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AI is Driving a Freemium Renaissance. Run Toward It.

By Jason Lemkin
Thursday, February 13, 2025 | SaaStr.Ai, Artificial Intelligence (AI)

AI is Driving a Freemium Renaissance. Run Toward It.

So there are two massively different vibes in B2B and Cloud and SaaS today:

Folks fighting to keep slowing growth going. Which, perhaps ironically, leads vendors to be less customer-centric. Here, we see threats when customer attempt to cancel, big price increases every year, and renewal managers trying to force customers to buy extra seats they don’t need.

but also

In many high-growth AI-fueled spaces, massive competition as well. Which is pushing them to be more customer-centric. OpenAI, Claude, DeepSeek, etc. are 3 big examples. All give you so, so much … for Free. It’s like the Good Old Days of Slack and Zoom. Which back in the day, were so Free you almost couldn’t believe it.

So as part of the 10,000 new vendors we’ve seeing a rebirth of Freemium on many levels.

FREMIUM RENEAISSANCE

SF Bay Area, May 13-15, 2025

WIN $500K - $5M AT THE SAASTR ANNUAL MAYFIELD AI DEMO STAGE

This year we're partnering with Mayfield to bring you the AI Demo Stage and Pitch Competition to SaaStr Annual 2025.

You could win $500K - $5M in funding from Mayfield AI Garage!!

That's right. This is epic opportunity to showcase your AI Startup.

The winner(s) will receive funding from the Mayfield AI Garage, who are at the forefront of investing in cutting-edge tools at the intersection of SaaS and AI.

PITCH TO WIN

Carta: 62% of Start-Ups Fail. And 1.3% Become Unicorns.

By Jason Lemkin
Thursday, February 13, 2024 | Blog Posts

Carta: 62% of Start-Ups Fail. And 1.3% Become Unicorns.

So Carta has some interesting new data from all of its start-ups from The Class of 2018 here.

Every start-up dataset is a bit different. Some are broader than Carta, some narrower, but Carta is a good proxy for typical tech start-ups that raise a seed round.
And what happens after that seed round?
Within 7 years, 62% of start-ups shut down.
But of the ones that raise seed capital? It’s not clear, but it might be as low as 30% that fail within 7 years.
15% are able to get to Series B
1.1% raise a round at a $1B or high valuation

62% FAIL

Transitioning from Sales-Led to Product-Led Growth and Scaling to $100M ARR With Apollo’s CEO Tim Zheng

By Jason Lemkin
Tuesday, February 11, 2025 | Sponsored Posts

Apollo.io, an all-in-one go-to-market platform, underwent a significant transformation in its business model that led to remarkable growth. This analysis examines their journey from a struggling sales-led organization to a successful product-led growth company, resulting in over 880,000 paying customers and substantial revenue growth.

CEO Tim Zheng came to SaaStr Annual to share the deep dive on the journey from SLG to PLG here.

SALES-LED TO PRODUCT-LED GROWTH

This edition of the SaaStr.AI Daily is sponsored in part by Prismatic

Win more deals with the right integration strategy

Not every integration request may make sense for your team, but they all make sense
to your customers. Saying "yes" more starts with the right integration strategy.

FIND YOUR STRATEGY

How Dialpad Hit $300M ARR by Building Their Own AI Stack: 5 Key Learnings

By Jason Lemkin
Tuesday, February 11, 2025 | Sponsored Posts

When it comes to AI implementation in SaaS, most companies are still figuring out whether to build or buy. But Dialpad has been quietly building their AI advantage for over 7 years, processing more than 8 billion minutes of conversations and hitting $300M ARR along the way.

At SaaStr AI Day 2025, Jim Palmer, Dialpad’s Chief AI Officer (and co-founder of TalkIQ, which Dialpad acquired), shared the tactical playbook they used to build and scale their AI capabilities. Here are the key learnings every SaaS company should know.

HOW DIALPAD HIT $300M ARR

One Thing is Clear: AI Makes a Lot of Business Software Look Awfully Expensive Today. Is Deflation Coming?

By Jason Lemkin
Thursday, February 13, 2025 | Artificial Intelligence (AI), SaaStr.Ai

So just how much will AI remake classic B2B software? We are still learning.

On the one hand, new AI-first entrants are rocketing to $10m ARR in a year.

On the other hand, the classic leaders in SaaS have rebounded from 2024 lows both in terms of growth and market caps. And all the leaders in SaaS are leaning in on AI, from Salesforce to Asana to HubSpot to ServiceNow and more.

One thing does seem clear though: AI makes SaaS look expensive.

There have been so many price increases since 2021, many apps are 40% or more expensive than they were in 2021. With very little to show for it.

Everyone is pushing hard on upsells, but for what? To raise prices even more?

The power of OpenAI or Claude for $20/month is jaw dropping. Almost no SaaS app provides that much value.

DeepSeek has, at least in theory, cut the price of AI for SaaS as much as 90% overnight.

The power of Cursor, Replit, etc. shows how much you can get on the dev side in AI for just a small amount of spend. The ROI here can be 100x or more. And in Classic B2B — you are raising my prices this quarter … again?

MORE HERE

Where AI Really Matters in Vertical SaaS With CEOs of Owner, Alloy Automation, and DoNotPay

By Jason Lemkin
Thursday, February 13, 2025 | SaaS Product Pricing, Sales

Activant Capital brought together at SaaStr Annual a group of break-out next-generation AI enhanced vertical software leaders: the CEOs from Owner.com, Alloy Automation, and DoNotPay.

The software industry is experiencing a significant transformation, particularly in vertical-specific solutions. The first generation of vertical software, built approximately 15 years ago, is now ready for disruption. This change is driven by advances in AI technology and changing customer expectations.

The panelists emphasized that vertical software is particularly well-suited for AI implementation due to its contained workflows and specific use cases. This makes it easier to develop AI solutions that can drive concrete outcomes for customers while maintaining reliability and accuracy.

VERTICAL SAAS

644 Emerson St. Suite 200, Palo Alto, CA, 94301

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