Ask Me Anything with SaaStr CEO and Founder Jason Lemkin

And we're just going to let everyone have a moment to get kicked off and get settled in. Want to make sure everyone's audio is on. So we're just going to give everyone a few moments here. As we get everyone settled in the room, we have a great session in store as always, if you can turn on those cameras, that always helps us know who we're talking to. We want to make it as interactive as possible. This is a great session this week with Jason, so we want to see and hear from you. And we're just getting people kicked off, but welcome, welcome. Thank you guys so much for joining us. Before we get kicked off with Jason, I just want to remind everyone that next Wednesday is our digital event, AI Day. It's basically going to be an extended series of workshop Wednesdays all on Wednesday starting at around 8:00am Pacific Time. We have a lot of amazing content from Pager Duty, Shopify, Lightspeed, IBM and Cisco, just to name a few. So make sure that you have signed up for that. I'll drop the link in the chat. It's saster.AI.com. we're going to have a lot of awesome sessions and a lot of time for Q and A there too. So hope to see you next week on some of those digital sessions. And then today we are thrilled to be joined for and very in demand and highly requested session that we always get is for people want to have AMA with Jason. So we are answering everyone's requests and bringing Jason back for an open ama. Um, these are always a favorite and we can always count on these sessions to be filled with hot takes and actionable takeaways. Uh, Jason, have you had your iced coffee yet this morning?

I have, I have, I've had my iced coffee. I've trained my LLM on myself. Um, and I'm, I'm working to be obsolete by the end of the year.

Um, well, we'll have to see about that when we get Jason's.

With 11 years of content. I, we, we, we shouldn't need any human in the loop here by the of the year.

We may be having workshop Wednesdays with Jason's bot here by the end of the year. So we'll see. But we have as much time. We have a full hour with everyone. So please make sure to start dropping your questions in the chat because we're going to start getting everyone queued up here and again, we'd love to hear from you live. And so I will be working with you to get everything squared away. So welcome Jason. Thanks for joining Us for an open ama.

Excited to be here. Happy Spring.

Yeah. All right, well, we have some questions that have come in from Social, but before we get started, anything on your mind that you want to get kicked off with?

I don't have anything on my mind. And we can just dig into questions. You know, I. I will say, well, I do have a lot of my mind. I think that the biggest thing on our mind really is trying to figure out what the future of AI will be. In B2B, we are going to have a series of things. We are going to have a Saster AI deep dive. Next week, I'll be doing one with Jennifer Tejada, the CEO of PagerDuty. We'll be having the head of AI at Shopify. That's pretty disruptive. Shopify is essentially getting rid of their entire support team and taking it over with AI. There's massive change happening. A lot of us, I think last year were pretty skeptical of the role of AI and B2B. Not overall, not. Not full. Our kids doing homework or in other areas. But I think we were pretty skeptical. And I remember last year at Saster Annual, which was just six months ago, I asked, you know, I asked David Sachs what they thought about AI investing in SaaS, and he's like, yeah, we have three and a half billion to invest. Lot of. Lot of dry powder. We plan to invest 80% in AI. I said, wow, that's a lot. I'm like, and what's the what. What are the best apps you've seen? He's like, well, they're. They're mostly demo air, right? That was six months ago today. Amelia, who's on here, we've just reviewed almost 10 AI apps ourselves over the last week. We've picked one we're already going to deploy, I think. Right. And the amount of innovation here. And I will just say, like, I literally this week earlier, I was having an argument with a founder at 20 million in AR. I was having an argument with the founder that I profoundly respect. And I put argument in quotes. I don't really argue. I just try to help. But he was arguing in space that the AI is. It's a bunch of Sony baloney. And he was maybe, but they are losing deals to a competitor that maybe has issues. But is AI first and just the wave of innovation that's going into him, like, you got to think six to 12 months out and you got to think, do we really need an AE that takes two to three days to respond to an inbound email? Do we really need a BDR that can't properly qualify a prospect because they don't understand the product. Do we really need a customer success team? I mean we just wrote up on LinkedIn yesterday we had one of our existing vendors try to double our pricing. Last week they tried to double our pricing with no notice. The SARO showed up, the CSM came to the call the customer success lead and said nothing. Didn't say a word. I'd rather have AI. I'd rather have an AI than a CSM that comes to a QBR and says nothing to CSM that comes to a QBR that says isn't everything great. I'm being a little facetious, but I do think you asked what's on my mind, Taylor. I do think AI is coming for every job in SaaS that is attached to revenue. I really think that in a year your HubSpot, your other apps will have automated sales and marketing agents that actually do a better job than nothing. That do a better job than nothing. And I'll shut up. But it took me a while. I saw this happen in two areas, one macro, one micro. The macro area was I have done a lot of investing in post sales and contact center in gorgeous, which has 13,000 customers in the Shopify ecosystem and Maestro QA and Talk Desk in front and Intercom. And in post sales the goal is to automate the majority of interactions by the end of the year from like 5% 12 months ago to 50% by the end of the year. The majority and it's and we'll talk about it next week. But it's such a force of nature. And the thing I didn't get for a while, you know, pre generative AI, I personally hated bots. I hated the being forced to talk to never get to a human on a menu, to hit 0 pound 00 a thousand times trying to talk to Citibank. Nothing drove me more nuts and I didn't get it. But what I didn't get is that AI is going to soon be good enough in B2B to get you 80% of the way there's. And 80% of the way there is a lot better than nuts. It's a lot better than an AE that never gets back to you. It's a lot, a lot better than SDR that doesn't understand the product or a BDR that doesn't understand the product. It's a lot better than not being able to talk to anybody that knows it. So 80% for a relatively modest amount of money. It's just going to rip through everything. So my biggest advice is run toward it. And the other thing I'll say last and you can ask questions. The other thing that I guess is maybe obvious to people, but you might not see it if you're not in the thick of things. Yeah. There's 10,000 AI products to, to do outbound breakup emails now. Okay. They're, they're. You're overloaded with it. That's not. What's more interesting than that is that there are hundreds of incredible entrepreneurs trying to solve this problem, trying to automate workflows in B2B. Hundreds of the best. And I do think 99% will fail. And it, it, there's way too many. This is some sort of Cambrian explosion of vendors. There's way too many folks, especially in the same time as people are cutting their gong and sales loft and outreach and other budgets. Like it's a strange time to be having so many vendors in sales when, when it's, it's a category under so much pressure. You can see it in Zoom Info's numbers. It's public. But boy, when you have the best, the best working at this moment of time, just magical things are going to happen over the next 12 years. So I, I just, I am. I don't know the answers. I. We are students. We're at sas. We're going to start writing this up regularly. The vendors we learned. We're going to do an AI event next year and in September before sas. Jonny we're going to do a full day and a half AI summit for 3,000 people and we're going to bring in all the best learnings. So much is going to change between March and September and we're going to just have a massive second event which we haven't announced yet before sas. Jo we're just going to rip through how everything in AI is going to change in SAS and B2B. So I'm a little late to the bandwagon. I was, I wasn't skeptical last year. I just, I wasn't sure that we were going to replace Human in the Loop. Now I strongly feel that in 18 months human in the Loop will be, will be. Will come number two. It'll be level three. Everything will be level three humans and level one and level two will be AI and, and lean into it. Lean into it or I think it will steamroll you. So anyhow, that's, that's my rambly answer to what I'm thinking about. Taylor and what, what do we have for Questions.

Yeah, so I'll just jump into the AI ones while we're on it. So some of the questions were, what are you excited? What are you seeing that's most exciting? So I think, yeah, big takeaway is it's hit post sales, but it's coming for, for sales in general. So I think everyone needs.

And for marketing. Let me, let me give you another example. I'm a super fan of. You've. You've seen me, I talked about it on Lenny's podcast and others. But let me tell you about why. Like, so that's how I think strategically. Hundreds of the best founders in here already radically ripped through post sales AI. But here's. I know most folks get it, but there is this app called Opus Clip that, that I use all the time. And here's where I. It took me a while to see the 80 thing. So we do tons of video at Saster. We must produce. Taylor, what do we produce? 500 hours of video a year between Saster Annual Europa. We do a workshop Wednesday, we have, we have, we have 11 years of this content. You know, I mean, it's too good. And so for years, Harry Stebbins, you know, and Harry, Harry bought an agency to make video clips for him basically to do social media. And he's like, you gotta do these things. And I'd be like, I don't have time, Harry. We got nine people. We got too much going. He would nag me. I mean, I love Harry. I mean, not. You gotta do this, you gotta do this. And then finally Opus came out. And look, the Opus, the clips. You give a URL to a Saster video and it gives you 20 clips in five minutes. It reads them, it transcribes them, it clips into the exact length. And here was the aha moment. Like, are they as good as the clips that Harry or Lenny do with their agencies? No, they're not. And we can see it in the numbers. When I take a clip from Harry or Lenny that have agencies and I throw them up on Google, for example, for Google Shorts, they perform about twice as well as the ones from opus 2x, but we get a hundred x more and don't need a. Per an agency. We don't need an agency. We have an app costs a hundred bucks a month that does a hundred. That does 80% as good as an agency that will quit that. That doesn't get it done in time where it's late. And so there are some cases where 80% is not good enough. I don't want to throw an 80% rep on my million dollar deal right on my. On my. Must close. But the fact that now we can do daily clips across five different social media, whereas last summer we couldn't do any without some agency that was. We couldn't find. It was five or ten grand a month. It's just, it's, it's opus clip, Ryan. Yeah, it's just disruptive. And I think we're going to see that up and down the marketing stack because we don't have time. It's not about making dumb, dumb, crummy content. And some folks will be good at that. They'll use generative AI to make 10 million blog posts and run SEO scams. Let's leave that to our B2C and B2s and B friends. No, for us, it might be that, hey, we did a podcast. I don't know how to write. Okay, I can talk, but I can't write. I throw this into AI and all of a sudden I've got a pretty good blog post that's disruptive. If you can't write, but all of a sudden now you can talk. All of a sudden now you've got, say, 10 canonical blog posts that are of really high quality, whereas for years you had nothing. That's just another example. I don't have that problem. We write till the sun comes down. It's faster. But I know plenty of people. Most people can't write, but they can talk. So I don't know what that app is, but I think marketing will disrupt. AI will disrupt everything in marketing and it will eat up everything it can in sales. And it may just be the death of the lazy csm. I think it may just be the death of lazy. That's what I'm any. Maybe that's not exactly what you're asking, but this opus one of eight doing if doing 80% as good as a human when you're already doing it may or may not be worth it. Doing 80% of something you can't get done. Yeah, that you can't get done. That's what people are missing. And 20% isn't good enough. A bot that yells at you, that can't answer your questions, but a bot on your website. And we're going to add something like this to Saster soon, right, Amelia? That can answer 80% and 90% of your questions. Like for real, not. Not dumb answers, but can ingest everything. Like, we're going to run this experiment shortly on Saster, and I think it's disruptive. Why wouldn't you do it like this? It should change everything.

Yeah. So that's another question people had is OPUS is a great one. Jason, obviously we've been working with it a lot with you, but I think people are also wondering, are there any other AI tools you're experimenting with? I know you guys are looking at stuff.

Yeah, we're going to write it up in a couple weeks. We're not going to write up the ones that don't work. Good. Because first of all, we're saster. We're not negative. We will anonymize a little bit of it, the ones that are almost there. I don't think we evaluated too many tools that were worthless, but basically a lot of tools don't really do what we wanted to do, which was replace a mediocre ae. That was our goal. Or to replace a mediocre bdr. But we are gonna. So we will write up the one we use if we. If Memelia chooses to deploy it. I think we are. And then we'll write up our learnings without names for the others. But we're gonna keep doing this and share our learnings because at Saster, we just. We have a lot of scale, but we can't. We. We just don't have enough people to do what we wanna do. So we're like a hyper test case. Like anything that can. That actually works for us, we will buy it. If it's even remotely. If it gets us 80% of anything, we only have nine people, we will buy it.

Right?

Right.

Yeah. So a lot of. Not if it doesn't work, but we will.

We will try. We will try. We want to triple the size of our team with AI. That's our goal. Triple the size of team Saster with the same number of humans.

We have a question about that from Trevor about existing employees helping. Trevor, you want to jump in?

Sure, yeah. Thanks. My question, it's really around. Trust is a huge issue when you're dealing with customer support or anywhere where someone's going to act based on the data that AI provides. And what role do you see the company employees like? The jobs that are going to be replaced. But it seems like employees need to be that source of truth to provide AI to provide that source of truth so AI can provide accurate answers.

You know, we'll see. You know, if you'd asked me this question in 2019, I would have had a very different answer. But I have to tell you, Trevor, when I interact with vendors, I'm also always trying to learn. Right. I'M a student of SaaS. When we talk to vendors, when I go to their support teams, 95% of the folks I talk to don't understand the product themselves. We literally wrote, I wrote up on LinkedIn where I already have a thousand likes of this terrible experience with the new CRO we had with the vendor we use. The CRO said he didn't know the product yet. He didn't know the product yet. He was too new, probably been there six months. So the level. I know we think this as founders and sometimes, oh, our team are these Experts like our CSMs, our support teams, our sales teams are experts. I know it's a little mean, but when I get a good cold ebound from an SDR that clearly was, it's good. It's actually thoughtful. I asked them back like, okay, what could you really do for Saster? They never have any idea. Even the good ones can't answer a question. The AI is better than that. And those are the good ones. You know 90% of the outbound emails you get are horrific, right? You know that talking to a terrible customer set and what people don't. Here's the thing. I know, I know a lot of folks in CS are angry at me for saying this, but this is so different from 2019, 20. The majority of CS interactions we have as buyers are terrible at Saster. They're terrible. They're terrible. They hide from bad news, they don't follow up. All they want is a pat on the back and, and, and a 10. They, they don't want anything. Or even worse, last 18 months, CSMs have been turned into upsell agents. Right? They've been turned into ambush agents. That's worse. Like, I just think the quality is so low on average. Not for your top performers. You need. That's why I say maybe humans may be not so much in the loop, but they're tier three outside of big accounts. Big accounts will have humans and everything else. Humans will be tier 2, tier 3. But I just don't think we need mediocre CSMs making $100,000 a year that don't know the product and take days to get back to you. Why do we need to pay these people $100,000 a year? Why? Maybe it's not quite the question you're asking, but I think we, we want to believe that it is easier to get super high quality folks into SaaS than it is. It is hard. It is hard. You have to be relentless about it and it's hard as you scale it's hard as you scale. People aren't honest about this. They aren't honest about how mediocre CS is. They aren't honest honest about how lame the SDR interactions are. They aren't honest about how mediocre a mid pack AE sometimes is. They often don't understand the product at all.

I think anyone who hasn't sat with a customer service agent and watched them interact with people and has no idea. Anyone, anyone who sits in with a CS agent and watches how they interact with customers and be like, oh my gosh, we have not documented 80% of our problems. Right?

It's not that I don't think there are folks that have centers of excellence. There absolutely are. Right. I think it's actually more common in B2C than B2B. Because your money is support in B2C. Right? Support is kind of sales, right? I click on the link, I'm either going to buy that sweater right now or not. So actually our B2C friends are much, much, much better at support than we are. Because support is sales there. They're infinitely better. The tools are better, right? The software is better, the people are better. But boy, we're just, we just, we, we treat it as a, as a, we treat it as a, as the folks in another building. Folks that we don't really care about. And if you're lucky, you have a great team to manage this. But you got to be relentless about it. Right?

It's a cultural thing. It's a cultural thing.

Yeah, but you're right, listen, we could move on. You're right, it. I think but most founders that are not profoundly involved with their functional areas today with sales support, success even, it's much worse than they think it. They, they. We all want to be. Here's the problem with founders. This is a tough one. There are some founders that want to be micromanagers, that want to be in every detail, but not that many. Most want to be macromanagers. Most want to hire good people, back them and get out of their way, do a one on one and help a little bit. They don't want. Most founders don't want to spend 20 hours a week micromanaging people. They don't want to listen to gongs. They don't want to. They don't want to be reading every email. But it's tough. You kind of have to. To get a lot of these functions to work. It's complicated. Anyhow. I just, I just think people should listen, participate more in what these functional groups are doing. And realize you can't, you can't macromanage all of it. You can't macromanage all these people. It's tough. It's tough. That's just why I think AI is just that. Plus, there are two things that are fueling this change. One is that I think it's very tough for folks to, to staff these, these functions in general. It's just tough to staff them. Two, though, I've written this up a lot and people, not public company founders, all CEOs, all get this, but startups still don't get this. You got to be so much. This is the age of the maximum efficiency in SAS. The average public SAS company is now marching toward 400k in revenue per employee. Okay? Now sure, if you're lean and bootstrapped and you've been profitable since the day one, you, you, you, you, you, you have decent numbers. But most SaaS startups don't even understand how efficient, how few humans you're really able to have. At 400000 per employee, 100k was the average in 2021. So we have to be four times as efficient today in 2024 as 2021. I don't think most folks have gotten their arms right. They think we're in a downturn or they think fundraising is hard or blah, blah, blah, blah. No, no, no, no. We also have to be four times as efficient. And the only way you're going to get there, I mean, the math doesn't totally tie with growth and all this, but you probably have to have half as many people as we were planning to just a couple years ago. Half as many. And AI is the only way to bridge the gap. It's the only way to bridge the gap. Everyone is still talking on LinkedIn about, hey, we got to have more people, we got to have more people in customer success, we got to pay people more, we need more folks in sales, we need more folks. And yeah, and I kind of believe all of this in Sasser. If you have a perfect engine and they're all accretive, but we also have to deal with 400k in revenue per employee. That means you can only have 400 employees at 100 million in revenue, only 200. At 50 million, only 100. I keep, keep doing the math. It doesn't have to scale perfectly in the early days, but we've all got to be hyper lean. We've got to be hyper lean. So I think that is a reckoning that is in process. But I don't think all founders have internalized and I don't think 95 of ICs have internalized what this means. They haven't internalized what it means. People have to just be so much more efficient and better and if they don't, we either have to find kids or find AIs.

Yeah, we have a question someone's asking. What do we think it's going to do for the next generation of innovators and disruptors of potentially destroying and are affecting entry level jobs the most?

Listen I My, my who know. We'll. We'll see. We'll see. I my views. I know a lot of people don't like them so much, but I interview so many people and I just don't think most tech veterans want to work anymore. I don't think 80 to 90% of folks were. And I know when I say this a lot of people get mad at me. Especially folks that don't really want to work get really mad at me. But. But it's a fact. So we just can't afford folks that want to work 10 hours a week and make six figures anymore. We could afford it in 2021. We can't afford it today. So the qu. The interesting question is will the next generation want to want to do it? Will the folks coming out of college, will kids want to do it? I hope so. Taylor, what do you think for your own business? Do you see a tons of freshly minted college grads want to come to cred and work 50 hours a week and do all of it? Are you finding it really easy to recruit those folks fresh? You recruit a lot of folks fresh out of school. Is it easy?

No, it's not.

No. They don't want to work.

Engineers we can be. They don't want to work.

And so I think we're going to be stuck. Here's another way to thinking about it. In B2B, we're going to be stuck using AI because there's no one to work at our companies. Not, not that you can't get some pirates and romantics. You got to find some ways to find some. You have to be relentless as founders to find these people. But at some point you either have to settle for folks that that slightly phone it in or an AI. And I think we're going to end up settling for an AI in the coming years over folks that phone it in. We're just not going to settle for folks that the mid pack folks that phone it in. We just can't find them. They're too expensive. They quit too. There, there's, there's a new vibe on, on LinkedIn. I don't know if, if you guys have seen some of it, but a lot of folks are asking for no more cliffs investing. They're like, well, I'm gonna quit in three, four, five months. I don't, I want my stock. Like, there's certainly two ways to look at that, but the whole point of a cliff was to incent folks to stay at least a year. This has been so turned around by current thinking that folks are like, what's the. I'm not going to stay a year anyway. So I don't want, it's just, I'd rather have an AI that's going to stick around for a few years. We just don't know. We just don't know. We just don't know. I just think there is the, the final point I guess I'll make on the point and then we could go to the next question. What, what the thing is, if you're leaning in what you can also see, if nothing else, like, a lot of folks are confused, where's the budget coming for AI? And I certainly ask a lot of folks who are getting a boost, where does it come from? And there, there at the, at the CIO's office, there's a certain amount of budget for experimentation. There's a certain, but it's not that much. We are, we are basically still doing app layoffs. Folks are still contracting the number of apps they have. We just had Adam Gross, CEO of Vimeo, at our Miami event. It's up on our YouTube. He's like, I'm still looking for SaaS apps to get rid of. Like we have 100 or 200 Vimeo. I don't even know what they do. So the app layoffs are still happening. There's a little bit of budget for experimentation. But mostly the AI budget is about getting rid of people. It's getting more efficient and getting and getting rid of people. And so if you can tap into that, you can tap into budget that may not otherwise exist in your category or vendor, and it's a little brutal. But if you're in the contact center again and folks are looking to get rid of the majority, more than half of their contact center people and replace it with software. If you can get rid of 100 CS customer support agents, which is soul crushing on some level, don't get me wrong, if you can get rid of 100, there's probably budget for 50 grand. There's probably budget for 50 grand. I mean I know it's, I'm dating myself, but I remember in the early days of E Signatures, Comcast was one of our big first big customers. And I know this sounds crazy, but we went out to their headquarters and they had an entire floor of humans and file cabinets that would file away your, your contracts for your business Internet for, for your, for your cable modem. And they took us down there and they had to turn on the lights because no one worked on the floor anymore. And the cabinets were like kind of askew. They're like the old metal cabinets like I lost, you know, the ones that they're, they're like grand house. And they walked us in and like the, the whole, all the people were gone, all the paralegals and humans were gone because of automation. Because we could automate how Comcast business did their, did their signed up their business customers. That's what AI is going to do. It's just going to eliminate floors and floors of people. And I've seen it. It's going to happen again. It's in progress. And that's where you get budget. That's why comcast paid us 100 grand, 200 grand, 400, 500 grand a year. But as. So yeah, we made their business better. But if you also got rid of 200 employees, I mean there's, there's room for 30 or 40 grand a month. Yeah, the Klarna thing going to Sam, like I know the Klarna thing lit up the Internet and it is a good example. But just bear in mind a lot of these stories that aren't direct from the vendor are a little apocryphal so that like there's truth in them. But a lot of them are also what I, because I know a lot about what's happened in the contact center. It's not, I'm not saying they didn't happen to Klarna, but there's a lot of experiments that are happening right now and they're not all, they're close to the truth but, but just bear in mind all the stories you hear always have like a there, it's always slightly, slightly exaggerated. But the trends, the trend is absolutely there.

Not you, Jason. Another Jason has a question for you. Jason, you want to jump in?

Hey Jason, how are you?

Good, thanks.

I am a 10 year veteran customer success manager. You're giving me a lot of feels today. You're not wrong on anything you're saying, but a question that I have and you've pointed well before I say that I Guess a call out is you've pointed to like lazy CSMs, lazy reps.

I know people hate it when I say it. I've just got. I'm trying to be honest because it's actually helpful in this case.

Yeah, no, you're not wrong. And you had me thinking when you're talking about the founders that aren't really, you know, taking care of the different teams and really, you know, macromanaging and really understand what's going on. But my roundabout question is, in an organization and of different sizes, from startups to, you know, scale ups and bigger companies, what teams and roles should and need to be involved to fully leverage AI to, you know, really get in front of this wave that's happening. It can't be just again, speaking myself. You can't give me, you know, a small budget and say, go figure this out when I've got time dealing with accounts and such.

So how, what would I do? How? There's no here's what I would do. I don't have the perfect answer question, but here's what I would. Because we're doing it. This is what I would do. I'm not saying this perfect that I would go to. I would challenge each department that you have. Engineering's probably already there, so you probably don't have to do it in engineering and say, I want you to go find one app to bring in that's going to make us more efficient. Go pick one, go qualify. 10, find one. I'll give you 20 grand, 30 grand, 40 grand, maybe you're smaller. 5 grand, 400 bucks a month, whatever it is, go find one. Go find the best one. Just go find one.

It's a great discovery that should oversee this. Where's the CTO in this? Right? Like how does that each functional look.

Every functional area, even if you're tiny, they have their own little budgets for their own little apps the CTO doesn't have to be involved in. Whether you use Mix Ma, have three seats of Mix Max or two seats of sales off or buy a seat of Gong. I mean, at some point maybe you need a CIO and other things, but just give them a little bit of budget and say, just go find something. Inspire the team to do some tire kicking and have a little bit of fun and bring an app in if they're not already doing it and see what their best idea is and deploy it and then kill it if it doesn't work and bring in something else later this year. Bring in something else before September, before our AI summit But give folks, empower folks to add. Just pick one. Let's like give them a little bit of budget and let them learn and say go pick one app to bring into our department. Find something new. Find some innovator. Right. There was literally someone just on Twitter today, one of the founders of a. Of a calendaring company, that front bot. He just is launching this new startup that automates this. This sounds cool for cs. I don't know whether it'll really work, but it ought. It'll go back to your lost customers and it will interview them voice for you, find out why you lost the deal and summarize all the notes and all the action items to you and then attach it to your CRM. Like that could be great. Like it may not quite work that way if it's just launching. But look, that's pretty cool for a CS team. How many folks in CS or sales really interview lost deals? Like they don't try. They send a lame email. Some people send a survey. It never happened. Like I find sometimes CEOs, the best CEOs do it. Most organizations really never find out what happened in lost deals. They really never get to the truth and they never put in the time. So that's just one that like today, if that app worked and I was in cs, I'd pick that one myself. Like, okay, I'm going to shoot this. Maybe we did it for Saster. Like, let's look it up. Amelia. We sent it to all our sponsors that churned. Our sponsors that churn. We have 200 something sponsors a year. We have a pretty high churn rate because it's a marketing buy. I'm pretty sure the reasons 80 of them give us aren't true. It's okay. But I'd love to know the real reasons that an AI without it, without an. Without any issues or any tone, that'll just talk to them. If it really works, I'd pay a few nickels for that. Would you, Amelia? Yeah. 100. That's my one idea. Let empower everybody right now to go find one app.

Yeah. Jason, you should definitely join AI Day next week. Amelia and I've been reviewing everyone's topics and everyone's content and they're definitely some people who are talking about building an AI culture and how to do that change management, really empowering the team. So there'll be lots of tips we want to empower.

Listen, we're not. It's. The thing is you can't replace everything with AI today. That. That is a. That's Twitter Insania. Insania. But the amount of progress we've made since September is so high that you got to be roughly on, you got to be totally on top of it. If in the competitive landscape for your own vendor. If your top competitors are truly rolling out some, a little features and you're not, here's the one thing I can tell you. No matter what, if your competitors are rolling out AI features and you laugh at them but they do something and you have nothing, you're going to lose deals left and right. That's where the energy is. That's how you get folks that want to do demos. That's what folks are excited about. If you fight this wave, you're going to lose. You're going to lose. So that if nothing else, don't, don't mock it. Find the gem of truth and AI in your segment and lean into it and expose it to your customers. They want to see it. They want to see it. They don't want to see yet another payroll app. The other thing, and this is a tough, this is the other, if you ask Taylor, the other second thing I'm thinking about, then we'll take some more questions. The other thing I'm really thinking about that I was resistant too, but this is why we're doing a whole AI summit this year. Is, is SAS in a sense dead right now? And I don't mean literally dead, obviously. You know, if you, if you look at the growth of, of HubSpot, of everybody else, like these are good times. But is there any energy to buy things that aren't AI enabled today? Is there any energy in the enterprise? Is there any energy at all? I just think this so called downturn which is at the same time as we're still spending more in SaaS, right? It's really more app layoffs, app contraction. But this so called downturn is coming at the same time as AI. It is just absorbing all of the energy in the industry. All of the energy people just literally don't have any energy to talk and let certainly vertical SaaS will always be differentiated. Everyone wants an ERP for their industry. There's all. Tons of industries are not sassified enough for vertical. But for anything that's remotely horizontal, I just don't think there's any energy if you're not AI first today, there just isn't energy. So you, if you want to resist this, there are times when you just got to jump on it. You just got to be part of trends. And this one, this one seemed a little silly. For B2B even last year. It isn't, it isn't silly in my opinion today. So.

Next up we have, we're staying on the AI train for a little bit longer. Grossen, you've had some great comments throughout. You have a question for Jason about start. Where you start. You want to jump in?

Yeah, I think, thanks Jason, for all you do. Number one, I think you probably answered my question already. We're, we're a $1 to $10 million stage SaaS company. I was just curious where you would start, but I think maybe you just answered that with, you know, ask your department leads to go, go find one, go find one app per department. Right?

Jason, what about if you're trying to implement AI into the product, where do, where do you recommend starting?

Listen, I don't have the answers other than I'll, I'll be a little redundant on this one. If, if you knew, if you knew the answer for, for real, you would have already started today. Okay? The, the folks I've invested in, the folks that I'm, that I, that are at the cutting edge, they've already shipped something. Okay? If you're not there, if you haven't so embraced what's happening that you've launched something, then my best advice is just copy the competition so you don't lose deals. Just look at whatever your competition is doing and build a mediocre version of that. Because look, the reality is feature parity matters in SaaS. We know feature parity is important. We know we lose deals to feature gaps. And I am seeing rampant loss of new business due to not having AI feature parity. We, we can argue whether it's perfect, we can argue whether that hallucinates in some cases, we can argue whether it gives the wrong responses. But if you don't have the feature, you're going to lose the deal. We know we've, this has been true since the 1800s in business software. If you don't have, if you have a critical feature gap, you lose a lot of deals. And not having AI pseudo parity, the competition means you're going to lose a lot of deals. Right now, even if the AI or competition isn't perfect, people want to invest in vendors that are on this journey that are going to spend the next 6, 8, 10, 12, 18, 36 months making it better and better that we've, there have been so many price increases and rip offs in SaaS the last two years that we forgot what the point of SaaS is. The point of SaaS is not to rip your customers off on renewal day. The point of SaaS is every year you get better software. Every quarter you get better software. Sometimes you get better software every week. And the software gets so much better that it actually should be deflationary, it should get cheaper because in 24 months the products are so much better than they used to be that we're delighted to spend the same amount of money instead. It's all been a ripoff. The last 18 months. Folks have, are launching fewer and fewer features and ratcheting up prices and, and digging into their existing customer base to, to struggle to maintain growth. But it should be the opposite. You, you don't, you shouldn't. You, you. In sas, we bet on a vendor for years to come and we bet on innovation. And if you're not, if you don't have pseudo AI parity, I'm going to bet on the vendor that is, I'm going to bet on the vendor that, hey, maybe your, your AI SDR isn't great today, but at least you've got one. At least you're out there talking about it. I mean, I didn't even totally get why Dharmesh was instantly all over AI bots on, on day one with HubSpot. I think there's, I think he saw the future. He did a lot of things right. There were a lot of reasons. But I also want, I think intentionally or not, I mean, they are. He is a great marketer, even if he's the cto. I think it's Hubs. I think he wanted to make sure that HubSpot was thought of as first of mind here, ahead of everybody. So that, look, maybe the HubSpot hasn't fully rolled it out yet and maybe it's coming next year and maybe it's starting it inbound. But at least I'm going to stay on this journey with HubSpot rather than a vendor that's not embracing it. Right. You got to be that vendor.

That's a great segue, Jason, to some non AI questions. We have some things about that you've posted, been posting about recently with pricing and price adjustments. So would love to hear. We know we've a lot. I think a lot of people in this room have probably read some of the stories you've talked about of, of the aggressive renewal and the huge price increase. What are some of your best advice for overcoming that? Like how far in advance should teams be mapping out pricing increases and who's in charge of determining pricing?

I think price increases are where folks that don't Know how to innovate. Go when you're out of ideas. It's where you go when you're out of ideas. You get around the room. We're out of ideas. What do we do? We go, we go, we go raise prices on the base. Here's the thing we forget and, and this, it look when you're mature, this makes sense. I, I remember when we were acquired by Adobe way back when we were doing a million bucks a month, 12 million a year, growing 100%. So we're on our way to 24 million next year. And, and the CMO of our division said this is like a waste of my time. I'm like oh, I feel better now that we're, we're part of the mothership. Like what do you mean? It's like I could just raise the price of Acrobat a dollar and that will do more than you're going to do the next three years. He had a point rounding era. He had a point at that level at, at that time it was a 700 million dollar business. It's bigger today. If you raised price a dollar and he made another whatever, 8, 8, $10 million he didn't have to support me. My complaints, our team, the head count, he just raise a dollar. Just go to the website, raise a dollar. So the point of the story is yeah, if, if look, if you're at 100, 200 million in revenue and your growth is facing decline into the single digits, pricing games and pricing stuff is, is super important. But if you want to grow fast, you want to innovate and you want to take care of those customers and the energy that goes into these pricing games especially from new CROs and revenue teams. You know, I would love to see more focus on logo retention. I would see, love to see more focus on grr. I would love to fight this toxic trend of having customer success report to sales to the CRO. I think it's terrible if your CRO does not get credit for, for the somewhat for, for a lot of customer success. They're just going to focus on new deals. I know it seems apocryphal but I like sales as much as possible to be focused on closing, closing new customers and this, this trend of having CROs earlier and earlier in the life cycle of a company of folks coming in at 5 million, 8 million, 10 million. And forget about title inflation. I'm pretty cool with title inflation. We could talk about that but folks saying hey listen, I don't want to be, I don't want to just close new business. I want to own post sales and customer success and account management and all these things. I get it. On paper it's career growth, but you're much better off having just a great VP of sales. Just close new customers, make them happy and keep them for a decade. The rest will work itself out. Having your CRO focus way too much energy post sales is to the detriment of your long term success as founders. It is to the detriment of your long term success as founders.

Getting a lot of.

You can't help it as a CR if you're full. If you're. Half your job is account expansion and half your job is new business. As CRO, not only is your time split in half, but even worse, you're going to have the same problem every sales team has. They're going to do this stuff that's easiest. So you're going to have that experience. We just wrote up on LinkedIn the other day where the CRO, the new C. One of our customers just came in and doubled our pricing on us. Why did he do that? Well, it was easier than finding a new customer. They're not falling out of trees these days like they used to in 2021. They're not. They're not falling on the ground like ripe apples. So you, what's the easiest thing to do to. To, to rip off your existing customers. But, but that's not what you want as founders. You want to bring in new customers. You know you want to bring in. And even, you know, I just wrote up Snowflake on the five interesting learnings on. On Saster. It's, it's a good one from last week. And Snowflake's having a slightly rough year this year at 3.1 billion in revenue. Growth has declined to the 30s. Okay, like still great at 3.1 billion. But not the insane growth before. Not the 70, 80 we saw before. But, but. And NRR is down, but new customer account is still over 20% at Snowflake. Even at 3 billion, they're increasing their raw customer count over 20%. That's the magic. That's the magic is materially increasing your customer count each year. Everything else is a fake. Maybe it makes your VCs happy, maybe it takes the stress out of your board meeting. But the only way you can win in B2B is to materially increase your customer count each year. Everything else, it doesn't get you anywhere in the long run. You got to increase your customer count.

Super helpful, Jason.

We're Switching gears, my last advice, that is as founders and as management teams and as revenue leaders or whoever, be honest about these two metrics. Be honest about not just your revenue growth, but track these together and your new. New customers. New customers. And pick a number for your new customers. Now, it can depend a little bit on where you're at, but you at least want your new customer growth to be. To be half of your total revenue growth as you're scaling. That would be great. So if you're growing 100%, you want your new customers to be growing 50. Okay. And the, the companies I've invested in that are north of a hundred million, two hundred million in revenue, I, I see warning lights when it's less than half, when they're growing 30 at 200 million, but the new customer counts 10%. They're not going to get there. They're not going to get there. You want at least to be half. And if you track that metric with your team as relentlessly and religiously as the top line and you invest in it, you're going to have a much better outcome than if you let those diverge. You can't let them diverge. You have no future if they diverge. Even if you make the plan for the quarter.

Yeah. Seeing a lot of stuff resonate. People are saying logo retention, gross retention are the critical.

But logo retention and gross national grading, it even took us a while to understand the differences over the last years. What we're not talking about enough is enough. New customer additions each year. That, that is as important as your ARR growth. And the last two years, we have rammed through price increases year after year after year. We just did a Survey Today on LinkedIn. The majority of you are raising prices again this year after the majority of you raising prices last year. Hooray. Okay, I'm pretty, pretty, I think it's pretty toxic and I'm pretty negative on it. But whether you raise prices or not, that doesn't increase your customer count. Raising prices does not increase your customer count. So be honest. So be honest. Are you hitting your customer count goal? And grr is part of that and logo retention is part of it. But if your overall goal is, look, we got to increase our new customers by 20 this year, logo retention and all. NGR, it's all just a subset of, of that goal of, hey, we gotta, we gotta have 2,000 customers this year, guys, or 200 or whatever, or we are going to quietly go into terminal decline. Quietly going to terminal decline. And you got to drive this as CEO because no one else can really own this number. The CEO's got to drive it and with the team and make sure you hit this, this, this customer count goal. And if you do hit it, the good news is if you do hit it like snowflake, even if NRR is down like it is for almost everybody, we wrote this up this week. Even if NRR down, even if other things are harder, if your customer count is still growing 20, 30, 40% a year like you have, you have a great future ahead of you with 100% or higher NRR, you have a great future. You have a great. Even if you have a tough quarter or two, that is what's going to pull everybody out of tougher times is continuing to add new customers.

Yeah. Big takeaway moment, guys. Make sure you're focusing on new customers. Heard it from Jason. Jason, we're going to switch gears to some funding stuff. Chris, you jump in with question about the investing ecosystem. You're still there, Chris?

Yeah, I'm here.

Hey, Jason, thanks for being with Saster.

So my question is whether you think the AI trend will impact funding in.

The sense that are we going to see later stage rounds kind of go away because people get more efficient, need less money and therefore can do maybe.

A seed a round and that's enough.

To kind of hit, you know, velocity, I guess, terminal velocity. So I'll just be curious about your comments on that. I think it's barbell. So I did try to write this up a little while ago on Saster. There's a third way. This, this raising just one round and a lot of people, it kind of took off on Hacker News and a lot of people kind of rewrote it. That's all cool. I do think this trend, I don't think it's so much AI as just the trend toward efficiency. I do think more and more folks will raise one round and be done around and a half. Or to simplify it, I think more and more folks will raise less than 10 million and that will be basically it until they're very late stage. That's what Viva did right there at 35 billion. It really, honestly, it's what I did. You can do it if you're relentlessly focused on efficiency. Like you can raise around and a half is enough for an 80% gross margin business with high NRR and good word of mouth. Like it's got to all click. You need higher NRR so that you have an annuity starting years three and four and you need word of mouth to kick in so that your CAC doesn't ruin you. Okay? Like, all the great software companies are built on 80% word of mouth at scale, broadly defined. If you're not getting that, you can use capital to brute force it. But if you can get that early, either directly through word of mouth or through viral, or even a light, light amount of virality, it doesn't have to be, you know, TikTok virality, it could be light virality. But if you have a. Most collaborative apps are viral, right, because you collaborate with third parties and you expose them to your app. If you can get enough of that engine going and, and you're efficient, you can do a lot. You, you can get to 100 million in revenue on 10 million of, of RIP. So I think we're going to see more and more of this trend intentionally and probably more often than bootstrapping you can do. For those of us that have bootstrapped, it's over romanticized. Very few folks that are bootstrapped tell you those first four years were easy. Almost everyone that's bootstrapped will tell you I wish I raised one round of capital. Almost everyone that's bootstrapped that got to scale will say it wasn't worth it. I, I would have liked to have just gotten those first early years were too, were too lean. They were just too lean. So a little bit of capital would have helped so much in the early days. So I, so I think bootstrapping, even though most folks have bootstrapped, you know, we did a great interview with, I did one with Ben Chestnut a couple years ago at SAS Trainer was great. Better than people realize, worth the watch. He's like, yeah, we bootstrapped to, to, you know, a billion in errors because no one would fund me in the early days. Most folks that are bootstrapped, there are, there are thoughtful reasons to bootstrap, but most folks that are successful bootstrapped because no one would give them any money. Like, it's not, it's not like there's this great option, but raising, raising one or one and a half rounds and stopping is an option. It isn't. It is an intentional choice. I went through it, we got to coming up on 10 million and all of a sudden it was easy for us to raise again. And people came in and maybe it was a mistake not to raise. For me, it was a long time ago. It was a different time in SaaS, but, but as we got to 10 million, growing 100%, everyone wanted to fund us again, right? We became in fashion. I'M like, but do I want that? Like, do I want, do I want to raise at 100 million or 150 million? Then I got to sell for 500. Then I got another per, like I made the choice to say no. I, I don't know that it was the right choice, but it was intentional. We had, we had the option. So I think that is going to become much more in fashion. But the flip side, the thing that people don't totally see is Listen, in 2021, any B2B company that was growing decently got funded. And that's why we had a thousand unicorns. The budget's inflated. There were so many folks at 5 million growing, tripling and 10 million doubling and they all got funded. Right. And we ended up with a mass amount of unicorns. That's not true today. But what is happening is maybe 10 or 20% of folks are growing at 2021 rates or faster or, or faster. I'm just investing in a company that went one to ten in one year. Okay, and what's happening with those, what's happening with those is they are being flooded with capital even more than 2021. Because at least in 2021 there were more places to put it. There were a thousand unicorns. Okay, but now if you are a top 5% startup, ideally AI first or AI enhanced, and you get to any level of traction, you will just be flooded with more capital than any startup should have and not, and even worse, not just from new folks. But what has changed is that your existing investors, if they're bigger funds, they don't have enough good ideas. So if I'm sitting on a billion dollar fund and I'm slow, I'm behind. I haven't invested that much the last two years because I can't find enough ideas. And I have one portfolio company take off, I want to put 20, 30, 40, 50 million into it because I, I got the clocks running on me. So we're seeing insiders flood high performing startups in a way I've never seen in my career. Even in 2021, a lot of that money was outsider. It was the Tiger globals and the softbanks. And we'd laugh because every week Tiger would do a new unicorn. But those are new investors. Today it's the existing investors that are flooding, flooding the, the high, only the best ones, but the high performers. So I, I, that's why I think it's barbell. I think some folks will stop raising after a round or two, but then others will reach a level of scale and they'll have to be, they'll have to be very disciplined. And I've seen, you know, Ed Sim from Bold Start wrote a tweet the other day and I've seen it too. Like, we're back to a lot of startups raising three rounds in one year, the hottest ones. And it's always bad. It's always bad to raise too much capital too quickly. You lose discipline, you spend so much. The vast majority of SAS unicorns I talk to today, they just completely regret that last round or two. Right. But, but, but, but I don't know. I don't think the growth capital is going to dry up because it's got to go somewhere. And there has always been a surplus of there. There's. There. It's always been hard to raise growth capital, but there is always, if you're in the box, there's always been a surplus if you're in the box. If valuation, growth and timing works that you'll always get 10 offers in growth if you're in the box. And if you're outside of the box, it's just brutal in growth, it's just you'll get nothing thing sometimes at seed stage, if you're outside of the box, someone will believe in you or they'll believe in a submetric. But in growth, like, it's just everyone wants to invest in the same thing, but if you are, especially if your area first is just more because there's fewer good candidates, that capital just has to. It's just going there. So it's strange times. It's strange times. There's a little pocket of the world that. Or 2021 is still here, but it's not the 11th payroll app growing 40amonth. That one is not flooded with capital.

It's the AI.

Well, if you have to have high growth, high potential, great team. But if you check the boxes, it's just. There just aren't enough candidates. So, and, and there's more capital. I'm not. Don't know if there's more capital in 2024 than 2021, but it's close. It's close. There's certainly more quality capital because everyone keeps raising funds. Everyone keeps raising more and more money and they don't know where to put it. And so they're just going to flood their, their best companies. They're just going to flood them.

Promising, though, for everyone in this room who may be out there looking for funding, maybe. Jason, we're going to close on one question. We're Almost at time. So we're going to close on question about efficiency. Giovanna is asking, what do you recommend the ARR per employee for a startup of 2 million ARR to be seen as efficient?

I, I, it's a great question and a terrible question. Now what I mean is I think founders and I, I, I've written this up a little bit. I should write it like 10, I should write every week. Founders across the board are misinterpreting advice from VCs, from social media. No one wants a startup at 2 million to be profitable or efficient. It's too early. And, and what? I mean, no one cares. But then I'm going to qualify this. No one cares if you're profitable or efficient early. They don't. It doesn't matter until you're at scale. It really doesn't matter now. Folks can't raise as much capital these days. Right. And there's other challenges. But you don't get credit as a startup today for being profitable but not growing. This is so many people don't get it. Hey Jason, I'm at 3 million. I'm doing this, I'm doing great, great, great. I get it. I get a cold amount, son. Great. I email back. How's growth? Well, growth is slowed. We don't really have any capital, but we're profitable. Good. But it doesn't support investment. You have to grow today. Here's the tough takeaway. Look, it is harder being a founder today than it has been in many ways since for five or six years you have to grow as fast as ever in many cases not more efficiently. That matters later. But with less capital, you don't get a pass. You don't get an excuse for investors for growing more slowly because you're profitable. Maybe that's a choice you will make for your own life and your own company. That's a slightly different question. But make no mistake, you will get. No VC is going to fund you because you're profitable. We don't. You don't care. You've got to get from day one from a. Well, you got to get from to make a venture investment work. Let's step back from it. You've got to get from 1 to 200 million in revenue in 10 years or less. 1 to 200 million in 10 years or less. Not in a week, not in a day. We're not always. But put it on a spreadsheet. If you're at 2 million growing 20%, how you going to get to 200 million in seven more years? You're not will fund you because they can't make money in venture. It is impossible. It's not that VCs are all jerks or that they only want to invest in hot companies. No, it's actually very hard to make money in venture. It's very hard to make money in venture. Let's say you get to.

It's.

Let's say instead of 200 million, you get to a hundred million in ten years. That's pretty good. But let's say the growth slows and you sell the company for 800 million. That's pretty amazing, isn't it? And let's say the VC owns 10%, that's 80 million. Let's say the fund is 300 million. How much of the fund have you returned? You haven't even. You've barely returned a quarter of the fund. You barely returned a quarter of the fund. And that's what the billion dollar exit. We could do another one on just how. It's not that you have to have empathy for vcs, but until you underst it. For years it was just very hard for founders to understand how that math worked. I didn't understand it right. And so yes, for VCs not. The beauty is they're lucky. Not every bet has to work out okay. It's much easier than being a founder in that sense. Not everybody works out, but some of them have to work out. And the only way they're going to work out is if you can get to 200 million in revenue in 10 years. From 1 from 1 to 210. So you can't. No one can give you any credit for being efficient. It's just a new criterion added to the all the list. You need to have an A plus team. You need to have disruption in the marketplace. You need to be stealing market share. You need to have cutting edge technology. You need a great cto. You need. You need triple digit growth. And now you need to be more efficient than before. Your job just got harder. But you don't. The pressure isn't off because hooray, you know, you got profitable. Hooray. It's hard but just think about the 1 to 210 years and at least you'll understand why people are thinking about you the way they are.

Thank you so much Jason. So many great insights and hard truths. That's why we do these AMA sessions. We love hearing it from Jason. We're already getting so much great feedback people really valuing the education as always. So thanks so much Jason and thanks everyone for joining. We will see you next week, hopefully at AI day. You guys had so many AI questions.

Wait is what's better. So Sasser AI.com or Sasser AI to sign up, which one is better?

They both work.

They both work. Sasser AI sign up. See you there. Send me some questions for Jen Tahada, pager duty and some others that we'll do. But then we'll do a lot more in September. So if you come, if you buy a Saster annual ticket, you get to go to our Saster AI summit, too. They're back to back. So we'll see everybody, hopefully in September. All right. Talk to you guys soon.

Thanks, everyone. Have a great day. See you next week.