Top 10 Go To Market Mistakes Founders Make Again … and Again with SaaStr’s Jason Lemkin

The reason they left the game is because they didn't want to be in the game. Sales is hard. It sounds like I'm being critical of those folks. And to some extent I am, but here's the tough part about sales in particular. It can burn you out. And I haven't seen too many folks in sales that get burnt out by sales and then magically rebound in 2 years and are excited. It should work that way. I know what happens with some Olympians. I know what happens with some founders, but I just think what happens in sales is it's not just tired, there's fear. And when fear sets in sales, it's almost unrecoverable. First of all, thanks for everyone for actually making me feel better. I'm pretty positive, although realistic, as those of you who follow our content know, but there's some friggin Debbie Downerism, a lot of grouchy people on LinkedIn, a lot of growth stage VCs saying from their fancy offices, that they're never gonna make any money on their unicorns. And there is just a lot of grouchy-isms. And I wondered coming this year, this be like a, what would the vibe here? Would it be a bunch of Debbie Downers and, and grouchy people from LinkedIn? But it's great. Every single person I've talked to here has been positive. It's great. I don't see any negativity. I see us all building. I see a lot of folks being, feeling pretty good and being rational. So thank you everybody for, for picking me up a little bit. Not that I was down, but It's a good sign. It's a good sign. Uh, you almost wonder with the grouchiness, does anybody need a SaaS-ter if everyone's good complaining about having to go to the office or hit a quota? But it is, it is good to hear we are still building amazing companies. One thing as an aside, for almost 2 years we have done a Live Workshop Wednesday. It's every Wednesday, 10:00 AM Pacific. Frankly, what we do is we will look at the 200 pieces of content we had and we'll basically invite the the 50 best to come back, do it again, but better. And then take more of your questions on Zoom, on the internet. And then we'll, then I pick and choose other great speakers over the years. It is great. We've been doing it for 10 years. I'm literally 10% of the people I've talked to even know we do it. So if you like this content, just go to sastr.com on the right, there's Workshop Wednesday, click and sign up. It's free. You can join it. Anyhow, I did one of these and it was great, but a very small number of people saw it and I wanted to update it. Thinking on the last 18 months, what are the top 10 founder go-to-market mistakes I see? Some are old, some we've been writing about for over 10 years in SaaS, but some are new because the world has changed. Expectations have changed, especially for the team. So I just wanted to summarize some things, um, to help you distill all the mistakes we make. Um, and this one is really This was always an issue pre-2020, but the number one issue, there is reason number one, the number one reason I see startups struggle at your stage in today's world is they hire a VP of sales that either doesn't want to sell or doesn't ever want to learn the product. And I told the, I think I told the funny story on some SaaS thing before we, I interviewed a whole bunch of maybe 50 or 100 VPs of sales the last year for ourself, for portfolio companies or others, VPs of sales. I can't tell you how many by the 4th or 5th interview didn't really know what the product did. Did you watch the explainer video? Did you go to a video? Did you hit the trial? No, I haven't had a chance yet. You've done 4 interviews. You met twice with the CEO. When we interviewed for little team SaaStr, almost no one had any idea what we actually did. VPs of sales. VPs of sales. So they don't know it. And I guess some of it is that we interview over Zoom now for first interviews, but it's terrible. And I'll tell you two other specific stories. A company I invested in that's coming up on $16, $16, $17 million in revenue, but it's had a tough last 18 months, like some of you have. And I knew the VP of sales. I didn't put him into the company, but I knew him a little bit and I recommended him. I didn't know him personally. I didn't actually do the work. To fully recommend him, but I said, hire this guy. And in the sort of disaster tragedy story, 6 months in, sales went down. You bring in a VP of sales and sales went down. He hired 10 people. He brought in a team and sales went down. It's the tragedy, disaster tragedy story. But he was honest enough to not hide from it at the board meeting. He was honest enough to not blame me, the Lord our God, the, the weather. Whatever, he said, honestly, I've been here 6 months. This product is much more nuanced than my last product. The sale is more complicated. And I just never really learned how it worked. I never really learned how it worked. And when people would interview at this company, they would call it the Gong of something, the Gong of another category. And that was great. And everyone's, oh, I'm going to join the Gong of this, but it was barely true. Okay. The product was much more nuanced. Much more enterprise, much more workflow. And he would go into head-to-heads with their competitors where their VP of sales knew their product cold. He would lose every deal. Oh, we're the Gong of this. Well, do you integrate with this? And how does it integrate with Workday and Salesforce? And how do the workflow, how does the automation, how does the analytics work? I don't know. I gotta get Julie. I gotta get Bob. Never understood it. And this was someone I like and trust. And now when I see VPs of sales fail in 2024 and 2023, I always, ask them if I know them or the CEO, did they ever know the product? And they never know the product. And at that same board meeting when the VP of sales admitted it honestly, the CMO, actually I knew her and I'd put her into the company and she raised her hand on Zoom and said, honestly, I don't know the product either. I don't know the product. And you can laugh. Okay. But I can give you a lot of stories. I can give you a lot of stories. This is, they don't know the product. Here is my rule. And this used to be the rule when we all worked in offices and this used to be the rule in the old days. Before anyone in sales from the bottom to the top starts, they gotta crush the demo for you. They don't, we don't do this anymore as founders. In the old days, any salesperson would come into your office and maybe they'd be nervous or maybe they wouldn't, and they'd get in front of the whole sales team and they'd have to do a pitch. If anyone's been around for more than 5 years, you might remember these days you had to pitch the whole team and, and that's the job because it's sales. I can't tell you how many sales folks never do a pitch before they start. They never do it. Maybe it's okay for a rep. I don't believe so. But a VP of sales, it's too late. You hit the ground running. You've gotta build the team. You've gotta build the playbooks, and they never ever learn it. So whatever you do, I would cert— never give anyone an offer letter before they give you a demo from CRO to junior SDR. I would never give them an offer letter. If you're foolish enough to do, don't let them start until they can do a demo. I, then I would tell 'em, take a week off, take a paid week before you start. Take 2, take 4 weeks and actually start, Mr., Ms. CRO, when you can demo this product. 'Cause it's just too late. They think, everyone thinks today, oh, and I ask them, what do you think? Oh, I'll learn it when I get there. I'm good at sales. I'll learn it because I'm a people person. I'll learn it. My customers love me. That's sales. My customers love me. It's too brutally competitive today. That one that I knew that I trusted, people love this guy. His customers loved him, but the comp— the AI-driven competition ate his lunch 'cause he never knew the product. Okay? So don't do it. They need the demo, don't make the hire. The related one, which was always a little bit of an issue before a couple years ago, but was the world changed when capital flooded the markets in 2021, is this third version of it. Do not hire a VP of sales that won't carry a bag, that won't sell themselves. It's funny, in the early days of SaaS, one of the earliest posts I wrote, does a VP of sales need to carry a bag? And I wrote a lot of the, a lot of the things I had strong opinions on. I said in the early days, I'm not sure. And the reason I said I wasn't sure is let's imagine you're joining a startup at $2 million and you want to go to $6 million and your deal size is— and you want— I want to say, let's keep it simple. You want to go from $2 to $6 and your sales reps on a yielded basis do $400K. Okay. And your VP of sales comes in, there's one rep, which is pretty common. To go from $2 to $6 to add $4 million in bookings, they're going to have to hire 10 reps. So if you ask them to wait 6 months, carry a bag, be a rep themselves, they'll never hire the people, there won't be enough time, you'll miss the plan. But I realized as time went by, I was lucky because my first, my second VP of sales, Brendan Cassidy, had did this. What I got wrong was he, when he was the first head of sales at LinkedIn, LinkedIn was an early EchoSign, Adobe Sign customer. He'd used my product in the field for 18 months. So I took it for granted that someone could pick up, that, that someone didn't have to carry a bag in the beginning to get smart on the product. But he, not only was Brendan great, you've probably seen some of his content, He was already a customer. He'd already used the product hundreds and hundreds of times himself and for his team in the early LinkedIn sales team. Today, there's too many folks who are burnt out, my friends. There's too many folks who are burnt out the last couple years. There's too many folks who want a VP of sales, but wanna look at dashboards. There are too many folks who are VPs of sales that aren't willing to travel anymore. They've gotten comfortable at home. They're tired. There are too many VPs of sales that quit when it was good to be a fractional CRO. And I know this can be triggering. To be fractional or have 11 clients. And now there's not so much money and they're forced to get a full-time job. But the reason they left the game is because they didn't want to be in the game. Sales is hard. It sounds like I'm being critical of those folks. And to some extent I am, but here's the tough part about sales in particular. It can burn you out. And I haven't seen too many folks in sales that get burnt out by sales and then magically rebound in 2 years and are excited. It should work that way. I know what happens with some Olympians. I know what happens with some founders, but I just think what happens in sales is it's not just tired. There's fear. And when fear sets in sales, it, it's almost unrecoverable. It's the one symptom where if you're ever deciding, should I give my VP of sales more time? We've talked about this for years in SaaStr. The numbers aren't improving, but things look okay, or this or that looks okay. The number one way whether to keep ahead of sales is if fear sets in, it's unrecoverable. When the VP of sales, no VP of sales takes a job where they don't think they can sell when they start, but 8 times out of 10, it's harder than they thought. You hear so much in today's world. So many folks criticize. My CEO told me it was so easy. My CEO told me we were growing 300%, but it turned out to be 30%. My CEO told me this, whatever really happened. What they're complaining about is it was harder than they thought. It was harder than they thought going in. That's on you as founders to be more transparent. But when it crosses the line to fear, when they don't think your product is sellable, when they feel like it's not their fault, it's a product's fault. A little bit of this is okay in sales, but if it's con— I can't win a deal because whoever's been here today, because DeepL is so much better, because Grafana Labs is eating our toast, because Howard from Rome, he's got all that money from NetYEX, we can't beat him. When you hear that too much, it's hopeless. So. Make them carry a bag, make them do it, make them do the demo, or it just don't work. You can't hire. I know it's tough. You can't hire the burnt out. You can't hire the broken in sales. You can't hire the folks that don't want to do it. And I'll give you one last story. I briefly maybe told this on a webinar before, but a version of this that doesn't want to carry. I, when I, I interviewed this VP of sales from a, that had been both at a startup you've all heard of, and then a public company you've all heard of and was highly regarded in sort of my sales community. In, in the Bay Area. People loved him and he'd gone to a higher flyer and it hadn't worked out. He'd gotten fired, but so be it. Like, actually, I think a VP of sales that's been fired once, not all the times, but once can be a great hire because you want the pirates and romantics. You want the passionate ones. And sometimes those passionate ones have a conflict in their— you don't want them to have conflict with all their bosses, but if it's just one, it's not that bad. So I don't view that as a flag, but I do want to learn what happened. And he comes in and he is, I've got 6 reps to bring with me. I've done this. I know this cold. I know SaaS cold. And this guy lived in the East Bay. This guy, if anyone's, you won't really know it, but if you've been to the Bay Area, there's a town east of San Francisco, east of Oakland called Pleasanton. It'll take you about, if there's, you can take the BART. So it's gonna take you 45 minutes to an hour to get to the city. And he said, I'm willing to travel to meet 6-figure customers, but only in the East Bay. I won't go as far as San Francisco or Palo Alto anymore. I'm not willing to do this anymore. And he's just broken and, and I get it. And it's fun to work in your pajamas and your sweats at home and all of this. And the person that introduced me to him, I highly respect. And he argued with me, yelled at me. He is like, how can you not hire this person? I'm like, are you not listening? Like, he won't leave. He won't take off the pajamas and he won't go to San Francisco or Palo Alto. So just, you can't hire these people if they don't want to sell. And the trick was, and then at the end of the interview, I already knew it was hopeless, right? But then I asked him, are you willing to carry a bag? Are you willing to sell yourself? The meaning is no, my team will do the selling. This is a way to normalize all these issues, to normalize the won't leave the house, won't travel, won't learn the product. Push them in 2024. Will you carry a bag just for a quarter? Carry a quota for a quarter. I used to not be sure. Now I think it's 100% required. They've got to sell themselves. And if you hear hesitation in their voice, They ain't gonna do it. If you hear a maybe, don't make the hire. You need to hear a salesperson that still wants to sell. The answer is, of course, of course. The first week I'm gonna meet, I'm be on the road. The first week I'm gonna meet customers. The first week I'm gonna do this. So this is just accelerated as people have gotten burnt out, as it's harder than 2021, as people like to work from the pajamas, more power to them. Do not hire someone that can't sell or demo the product. Number one, we, that could be the end of the presentation. And that is new. That this is much more common than before 2021, '22. It's certainly much more common than when we worked in the office. Okay. The second one, this is actually an old one. This is an early one. The SaaS oldies will remember an old post. Don't you hire the wrong VP of marketing. All you'll get is blue pens with your logo on them. If you talk to oldies, they all, that was like a fad of the old. I lived that. I hired a VP of marketing and all I got was sweatshirts. All I got was t-shirts. All I got. So many folks said I got blue pens with my logo on them, and it's not their fault. We made fun of that, but time has gone by. And what I really realize is what happened is they hired a field marketer. They hired someone that knew— we're at an event— they hired someone that knew what events. And yes, blue pens with your logo on it is not the, the number one way to get leads here, but it's part of the toolkit. But if you're not doing field marketing, it's not what you need. And a mistake that was always true 10 years ago but is accelerated now As there's more veterans, right? There's so many great SaaS companies out there, so many great cloud companies. They're spinning out directors and managers and VPs looking for their new roles. There's orders of magnitude more candidates than there used to be. And they're hiring so many marketers that don't know how to get you leads. They don't know how to get you demand gen. They don't know how to get you demand gen. Don't hire up someone that's a product marketer. You don't need at $2 million, $5 million, even $10 million, Eric, You don't need 11 pages on your marketing site explaining how different segments of your market are critical. You will need that someday. You will need that when you're Mongo or Datadog, or when you're Datadog with 8 products or Samsara with 6 products, or even HubSpot with 5 products. If you got 5 products and 3 segments like small, medium, and large, you're going to need 15 landing pages for these segments. That ain't you. So don't hire a product marketer. I just caught up, an old SaaS superfan just crossed $15 million ARR and he begged me to do a Zoom the other day to catch up. I didn't. We were coming to Europe. I didn't have time. I'm like, okay, let's do it. And he is, things are good and bad at $15 million. Like we're growing 60%. I'd like to grow faster, but we're growing. So we have tons of money, but my marketer and salesperson doesn't seem to be working out. So the sales, I asked, does he or she sell themselves? What do you think the answer was? No. I'm like, okay, we can end this. This is not working. And then what's wrong with your marketer? I really love Bill. I love him to death, but it's not working. I'm like, what's his background? Product marketing. He doesn't know anything about growth. Does he do growth marketing? Does he do social? Does he do webinars? Does he do anything? He's no, but we have 3 great product landing pages now after 4 months. And the, and he doesn't know, he's actually an engineer by trading, first-time founder, doesn't know what marketing is. And a lot of us, the folks in product marketing at big tech companies are super smart. They're, they're often smarter than your average marketer because because they spend 2,000 hours a year staring at a website, talking amongst themselves around segmentation and markets, and then building collateral. That's not what you need, right? You don't need a corporate marketer. You don't need a brand expert at your stage until you have a brand. When you, when everyone has heard of you, you can hire a corporate or brand marketer. That's great. When I went to Adobe in my brief tenure, when we were acquired there, they didn't do any demand gen that we thought of because everyone was an Adobe customer. What do you do when everyone's a customer, right? One, you have account managers 'cause you call on customers 'cause you already have 'em. And two, you run a lot of brand marketing so people remember to buy more. You run TV, you run media, and you talk about Adobe and creeks and streams and things like that. We make fun of as founders, but that's because everyone's heard of you. It's not you. When you hire this corporate marketer, this brand marketer, you're gonna have the, the most beautiful streams and videos you've ever seen, and You're gonna have no leads. You're gonna have no leads. The third one is new and the last one's the cheat code. The third one's new, the last one's the cheat code. The new thing in 2023, 2024 in mar— this is true in every functional area actually, but it's especially true in marketing. Everyone's a strategist. We need, we do a lot of social media at Saastr. I don't know if you knew, we do a lot of blog posts and tweets and stuff. So we were trying, I was trying to, we're trying to hire someone for social media. I interviewed someone 22 years old the other day. She knew SaaStr, wrote a great email. She's like, yeah, I need about a team of 5 to start. Had less than 12 months of work experience, as near as I could say. So usually I read someone's LinkedIn, but I didn't because the email was so good. I pulled up her LinkedIn. First line, what do you think the first line is? Strategist. I'm gonna simplify. Everyone wants a team today. And what happened was the problem is in 2021, everyone got a team. There were 1,000 unicorns. And when you raise, instead of raising $10 million, you raise $50 million or $100 million. It's not that as a founder, you're like, I don't really think we need 22 people in this department or 40, but you have 99 problems, right? And you use cash to solve some of them. And if instead of, we used to do something with 2 people in marketing, now we need 5. And if we need 20 people in engineering instead of 10 or product, you just did it. If you had $200 million in the bank, $100 million in the bank. Now, not that most of we did, but it changed our culture. And it meant everyone wanted a team, and as a team, they became strategists. So here's my cheat code, honestly, for any role, but 100.0000% for marketing. If you like a marketer, if they're smart, if they're intelligent, look at their LinkedIn and see what their first line is. If it says strategist, thank them, send them a blue pen with your logo on, and do not hire them. Trust me. Not 99% of the time. And on these strategists, bear in mind, if they're more senior, your board investors will love them because they don't know what marketing is. These strategists are great. What do boards, what do VCs do? All day long they're strategizing the future of AI. AI is going to destroy your startup. AI is going to take over everything. That's what VCs do. So VCs love the strategist. They don't know. They don't know. Open up the LinkedIn. If the first line strategist, send it to your worst friend, send it to your enemy, send Send it to your competitor. Hey Bob, I'm my competitor. I haven't heard you for a while. I'm glad you're doing well too. Have you looked at Elena for marketing? We're a little small, but I thought she might be a great fit for you. And the flip side is do not, whatever you do, not hire them if strategist is the first. If you want a marketer to get you more leads, more opportunities, more pipeline, more customers, the best ones up until even $20, $30, $40 million all have one thing the same on their LinkedIn. Their first line is their commit. I got 123% of lead commit. I got, I hit 118% of my MQLs to sales, my MQOs, my marketing. It doesn't really matter what the acronym is on the stack of the pipeline from leads to opportunities to revenue. The best marketers, demand gen marketers, are machines to generate pipeline that they hand either to sales or sometimes if, if it's a true PLG, some of it sells itself. But what do they brag about? Right? They don't brag about the blue pens or even, they brag what they did in their first line. They're gonna tell you, just like almost every salesperson on planet Earth, their first line of their LinkedIn is President's Club or 118% of, of the quotage. Every salesperson on LinkedIn hit over 100% of their quota, which is just great. Every single one. But you don't, but if you go and just pop into LinkedIn marketers, you're gonna see very few on their first line. Do they brag about the amount? Of money they brought into the company. Very few. When you see it, make the hire. So you gotta hire. There's so many marketers, so many people with marketing. It was an issue 10 years ago, but it's a bigger, it's a bigger issue today. If you want leads, ask them, what was your commit at your last company? What was your commit? It could be a lot of things. I don't know. I don't know. Bob on my team handled that. I don't know. I'll have to get back to you. Don't hire that marketer. No matter how smart they are, you don't need the strategist. Okay. Third one. I don't know if this is more common today, but it is super common in the conversations I'm having with founders. It seems more common, which is founders hiring a revenue team, a go-to-market team, and stepping out of sales. Founders who are like, I don't really like sales. I don't, it's icky. It's sleazy. I, I had to do the founder-led sales 'cause I didn't have anybody. Thank God that I hired Taylor. Now I'm getting back to product. And this is what I hear. I used to hear this a little bit, but now I hear this all the time. Thank God I can get back to product. Thank God I get back to product. And maybe what's changed over the years is that every category is more competitive now. It's not just that there's more vendors, it's that software is better every couple years, right? It got better and better. Now with AI, it's even more competitive, right? You have to have feature parity in AI. And so founders are stressed and they're stressed about the competition. They're stressed about convergence. Now, Rippling launched its 118th product. Oh my God. Datadog, its 47th product. And it's stressful, this convergence. And so I gotta get back to product, guys. I'm the product guru. And so Bob, my new CRO, Elena, I'm out. I'm out. I'm outta sales. Not 100% of the time, but at least 90% of the time sales falls. Sales falls. There are this elite level of crazy VPs to sales, CROs that have done it before and have startup experience, but still wanna carry a bag and already were your customer before and already knew everything. And they check every single box and they're, and the reason is they, they're so fluent, they border on a co-founder. They have that level of fluency in the product, the market, your co-founders have. If you really hire that person, that almost co-founder, sure, step outta sales, train 'em a little bit, backfill them, be there for questions, help them. But if they are better than you on day one on everything in sales, sure, of course you can get out, but be more honest. Can they demo as well as you? Do they know the objections? Do they know the integrations? Do they know how the API works? Do they know the competitive landscape as well as you? Do they know why you lose? Usually 99%, it's zero. So what happens when the founder steps outta sales? These tough deals just don't close. So you can't do it because you hire a VP of sales. And then just a couple nuances here. Even when you hire the great one, the great VPs of sales don't let you get out of sales. The great VPs of sales and CROs just change what the founders do and they turn you into dedicated middlers. When you start for founder-led sales, you're an opener. A middler and a closer. You gotta find the customer somehow. You gotta do the demo. You gotta convince them to buy, and then you gotta ask for the money and close, right? Any great VP of sales will be a better opener and closer than you, almost always. Opener and closer. They'll spend 50 hours a week hunting, and then when any deal comes in that's good, they will be relentless for closing it. And founders were never like, a few of us are relentless closers, but mostly we're at best mediocre closers. We get a little nervous. We think asking for money is a little unseemly. We don't know how to maximize the deal size. We don't know how to pull it in for the end of the month or the quarter. The great VP sales are great at that, but they know that when I bring a CEO into the deal, it increases the odds it closes. The CEO not only is the, probably still the product expert, the vision expert, the industry expert, but also at a practical level. I know all of you guys have learned this, but let me remind you, customers love to talk to the CEO. They love to talk to the CEOs of NVIDIA, which is why what's-his-name is everywhere. They love to talk to the CEOs of Microsoft, which is why Satya's on the road. Marc Benioff goes to Davos. He said the other day he goes to Davos, the event in Switzerland with all the VPs, and he sits at the top of a staircase all day to meet customers. Like Salesforce is too big, he can't meet all of them. So he goes where the VIPs are and he has a spot. He's been going for 10 years and he just stands at the staircase and says hi to his customers. Okay. That's being a great middler. Even at $30 billion in revenue. And you, a great VP of sales, in fact, will give a CEO a meeting quota per month and say, I need you to do 10 Zooms and 2 in-person meetings a month. A great VP of sales will literally give the CEO a quota. You don't see this often, but you see it pretty often with the best ones. So my point of that is even the ones that let you step out of sales, don't let you step out of sales because they want you to be the middler. So no, I know when you hire the VP of sales, you want to get back to product. You want that time back. I am sorry, you never get it back and you will profoundly regret it when you step out of sales. And then just two nuances here. One trend that is newer with company, especially with companies that are more well-funded. In the old days, we had Amit from Gong. His Series A was $7 million, right? Today, a Series A is double digits. Christoph Janssens, he's here somewhere. I think he said the Zendesk Series A was like $3 million, $2 million, right? But now that we're hot, now that the, the B rounds are $20, $30 million, even though they're harder today, don't get me wrong, it's not easy, but as the rounds are bigger, more and more founders want this COO. They want a COO to, to manage half their team. And we could talk about pros and cons, but what I see way too often is a version of this these days. The founder that wants to get back to product hires an expensive, fancy COO from somewhere great. Loom got acquired. I'm gonna hire Billy from Loom to be my CEO, whatever. And they exit sales and think this COO who still doesn't know the product, doesn't really know the competitive landscape, can magically own sales for them. I see this is, this is a subtle point, but if you're thinking a COO can replace you with your— maybe at scale, but there's a reason Marc Benioff also has to keep firing all his presidents and co-CEOs. They're not, they can't do this role. He still has to go to these deals. It's tough. So COO to manage certain functions, great. But to replace you in sales, it just doesn't work. I know you want it, but I just, I don't know why this is accelerated, but it may be the capital for the COO and the competition, but don't do it. Point 4, this one, this one is new. This one is new. And it, this is what we talked at our, this is our closer. We talked at our opener. About the segment of SaaS, the B2B2Bs that are decelerating, right? We talked about the shock to the system of Mongo going from 40% to 17%, Salesforce shrinking to single-digit growth, UiPath cutting its guidance in half. What's happening here? There, there's a lot of things. There's macro impacts, there's budget contractions, but a lot of these folks have cut their marketing budgets to almost nothing. And when the first kind of shocks happened in some segment, and again, not all segments are impacted, some folks are crushing it. The Canvas and the Netscopes and CrowdStrike yesterday announced a massive quarter. I think they're $2 billion or something. No, no issues in security. But when growth comes up short and you actually have— many of you don't even have a marketing budget yet, but when you have a marketing budget, $2 million, $5 million, $10 million or more, no one really wants to do layoffs. There's always one or two people you want to let go. Thank God I finally have a reason to let go of Lemkin. But we don't want to do layoffs and we certainly don't want to cut sales because we need sales. We know we need sales, right? We certainly don't want to do that. And we can't fire any of our good engineers. Where's— what can we cut? So first, can we cut the office? Oh, I forgot. We let go of the office. What is there to cut, right? We can't get rid of the Kind Bars anymore if you don't have an office. People cut the retreats, which I think is a mistake. I see folks doing annual— getting to get the team together once instead of a quarter. I think that's dumb. But my real point is the simplest thing to attack is that marketing budget. That's marketing budget. Let's not spend the money on it. Let's certainly not spend anything. That has a longer lead time. Like for example, sponsors here, a lot of these are back, but a lot of folks that were here last year cut their marketing budget to zero. They're not here. It's not 'cause they don't love SaaS, or in some cases the marketing budget literally is zero. I talked to a public company, the CRO, CRO, CMO doing multiple billions who called us a couple weeks ago saying, I can't do SaaS Europa this year. Multiple. And this company is massively profitable. He said, why? My marketing budget just got cut to zero. He said, I wanna be at annual in September. I can't do it. I know I told you I would. It's fine. It's fine. This is a multi-billion dollar company that has pressure. And so the CEO cut, literally cut his budget to nothing. So look, the reality is when, when you cut salespeople, you cut your present. When you cut marketing, you cut your future. And it's a tough call, but I, I genuinely think a lot of SaaS companies are, public companies are too efficient. And one reason a lot of them aren't going to get better is Salesforce wants 50% operating margins. The only way you can do that is spending nothing on sales and marketing, right? That's an extreme example. What way too many startups have done is cut it to nothing, just nothing. The old, sometimes the only thing they'll do is very limited digital stuff with an instant ROI, a Facebook ad, a little bit of, a little bit of LinkedIn ads, but it has to be, it can't be even building pipeline. I want to see customers this quarter. And if you're— and almost everything in marketing is going to have a longer sales cycle than an inbound lead that says they want to buy today. So when you cut marketing, you cut your future. So look, I don't know the answer to all— you, if you have to cut, you have to cut. But what I learned from the first great— I remember the first great marketing leader I'd ever worked at. I knew nothing about marketing and I was working at a startup in the early days and it exploded and then it had some tougher times. It still did fine at tougher times. And the CEO called all the executives together and said, listen, we all gotta cut like 20%. No, there were no layoffs, but we gotta cut expenses. And I loved our VP of engineering, he was so grouchy. He's like, we can't, we, we need more people. Like, eh, then everyone was grouchy. We only had one veteran. We only had one person that had actually done a startup before, our VP of marketing, Greg. And he said, got it. Tell me my budget and I'll tell you what I can hit. The pro. And he did. And so this is my last point. If you trust your VP, if you hired the product marketer, you didn't get any leads. That's on you. But if you hired someone that knows how to build pipeline, build opportunities, build leads, and times are tougher, trust them to come up with a budget, give them whatever it is, $20,000 a month, $2 million a year, whatever you have to give them, challenge them, debate it. Don't be wanton, but trust them to force rank that spend and keep it going. Don't cut it to zero. Literally, again, a multi-billion-dollar ARR public company with 40% margins. Told us the other day their marketing budget was cut to zero. I'm not gonna tell you this company, I love it, but I might short it 'cause it doesn't bode well for the future. Okay, point 5, this is new and we've talked a lot about, we've had some pure play AI folks here, the Synthetix and DeepLs and folks adding AI and OG AI like Gong. And there's a lot to talk about, but let me talk about one thing that is under discussed and I know it, AI, for a lot of us in B2B, it's confusing. And a lot of folks in developer side, it's confusing. Many of you may not think that AI is magical. Some of you may think that adding a lot of hallucinations to your application next week does not make it better. A lot of you may be making fun of things. A lot of you may be saying, I don't need to make cartoons out of text when I'm serving accountants. Or I met a great founder doing SaaS for asphalt, for roads. He may not need AI today. To do project management for asphalts and roads. It's not always magical in B2B today the way it can be in other spaces. I'm not a cynic, I believe, but I, I think it's not, I don't think we're gonna fire our sales teams tomorrow. I don't think any of this stuff, but you've gotta understand two things. This is where all the budget is that is being added as an AI. And more importantly, this is the mistake I see founders make. It's where the competition is. And I see startups that do not have AI feature parity. They do not have AI feature parity. Everything else is great. Okay. But Intercom automates all the chats or whomever automates all this with AI. In today's world, if you go into a bake-off, a competitive bake-off, and your competitor is making real or fake promises with AI and you cannot compete, you're gonna get slaughtered, especially in the enterprise. You're gonna get slaughtered. You're going to get slaughtered. Customers are not stupid. People are not stupid. Are customers being oversold in AI and B2B? Absolutely. Are they— are we already seeing backlash in the enterprise of projects oversold for efficiency and automation? Can you hear 100 folks say, oh, my dumb competitor promised this, they lied? Whatever. Whoever is coming back because they lied, they're coming back, but they haven't come back. They haven't actually boomeranged back. God, whether you believe in this stuff or not, whether you think it's 3 years out or whether you think we're already here, whatever you do, calmly sit down with your team and make sure you have AI feature parity. And a related conversation that's tough, and I've done this with a bunch of startups that I've worked in and invested in, a tough— first of all, a lot of folks don't wanna do this. They wanna complain about how dumb it is and their competitors kill them. Once you're self-aware about this and you put your 3 top 3 competitors on the board and you talk about what does AI parity in, in our space even mean? Okay. And you're honest about it and you look at it. And sometimes when they're honest about it and you put it up, an issue you don't really— the tough thing for some folks is they don't have the right CTO. They don't have the right CTO today. The CTO is still struggling. They're trying to understand how this works. I see this too often. And you gotta, in a general, I think to win in this world, this kind of world, you gotta hire hackers. You gotta hire tinkerers. You gotta find folks that, uh, love working on the bleeding edge of technology. If your CTO by today isn't sure how to, doesn't, isn't sure how to integrate AI into your product, ask yourself if you need a new CTO. It doesn't mean fuck, let, get rid of them, but your competitiveness, I think, is gonna, gonna continue to decay and accelerate. I've seen a number, I think I've built enough software. I can't really write any code today. but I have built a product that's done a couple hundred million in revenue. I've done some good investments. I think I know the difference between a great CTO and a merely good CTO. And I see too many good CTOs that can't make this shift. They can't. It's too expensive. I can't hire any AI engineers. I can't, it's too, I can't afford Azure, OpenAI. I can't. I believe that you can't. I believe you can't. So find someone that can. Find someone that can. Too many can't. You gotta find a way. You gotta be honest if you're at parity, and then you gotta be honest if the team can make this generational shift a lot. The best ones all can. They love it. The— we all watch like Dharmesh from HubSpot tinkering on AI before we even understood what AI was. He's a great CTO. He's a hacker. That's what hackers do. They go home at night and they're excited about the best technology and they almost do too much. It's almost annoying. Sometimes that's a nice to have. We're in a generation where it's a must have. Okay. This one's so important. I think we, as a group, we know this a little better than a couple months ago, but it's still the social media and VCs are sending all the wrong messages on profitability. All the wrong— I can't tell you, this is a pretty good— most folks here are either doing okay or believe they will do okay. Like I haven't, but in the broad world, a lot of folks that are struggling think all that matters is being profitable. All that matters is being profitable. You can't go public on 10% growth. You can't get acquired for any reasonable amount of money on 10% growth. Hooray that you're profitable, but that's not the goal. It may or may not be part of your journey. If you're, if you have no capital, it has been part of your journey since day one. It's not, if you're ca— forget about bootstrapped or not. If you're capital-free, you have been at least breakeven by hook or by crook since day one. But whatever it is, there's so many good analysis. I put them together on SaaStr that everyone from Redpoint to Bessemer to Meritech have all crunched the public numbers. And they've summarized this for the public companies. For public companies, growth is still worth twice as much as profitability. For startups, it's probably 4 to 10 times. And for startups, what really matters is this next line is hooray if you're profitable, but you've gotta still hit T2, D2 or better, triple-double to get funded. Tripling from— look, some VCs will cut you a little slack, but the goal of venture investing is to IPO within a decade. And to IPO today, you've got to be doing at least $200 million, growing at least 40%. So build your own. If you don't believe me, build your own spreadsheet. What does it take in 10 years to get to $200 million growing 40%? You probably have to be tripling at $1 million to $3 going from 3 to 9 and then 9 to 18 and 18 to 36. And most startups don't do this. In our opener, Emer— I had Emergent slice some of their data. It's less than 10% of venture-backed startups that hit this. Not 10% of all startups, only 10% of folks that raise seed rounds from the top VCs even maintain this pace. Right? And if you don't, find a way, you're founders, you will not fail if you're not triple-double, but it's still the bar for venture capitalists. Actually, the Venturing Capital has just gotten harder. Not only do you have to triple, triple, double, but you can't burn $700 million while you're doing it. You have to do, you have to do it all. You have to grow just as fast as 2021 and you have to burn less, but there is no profitability is not the end state for investment and it's not the end state for an exit. It's not the end state. Enough patting everyone on the back for being profitable. So it's great if you need, if you have, if look, don't run out of money, that's the worst thing. But being profitable is not the end state for a startup. It may be for a mom-and-pop, um, it may be for whatever the heck a lifestyle business is, but I don't think people are coming together here and giving up 2 days of their time to have a no-growth business. So don't confuse them. 7, we hit. 7, we hit. So I'll just spend 30 seconds on it, but it's worth just breaking out so it rattles in your brain. I don't understand. I understand a lot of things in SaaS. The one thing I'm more confused about is where non-founders are in the world today. There's so many people that are just broken and bitter and fractional and angry, and I don't really want to hang out with them. But I hear you. Like, I hear you. And I know 2021 seemed weird, and I know the transition from 2021 to 2023 for a lot of folks was brutal. It was brutal for folks that were new to the market, and it was brutal to folks because the world of 2021 lasted almost 2 years. It lasted so long that we all thought that was the new normal, the thousand unicorns, right? I remember meeting with a top VC that you all have heard of, and I was with him in 2021, and he's, you should invest in my, these three companies I just did at the seed stage. It's okay. It was like, this one will be a unicorn in about 14 months. This one will be a unicorn in about two years. This one might be a unicorn this year. That's the way VCs thought in 2020. Like, they'll all be unicorns. They'll all be unicorns. And so they all raised insane capital and We're just struggling in many ways to get into this world. But look, if nothing else, you got— I know it's hard. You gotta hire folks that wanna— I don't even watch basketball anymore since March 2020, but you gotta hire folks that wanna play the game 48 minutes. You can't hire folks with 3 jobs or wanna be fractional or wanna run 2 businesses on the side or wanna see how it goes or think they can be a fractional CRO for 7 companies at the same time. It's too hard out there. You can't hire the broken, the bitter, and the fractional. Even if it's all you can find, even if their resume is great, even if someone else recommends you, there's too many pissed off people. There's too many people who are just broken by the, the change, the velo— it's just the velocity of change. Look at Zoom. Isn't it just a proxy for all of us? Zoom in one year went from $1 to $4 billion in revenue from whatever mid-2020 to '21, went from $1 to $4 billion from 2020 to 2021. Anyone know what Zoom's revenue is today? $4 billion. So one year quadrupled, and the next 3 years it essentially grew zero. Uh, Eric Wan is one of the greatest generational founders of our generation, but that's hard on anybody, isn't it? You learned how to go from 1 to 4 land, and then you have to live in 4 land for no growth for 3 years. You can't hire those people. You can't hire those people. You don't need those people. You don't need Dashologists and startups and the broken and the bitter. Okay, the last ones are really quick, and then we'll take some questions until they kick us out. Boy, this one is like one of the earliest SaaSer posts of all time. I don't think this has changed, but I, this is still a top 3 mistake in executive hiring today. Just don't hire for the logo. We all succumb to this. My God, I got someone from Notion. I got someone from Insider who's here. I got someone from Mailchimp and I'm doing email marketing. I got someone, Mailchimp, I don't know what it's doing today, but when it got bought by Intuit, it was doing a billion in ARR. That's not a startup. Different set of cycles, different set of skills. We all keep making this mistake. Again, I can't tell you how many candidates I get referred to. This is the best person at Toast ever. Someone recently, a founder that I just love, a first-time founder told me that this was like the greatest person at HubSpot. And there's some good deal size analogies and was there really early. Cool. So I talked to him. When was there really early? $200 million in ARR. Was there really early, really saw the early days at HubSpot. $100 million in ARR. I'm pretty sure that was like a year after the IPO. So that's early in his mind. Everyone loves this guy, but we all keep making the mistake. So look, here's my simple cheat code. I, and every time a founder makes a logo hire, a mistake, and they, we talk what happened with Bill is just too big company, too whatever. And I always ask them this simple question. Okay, put your hand on their LinkedIn, cover that job at Mongo or Datadog or ZoomInfo or wherever, every company you look. Would you have still hired them if they didn't work there? And the answer from the founder is always no. It's, they don't hesitate. They don't maybe, no, I would not have hired them if they didn't work at that company I look up to that's in our industry, 100%. So whatever you do, this is just a cheat. And for yourself, challenge people on your team, challenge your co-founder. If you fall in love with someone in any part because of that logo, literally, if you want, this is just for fun, print it out if you can find a printer. Take a black marker and black out the LinkedIn and for fun, hand around and say, would you still hire them? And if you hear that hesitation, they're going to be gone. There's no point in hiring someone that's not going to be there in 6 months. They're going to be gone. Okay. The last one I think we hit, so I'll just reinforce it. Guys, don't look for instant ROI. It doesn't exist. The instant ROI. Here's the real issue. Not only have people retreated, cut their marketing expense to almost nothing. The bigger fool errand is everyone is spending time in free marketing to make up for it. They're like, listen, we're not going to do any more booths. We're not going to do any more joint marketing. We're not going to do any more spend, but you know what we'll do? Let's do a podcast. Let's spend 3 months planning a podcast. Let's build a studio. Let's get an agency. Let's get the same guests that are on every other podcast, but they won't come. So let's get the folks selling courses. And horses and tools. Let's get the, the fractional people that will show up to anything. And then 3 months later you have one podcast and who's gonna download it? Nobody. And I'm not saying that actually that alone, that's a bad idea to do 100 of them and they build something. But the, think about the amount of soft costs in what I just described, the amount of time and energy from your expensive 6-figure employees building one podcast. You think this is a joke? I literally just talked with a CMO. This is the only thing he did in 4 months as a company at $200 million revenue. Only thing he did in 2 months. Okay. Free marketing is great, but anything other than viral usually has a high soft cost. So it's not magical either. So free is not magical. Magic. We heard some talks say magically bolting on a PLG motion to a sales-led thing is not an instant solution to marketing. It's— I hear so many folks that they're struggling. What are you going to do? Our product's $60,000 a year. Oh, we're going to go PLG. What does that mean? We're not quite sure, but it's going to be self-serve. It's going to have a free trial. It'll sell itself. If it was going to sell itself, it would already be selling itself. Going downmarket PLG is a huge commitment if you don't start there. It takes years. It takes much better onboarding. It takes totally different sales and marketing skills. It has a different set of competitors. If you're 100% committed to doing it, do it, but it ain't a quick fix. It ain't a quick fix adding PLG to SLG. So this stuff all takes time. Do the stuff that takes longer. Building pipeline takes time. You gotta do it. Referrals take time. You gotta do it. Instant ROI is a recipe for not growing. Okay. The very last one. I don't have all the answers here, but I do want to share it. And I've had some good conversations on it here. So I know people are aligned with me here. I think there is an operational tragedy in SaaS that has happened in the last 18 months, a tragedy. Which is that as parts of the market came under stress, as growth got harder, there's a couple things we did. We all raised prices without earning it. We sent an email to your customer, thank you very much, prices are up 20%. Everyone did it. Slack did its first price increase in history 18 months ago. I did a, a blog post, every single leader in SaaS that hadn't done a price increase did it. HubSpot did too, after basically having the same pricing for a decade. Everyone raised prices without earning it. It's one thing to launch a new edition. It's one thing to launch an enterprise edition with different functionality and different integrations and say, look, our regular one's still $20 a month, but our new global one's $40 a month with all the security integrations. The market doesn't mind that, but raise prices 3 times for the same product. Fool me thrice. What's the expression? Fool me once, fool me twice, fool me thrice. Even if you don't churn, you really start looking for another vendor. And you certainly don't want to buy more things from a vendor that ripped you off. And we're seeing a couple things and I want to tie into this. What we're seeing now across a lot of companies, and Salesforce just talked about this in this, in their analyst call, people just don't want, they're not as receptive to a cross-sell to buying more products and more solutions when you rip them off in the core one. If your product is cheap relative to value, And it's great if it's cheap and great and, and someone from the company calls you up and says, hey, we have another product we were launching. It's another product. You want to take a look? I'm excited. You only have a handful of vendors in your stack that are great, cheap, and trusted. I'm gonna take a look at it, right? Everyone at Canva is so cheap. Everyone at SaaSer has their own license. If someone called me and wanted to sell me something else from Canva, I'm all in. Okay. It's a great, whatever it is, it's a great deal. I can give you other examples that are great deals. I ain't gonna take a call from our Salesforce rep. We have 3 licenses from Salesforce, I think they charge us like $20,000 a year and raise prices every year. Like, we're stuck on it for a little while, but I certainly ain't buying anything else from you. I certainly ain't buying anything else from you. So, we're under stress, and what we have done the last 18 to 24 months is we have tried to make— push our existing customers to make up for the gap on new customers. We've tried to do it. We talked when we started this day on UiPath that crashed. Epic company. Daniel Dines was here last year. He's back as CEO. Generational company in automation and going into AI. Last quarter, UiPath, its growth crashed, but it still grew 20-something percent, but it had no net new customers. It started the quarter with the same number of customers. And even UiPath, how'd they do it? They drove their 5, their customers up to $5 million a deal and more. Oh, done. That's great. Done. That's great. But squeezing your customers hard is tough. We have a vendor here who will go nameless that we've worked with for years coming into SaaS Europa. They hired a new CRO and the CRO called us just right. We're already stuck when we're doing this. We gotta come here, right? We gotta come to London. We've already, we've sold a few tickets, a few booths, and this new CRO comes in and says, oh, we're tripling your prices. No notice, no email ahead of time. Just get something. We're tripling. Why, why are you tripling your prices? Because it's too cheap. Maybe, but like, how about talking about it over the 8 years we've worked together? And just got really belligerent. We just, we then just see you later. See you later. Now look, we did end up paying more money for this product, but we certainly won't buy anything else from them. We asked that they take us down as a case study on the website. We've given them dozens of customers. We won't give them another. So this is all over the place. You can hear stories of public companies threatening customers. You can hear stories of public companies threatening to sue vendors if they keep their data after turning off. We never used to hear this. We used to thought you owned your own data. Now we're finding out the terms of conditions of a lot of websites say, you know what, you know what, the vendor owns your data. So an aggressive sales rep will call you up and threaten you. We see too much of this. Be attuned to this as founders. But I think the worst of all of this, what has made it the worst, is when we've all decided that customer success should be part of sales. The worst of all of these trends, because what we've done is weaponized customer success. We've taken the one person in the company who, if they're actually good and not lazy and do any work and show up, Their only job is to keep the customer. That's what classic CS job is. GRR, retention. Don't lose your customers. You don't have to worry about overselling them. You don't have to worry about this. Just keep your logos and you'll get your $20K or $30K annual bonus and you'll be happy and get your NPS up and your CSAT, but just keep your logos. As soon as everyone moves CS into sales, and they do this because of stress, because they wanted to monetize the base, they wanted to monetize it. The story I just told you about the price increase. I don't think the CRO should have been working on us, right? That should have been CS or someone else making us happy. But everyone leaned into their base. And so whose job is it to make your customers 100% happy 40 hours a week? Ask yourself this if you've weaponized CS. Is there, at least for your top 20 or 30% of your base, is there anyone who day and night, all their job is to make those $50K, $80K, $100K, $200K, $300K customers? Is there someone who all they do is worry about that and nothing else? Or do they now think, is their now job NRR? My job is to turn my $2 million book into $2.8. Sounds great to the CRO. Is that right for the company? Is that right for the customer? It creates aberrant behavior. It creates aberrant behavior. I'll give you one last story. I'll give you a last story and then we'll take some questions. We were on, we did a Zoom the other day with a vendor we use, been using them for years. Head of customer success insisted that I be on it. I don't, I don't need to be on it. We got a good team over there. They can be on it. They insisted that I be on the Zoom, get in, and they wanted to sell us another product that we, that was like twice the price. But then the VP of CS made a mistake. She, the goal was, that's why they insisted that you don't need me. Amelia can make the decision. She owns the budget, but they wanted me on and the real goal was to get to buy it. And then she made the mistake of asking what my feedback was. And don't ask, I've built software. I can see the bugs. I can see the issues. I can see the problem. I said, so you really wanna know what I think? Because I'm, I'm honest and I've done references for you and I've given you customers, but do you really wanna know? And I went, your product doesn't scale. It's gone down on us multiple times. Here's all the issues. And just ended the Zoom. Just turned off the Zoom. Now, at first I thought it was because they didn't want the feedback, which is 20/20/4, but the real truth is there was no money in it for them, right? It was clear that the upsell wasn't coming. It wasn't worth their time. Move on. Is this the experience you want with a logo customer? Is it? Who makes your customers happy? If customer success has rolled into sales, I don't know what to do, but Churn Zero did a survey. Gainsight did a survey. They're both on SaaS. I'm sure Hook would give you similar data. The majority of SaaS teams have moved CS into sales, the majority. So even though I hate it, it's possible you hate it. I feel like the ship has sailed. And so we may need to just make sure somebody's making our big customers happy. So top 10. Thanks everybody.