You say we're in a "downturn"?
It's more like the weather
Raining in some places,
Sunny and bright in many others,
Almost too good to be true in a few https://t.co/AL5H7dA4BG— Jason ✨????SaaStr.AI Sept 10-12✨ Lemkin (@jasonlk) July 24, 2024
So just what the heck is going on in SaaS today? There really are 3 categories of SaaS companies:
???? 10% or so are growing like a weed, often fueled by AI (which also is fueling Cybersecurity).
Databricks, OpenAI, Apollo, Wiz, Clay, GitLab, ServiceNow, Crowdstrike, Drata, Vanta, etc. OneStream (SaaS for CFOs) just IPO’d growing > 30% at $500m in ARR!
⬆ 20% or so are doing well, because they sell to end consumers — outside of tech. The U.S. economy is doing fine overall.
Canva, Monday, Klaviyo, Samsara, Braze, etc.
???? 60% of us are selling classic B2B2B products. There, buyers are still looking to cut. Even 3 years into a “downturn”.
Iconic leaders like Salesforce, Zoominfo, RingCentral, Five9, Zoom, Twilio, Asana, etc.
Salesforce needs 3x pipeline coverage today to hit its number. 24 months ago, it was just 2x.
I’m oversimplifying to some extent, but not overall. And this is also true at scale-ups and pre-IPO SaaS startups. Maybe 10% are still growing like its 2021. Another 20% or so are growing well enough. And maybe 60%-70% have seen growth slow to 20% a year or less.
Net net there are still plenty of winners and a steady stream of outliers.
But the biggest issue is with 60%-70% of folks in “tech” going into a third year of cuts, seat reductions, and workload reductions — it’s just changed people. If the goal is just to grow 20% this year, or even to not shrink — who is striving to learn? To grow as a professional? To do great things?
Not as many of us as used to. It’s just different. It’s not a downturn everywhere, it’s not a downturn on Nasdaq, it’s not a downturn in the consumer economy per se. But 70% of us in B2B tech aren’t really in growth mode anymore. That’s changed everyone.
