vendors and your best partners and less money to the rest.

Thanks.

Right. It's true of software and it's true of partners, right?

Cool. Okay, last question from Michael. Let me add your pin. And also, thanks for coming to Saastr Annual this year.

Thank you. Yeah, my first time. Very, very good event. Met a lot of CROs, CEOs, and, and definitely, uh, I think I already signed up for the next one. Um, but what I, I was really thinking about what you're talking about, the agencies and looking more for a qualified lead because I, that's what I do, is I do lead gen automation. And then what I see most people doing, they're just throwing stuff at the wall and seeing what fits. Um, I want to get your opinion on using anchor data or anchor events like, like this, like a roundtable, like a master class. Um, like, uh, hey, let's get together for thought leadership, best approaches, versus trying to sell all the time. I think that's what a lot of SDR companies are trying to do. So I want to get your opinion on kind of more of an educated approach versus let's just sell, sell, sell. Well, look, I think that it's a complicated question. I don't, I don't think I have the right answer for today, but I will answer in a way that hopefully is helpful to, to both you and a broader group. I think that if you're being strategic, and this is hard if you're a third party, if you're an agency or a vendor or something, but if you're being strategic about all this, You got to think about multi-touch. You got to think about multiple ways to engage with prospects. And this is— and you got to— and this is— I love this again with Lauren Padelford, the CEO of Slice, who we did this with last week, who was head of Shopify Plus too. You got to find a way to add— and no SDRs do this anymore. They used to do a little bit of it. I tell you a story, but you have to find a way to add much more value first. Yeah. Before you ask to sell. And I asked Loren Paddleford, CEO of Slice, is like, okay, how do you do marketing to pizzerias? Like, I'm curious. It's like, yeah, we tried email. It doesn't work, right? Yeah, cold calls work, but it's brute force. He's like, events kind of work when we get them together dropping. But you know what really works? He said, we found dropping by and just adding value. And like, sometimes it takes— even though it's an SMB, it might take a year to close them. But if we consistently add value for this SMB and no one else does this, we will close them eventually. You gotta add much more than you take out. And the typical SDR email of, uh, you know, hey, have you thought about changing your HR platform that you're perfectly happy with this year? Like, I think those days are mostly over, right? Um, so I think, and so I think that is important. And so do I think getting people together is important? Yes. Do I think thought leadership on its own is magical? Only if it's great. I'll leave you with one last point, and I know it's maybe partially, yes, and it could be a long conversation, but we don't have time. I get, I just use this term for fun. It doesn't, I don't literally mean it, but I get a little triggered when I hear the term thought leadership. Not really triggered. I don't get triggered, but I'll tell you what I mean. The reason I say that is because it is an overused goal of the mediocre marketer. The mediocre marketer comes in and they're like, You know what our problem, uh, Michael just doesn't get out there enough. They don't know him enough in the industry. I'm gonna hire a, a PR firm and an agency, and I'm gonna hire someone to write a lot of blog posts in Michael's name that he's never read. Um, and we're gonna do a podcast that's outsourced that no one will listen to because we really wanna be a thought leader in our industry. It just doesn't work that way. Right? Um, you can be a thought leader if you're, if you are already a thought leader, like Like thought leadership is like brand. If you have brand, you can build on brand. If you have thought leadership, you can build up. Aaron Levy can write one tweet about AI and literally, you know, his engagement is off the charts, right? But so I don't like thought leadership. I like adding value to the industry. What the tips of the tactics— adding value. The tips of the tactics of everybody in the roundtable. Yeah. Saying what's worked for you, right? Give, give us 2 things that worked for you over the last 6 months. But if it's great and I'll break you, I, it's not that we do round, we did, you were at SaaS January, we did hundreds of brain dates, a thousand brain dates. Yeah, I was there. Yeah. We do all this stuff. And, and what you probably saw is like a lot of those brain dates were great, but some of them weren't even with a massive amount of filtering. Even you don't know how much energy we go into making them good. But we can't do it. So, so my challenge is if you're gonna do this thought leadership stuff, if you're gonna do anything in this, like do less of it better. And make sure it's great. Slow it, slow it the frack down. And this is what we do. It's— and it really annoys folks when they get dinged from their brain dates. But our bar is pretty simple. Would this add value to me for real? And most of the proposed— we— tell me, Emily, if you're, if you're on voice, I think 70 or 80% of them we have to ding, right? Because they don't meet this basic bar. Would this add value to me? And then they all get pissed. Well, you know, why can't I talk about my dumb product no one's ever heard of? It doesn't add any value to the universe. So if you wanna do thought leadership and events or any of this stuff you're talking about, and it's just going back to whether it's Lauren literally going to pizzeria and saying, we can save you money on pizza boxes, which they do. I mean, that's a very tactical example, but add value to that industry. And, um, I'll give you guys one last example to look at and then we'll break if you want. There is a company I invested in that no one knows of, but it's a huge deal. It's called RevenueCat. And what RevenueCat does is they automate mobile subscriptions. Okay? So 30% of all mobile apps that have a subscription use RevenueCat to manage it. They use it with Stripe, they use it with other apps, but you, it's very, actually very complicated to manage this across iOS and Android. But, but it's, it's an SDK, it's an API. No one really heard of them. They do a little marketing now, but they've been doing this Sub Club podcast for 2 years. It doesn't get a million viewers, but every week they bring on a top person in the industry with a paid mobile app and talk about the issues in the industry. And it is a source of a massive amount of revenue for them, including their first million-dollar deal. And it, and you can go on YouTube and, and, and you won't see 10,000 views, but you will see, and this is why I break on every one they do, at least most of them is the only goal is to add value to their 10,000 other 20 or 100,000 developers, whatever. There's no other goal. Let's bring the best in to share this. And that's what Saastr tries to do with our thousands of pieces of content. What are the secrets? You know, bring in the CEO of Apollo, bring in the CEO of Klaviyo. The questions, what are the secrets that we don't know? Add value and, and that will work here. So I know we got a little off track, but you can be a thought leader by adding unique value in your industry. It's not by talking about AI forever. Like, we don't need that. Right? I know you know that, but thanks everybody for the time. And we'll, we'll, we'll keep marching on Workshop Wednesday. Appreciate it.

Yep. Thanks everyone for joining. As always, thanks for all the questions. Sorry we missed a few at the end there, but we'll be back on another Workshop Wednesday. You can also catch some of our great SAS for Content if you missed some of this on our SAS for YouTube channel or on our podcast. The session that Jason mentioned with the CRO slice just went up on the pod today. So you can listen to it there. Thanks, Jason, for all the time. And we will hopefully see you all next week and also at SAS for Annual. You can get your early bird tickets for 2025 just at sastraiannual.com. We will see you there. Thanks everyone.

All right, talk to you soon.