SaaStr 792: Why I'm Scared to Buy New SaaS Apps Now with SaaStr CEO and Founder Jason Lemkin

0:00Welcome to the official Sastr podcast where you can hear some of the best Sastr speakers. This is where the cloud meets. Up today on the Saster Podcast. We forget that the last S in SaaS is a service. This is supposed to be a service and not an endless sort of games to prop up NRR in stressful times. And it's tough. Even some of the SaaS leaders we look up to the most are playing games around this, around buying, around what I'm buying, around leaving, around data that years ago they didn't play. They didn't play. Slack and Zoom never raised prices for years. Slack was disruptive in the early days because it implemented what it called the fair billing policy.

0:41And if you didn't use seats, they didn't charge you for them. And I think for a while we got there. And then when SaaS got harder the last couple of years for many, even if growth was there, it got harder. We stopped those fair billing policies. We kept billing for seats folks weren't using. We made it harder to leave. And we're back. And it's so tough now that honestly, I'm scared to buy.

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3:09Hey everybody, it's Saster. I've got a bit of an odd one here, at least odd because it's Saster, but to be honest, I am scared to buy new SaaS apps. Now, I'm not kidding. This may seem an almost heretical thing for Saster to say, but I think it's a challenge. I think it's something we should all reflect on, especially if you're seeing growth slow, if you're seeing things get harder, it may be you actually may be making it much harder to buy your app than you realize. And I can tell you, even myself, I am scared to buy new SaaS apps. I'm going to tell you nine reasons why, because of the sheer amount of friction that many, even SaaS leaders have added in terms of buying, using, and most importantly, leaving.

3:50And the harder it is to leave, man, the more stressful it is to buy. Trust me, those short-term benefits by pushing churn out a quarter or two may not be worth it if it creates huge amounts of friction going in. And I'll tell you, in this age of AI where it's exploding, we're buying more and more AI apps. Many of the best AI apps are very easy to try, buy, and to leave. Claude, ChatGBT, and others, they're 20 bucks a month. They're cheap. The free versions are really good. DeepSeek is free too. I use some of them free. We pay for some of them. They're all great. And honestly, just as an experiment, I went from the free to the paid version of Claude.

4:28And then I just tried out the cancellation process. Took one second. There were no games. They didn't tell me I had to wait a year. I was not threatened. There were no issues. I just was able to downgrade to free and then go right back. That's the way we want it, folks. We forget that the last S in SaaS is a service. This is supposed to be a service and not an endless sort of games to prop up NRR in stressful times. And it's tough. Even some of the SaaS leaders we look up to the most are playing games around this, around buying, around what I'm buying, around leaving, around data that years ago they didn't play.

5:02They didn't play. Slack and Zoom never raised prices for years. Slack was disruptive in the early days because it implemented what it called the fair billing policy. And if you didn't use seats, they didn't charge you for them. And I remember thinking that was crazy at the first SaaS annual and asking Stuart Butterfield about it. He said, yeah, this is the way we have to do things today. We have to be super customer centric. And I think for a while we got there. And then when SaaS got harder the last couple of years for many, even if growth was there, it got harder. We stopped those fair billing policies.

5:29We kept billing for seats folks weren't using. We made it harder to leave and we're back. And it's so tough now that honestly, I'm scared to buy. And it was interesting that Zylo, which is one of the vendors that helps you manage SaaS costs and vendors reported that the average number of SaaS vendors is down. It's down. And that's, I think there's a number of reasons, but it's not because spend is down. According to Gartner, spend on SaaS is up 20%. And you can see us buying all these cool AI tools that do things we couldn't do before, that are creating this video, that are writing up SaaS-ter posts, that are doing our clips.

6:03We could never do those things before, and we're paying for them gladly. But beyond that, we're trying to standardize on the platforms we already use because it's just stressful to add a new vendor. If we're already using HubSpot, if we're already using Salesforce, we're all asking ourselves, can we just do it in the apps we already have? So make it easier. So let me tell you nine reasons. I'm genuinely scared to buy SaaS apps today. And maybe if you listen and think about them, maybe you'll realize if you're doing some of these, maybe you shouldn't be. Maybe you're going short. Maybe even you're pressuring your revenue team and they're responding by going short to make this month or make this quarter.

6:36But maybe ultimately it's not the right thing for the customers and not the right thing for the business in the long run. Okay. Number one, I am just scared to buy an app that it will be impossible to cancel or downgrade. I can't tell you how many apps for years. We didn't cancel anything at Sastra. I didn't have time, but when I had a little time, there's several apps I tried to cancel or downgrade. These were battles. One app, a sort of pre AI video app we use that I honestly had not used in 18 months and had paid for. I tried to cancel. It was hidden. It was hidden. And when I finally found the cancel link, they said I had to talk to support.

7:09And then I talked to support and support told me no one was available in finance from nine to five. No one worked in finance. I couldn't process my cancellation. I couldn't believe it. There is another app that we paid over a thousand dollars a year for. And finally, after eight years, we moved to another vendor because their support just deteriorated so much. We couldn't even get things fixed. And so finally I left and month after month, they kept charging us and the downgrade link was hidden. I finally found the downlink and I talked to support. and we literally hadn't used the product in three months.

7:40Usage had gone to zero. And I finally talked to somebody, I said, listen, I'm canceling. I'm going to call Amex. I'm going to do whatever. And they said, listen, you don't actually, this sort of retention team said, you don't really need the thousand dollar a month version. You can use the$200 a month version. I'm like, great. Listen, just as a backup plan, sign me up 200 bucks. I'm in the next day at an email from sales, we're not going to allow the downgrade. We're not going to allow it. The retention team wanted to keep the logo. They wanted to keep the GRR up, but the revenue team thought it was better to threaten me than to lose that$800 to go from$1 ,000 to$200 a month.

8:11So it was an ordeal. Finally, I just said, forget it. This is not the kind of vendor I want to work with. They still charged me a two-month exit fee on an allegedly grab-as-you-go month-to-month feature. They charged me$2 ,000 to leave. And it was just brutal. And I just don't want to go through this again. I don't know if I can trust a lot of vendors. I'm assuming now I can't. I think in Sass in the old days, I assumed I could. We all assume we get excited and we put in our credit card or process that first PO. We all assume it's going to be great and that if it's not, it's on them. But the vendors are making it on us.

8:44It's on us to get out of there. It's become a roach motel. And I just don't want that. I don't want to just so many companies. I don't want another vendor that I have to worry about that it's going to be impossible to get out of there. And I will note most of these next generation AI vendors, they're freemium, they're easy to upgrade and they're easy to downgrade. Why aren't you? It's because you're not growing fast enough when you're playing games. Okay, the second one, which really didn't exist until a few years ago, and I'm also scared of it, is that we'll pay for your app, we'll finally use it, and then you've got us and you're going to force us to use a much more expensive addition.

9:18The first time I personally saw this was twice Zoom. We pay a couple hundred bucks a month for Zoom. Twice they sent us bills out of the blue telling us we had to upgrade to 40 seats and prepay four years annually. And the first time they did this, they claimed it was a mistake, but it wasn't. Many other people said on social media. Then they did the next year. They've told us we had to upgrade and quadruple our spend and pay years prepaid. I get it. Zoom's under pressure. They're growing 4 % a year at 4 billion. It's a tough business, but man, it's just, I, I, it's just a turnoff. I don't want you to force me to buy something more than I bought on day one.

9:53We had another vendor that helps us manage our events and we've used them for many years. We've been a halo customer for gosh, probably seven years. and they hired a new Sierra last year who told us now we had to pay an extra$7 ,000 a year in a logo fee to have the app branded with a logo. $7 ,000 a year to stick a JPEG that we've already been doing for seven years. And we asked why, and the Sierra said, that's just the way we're doing it now. And look, I get that their growth has slowed and they want to force money out of the base, but man, not only do we no longer love that vendor, not only have we actually now using half of what we did once they played that game.

10:30I just don't want to buy another mediocre vendor. I don't want to buy someone that's going to torture me after year one. It's bad enough to have a price increase I wasn't expecting, but it's even worse to try and double or quadruple my pricing by adding stuff I just don't want to do or forcing me to buy an edition I don't need. It's burned me out. I just only have so much time. The third one, I'm just scared about renewal drama. I've had enough of it. You know, a couple of years ago, we instituted a policy at little tiny Saster that as soon as we buy an app at Saster, we have to immediately send a termination notice.

11:02And people made fun of me four or five years ago, but now this has become a common practice. And a lot of CFOs offices, they immediately terminate the app. It's not that we want to cancel after a year on. We just don't want to be threatened and forced into an auto renewal. But we've had some, after many years, we've had some change on our finance team. In some ways it's better, but it's changed. And I'm just worried those notices won't go out. I'm worried that I'm going to buy an app, not use it, and then get a bill for$20 ,000,$40 ,000,$50 ,000 a year and not even want the app anymore. Do I have to remember to send the notice?

11:31Why is the burden on me? And a lot of apps are going to 60, 90-day notice you have to give them before the renewal. It used to be you just let them know ahead of time. Now, 90 days, it's a ripoff, and I just don't think I have the team and the infrastructure to keep up with this. Even worse, a number of public SaaS companies you probably know threaten to sue users or threaten legal action. One of them is well over$100 billion in market cap, has repeatedly, you can see it on X if you search, sent messages threatening to sue them or legal action if they don't complete their multi-year contract. This is just crazy.

12:04Why would you sue a customer? Why would you threaten to sue a customer? I get that if someone on the retention team's bonus is tied to not losing customers. I get why some people might cross a line there. I get it. I do. It's natural for their incentive, but man, why would an organization allow this? Several that we look up to that are iconic. So I just don't want that renewal drama in my life. I got enough. I got enough drama as it is. I don't want this. Fourth one, I am getting burnt out that you're not being honest about the variable costs and charges. Certainly a lot of folks have gotten stung, even though I think Claude, Jack GTV, et cetera, the base pricing is very transactional for the prosumer product.

12:43The API stuff can be expensive and I get it. So this is not an issue that is unique to struggling companies or older companies. But man, I am just burned out on this. Saster is a little bit different in that we're tiny. We have a tiny team, but our database is hundreds and hundreds of thousands of names, hundreds of hundreds of thousands of folks that get our emails. And we have multiple emails. We've had a hundred thousand folks that have come to our events. So our database is pretty big. It's a half million people. and the one in particular that burns me out is when folks ask if we'd like to try their marketing tool and their marketing tool is$29 a month or$99 a month or$10 ,000 a year, but a lot of value.

13:19And I'm like, okay, let's look at it. And then they want to sock us to a bill. One vendor that's several thousand dollars a year for a marketing tool wanted over$100 ,000 a year to support our records of 500 ,000. Look, more power to you, but you've got to charge an SMB like an SMP plus to be paid. So I'm just spooked that anything with a variable charge, I'm not going to be able to get a handle on and I'm burnt out on it. And I know we, there are positives for vendors on consumption pricing, but if I don't know what it's going to cost going in running in essence, a small business, it just burns me out.

13:51It burns me out again to not know what it's going to cost. Okay. Fifth one. I've just given up on vendors that don't for the most part that don't have a free trial or free edition. I know this used to be uncommon. And then freemium came back at Lassie and HubSpot Monday and others actually started off without free additions for the most part and added them later when they realized the power. But in the age of AI, so many of the apps that we love are free to start, free to use, free to try. And yeah, I know that AI has expense, but so what? So what? It's what we've grown to expect. So there are so many apps I would probably buy today, especially AI related ones that can make up for the fact that I don't have enough humans to do the work.

14:30If they were cheap, If they're easy to buy, easy to leave, and they had a free edition. But I can't tell you how many apps I go to try out, especially AI apps. And I just immediately am asked to pay$80 a month because they have AI expenses. I don't care. I don't care. AI is also the rebirth of freemium, rebirth of free trial. We expect to try this stuff for free. And you've got to work around the cost. You've got to get your conversion metrics right. But if you don't have a free version for me to at least try a little bit, just says your product's too hard to use. I'm out. I'm out. It's just, it's not something I want to pay before I can actually see if there's any value, not in the age of AI.

15:05Okay. Point six. This one has really crept up on us as a tiny team. I am, I am scared that customer success will do nothing after the deal is closed. I know I've talked a lot about this on Sastron. I don't mean to sound grumpy, but I am grumpy about this. I am grumpy that most of the vendors we work with customer success has turned into upsells and account managements, and they're just there to get us to buy more stuff. And if we love them and you've treated us well, of course, we want to buy more stuff from you. All of us actually do. Going back to the Xylo data, we're asking fewer vendors to do more.

15:36So if you knock it out of the park for us, we all want to spend more and do more with you. But man, I am so burnt out on customers showing up to QBRs and reviews with people that know nothing about our usage, nothing about us. They don't know how to spell Saster. And they're just there to make more money. We had one the other day where we were forced to go on a QBR with the vendor we rely on. And they said they wanted to do a roadmap review. We love that. I'm the biggest fan in the world of roadmaps. If you read Saster, do roadmap reviews, do them in person. If you can do them on Zoom, do them wherever, because everyone that's invested in you wants to see what's coming, do a personalized roadmap.

16:10So we get in, but it was a game. We get in. They did not want to do a roadmap review. All they want to do was upsell us. And then we asked for the roadmap review. They said, just go to the webinar we're doing next week. Click. They ended the Zoom. They didn't really want to do it. They just wanted the upsell. So I'm just burnt out that there's no one I can trust at a vendor that I'd buy. Okay, number seven. I've written about this one so much on Sastra. Some of you have listened and really knocked it out of the park by doing it. But I am scared I'm 100 % on the hook for migration from another solution.

16:39Just too many folks don't care at all about the headaches of moving from one solution to another. I'll give you a very small example. I was playing with a next-generation AI payroll app just to see, hey, maybe this would be better for us. We're pretty happy with the solution we use, but I wanted to try it. And a cool app growing very quickly. People love it. One, I had to put a credit card to try it. So the clear issue right there. But the second one is I didn't know how all the pieces would work. Okay. Let's say I actually use this for payroll. How's our 401k integration going to work? How's our healthcare?

17:10Healthcare is just like the biggest issue. If you're running payroll, how's it going to work? And the vendor didn't really explain that. We were on the hook for making sure this would happen. Not worth it. Not worth it. So I'm out. want to try the cool AI payroll HIRS app. But if I'm on the hook for the migration headaches, I don't have the time. The last two quick points, and then we'll wrap up eight. This really summarizes the other seven. And this has always been an issue in SaaS sales, especially always been an issue, but it's some ways it's getting worse. I'm scared. You'll burn my time. I don't have a lot of it.

17:43I just, I just hate when sales thinks it's all a game and all about the sales. If I had to, if any sales professionals, especially newer ones, folks newer in your career are watching or listening, I would just try to give you one insight, which it takes a while to understand, but sales is the tiniest part of a journey for the customer. Yes, it's important. Yes, you're going to get your commission from closing the deal. Yes, it matters to the startup, but think about it from the buyer's perspective. As long as the app is not too expensive, the soft costs and the time are so much more important than the money.

18:18The amount of time we invest on our core apps is huge. And I don't have a lot of time. The other day, for example, we went to, there's an app we love. We have two seats and we wanted to go to three. We wanted to go to three, but we had to talk to sales and buy a multi-seat version and schedule a call that was going to take days. I don't have that kind of time. I know your time is important in sales, but you're doing a service. I'm just scared you're going to burn my time. I don't know. Everyone wants to get on the phone. That's my related point here. And then I'll wrap up on point number nine.

18:46I don't, this has become a new sales thing where folks don't even want to share information by email. They always want to get on the phone. I just got one this morning. Hey, going back and forth by email is so tough. Let's get on a call. I know this has been taught to SDR teams all across planet earth and do what you want, but I'm not getting on the phone. This is an age of AI. This is an age of, this is the internet. I shouldn't have to get on a call to get a couple of questions answered, right? I shouldn't. I really shouldn't, unless I want to. Some folks love to get on a call. Some folks love to do the Zoom.

19:18The more enterprise you are, the more folks want to talk, the more complicated the business process change is. But if I need a couple of questions answered, please just answer them. Again, I don't want you to burn my time. I just don't have a lot right now. And the last one, this is down on my list, but it's still one that makes me not want to buy because it's become a bigger and bigger issue. I'm scared you'll make exporting my data hard. Now, this has been an issue since the dawn of SaaS at a bare minimum, going back to the early days of Salesforce, the early vendors I had at a minimum, even if you, in theory, could export your data, it was very hard to export the data in a structured format.

19:55Even if you could export your Salesforce or any data, Adobe Sign, Echo Sign, whatever, even if you can get it all out as PDFs, how are you going to get the structure around it? In the enterprise, data lakes and other services like Snowflake and Databricks, there's many reasons enterprise wants them, but they want to own their data and be able to do their own things with their data and not have these exporting headaches. Small businesses don't quite have those capabilities, and SaaS is a small team. So I'm just worried when I leave, you're going to hold my data hostage, and it's going to be a big headache.

20:25No matter what your terms of use say, no matter what it says, it's my data. Even if it's your data too. I'm not claiming it's not somewhat your data. But if I paid you for years, if I paid you promptly, if I paid you on time, if I paid you thousands and thousands of dollars and you're going to make it hard for me to export my data just so you can trap me. I get it, but I just don't think I want to buy that app unless I'm forced to. So listen, here's my final point. This is my final point of advice. And seriously, I am for the first time in many years in SaaS. I am scared to buy new apps now, unless it's clear I can leave.

21:00So I have just one bit of meta advice beyond thinking through this checklist. I bet 99 % of folks, you can hear some of you in these nine points, but quietly go to a room, slow it down and go buy your app with a clear mind, like a prospect, slow it down. Be honest, pretend, know a little bit about an app, about your own app a lot, know a little bit enough to be smart, but slow it down. Try it from scratch. What is the funnel? Do you really feel like you can get enough information? Do you really feel like you're comfortable buying? How hard is it is to talk to sales? What's that experience with the SDR and the sales team?

21:34Ask yourself if there's anything, anything that would give you pause from buying. And I'm going to argue until you're at mass scale, until you're at the Salesforce scale, don't add any friction to the sales process. There is an argument when you're at hundreds of millions of revenue to add friction. There is an argument that friction itself is a qualifier, especially for your sales team, that you don't want the customers that are the wrong customers, the customers that are going to bounce. the customers that are the wrong fit. And I guess I get it, but unless you're at hundreds of millions of revenue, you want to close every customer you can for the most part.