The Cold, Hard Truths About SaaS In 2023: Part 1 AMA with SaaStr CEO and Founder Jason Lemkin

until everyone's gone or as long as we want to. So come on up to the— if anyone's got any questions on anything, sales, marketing, venture capital, markets, multiples. I actually have a question about sales and marketing. So help me understand where SDRs should report to. Like, should they report to head of sales or head of marketing? Because this is technically a demand generation job. Sorry, ask the question. Who should report to? SDR. SDR. Is this a sales role or marketing role? Where should SDRs report to? So let me give you a tactical answer and then a strategic answer. The tactical answer is in the early days and maybe later, SDRs should report to whoever has the most experience managing SDRs. It's that simple. There are a lot of sales leaders who have only done inbound, okay? They have only responded to leads. They should not manage SDRs if humanly possible. They almost all fail. They hire the wrong people. They don't have the patience. They don't know what to deal SDRs need a typically, especially unless you're lucky enough to get a seasoned one, which we could talk about, and that's a gift if you can find someone that wants to be a lifelong SDR, they need a lot of attention. They often have ADD, they need a lot of oversight and a lot of training, and they often quit after 6 to 8 months. So you have to recycle the engine. And a head of sales, of EP sales that has never managed a high turnover, brand new team will just, they'll melt. Okay? On the flip side, marketers, whether you call them SDRs or BDRs, more and more demand gen marketers have their own, uh, SDR team, right? But the reality is most marketers use them to qualify leads. They don't usually use them for raw outbound. Some do. Some are great at combining ABM with outbound, and, and those marketers are gems that really run a classic sales-driven outbound. Mostly they don't run the full playbook. They use it to qualify your leads intelligently before they pass them to sales. So neither, that's not perfect either, a marketer that's only done part of the SDR, but I'd much rather have a marketer that's managed 3 marketing qualification BDRs than a salesperson that's never done it. So that's the tactical, and you know that's the answer. Whoever actually knows how to do it should do it. The strategic answer is later many folks end up with 2 teams. They end up with a classic outbound team that reports to sales, that does true pure outbound, right? Like Sam Blonde talked about in the first Brex session. And then marketing owns its own number in leads, and they often will have their own team of BDRs that qualify their own leads so that marketing's leads are higher. And you'll often end up with two different teams. They may both be called SDRs, they may be called BDRs or SDRs, but they'll both end up with their own sort of teams. Yeah, thank you. And either like, I think like a senior SDR, because most SDRs, They want to grow their account managers. It's a dream. If you know one, let me know, I'll hire them myself. I'm hoping, I'm hoping, I talk about this a lot, Lars Nielsen who runs outbound at Snowflake, he did a great session at SaaS Triannual, so you should watch it on the video, we were talking about it. Everyone that's been doing this for a while hopes that this will become a new path, that SDRs will, that better paid, more seasoned SDRs will stay in the position longer instead of, you know, the classic SDR in the US. I don't know exact comps in, in, in Europe, especially, or Central Europe, it's lower, but in the US, a classic comp package for an SDR even today might be a 60/20 package, an $80K OT, 60 base, 20 variable for setting up appointments or revenue commits. And look, in certain parts of the US, that's good money. In other parts of the US, in New York or SF, it's pretty terrible money, right? Depending on what it is. And so they're looking at the AEs making $140K OTs or $200K, and they all want to be promoted in 3 weeks, right? The ambition ones. And most folks have not really built a path where an SDR that's great can make $100,000, $120,000, $140,000, $160,000. And so at least you might take a pause pretty good at penetrating. I'm pretty good at getting discussions and I don't wanna be a closer. I don't wanna deal with all procurement and the drama and the 11th. Let me just be an opener. And if you think about it, if you build a spreadsheet of cost of sales and everything, if an opener is really good, you should be able to pay them close to as much as a closer, right? But we're not there yet for some odd reason in SaaS that has not developed in our culture. But once in a while you can find one. And it is, as a founder, it is worth hunting out these unicorns, these rare people, not, not valuation unicorns. It's part of the job, right? It's not to hire the mediocre or the average. It is. And if you can find someone that has been an SDR or an outbound for more than 3 or 4 years and genuinely you can just smell the passion coming out of their pores that they want to do this. Give them, talk to them, recruit them, and give them a path. Say, look, you're not gonna be stuck with a second-tier comp package for your whole life. Like, I'm gonna give you a commit. You bring in, you know, a classic way to measure an SDR, you can do appointments, but really the classic metric is an SDR needs to bring in deals that close at $2 million, $2 million, right? And say, look, to someone, great, you gotta do that. You do $3 million, I'll increase your comp 50%. You do $4 million, I will double your comp. Like you could have an unlimited comp like you do with an AE and a great SDR. We had even one on our SaaS team that did $5 million in a year. Why shouldn't that person make $200,000? Why do they have to be stuck making a 60 plus 25? They don't, right? So, um, anyhow, I only know a few like this. I wish there were 100. I, I hope there are 1,000, but if you can find one, never let them go, right? It's a gem.

Thank you.

Yeah.

G'day, Jason. Jimmy Smart. SAS has been on bucket list for me. I've come in from Australia and certainly didn't disappoint, so thank you.

Thanks for coming.

So my question's a bit of a two-parter. So, and you started to talk to Edith in one of the earlier sessions about, you know, the space that we play in, it's high stress, it's long hours, and with that can be a challenge around managing mental health. How do we get a sustainable output that means we're not burning out as founders, as ecosystem operators? Being on both sides of that coin, do you have any advice as far as mechanisms or things that you've found to work as far as finding that sustainability and mental health in the space that we work in?

How many employees do you have?

3.

Okay, here's my advice. Here's my advice. Let's step back for a minute. Folks overall in tech, and I don't mean to sound like a fuddy-duddy or someone that's been doing this for a while, and I know some people think this is This is, I try to mostly be positive, but I'm gonna say one thing, 'cause it is so important as leaders. Folks in, folks have gotten lazy as frack. Lazy as frack. CSMs don't wanna deal with headaches. They don't show up. Everyone wants everything automated. When we complain to CSMs that are on our accounts, they hide now. They used to solve your problem. They used to get on the phone. They used to want critical feedback. Now if they don't get a 10, they don't even wanna talk to you. They don't want to fix anything. In fact, many times all they want is an upsell, or they threaten you on the renewal. CSMs threaten you. Hey, we're going to turn your product off if you don't pay 50%. That sucks, okay? That's lazy. So many marketers, you heard Sterling about talking about sales and marketing from Divi this morning. So many marketers don't want to own any lead commitment anymore. They don't want to own any number. So many folks in marketing want to hide in the middle of infographics and soft goals, and everyone's gotten grouchy because it's been a long time, and then And, and I'm gonna come back and ask you to answer your question. And then things got worse in 2021 for a couple reasons, right? One, the truth is when everyone got distributed and worked from home, that worked really well for certain types of people, very motivated folks, senior folks. And honestly, some, a lot of folks worked even less. They really did work 3 jobs and they really did work 10 hours a week. And it's true. It's any, it's, and anyone that says otherwise is deluding or is mediocre. Anyone that says it isn't true is mediocre. Anyone that's great knows In bigger startups, tons of people did not work in 2021 in general because we were distributed. And then even worse, things got easy in 2021. So people worked even less. Sales with— it never got really easy, but it's so much easier than 2 years before or 2 years after that folks phoned it in. They phoned it in on NRR, they phoned it in in marketing, and to some extent they phoned it in in sales because they didn't want to talk to 4 stakeholders. They didn't want to convince the CFO of budget. They wanted to do a one-call close. And so everyone got lazy. And I actually, I worry that there's a whole generation of folks that will never get unlazy, that we almost— and I know this sounds crazy— I almost feel like though, as leaders, for some of us, we have to start from scratch. We either have to hire brand new people that haven't been trained in the horrible ways from late 2020 to the beginning of '22, hire brand new people, or hire folks that have been around long enough that they remember when sales was hard. They remember when there were 3 stakeholders. They remember when a deal took 6 months to close. They remember when competition was stressful. They remember when venture capital didn't come out of the, out of the sky, right? People got so spoiled. Not, not everybody, but so many folks got spoiled by venture capital being unlimited in 2021 that they lost all discipline too. Okay. So I'm worried that everything has gotten worse and that we have bred a generation of, and I know this sounds almost terrible to say, but a generation of not folks in this room, but of just lazy people that need to come out of the system, right? And, you know, the way Elon Musk handled it, it's very toxic, right? I mean, but Twitter still runs with a quarter, 20% of the people it did. Okay, maybe the, maybe the content is more toxic, but site still seems to be up. We're all kind of like that. Okay, so what do you, what do you do is with this balance? But we all want balance. We don't, we do want to be, balance, but we don't want people to work 10 hours a week, right? You know, we hear sales reps now complaining that they have quotas because it's harder in 2023. They don't want quotas anymore.

And just to clarify, particularly from my point of view, I'm probably talking from the founder perspective and knowing that, you know, whether you're fundraising, whether you're trying to keep the business afloat, whatever those challenges are that you're facing, they are persistent, they are ever-present. So it was probably more at that angle.

No, but here's— so here's my answer to all of this. Yeah. Okay. And we all used to do this in the old days when things were smaller. Your first 50 employees, your first 50, have to be pirates or romantics. They have to be pirates or romantics. You know what I'm talking about. These are folks on your team that for reasons that almost don't make sense, live and bleed startups, right? The ones that know more about your product than you could possibly imagine why. Right, that, that, that think that your weird type of compliance product for the dairy industry is the most interesting thing that has ever happened on planet Earth, okay? Or these are folks that have never worked in an empowering environment, because if you have under 50, everyone should be an owner. Maybe not a VP or a director, everyone should be an owner. There's not a lot of redundancy, sub-50 people. So you'll take some folks who had a terrible boss, over-micromanaged, and you put them working for you, I know you're a great leader, and they just fly because they're freed from these shackles. And the mistake you make in the first 50 is when you hire someone that looks good on paper, or they've made an infographic before, or they've done sales at Brex, or Divi, or LaunchDarkly, or other great folks have come, but they're not a pirate or romantic. They don't leap off that page, and they don't never work out. And in the old days, only weird people worked at startups. It was so quirky. When I started my first startup, you know, my dad didn't tell me not to do it, but he told me it was a dumb idea. Dumb, startups used to be a dumb idea, right? They were so risky. And when startups became mainstream, no one thinks they're dumb ideas anymore, do they? No one thinks it's a dumb idea, and that's good in the sense that there's more humans, but it's bad because we lost, we got normal people. And you can't build, your first 50 people can't be normal people. You'll fail. And then when you go from 50, when you, and then what's the break line? And I've asked a lot of CEOs this myself, because I'm learning, always learning. And one way or another, people say the same thing. Some people say, hey, we always want our first 1,000 employees to work 24/7 and be intense and never sleep and all this, but that's not possible. The real answer ends up being managers of managers. When you have two levels of management, the reality is that you want to keep the bar high, but you have to expand, you have to expand what you do. But until then, you know what I'm saying, the pirates are amazing. You've hired normal people that want a normal job. You do not run a normal company, you run an 8-person startup. Don't hire normal people, they will fail. Yeah. Right? And they can be quirky, and they can be from weird places. Well, I'll tell you one last story, just because our last, I didn't totally get this. My first team at Adobe side and Echo side, you know, we had almost all pirates and romantics, but I didn't know it at the time, but I remember I was at an early Dreamforce, and this, like, 6'8" sales guy, and Dreamforce is Salesforce's big event, it used to be everyone used to go, now it's a little more niche, he grabbed me by my, you know, he's like a foot above me, maybe 7 feet, grabs me, almost pulls me up off the ground as I'm walking out of the parking lot, going to my Skoda, I'm like, I'm like, hello? He's like, do you work at EchoSign? Which is my company, EchoSign. I was like, yeah. Do you know Joe Colletti? I'm like, yeah, he's our sales rep. He's like, I love Joe! I love Joe, he loves your product so much, I love that guy, right? That's who you need, right? And it turned out Joe in his previous SaaS job was absolutely mid-pack, okay, he was not the best rep at, he worked at a third-tier email marketing company that actually ultimately failed. He was not top decile, but he was smart, His parents were both doctors, okay? He had not yet been successful, but he knew our products, you know, he knew our product at a level that, you know, like Edith talked about that ad tech person, if you saw that, that Joe was our guy and the customers just loved him, right? So you get that guy, that pirate or romantic in sales and magic happens, and Edith told the same story, and you put the ordinary person in and they sell nothing in the early days, right? But later they do okay. So anyhow, long-winded answer to pirates and the romantics are the only thing I've figured out how to answer this. And then the rest of it works itself out. The pirates and the romantics may work 50 hours a week or 40 hours a week, but their output is so high. It's so high, right? And the ordinary people that work 20 hours a week produce a tenth of the output of the pirate that works 40 to 50, right? And they'll produce the balance, I think.

Thank you.

Hi, yeah, just kind of touched on it a little bit there, but there's obviously like the environment that we're operating in 2023 is so vastly different. 23 and been pretty much in the past, at least from my perspective. Um, I'm like a founder that's bootstrapped and wondered, like, you know, often when you're Googling like founder bootstraps, you can kind of get different playbooks that are written in 2016, '18, even '19. What do you think like the, the founder playbook in 2023 is, considering that, you know, so much has changed in 2 years? Well, how does the playbook for bootstrap founders change? Yeah, well, the good news is it's never changed because you have no capital. It's never changed. Really, the ones that raised $200 million and now can't raise a dollar, their playbook changed. Let me tell you, their playbook has changed a lot. Okay? It really hasn't changed. And I actually think— and look, if you're not growing any longer in 2023, that's terrible, right? I actually think 2023 is the year of the efficient. If your growth is still pretty good and you're bootstrapped, you are not cool in 2021. You are lame. You're kind of cool today. So hire, like, be— so I'm gonna tell you, this is one, it's not where— and then I'll answer your question more specifically. Now's, now is your time, your window, and it won't last. We will get drunk again. Multiples will probably go up. Venture capital will come back. It always has. And you know, people will only wanna work for unicorns again, but there aren't now. Unicorns are stupid today, right? They're stupid. Like, people don't wanna work for, but it will change. So now is your time. To hire someone that went to work for a unicorn that got laid off and is bitter. They're like, you know what, now that I look back, I got these stock options at a $2 billion valuation. Even if I didn't get laid off, I was never going to make any money because we were going to exit for $500 million. So what's the point of having options at $2 billion? And they just want to work for a good CEO in a good company where they can be paid well and left alone. And they don't want to deal with that, that overfunded unicorn crap. So this is tactical advice. The strategic side is this. And I've written about this on Saastr a few times, and there's a lot of examples that I've written up. You can see like Atlassian, Qualtrics, and others that basically bootstrapped forever. The reality is it normalizes at about $10 million, $8 to $10 million ARR. Okay, now you can't— I don't know if you saw Parker Conrad from Rippling. You know, they've raised— he's burned and raised so much money, you can never catch up with him if you're bootstrapped, right? But most normal SaaS companies, when you hit $10 million in ARR, if your margins are 80 or 90%, if you're real software, that means you're getting $10 million of funding each year, isn't it? It's enough. 10 million, especially if you're growing, if you're going from 10 to 15 to 22 to 30, that's enough to hire enough people to start really making it happen at 10 million. And so what does that mean? What does it all boil down to? On average, and I've written up the, the data and I'll give you an example, it usually takes bootstrapped companies that go big, that, that have multi-billion outcomes, another 3 to 4 years longer than venture-backed ones. And that sucks. Okay, it does suck. And if you heard, did you go to hear Daniel Dines from UiPath who was here? He was our second speaker. What's UiPath worth today? $30 billion, over a billion a year. It took him 10 years to get to $1 million in revenue, and then he went from 1 to 100, I think, in 3 years or 2 years. 10 years, and he had a little bit, a tiny bit of money, but he called himself bootstrapped for 10 years. Took him 10 years to get to a million. He didn't quit, and then he grew as fast as it, and then he did raise money later, but he grew as fast as any venture-backed company once he got some in. An extreme example to say that the answer is get to $8 to $10 million. Realize it's gonna take you 3 to 4 years longer. Cry me a river. Too bad. That's life. Okay? Raising venture capital seemed free in 2021. It ain't free now. If the costs are high, your VCs want their money back, um, your valuation. So I— it's— it— people thought venture capital's free. It's not free. It's expensive and has a lot of conditions. You don't have those conditions. Suck it up. Get, get the extra years, get to $10 million growing at a decent clip, a decent clip. And, and you'll do— you'll do— you know, will normalize, right? I'll give you one last story and then maybe it's too much, but, you know, but I invested— I was the first investor. So they did eventually raise some money in a company. Let's see, what's the— 2023, right? Yeah. Okay. So this company was originally founded in 2004. It went 9 years, 10 years bootstrapping. Started off as a services company, so bootstrap through services to figure out how to build the software. Finally built the software, got to a million in revenue, and I invested. Okay, so it took them forever. So now it's 2023, so it's, I guess it's actually been 19 years. Um, and it took them the first 10 years to get to that million in SaaS revenue. Um, and they, they just signed a deal to sell for $300 million. Okay, and the founders still— now the founders did raise money, but they still own almost half. That's worth it, right? I think it's pretty good. Yeah, yeah, yeah, it's pretty good. And it could be worth more, but on an as-diluted basis, they don't own 4%, they own half between the two of them. So, but it did take them a decade like Daniel did at UiPath. And but once they got— and then it was very stressful, so then they all I know it's a long story, but it might be helpful. Then they never raised money. I gave them some money, and then they made the mistake that a lot of bootstrappers made, is they debootstrapped too quickly, because they didn't have the DNA. And I gave them like $3.5 million, and they didn't intend to, but they spent it all like in a year. Okay, they didn't go, they didn't do fly first class, or they didn't do any, they didn't, they got an office, but it wasn't all that nice. But they just didn't have the DNA to know what happens when instead of hiring one person a quarter, you hire one person a month or one person a week. And they just didn't get the physics right of what a VP really costs, especially if they miss the plan. And what does a VP of sales cost if the first one fails? And the first, his first VP of sales failed. I told him, whatever you do, don't hire this guy, 'cause I knew him. He still hired him. He brought in 4 tailboard reps, they closed nothing, the costs add up, and all of a sudden that $3.5 million's almost gone, right? So they almost had to rebootstrap after that. And by the time they got to $10 million, they were done, right? They're like, we're not going to raise any more capital, right? And they didn't grow at a hockey stick rate, but they never quit, right? And they're at $34 million today, selling for $300 billion in 2023, and they own half the company. So maybe that's my answer. Cheers. Thank you. Thank you. Yeah.

Hi, Jason.

Hello. Thanks for coming.

I'm over on the— your other side.

Oh, sorry. The audio seemed out of sync, but since it's the real world, I wasn't sure how the audio got out of sync. It happened once early. Clear on the screen. I'm like, it's been a long two days. Great two days, but a long two days. Thanks for coming.

Yeah, absolutely. Um, I started— want to start with a little story because it kind of feeds into this. In 2017, me and my boyfriend went to Saster, um, in 2017. 2017.

Is that at the Hilton or, um, I think so.

It was still in San Francisco. It was still—

it was crazy. 2017, it was crazy at the Hilton.

Escalators.

Yeah, that was crazy.

Crazy.

Fun crazy and bad crazy. Yeah, it was, it was good.

Um, But we went, we had two different jobs at the time. We went to all of the Saastr events, and after the conference, my boyfriend proposed. And—

Is that good?

Very good.

Okay, congratulations. I thought there might have been a few years. I didn't know where the story was gonna go.

Yeah, very good. And we just—

A Saastr proposal, okay.

A Saastr proposal. And we opened up our company. It opened up the week of our wedding. That wasn't planned, but it just happened to be. Now we're evaluated at $4.3 million 5 in ARR. As you can see, we're kind of romantics, and your pirates and romantics thought really, really resonates with me. How do you find them? I'm a very animated romantic person, so I start talking to people and they mimic what I want to hear, and then when I get in a meeting and I'm thinking I have these passionate people, they just blink at me, and I don't know how to get the right people in the room. It's not on Indeed. So do you have any—

So you feel like You feel like you can bring in folks into the hiring funnel, but you're having trouble figuring out if they're the right fit is your problem?

Exactly.

Are you the CEO, or who's— are you—

my husband's the CEO and I'm the COO.

Okay, well, look, I mean, I don't mean to oversimplify, but maybe it's not the problem you think it is. Like, first of all, you know, the number one job for founders is recruiting. Always. Not, not for a little while. At first, you recruit the initial team, And then you recruit one person at a time. And then as you scale, you spend your entire life recruiting. Everything, everything when you get big, it never ends and you better get good at it. But you don't have to be great at all parts of it. Some folks are good at top of funnel, creating excitement. Some folks are very good at screening and have the sixth sense of who's the right. And hopefully either you, your husband, hopefully he is, has complementary skills to you. And if he doesn't, hopefully someone else on your team does. Don't kill yourself, you be the, you create interest, you get folks, I mean look, you're doing $1.5 million in revenue, or $2 million, like, you know, you're not, you're great, you're not nothing, but like, you gotta get people excited. They haven't heard of you. You know, you're not Rippling, or Divi, or LaunchDarkly, or UiPath, or Loom, so, you're doing, you're activating people, play to your strength, and have him do the tough interviews.

Okay, thank you.

Right, yeah. Hey Jason, thanks for another great show.

Thanks for coming. So a lot of what we've been talking about in SaaS for the last few years has been a lot of specialization, building out specialized teams.

You know, you kind of went from sales to SDR to inbound, outbound, customer success, now growth marketing, customer marketing, field CTO, solutions engineers.

How do you think about specialization in the new kind of era of efficiency? Do you have your— has your thoughts changed? It's a really good question. So yeah, in my time in SaaS, we all went from very light specialization. SDRs and AEs was specialization. Then we figured out we needed sales ops earlier. RevOps became professionalized. CS became professionalized. There are always SEs out there, but true solution architects and all this became professionalized. And, and initially, initially, initially, the idea was efficiency. It was efficiency. Why do you want an AE being a solution architect, an onborder, a renewal expert, an SDR, an outbound expert, a technical expert, right? And Salesforce kind of blazed the way with, back in the day, one SE per like 8 AEs, and Aaron Ross and others in the early days built out an outbound function. We all kind of copied that. But what got lost around 2019 or so was that that team has to pay for itself. That team has to pay for itself. And what happened starting in 2018, 2019 when things got heated and then got overheated in 2021 is we saw a— no matter what anybody says, they're, they're full of it. On a, on a, on a yielded basis, sales efficiency went way down. So if you have sales reps only closing 2x their OTE and you have a whole team of enablement and you have a whole wonderful RevOps team and a whole this team, you're not— you're never going to get profitable on your customers. It will never happen. And so the goal of these functions has been corrupted. And for the handful when capital was free in 2021, it was okay. Because it was okay if these previously efficient functions really just enabled faster growth, right? Faster growth. And it was okay, but it wasn't okay in 2018 and it's not okay today. So it was interesting when Sam Blan from— that was CEO of Brex— kicked it off. He talked about how even Brex, which is— which was still relatively SMB for a long period, how the AEs had to do half of their own deals through outbound and And so he really described, in a way, a full-stack AE, right? And people talk about that, and I think that's great, and Sam's one of the best revenue leaders, but I don't think that works for most people. I think most people need to specialize. Closers should close and openers should open, and when the product gets complicated, you need some solution architects and sales engineers, and when you have more than 4 or 5 reps, you need some type of rev ops to keep the— you don't want your VP of sales doing all the scheduling and all the management. It doesn't make any sense, but you've gotta make a spreadsheet and figure out what do these people cost and sales has to pay for it. And a simp— a simplistic way to boil it all down is one, we have to revert back to sales closing 3 to 5 times what they take home. 3, at least 3x for SMB, at least 4x for mid-market, 5x for enterprise. And you have to budget in there the cost of the support of the team. And so that may have to be— it's usually— it could be more when things were nutty in 2021, but usually all that extra stuff costs about 20% more when you model it out. So it really maybe need to be 3.5x and 4.5x and 5.5x at scale and do it in a way that you believe is a— are you the CEO or the founder? No, I run some of the regional teams. Well, okay. Well, however builds it or however you advocate, like quotas got to go up or attain— maybe quotas don't have to go up. Maybe that's the wrong way to look at it, but attainment has to go up, right? And you have to pay for these resources. And if you're— so if you're a manager, right, the problem is too many managers were trained the wrong way the last 2 years. They never had to understand the fully burdened cost of these resources. Now most, even most VPs of sales don't really understand the fully burdened cost of the resources they want on their team, but they kind of get it. Like a classic kind of gets it. Like, I mean, Sam Blond, I love to death. Sterling, I know less well, but I love. I'm not even sure they knew the fully burdened cost of their sales teams, okay? And they're pretty damn good. But your average, uh, team lead has no idea what this stuff really costs, right? But you can distill it down to 3, 3x, 4x, 5x, plus a kicker for these teams, and if you're not performing at that level, it doesn't make sense, okay? So that's all of it. Will in an inefficient era folks roll back some of those functions? I hope not if they can reach the attainment required to justify them. If there's no, but if there's no proof of ROI, just like with your customers, they're gonna get cut. If you have a large RevOps team, and you cannot prove that the sales reps shouldn't just schedule themselves and they shouldn't just submit their own invoices themselves, they shouldn't just train themselves. If you can't prove that that leads to an extra deal or two, it's going to get cut back. It's going to get cut back. If the SDRs and the AEs argue and they say they sourced all the deals themselves, you're going to have a small SDR team, not a large SDR team. So they have to prove that they are accretive. That's the answer. These resources have— they used to be accretive, they weren't accretive for about 4 years, they have to be accretive again. Makes sense. Thank you. Yep.

Thank you. Um, yeah, so I'm gonna— I think you've kind of asked— answered parts of my question in the last 2 answers you've given around, uh, like managing costs around customers. But I've been in the London customer success market for over 12 years, starting with a career with Yama here, which everyone's forgotten. But, and the thing that I've noticed in the last year is that, and along with my peers, is the dumbing down of customer success. And companies are no longer looking to hire VPs of CS and CSOs. They're focusing more on the director level, head of, or even below, rather than thinking, hey, I can bring on this person that's got like high value, high skills that can maintain and grow my customer base. They're choosing to go for a lower value person that just turned the nuts and bolts of the customer function around. I don't know if it's happening in the US as well, but what are your thoughts?

That's not my experience.

Yeah.

The question is, are folks dumbing down CS to save costs or for fewer issues? I have not seen that at all. I have seen other things that trouble me and bother me in CS. I see the opposite. I see even, even with the flatness we see in the market and stress, I see I see tons of founders of really good startups that cannot find a great VP of CS. A great one. I see every, I see the majority of startups I meet between $1 million and $10 million want a true VP of CS and don't have one. They want one, they can't find the person. So I don't have that experience. But a few qualifications. No one wants a strategist at that phase. And what has hap— there's many things that have happened in the CS industry, which if you've read SaaStr for since its inception, since 10, since 2012, I've been the biggest champion 10 years ago of CS. Gainsight did a whole day at their conference like 8 years ago where it was all SaaStr content done live because I was such a proponent of CS. I'm not a huge proponent of CS today, of the way people do it, of this lazy way. I'm not a proponent of the laziness. I'm not a proponent of folks only wanting to do strategy and not meeting with customers. Okay, and not wanting to learn the product. And I'm definitely not a proponent, and I can't fix this third one, of CS main job being to drive revenue up. I do think that CS, a good CS team should have an expansion goal. Okay, but I don't think CS— we at Saastr, we're tiny, we get threatened by our vendors at renewal time. That's the wrong way to run customer success. Even me, I don't want to talk to these people. I don't want to talk to any— of all the software stacks we buy at Saastr, and we're tiny, but we're actually, because Saastr is not tiny for events, we are a number of vendors' largest customers, believe it or not. I will not talk to the CS people. I will not talk to them. They're either not going to want to hear my feedback and do nothing about it, or they're going to threaten me for more money. If you want to threaten me for more money, just do it by email. Like, I'll just read the email. Okay? And they're so lazy. I will tell you a recent experience. So like recently, there was a piece of software that we wanted to buy that was about $50,000, and we were going to substitute from another vendor that was $40,000. So we were going to pay more. And after about— I mean, we're a team of 7 for SaaS. We don't have a lot. We don't have a CIO or a lot. After about 2 months trying to get it to work, we couldn't get it to work. And they told us, the CS person told us they would need an extra $100,000 from us to get it to work. and they would need a year of overlap. So we would have to pay them $150,000, because they would have to run both products in parallel, without syncing the data, and we'd have to run 2 databases of Saastr attendees, 2 databases of all of this, for a year, for $150,000, and do all those soft costs. That's pretty bad, that's what the CS team told us. So we said, well, we'll think on it. We didn't say no, because once the, if the prospect is like frustrated, that means you still have a shot. As soon as they just go dark, you've already, you've lost, like, Oh, we'll think about it. We did, we stopped arguing. But then, then one of the folks at this company, one of the founders happened to email me and asked me how it was going. And I'm like, I don't wanna tell you because we're business friends. He's like, no, how's it really going? I'm like, well, you know, we tried for 2 months. It's supposed to be a 1 and a 1-hour deployment and then they wanted 150 into 2 years and it's like, I'm like, but please don't tell anybody at your company because I, I, I don't want to. And then of course I get an email the next day from the SVB, you know, we need it, we need a 2-hour call. Oh, now I'm guilted into it because I found out. I do the 2-hour call, listens, we explain all the issues, they're like, oh, that's very interesting, we'll get back to you. Never gets back to us, never fixes the issue, nothing ever happens. It's just enough already, right? It's enough already. So, no one wants that person on there, no one wants to make that hire, people are too strategic, This CS leader wanted to get on the Zoom, but really she just wanted to hear that things were great. You know, she got on and said, oh, we're sorry that this happened. Empathy. But what are you actually going to do to fix it? Nothing. Nothing. No one does anything to fix. So no founder wants to hire the resource I just described at an early-stage startup, do they? But everyone wants an owner. Here's the thing. Every founder is desperate to— who's frustrated, made a hire that they thought was an owner that isn't an owner? Raise your hand. Who in this room? Everyone wants owners, right? So I would worry less about whether you're the SVP of CS. I would talk about being the head of customer CS and explain how you're going to be an owner and you're going to be tactical and strategic. And if you talk to 50 CEOs between 1 and 10 million, I think you're going to get 10 jobs if you approach it the right way. That's my perspective from the field. Yeah. But I don't see this dumbing down thing, but I could see how you might see it, right?

The salary attached to the roles now has gone down about 30% in the London area.

Well, maybe it has. Well, I mean, look, that's a different issue of what happens with comp. Okay. And CS is a little different than sales, but let's step back for a minute. Sales comp has gone down in 2023 because attainment is lower, right? I mean, I did a SaaS survey of a couple thousand folks that put it, put it on SaaS in the last week or two. You know, only like, only teens of folks are hitting 70% attainment. So if your sales team in 2021 was hitting 70% attainment and they're hitting 30% today, your sales team probably depends on how it all works. They're probably gonna make 60% of what they made in 2021. They might make half. And I'll tell you, a lot of the sales folks I know are just grouching about it. I don't make enough money. Well, how much have you closed? Well, I've closed, I, you know, I don't really close anything anymore. Well, what do you expect? What, what do you expect? You think 2021 was normal? Okay. And, and it's not the same in CS, but if you find the right job, You may have to prove yourself. You may have to take— I know it sounds terrible. You may have to take a salary cut to do it. And I know, I know it sounds terrible, but maybe some of it is that the world got bloated and made no sense for about 18 to 20 months. And it's life, right? I know it's not what you want to hear.

I have 3 jobs. I'm okay. It's my peers that are struggling.

No, I know, but I can't— here's— I know.

Yeah.

And also, and the other thing to realize, and I don't know how long you've been doing that role, comp also was dramatic, went dramatically up for about 2 years. And you might not have seen it if you got promoted in 2020 or 2021. You might not have realized how much comp went up, but it went up crazy in many cases. Right. And it can't stay crazy. Right. And so maybe what you're seeing is founders are like, listen, I can't go to my team and ask them to take a salary cut. Like, I'd rather just hire a more junior person and let Bob quietly leave. Right? I can't solve all the things.

Yeah.

But I will say I can't solve whether it is, and startups pay less than big companies. All I can tell you on the other side is every CEO wants an owner. And whether I can get you the comp you want after 2021, probably not. Can you get the position and the title? Yes. Can you crush it for 6 months and ask for more money or talk about it up front? If you raise the NRR 10%, bring it up up front, ask for more variable comp. Approach it as an owner and maybe you can bridge the gap in the middle.

Yeah, thank you. And please continue to sack your CSMs if they're rubbish.

I just think the easy times of 2020 and the inflated NRR were just— they were just corrupting, right? It just corrupted.