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.
- 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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