Digesting impressions from SaaStr Annual 2019
I have been a SaaStr fan and follower of the SaaStr community and best practices for years, yet I attended my first SaaStr Annual last week. The conference prides itself on “actionable advice and learnings to help grow SaaS businesses from $0 to $100M ARR”. Overall the conference was a very positive experience with great speakers and topics, even if the sessions had varied format, quality, and relevance (for me). I preferred the data-rich, specific, and tactical sessions, as the learnings can most easily be copied, adapted, and applied by the startups I work with. It was also encouraging to see a strong contingent of Norwegian and Nordic SaaS companies visiting California, and I thoroughly enjoyed catching up with many of these at a fun social event/dinner hosted by our good friends a Viking Venture.
For the conference, I expected a strong emphasis on the core SaaStr topics of go-to-market and overall SaaS/cloud trends. I was not disappointed. My main observations, some a bit surprising, were:
- The SaaS/cloud wave sweeping the world is unabated. According to Bessemer Venture Partners, the cloud unicorn count is now at 55 and 2018 saw >$90B in large M&A in the space, while IPO and VC funding hit all-time high in the past year. It is impressive to see the force of compounding subscription revenue for this category of tech companies continuing to play out at such scale and volume. The conference keynote raised ambitions for SaaS/cloud founders and companies to building Generational Companies, the term used by Jason Lemkin, not just great companies. Without a more specific definition, I take Generational Companies to be SaaS/cloud companies reaching ~$1B ARR, built to last long term in a market changing ever faster.
- Coming from a small home market, Norway, it is easy to be at awe of the scale of many US SaaS companies. Discussing how to get from $10M to $100M ARR can seem like a luxury problem for an early stage venture capitalist with small market roots. However, it also strikes me how narrow some of these massive companies are or started out. In big markets, niches may be much larger than initially thought, and starting with a narrow niche is often a critical success factor for building a great company. The more narrow the niche, the more specific customer problems can be solved and the better the opportunity to provide great customer value. This narrow focus is more counter-intuitive to startups from small home markets, where niches are too small to build interesting companies. The key learning to bring home is to intensify focus on specific customer segments/niches and to think more about market segments across geographies.
- I observed a strong and almost uniform focus on net retention as a/the key driver for growth and building great companies. In short, a SaaS company with strong net retention is destined to succeed, only the level of success is uncertain. This is indeed a mathematical fact (see 1.01^365=37.7), but the emphasis was still a bit surprising. Both customer success and product were highlighted as key underlying drivers. Unsurprisingly NPS is seen as the most universal metric for predicting net retention. At the same time, finding a more unique leading indicator for customer success can be a powerful tool to drive a company, see material from Mark Roberge below. Examples of leading customer success indicators for well-known companies are 2,000 team messages sent for Slack and 1 file added to 1 folder on 1 device for Dropbox. This is probably the topic that I will have most conversations with startups about going forward.
- AI/ML has been a main and omnipresent topic at most tech conferences I have attended over the last couple of years. At SaaStr Annual AI/ML featured much less prominently, and I was surprised by the experienced low AI/ML “word count”. The AI-trend was not absent, as it was mentioned or highlighted in a number of sessions, but it was certainly not dominant. I think that this lower intensity was due to the conference format that invites less hype and more cases, as well as a fairly mature audience. I believe that most SaaStr attendees see AL/ML as an obvious and given underlying trend, and as a powerful new technology/tool to drive SaaS businesses — i.e. SaaS business model and product offering utilizing AI/ML to deliver great customer value. I certainly remain bullish on the AI-trend in this context.
- Diversity and inclusion was also a recurring theme at the conference. SaaStr Founder, Jason Lemkin, spent a large proportion of his stage time on this topic, where often times talk is cheap and the “bullshit radar” should be on high alert. For SaaStr Annual the actual numbers speak for themselves. 45%+ of the speakers were women and 60%+ were women and multicultural speakers. The SaaStr Annual Equality, Inclusion and Diversity Program issued 1,000 VIP, no-charge passes to the conference for members of underrepresented groups in the B2B/SaaS community. The conference was certainly better for it, and this is a real, encouraging, and positive development.
Favorite published content from the conference
Material published from the following SaaStr Annual sessions is definitely worth a closer look.
- A Step by Step Guide to Revenue Growth from Mark Roberge, Harvard Business School. The whole guide is great, although I found the framework for tracking lead indicators for Customer Success to be particularly useful.
- State of the Cloud 2019 from Bessemer Venture Partners, which provides an overview of market trends and predictions. This is well-known material updated and still great. I particularly liked the mid-section describing the G.R.I.T. framework, as a way for founders to guide building great and enduring cloud companies. The deck can be seen below, and there is an associated blog post.
- Top 10 Learnings about Free Trials from Tomasz Tunguz, which provides a great dataset for SaaS companies to optimize free trials. See deck below and associated blog post.