A short conversational transcript of a YouTube video (hosted by Jason M. Lemkin) conducting a 'vibe check' on the SaaS market. Speakers argue the SaaS downturn ended around Q3 2024, attribute much of the slowdown to customers overbuying software and headcount during the pandemic and then dialing back, and advise companies they can no longer blame the market if performance lagged in 2022–2023. The chunk also raises the problem of large SaaS firms whose growth fell from very high rates to the teens or lower and asks for strategic advice.
Questions this video answers
Q3 of 2024
Chapters
But I just like to do a vibe check these days because it. I think the vibe has been so volatile the last 24 months since ass.
Right.
A negative from folks thinking we're in the greatest downturn since the Tulip crash to exuberance and AI like this just. It's a whiplash time. So you're, you've seen it all. You're chairman of HubSpot, you're at Sequoia. You're seeing an entirely different category. Right. In clean tech. So are we, Were we in a downturn? Are we in a downturn? What's the vibe check as we talk today?
It being SaaS was in a downturn. There's a SaaS and it start. I don't know when it started, but I think it ended in Q3. If you look at the SaaS company's numbers, see it through Sequoia, see it through all my HubSpot dashboards where I see our customers. It felt like we came out of the recession in Q3 of 2024. And I honestly just think it's like the universe like flam sounds down and then splashed it way up and then slammed it down again and it's flashing back up and it's like the sine wave that's working through. And I think the size of the sine wave will get down over time. But I think we're in a different place in Q4 of this year than we were in Q4 of last year. Economically, Sasso, people overbought. People had too many employees.
Yeah.
And the downgrades were high, the growth retention for people were low. And I think we're just getting back into a better spot.
That's what I think it wasn't. They're just one of the frustrating things. There's so many people like zirp. It's interest rates. I think people just bought too much during a generational pandemic. They bought too much software and so they dialed it back, maybe too much. Because that's what we do. And we're through that. Right. We're through the over buying cycle for the most part. I think it's that simple, isn't it?
I think it's that simple.
Yeah. And we're seeing it.
So if you're out, you're listening and you get a shitty Q3 and Q4 is not looking good. It's not the market.
That's the message. I try to say you can't blame the market anymore. If you got a pass in 2022 or 2023, like you gotta be honest.
Yeah. Even Q1, Q2 I think we're still tight as Q3. It finally loosened up. Yeah.
And look this is a. This is. This may be a question where there's no good answer but especially as you're looking at stuff in Sequoia, if someone isn't seeing any rebound at all now and let's say growth is weak. Let's say it was great in 2021. Okay, it was 100% and now it's 22% or what's your advice? Is there any advice? Not if it's fallen from 100 to 80 it's one thing but if you have fallen far and look there's a lot of companies north of 100 million in ARR where growth is in the teens now or lower. Right. Any meta advice that you see yourself or at Sequoia, any ideas for that tough position?
I'm worried about that whole cohort of companies that's 120 million in revenue growing 18% and raise the crazy round the crazy price in 2021.
