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Your (Belated) SaaS New Year’s Resolution: Add a Layer

By Jason Lemkin
Tuesday, January 14, 2025 | Growth, Hiring

Your (Belated) SaaS New Year’s Resolution: Add a Layer

I agree with most Start-Up Truisms. One of the best ones is Don’t Chase the Shiny Penny. Double Down on What Works.

For sure this is true in SaaS. If you’ve got a good thing in a certain vertical, double down there. If you have mid-market customers but not many in the enterprise or low-end, focus there even more this year. Etc., etc.

And yet …

What tends to happen for most SaaS businesses even as early as $2m ARR or so, is that they get a core engine that’s working. At least at 20,000 feet. It’s hard, yes. But assuming you execute, and the leads continue to come in, etc. … you should grow, say, 100% over the next 12 months. Based just on the velocity rate from the past X months.

I completely agree you should spend 90%+ of your time just doing what’s working, only better, if you are at $2m ARR or higher and growing 80% or more YoY.

SAAS NEW YEARS RESOLUTION

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10 Ways Sales is Different in Vertical SaaS with Mangomint’s VP of Sales

By Amelia Ibarra
Wednesday, January 15, 2025 | Early, Sales

While some might dismiss sector-specific vertical SaaS software as ‘too small’ or ‘too niche’, companies like Veeva ($40B), Clio ($3B), Toast ($1.3B), and Slice ($1B) have proven there’s massive value in going deep rather than broad. Mangomint has quietly built an impressive vertical SaaS business in the spa and salon space, growing 100% year-over-year to approach $20M ARR with 110% NRR.

During a recent SaaStr Workshop Wednesday, Mangomint’s VP of Sales Marchelle Mooney shared 10 ways sales is different in vertical SaaS. Marchelle’s personal journey took her from early adopter of Mangomint, to 6 years later, VP of Sales over a 25+ person SMB sales team. Here’s some of what she’s learned along the way.

THE 10 WAYS

5 Interesting Learnings from Cloudflare at $1.7 Billion in ARR

By Jason Lemkin
Wednesday, January 15, 2025 | 5 Interesting Things, Scale

5 Interesting Learnings from Cloudflare at $1.7 Billion in ARR

So Cloud and SaaS have had a bit of a rollercoaster the past 4 years, from the boom times of 2020-2021, to the tougher times overall of 2023, to the AI boom of 2024+. But one thing has done well through all of it: security. We always need it, and the threats keep coming.

And Cloudflare has been one of the biggest beneficiaries. It just keeps on going.

5 INTERESTING LEARNINGS

Dear SaaStr: What Are The Top 3 Criteria for Hiring Your First Head of Sales?

By Jason Lemkin
Wednesday, January 15, 2025 | Hiring, Q&A

We’ve talked a lot on SaaStr about hiring that first VP of Sales.

But what if you can’t find the right person, and you’ve spent months looking? What risks should you take when you’ve realized Ms or Mr Perfect just isn’t going to happen right now? At some point, you have to take some risk. I’d boil it down to 3 factors.

If your risky candidate passes all 3 criteria, and you haven’t found your “true VP” after 4-5 months (possibly less), I’d go ahead and make the hire:

#1: Have they hired 2+ quota-meeting/exceeding reps before?

This is #1 by far. If they’ve never hired 2+ great reps before, you are taking on a lot of risk making them your director of sales or first “head of sales”. 95%+ of great individual contributor reps have zero experience hiring. Do you want to be the company where you learn if they can? Ideally, no. And this is not the same as simply being given a small team to manage.

#2. Do they have proven success selling at your price point?

Being great at $1k deals is not the same as $10k deal or $100k deals. Don’t gloss over the critical differences.

#3. Can they train you? See if they can train you to sell your own product.

If they can, they can train others. If not, it’s risky. Training is a critical part of sales management. Don’t skip this step. They have to be able to sell your product before they start.

THE TOP 3 CRITERIA

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Carta: 20% of VC Rounds Last Year Were Down Rounds. It’s Probably Not a Big Deal Anymore.

By Jason Lemkin
Tuesday, January 14, 2025 | Blog Posts

Carta: 20% of VC Rounds Last Year Were Down Rounds. It’s Probably Not a Big Deal Anymore.

Per Carta, last year a full 20% of all VC rounds were down rounds, i.e. priced at less than the last round price.

While this seems high to me, one thing is clear: the “down round” — like layoffs — has become normalized in tech.

Valuations can go up and down. They do every day with public companies. Not only up in start-ups.

Downrounds are still harder to raise than you might think. Most VCs don’t want to do them. I’ve never led one myself at SaaStr Fund.

But it happens. If you were worth $100m last year, and now it’s $50m … that’s still Default Alive. Raise the capital you need, and push on to a bigger and brighter day. Live to fight another day. Especially if you’re still growing at a decent clip.

20% WERE DOWN ROUNDS

Lightspeed VC: 100% of Startups See $250k+ Deals Take Longer Than 6 Months to Close

By Jason Lemkin
Wednesday, January 15, 2025 | Blog Posts

Lightspeed VC: 100% of Startups See $250k+ Deals Take Longer Than 6 Months to Close

So a little ways back Lightspeed Venture Partners put out a new report on 154+ venture-backed cloud start-ups.

One data point that stuck out to me is that 100% of them reported $250k+ deals take over 6 months to close on average.

This isn’t a surprise per se

$250k+ deals are almost always budgeted as part of an annual budget review process.
$250k+ deals almost always start off with a pilot and evaluation process.
$250k+ deals generally are part of business process change planned over an annual (or longer) process

Still sometimes you do close them quicker. I have, especially when you’ve already in essence been pre-selected as the winning vendor before the first call.

But it’s a reminder to get patient with sales cycles on longer deals. You can bring them in for sure. But only so much.

It was also helpful to see that respondents said 53% of $100k deals close in less than 3 months.

100 PERCENT WAIT

Dear SaaStr: What Are Some Startup Costs That You Didn’t Anticipate?

By Jason Lemkin
Tuesday, January 14, 2025 | Q&A

In my experience the one most founders get wrong is how much more employees cost post-initial traction and after your first round of VC financing. And how much that dramatically drives up the burn rate and cost of doing business. Dramatically.

This especially bites founders that get pretty far bootstrapping. Their “sense” of what things cost is often just way too low once they start to invest the first round of VC capital they raise.

Usually, in the early days, employees are fairly cheap. Founders barely pay themselves much, if anything. At least some of the early employees work for “low market”, if that.

And then …

The company raises seed funding, or a Series A, or whatever it’s called, its first real chunk of capital.

MORE HERE

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