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

07 Feb 2024 (9 months ago)

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 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.

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.

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.