2024 State of SaaS: Trends and Predictions with SaaStr CEO and Founder, Jason Lemkin

2024 State of SaaS: Trends and Predictions with SaaStr CEO and Founder, Jason Lemkin

Changes in the Tech Industry

  • The tech industry experienced rapid growth and high valuations in 2020 and 2021, followed by a sudden downturn in late 2021.
  • In 2022, companies focused on efficiency, cutting costs, and preserving cash.
  • The industry may need to "start over" with a renewed focus on efficiency and realistic growth expectations.

Sales and Customer Success

  • Sales leaders should be willing to visit customers, but many experienced sales professionals are no longer willing to do so due to burnout.
  • There is a concern about a "lost generation" of sales and customer success professionals who are no longer willing to engage directly with customers.
  • Startups have become mainstream and are no longer seen as challenging or demanding, leading to a decline in the quality of candidates.
  • Sales compensation is becoming increasingly confusing, with some companies offering outlier rates that distort the market.

Impact of AI and Cloud Computing

  • The rise of AI and cloud computing is creating a bifurcated world where a few "decacorn" companies will have a significant advantage over the rest.
  • Generalist roles in SaaS are declining as companies increasingly rely on AI for customer support and automation.
  • The era of generalists making customers happy in sales and support roles may be fading.

Market Trends

  • The downturn in the tech industry is not evenly distributed, with some companies thriving while others struggle.
  • Overall software spend is expected to cross $1 trillion in 2024, with growth in security, AI, cloud infrastructure, and price increases.
  • Companies are more efficient than ever, but multiples are stuck around 6X ARR, which is comparable to 2015-2014 levels.
  • Public companies have become more efficient by cutting costs, but sales and marketing efficiency has actually gotten worse.

Advice for Founders

  • Founders should be honest with themselves and their teams about whether they have fallen out of product-market fit.
  • Founders should be transparent with their teams but not share all the bad news, as it can be too discouraging.
  • Founders should avoid becoming "NR zombies" and relying solely on net retention rate (NRR) for growth.

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