Asana at $600,000,000 in Revenue!! Growing 34%!!

Wanted to take a deep dive today on Asana. Asana is crossing 600 million in ARR, growing 35%. And why Asana? A bunch of reasons. First of all, it's a well known iconic SaaS company run by a well known iconic leader that we are all interested in. But more than that, what is super interesting to me is the whole category. I can't think of a category in SaaS that has more vibrant competition. We think of so many categories in SaaS as having like a big number one, a smaller number two and then a long tail that barely get anywhere. But not in project management. Let's think about all the leaders for a minute. We've got Asana Monday, Atlassian, not all of Atlassian, but a big portion of Atlassian Smartsheet. These are all public companies worth billions and billions and billions of dollars all deep into the nine figures or more in revenue competing, maybe not always directly, some compete in different segments. Monday is much more focused on non tech, Asana is much more focused on tech, et cetera. And then there's a whole nother generation of competitors, either adjacent or direct notion. ClickUp airtable these are all folks in the nine figures of revenue. They've got to be 20 vibrant competitors in the project management space that are doing nine figures in revenue and there's at least five public leaders. It's crazy and it's just so interesting that we can learn from this. Compare and contrast, my biggest takeaway of all and then we'll get into our five interesting learnings. It's a reminder that competition is expensive in SaaS. And you wonder why are some companies more profitable in SaaS than others? Certainly sometimes viral is part of it. Certainly companies like Slack and Zoom and Calendly can get off the ground much more cheaply in some cases because it's viral. Calendar literally got off the ground with just a couple hundred thousand dollars. But then it's not just that. It's not just free marketing. If you're in a competitive space, sales gets more expensive. Sales support, even if your leads are cheap marketing support, it all gets expensive. And so what we've learned, what we can see from all the competitors in the space, Asana Monday and others, is that they're rocket ships. They're truly incredible. They have exciting PLG elements combined with sales. 11 but none of them are like wildly profitable yet, as I suspect they would be if the competition was quieter or meeker. That's when you really can get away with a lot of things and not just grow quickly but Grow very cheaply. Competition does make it all more expensive. But Asana, wow. So growing 34% at 600 million in revenue each year, that means it's still adding almost 200 million of new bookings. But before we get into the 5 inches, one extra meta point. Note that while that's incredible, for 34% at 600 million, Asana was growing 70%. So twice as fast at 400 million. So it's a reminder that. And we'll dig into this in the interesting learnings, it's a reminder that, yes, things are still great in SaaS. Folks are still growing at epic rates. 34% at 600 million AR is crazy, but it's not insane like 2021. In 2021, at the peak of the craziness, when people were throwing money at everything, caution to the wind. CFOs reviewed nothing. Everyone was throwing money at productivity, productivity, productivity. When everything was in crazy overdrive mode in 2021, Asana grew essentially twice as fast. 70% at 400 million. And maybe that's a takeaway for all of us. Many of you are in categories that are growing faster than ever. Folks selling to hospitality, to restaurants, to E commerce. These categories are actually stronger than they were a little while ago in many cases. But many folks selling to the core B2B market, like a lot of Asana's customers, are hitting some headwinds. In some cases, a lot of headwinds. A lot of startups have seen their growth slow way down. But maybe one way to think about it at meta level is compare yourself to Asana. Yes. Is Asana growing as quickly as 2021? No. Is it still growing at pretty stunning rates? 35% at 600 million? Yes. So maybe take it as a challenge that if you're not growing as fast as you did in 2021, so be it. If you're selling to tech, if you're selling to impacted categories, but maybe you can still sell at a pretty good rate like Asana. Okay, five interesting learnings. It'd actually be a little bit more because we've got some bonus learning. But again, it is interesting for a leader that has seen some macro impacts, but not completely. So. Number one is NRR. And NRR is always interesting for all SaaS companies. But Asana has. It's gone more enterprise, which we'll chat about, but it has tons of tiny customers too. So what's its nrr? Because it's something we can all compare ourselves to. Well, for its bigger customers, it's 100k customers NRR is 135% which is what you would expect. But very, very impressive. Very, very impressive. They're six figure customers get 35% bigger each year. And just think in your math of what that means. Over five years they can grow to seven figure customers. But it is down a bit like we talked about at the peak in 2021, at 400 million in revenue, Asana from its biggest customers was 145. So from 145 to 135, if you're seeing something similar with your bigger customers, I think you can feel like you're in big company with Asana. If your NRR from six figure deals have gone from 145 to 135. If your NRR from six figure customers gone from 145 to 85, maybe it's you, maybe it's not just the market. And with a blended set of customers, with their, their sort of targeted customer, 5k and up, but most of their customers by logo, by number actually smaller than 5k year overall it's blended at 115% overall. So pretty epic that with a mix of a small, medium and large model, Asana is still able to average 115% NRR and segment it. And you segment it, everyone segment your NRR if you do like Asana and you'll see trends. 135 for their biggest customers, 120% NRR for their 5K and up customers and 115% overall. 2 this isn't profound but it is interesting to see Asana go more enterprise late in life, but not that enterprise. But still it now has 500, 100,000 K or bigger customers. That sounds like a lot, but it's not that many. I think at 600 billion in revenue. So Asana has stuck to its self serve and its PLG roots. It's still strong there. But as things have gotten tougher and more importantly as the numbers get bigger. Right. To grow 30% at 600 million you've got to add almost 200 million of new bookings. And at some level it gets easier with some bigger deals. It's 500 100K customers are growing the fastest by far. It's 100K and up. Customers are growing 80% in today's world, 80% and has 500. So it's just something to think about. It's 5K customers and up are growing 26%. So okay, right. But lower than average. And the tiniest customers really aren't growing at all. All. And that is an issue we're seeing. Overall, perhaps the most profound one of the public companies is Zoom. Zoom today at over 4 billion in revenue, is seen its enterprise customers grow 25%. But its self serve customers, at least for the moment, at least temporarily, are actually shrinking. They're shrinking because so many folks bought Zoom in the peak of lockdown and whatnot and they just don't need as many seats today. So you're seeing this divergence in both Asana and Zoom and others where the enterprise actually is way outperforming their smallest customers. Number three related to this and this is just a different way to slice the data. But while Asana is a big push is 100k up deals. That's where its sales team hunts, that's where they focus. That's what they try to grow their base to and start there when they can. 5k is their line for to have sales involved 5k a year. And that makes sense. We've written a lot of classic Sastra posts on how it's hard, not impossible, but hard to scale a sales team, at least a US based sales team below a 5K ECB. It's just too many, too many deals to close. And Asana's come to that same conclusion. 5K is their line for a material customer and it's 73% of the revenue. And let's talk about that for a minute because there's, there's two ways to look at that. On the one hand that means it's, it's energy, its focus is going to go on these 5K and up customers because it's 73% of its revenue, you know, three quarters. And that's up. Importantly it's up from 2021. It was only 62% of the revenue just a few years ago. So it's going, not only is Asana getting this huge lift from 100k customers that bulge from 5k to 100k is growing much, much more faster than the itty bitty tiny customers from 62% in 2021 to 73% now. And so it would be tempting to put all of your energy into your 5K and app customers. But I think I suspect a superpower that Dustin Moskovitz has if his team doesn't coming from Facebook and all that is understanding the long tail. And, and just remember one way to look at it is hey, Asana is going to keep going more and more for these sales led deals. Okay? It used to be a minority, then a majority, now 73% of its revenue is from 5K and up sales led deals. But that means 27% comes from the long tail. 27% that likely has no sales cost and almost no direct marketing cost. Sure you can put some of your budget to that long tail, but likely all of your marketing is going to the bigger deals and you're getting the the long tail for free. So if Asana cut off its long tail, not only would those folks not grow into bigger customers as they do in many cases at least the 5k and up deals and occasionally bigger, but you would be cutting off 27% of your revenue. And so this is a tension, we've talked a lot about it on Saster is as you scale a lot of folks on your management team and around the table will, will push back to, to to get rid of the free edition, get rid of the small additions, get rid of them. Those customers, they make so much noise, they complain so much, they ask for features that your bigger customers don't need. And that is true. And if your sales team is under pressure to hit the plan for this year and they don't even get credit, they don't even get bookings credit for these self server small deals, they certainly won't want to spend a lot of time on them. But you as founders and as leaders have to remember that. Boy, the last thing Asana would want would be to give up 27% of its revenue, probably its cheapest customers to acquire and ones that can easily, easily over time grow into bigger accounts. Okay, point four, nothing earth shaking but always good to remember in SaaS they get 39% of their revenue outside of the US although interestingly the US today is growing much faster. Let's break this down for just a minute. The first point is I constantly track this metric on Saster. What percent of the revenue is outside the U.S. and why do I do this? Two reasons. One, for folks that are in like regulated environments like a bill or others, it's or even a stripe. And Adyen, it's very interesting to see how much they're able to break out of their local markets because of regulatory reasons. And you find folks like that are late to expand dramatically across the world. But a B2B app, like an Asana, like a HubSpot, like a Zoom, you can use it anywhere. You can use it anywhere. And I just find that way too many founders are too slow to go global. And I'm not suggesting when you have 20 employees that you hire 30 people in London and 50 people in Singapore. Of course not. But what I am suggesting, I don't see founders tying talk about it that much. Even up until 30 or 40 million in revenue and certainly not before that. I don't see them lean in. And if you have, if you're early and you have an unexpectedly large group of customers in England, in Europe, in Australia, in wherever, even in Latin America, lean into it. Localize your app more. I know it's work, but it's not that much work. Have a little bit of local customer success or support revenues. Do what it takes ultimately to get there. Because this, just like your long tail, can almost be free revenue. International revenue can almost be free. Not literally free, but if you're putting 100% of your efforts into U.S. marketing, U.S. events, U.S. activities and whoa, you find out you have 15% of your revenue outside of the U.S. don't ignore it, invest in it. Because it will keep, it will get, it will grow and be outsized. And you're not wasting all that energy, all that product energy, marketing energy, when these are essentially extra leads and extra customers that are, that are cheap, cheap or close to free. So lean into international revenue, don't run from it. And the second point is we just, it's just good to follow this because it's confusing to us. Yes, for many of us, not all of us when we started this, but for many of us these are tougher times. But how does that changing across the globe? And it's mixed. But most folks are seeing more pressure in Europe than they are in the US and different pressures in APAC and Asana is one of them. It is. The US is now growing, still growing 40% year over year. But overall international is percent 20. That's a big difference. So bear in mind if you are seeing one, I say go lean in international, don't run from it, run toward it. But if you are seeing more softness internationally than you are in the U.S. you're not alone. Asana seen the same thing. Okay, couple more points. Point five we actually kind of hit. But I just wanted to flip it around. We Talked about how 73% of their customers come from 5K and up deals that what is that other 27% look like? What do those tiny ones look like? Even though it's not the focus, even though the sales team isn't working on it, even though the 100k deals are growing 80%. So of course you got to put your energy into what's growing 80%. That 27% of self serve tiny revenue has 120,000 tiny customers and they keep growing. That's 120,000 customers to sing your praises. That's 120,000 customers that don't go buy another app. Remember, this is one of the most crazy competitive categories in software. And there's so many great vendors. Yes, Asana is great, but so is Notion, So is Atlassian, so is Monday, so is ClickUp, so is Smartsheet, so are many others. And there's so many vertical applications. So not only Does Asana have 120,000 tiny customers that are hopefully singing their praises, tweeting and doing all that, they're not going to the competitors. Right. And a lot of those 120 and at least some of them will also grow up and to be bigger. So that's an army. Asana has an army of 120,000 tiny customers that still give them 20% of their revenue, even today at 600 million revenue. And the competition doesn't have them. Okay, just four other short bites after our five interesting learnings. Number six. Salesforce integration is finally becoming important. This is just interesting, especially those of us who have been in SaaS for a while. It used to be that everyone needed a Salesforce integration from day one because Salesforce was like the platform for B2B. But that's changed over time to some extent. For smaller customers. Absolutely. HubSpot has taken over that space from, from Salesforce because Salesforce has exited CRM and SFA for smaller customers. But when you go really enterprise, when you get into the big deals, they're using Salesforce. Okay. Salesforce just mostly has abandoned the low end of the market and this is what we're seeing with, with, with, with Asana and asana has crossed 500 100k deals at 600 million revenue. It's seen a 50% increase in demand for its Salesforce integration. So is this epic? No. But the reason I bring it up is because again, in the old days of SaaS, every founder had. We launched Salesforce integration our first year. So many others did. But now I see founders not even thinking about Salesforce for years. And so be it. So be it. But bear in mind as you go truly enterprise, you're going to get that demand, most likely. And that's what Sasana seeing late in life because it has a very much a PLG self serve root. But now it's, it's booming. The Demand for Salesforce integration.06.7. This one's just interesting. On free to paid conversion and what Dustin Moskovitz and CEO Ann Ramondi said and Anne's Got a great session on Saster. You can go to sasser.com and find hers. What they said is yes we are seeing macro pressure, we are seeing some softness and but two interesting things top of the funnel demand is stable. So if you even if it's a little bit harder to close things, even if sales cycles are longer, demand still there. So challenge yourself the same way if you're seeing some, if you're seeing deals take longer to close in today's B2B environment, maybe that's life right now. But if you're seeing leads not even coming to the top of the funnel, maybe it's you because Asana is still seeing tons the same top of funnel demand. They said it's stable. The other thing that is interesting is their free to paid conversion is stable and this slightly surprised me in the macro I would think that it would simply go down. People would be are a little cheaper today, they're a little longer until they take the credit card out. But no, they're seeing the same free to paid conversion they've also seen and they added 4,000 new customers this last quarter, the same as the prior quarter. So bigger deals may be slowing down, there may be issues. But the core demand Asan is saying is still there. The core demand we're seeing the same top of funnel activity and we're seeing the same free to paid conversion. So if you're again if your free to paid conversion has fallen off a cliff recently, be honest, maybe it's you two last points. Number eight it's big customers. These 100k customers which are growing 80% again they also use its goals product. Now I'm not a total Asana expert but it's not a deep multi product company. It's not like there's 20 applications like there even is at Atlassian or others, but it has a bunch of core features and it's goals product is a set of functionality that limits just to its enterprise edition. And the majority of its big customers now use goals. The majority. So to me this is a good reminder that there's a lot of ways to go up market and also to raise prices. But if you build a more enterprise edition with richer functionality with additional products with these features, that's a great way to drive up this deal size like for sauna for 100k without having to rip everybody off. Charge your low end customers for features they don't want. I don't think their 2k your customers need goals. They're not big enough. But at the high end having the second product extension goals is key for them for these six figure deals. Okay, and the last point. Point nine and I think this is maybe one of the most fundamental points for so many founders. Asana is a PLG pioneer. Maybe not a pioneer like some of us were back in the day, the yammers and the echo signs and even Slack and others. But it's been doing PLG since day one, since well before we called this plg. We just called it freemium, self serve and viral. They've been doing it since day one and it's still working, right? As we said, 27% of the revenue still comes from self serve and the vast majority of the revenue still comes from 5k and up deals over 70% which are either started self serve or are self serve influence. So they are a PLG innovator slowly adding a sales team over the years. But having said that, sales and marketing today even at 600 million revenue still consumes 62% of revenue. Now some folks will be critical. They will say Asana should be more profitable this and that. I'm not. That's not my point at all. I think in competitive categories like this you're going to spend a lot in sales and marketing. That's the reality. But what is important is realizing that so many founders make the mistake. These magic three letters, PLG do not make you more efficient. They do not make you more profitable overnight. They are not the solution to your problems. I love self serve myself. I built self serve products. I've built products with free trials and freemiums. I love it because it's close to my heart personally. And I also love anything that is PLG or self serve because it makes the software better, right? If you, if you, if the software has to auto deploy, if the customers have to be able to self self procure, self get going, roll the product out themselves, it's going to be better software than if you put then if humans do the deployment and if it takes you 30 days to do a rollout. So there are a million reasons. I love having a at least a free element, a free trial, a free something. But it doesn't always make it cheaper. PLG does not make it cheaper. Doesn't mean you'll magically get to fire your salesforce or never build one in it and it's marketing more cost effective. I've made this point. Tomash Tungus has made it with data. So many of our Saster speakers that talk about it. PLG is not cheaper. PLG plus SLG can expand your base because then you could hit multiple segments like Asana. But unless you run a really pure freemium model, which has scaling issues. But if you run that, yes, that can be super efficient. But Asana is yet another case study that PLG is good, but PLG is not necessarily cheaper and does not necessarily make you more efficient. Thanks everybody. Talk to you soon.