SaaStr 802: SaaS + AI: It's Time to Move Much Faster 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. If your team is working 22 hours a week in your nice hybrid office and they sometimes come in on Wednesdays and they miss check-ins and you're doing quarterly releases and your competitor is in SF working six and a half days a week, AI first and pushing out code every day, you're probably going to lose in today's world. You have to find a way to get the team to work harder. You have to find a way. It's tough love, but it's the truth. Hey, are you tired of listening to hours and hours of sales calls?

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1:47All right. Thanks, everybody, for coming. Who's been before? A few folks. We'll talk through this all. For folks that read Saster and know it, I got to be honest. Well, it wasn't actually a year ago. It was last September. We switched to May. We're going to be May again next year. And even last September, a lot of stuff in AI, we were skeptical. Folks were theoretical. We were talking a lot about hallucinations. A lot has changed since last September. I'll talk through it. A lot's changed, especially in coding and contact center. But the change is just coming so fast. And I saw it in investments that I made.

2:23We'll talk through. But man, when we launched this Sassar AI, if you haven't tried it, just try it. It's on sassar.com. It's a chat bubble embedded. and we've done 130 ,000 chats in less than eight weeks on our AI. In fact, and the team that built it, the software Delphi is going to be here tomorrow after my session if you want to hear how it's built. But I've seen now 130 ,000 chats go through. I've seen questions answered. I've seen decks reviewed and board packs reviewed and SDR scripts written. And it's so good. It's so good. And I feel like I'm gifted with our AI because I've seen the future.

2:58this future that's like either here today or coming soon. And I want to chat about that and what I've seen for a few minutes. Tomorrow, I'll try to do a deep dive with more learnings. If you want to come at 9 a.m., I'll be doing a deep dive on AI and go to market. What I've learned, and we're also having the CRO of Owner. They just announced yesterday they raised it a billion dollars. They're at over 40 million, growing 10 % a month with a very sales driven motion, but infused by AI. So the CRO and I will be together. I was the seed investor talking about how AI isn't changing sales and more importantly, how they'll be changing sales and go to market soon.

3:32But it's just so much change that I want to talk about. And I'll get to there in a second, but Sastra is all about being positive. It's all about helping. It's about doing it together. But the theme here is going to be tough love today. It's a little bit of tough love in a positive way. But the reality is we have to move faster. Like everyone has to move faster is what I'm telling every CEO I meet. if you're running at the 2024 pace, if you're running a 2023 playbook. I know it's hard as it is. I know it's hard as it is to recruit, to ship, to do all these things. But everyone that's crushing today is not, they're moving faster.

4:07I'm going to talk through it. But, and here's just one way I summarized it on Twitter the other day. And we were here in 2024. AI can't beat a good sales rep. No way. And a lot of folks still quote a survey that I did six months back on LinkedIn. have you gotten your AI SDR to work? And Tomas Tungus, who's back, he did his own version of it. A year ago, people like AI doesn't work for sales. Like it's working now. Like it's working now. And so now it's, you know what? AI might beat an okay sales rep. I literally got emailed from a human SDR today, this morning. Hey, will you be at SASTR next week?

4:42Do you want to meet? today. This is from a well, highly funded B2B company. Do you really think AI can't beat that person? He's going to be out of a job next year. He will be out of a job. That is unacceptable at all. But it's definitely, I'd much rather get an email from an AISDR. Hey, Jason, I see you work at Sasser. Oh, wow, you found it, Sasser. Very interesting. I know you probably can't meet this week, and I know you only have a team of five and a weird, quirky business, but our product can solve this problem for you. The AI is going to write that email and say, hey, Jason, you want to meet at Sastr next week?

5:17Literally this morning, guys, these people will all be out of a job, okay? Because your AI, at least by next year, is going to be better than 80 % of sales reps. Not the best. I'll talk about a little bit today and a lot more tomorrow. That literally is an email from a company that's raised almost$100 million. Okay,$100 million. Last week, I had an issue with a$10 billion company that has raised a billion dollars, been a customer for eight years, gotten them tons of referrals, made them lots of money, and we had an issue, and I got an email from a human associate customer success manager. I have one hour next week to talk, dude.

5:59One hour next week to talk, dude. Okay? Now, listen, we're all friends. I'm not that big a deal. I'm a somewhat successful founder investor, but this guy shouldn't be calling me dude after being an eight-year customer. Associate customer success manager that clearly didn't know what we were, how long we'd been a customer, anything about me dude, and he had one hour free next Friday. You're going to lose your job. You're going to lose your job. And we tolerated this for a while. And frankly, in 2021, it worked because anyone, we all had to buy software. We got confused, but AI is so good. And again, we'll do more tomorrow, but it's so good.

6:39Those people are all going to lose their jobs. And these are very successful companies. You will not need them. You will not need them. You don't need them in support today. If you use Gorgeous or Intercom or even Zendesk or DecaCon that'll be here tomorrow and others, you don't need the mediocre person in customer success that says, I don't know. You don't need them. And you're not going to need them in sales or marketing or customer success by the end of this year or next year. You're just not going to need them. Look, those stories are from this week. It's crazy. Okay, so we're going to do a deep dive on that.

7:05But just quickly for folks here, tonight, there is casino today, but we have casino night. I'll be here until they kick us out. It'll be fun. Hang out. Unless you have other, there's a lot of parties. Go to the parties too. Those are fun. But we'll be here until they kick us out for casino night. Tomorrow will actually be the biggest day. So come back. If you have any interest in meeting VCs or if you are a VC, come to our founder VC brunch. We kicked it off last year. I think it's from 11 to 1. It's in the app. It might be 11.30 to 2, whatever it is. But it's pretty fun. It's in the founder lounge right there, but we'll try to get everybody that wants to talk to VCs and trick all the VCs that are here to come.

7:41It should be fun. We'll have the AI pitch finals if you want to watch it down there. And then we've got a lot more stuff than we do. Day three is our biggest day. I'm going to do a deep dive on AI with the CEO of Snowflake, CEO of Vox. Aaron will be here who's on really thinking through everything. He'll be here with the head of AI from IBM. That will be really entertaining, I guarantee you. and I'll do an open AI with the CEO of Calendly. We all use Calendly, right? I'll ask a couple of questions, but just come. It's going to be super informal with Tope. He'll answer all your questions. I'll talk for five minutes.

8:12He'll answer questions. It's going to be fun. And then we'll have a blowout party to meet everybody and we'll stay again until they kick us out. So tomorrow is the big day. Do all this stuff. It's going to be fun. And sign up for some brain dates if you haven't. Do some small meetings. Okay, so briefly, the theme, warning. I am pretty positive, but it's tough love. tough love is going to come. And I have this, almost every founder I talk to, any board meeting, I talk to most of them. There's some variant of this discussion, which is this. And here's the meta issue for folks. And I know, listen, the next 20 minutes for some of you may be, oh yeah, I get this, but most don't.

8:50So I'm going to say it anyway. This old software, it's all aging out, guys. It's all aging out. And really, and it took, I didn't see this until recently, but I wrote a tweet a little while ago that from like 2011 to 2023, software didn't change. It really didn't change. Miguel's with me. From 2011 to 2022, it didn't. You would roll out something, you would have something clever. It would be a cool new CRM or cool new marketing tool. And like you'd add a cool feature once a year and like you'd have a QWERTY release and a few things would go and then you'd do some security and you'd have some permissioning and some other, and it would change like every five years.

9:29Now the paradigms would change. Someone would figure out something really cool with mobile, with something, and then it would be like static for five years. Now it's changing so fast. Like even our little AI, when we launched it, it couldn't read PDFs. Now it's read like 200 VC decks and board presentations. That's just one way it changes. Our own AI in the next release is gonna be able to join Zooms and have full duplex conversations with people. Okay. And we actually don't even have to do anything. We just get the benefits from our platform. The rate of change is so fast. And I wrote this that software actually never really changed from like 2011 to 2023.

10:04And six public company CEOs emailed me after that and said, you're right. I have to work so much faster because honestly, my product in 2023 was the same. Not literally, right? And we're going to talk a lot about it in the next session with Ramani Angan from HubSpot. HubSpot has changed so much in a year. HubSpot has changed so much in a year. So my tough message is we were in this world, and it was even worse than this because so many of us had 110, 120, 130 % NRR for B2B products, and that was just the game. In fact, the original, we go back to the first Sastry annual, the first theme was zero to 1 million impossible, 1 to 10 million unlikely, 10 to 100 million is inevitable.

10:46And it's true, but it's just more unstable now. And part of that insight, which is obvious now, but was radical in 2015, is like this 110, 120 % NRR was the gravy train. It was so hard to get to a couple million in revenue and so hard to get to 10. But if you got to 10 million in ARR with 110 % NRR, your ticket was punched in SaaS. Okay? Just ship some more features, fill some feature gaps, win a few deals, hire great people. But you had five years before the paradigm changes. But now it's like changing all the time. I mean, it's just this instability is like stressful for a lot of folks. And if you're not seeing it, we're seeing it.

11:23If you talk to VCs here that have been around for a while and you have a quiet conversation, ask them, how many folks in your portfolio are north of 100 million and now are seeing growth in the 10 or 20 percent range? All of them. All of them. It didn't used to happen. Mostly they fell behind. They didn't launch other products. They didn't get ahead of AI. They didn't get ahead of the trends. are still selling their 2022, 2023 products is the real theme. Every VC will tell you, and we didn't used to see this. We didn't used to see any B2B companies get to 100 million and see growth radically decline after.

11:56We're seeing it all the time. Not everywhere, but all the time, okay? The other thing that is creating instability with AI is there's so many customers and so much change that it's lots of issues around churn and renewal. Even if, like, your customer base is stable, the fact there's 100 new competitors here that are doing super cool things puts pressures on renewal. It puts pressure on upsell. And you're selling the same product as last year. And someone here now can automate the whole process through AI, automate onboarding, automate conversations, automate everything. You're selling a workflow product from last year.

12:27They'll probably renew because they've built their business around you, but they're not going to buy more from you. And they're probably going to downgrade. So what a lot of folks are seeing is little cuts. Deals are getting smaller. NRR is coming down. Win rates are still there, but they're coming down. Instead of winning 90 % of deals, I'm winning 78 % of deals. See this as a red flag. See this as a flag you're not moving fast enough because this trend is going to continue. So many leaders, so many folks at 10, 50, 100, 500, a billion are seeing these little cuts as the folks that are much more innovative in AI are cutting away.

12:59They don't have to beat you in every deal to maim you. I call it maiming you. It's not that Twitter is through all these stories, oh, this great AI first SaaS company got to 100 million in eight days and is destroying Salesforce. It's not destroying Salesforce. Salesforce said 4 billion growing 9%. Those stories are like apocryphal. But much more common is people are getting maimed. They're getting maimed by so much more radically aggressive competition that's AI first. And the last two points on this summary that's making it harder, because it's weird, and I'm sure most folks are seeing it. If you are there, every buyer, every, especially the enterprise, every CIO has AI budget today.

13:39We can talk about whether it's discretionary or budgeted or where it's coming from. Everyone has budget for AI. So more money is going out at the CIO's office of the enterprise, but everyone's also has a mandate to consolidate the number of vendors. I'm going to ask Yamini about it when she comes up next, because they're benefiting from it. So you'll look at a lot of leaders that are benefiting from consolidation. If you look at what happened with Gong struggled for a while, then they're re-accelerating to 300 million. Okay. Why is Gong re-accelerating? There's some reason, but one, they got a rich enough product that they're benefiting from consolidation.

14:10Gong was hit when it was a smaller product from consolidation because people are like, everyone loves Gong, but they're like, I'll use the version built in to my other product. Now they're benefiting from it. But this consolidation is everywhere and it's something you just have to deal with. You have to fight, you have to be more innovative. And for a lot of folks, if you probably have to tap into some of this AI spend, if you're going to see the growth that you wanted before, otherwise you're just going to fight this consolidation battle. It's harder, but old software, it's aging out. It's aging out.

14:37And we really used to have a 20 year run. Now we're going to have five year runs and we're going to, the rate of change is so high. So I just had a little fun with my theme. I got to be honest, I never read Amp It Up, but I got the vibe, okay? The Frank Sloopman vibe was, you got to be a monster. You got to destroy folks and go to market. You got to work extra hard. That was the 2021 vibe, right? Who read Amp It Up? Help me. I didn't read it. Okay, you read it, right? But Frank's not CEO of Snowflake anymore, right? We'll have the CEO of Snowflake here tomorrow. Amp It Up was great. Be relentless in sales.

15:12I asked our AI app in nine seconds to make me a version of this. Be relentless in AI. This is, if nothing else, this is my push, my nudge. Be relentless. Don't just experiment. Don't ask folks what to do. Don't have one engineer looking at it. Be frigging relentless in AI. This is what you have to do if you're not going to fall behind. You have to be relentless because your competition is going to be relentless. They're going to be relentless. This is my theme. And just when some folks say, oh, it's earlier or enterprises aren't ready. There's some for that, but look at Palantir. Palantir is re-accelerating at an incredible rate at$3.5 billion in revenue, all driven by enterprise AI deals.

15:52The Department of Defense is cool with AI, okay? Military is cool with AI. Conservative enterprises, Palantir is re-accelerating. It's the only public stock that's almost at 100x ARR, Palantir. So if you think big conservative companies are ready for AI, and there's some truth to that. We just had the CTO of Rubrik talk about he sees it in security. There is conservatism. I just did a great deep dive on our pod with Mark Benioff. He said there's just layers of conservatism in Salesforce's base. But just before your team says, oh, they're not ready, look at frigging Palantir. Do a little research.

16:26Palantir is growing the fastest it has in years. It is reaccelerating at a crazy rate, 39 % growth at$3.5 billion. How much is 39 times$3.5 billion? Miguel, help me with the math. What's 40 % times$3.5 billion? It's like a lot, isn't it? that Palantir is adding 1.6 billion of new bookings a year. Sorry to interrupt. Go back. So don't be thinking that like your customer base isn't ready. They're ready. They're ready. It's going to go in phases. So anyhow, my point is it's really stressful when you have new competitors. It's really stressful when your product's getting out of date, but when it's good, man, it's really good because people, buyers are excited.

17:03Customers are excited. The market is excited. So I get, This is really tough love, though, this slide, is that because nothing changed, this was the tweet I did that I got. I can't tell you how many public company CEOs reached out to me on this. Because nothing changed, and listen, some people get mad when I say this, but we're just among friends. We got soft. We ran the same frigging playbooks, the same GTM playbooks, the same cadences, the same. And frankly, in some ways, Sastra benefited. I benefited because I'm like, oh, my God, I can't believe the playbooks I used at EchoSign in 2011 still worked in 2021.

17:35I was shocked. I thought they would be out of date in a year, but they worked year after year. Now, you had to evolve a little bit, but man, it was the same playbooks. And then, and this, I know people get mad when I say this. The truth is work from home and quality of life meant we worked even less with these playbooks. Okay. And it was just too easy. And everyone thought they were a genius in 2021. The average public SaaS company in 2021 grew 70%. Public. Public. The average public company, SaaS company now is growing in the teens. Okay. So we all thought we were go-to-market geniuses. We all thought we were product geniuses selling the same product in 2021 we sold in 2019.

18:13We were not geniuses. We were benefiting from a buying wave. And so got to change, right? We've just got to change. And a lot of folks in your org won't want to change. This is a tough question. This is a tough question. And when I talk to CEOs behind closed doors, when I talk to CEOs in the green room here, there's discussions that we all have that aren't had in public. And I ask them, how much of your team is not going to make it in the AI age? Okay. The truth is, and this is true for startups too, it's probably 20 to 40 % of your teams are not going to make it in the AI age. That sales rep that told me if I wanted to come to Sastra next week is not going to make it.

18:53He's not aggressive enough. Okay. It's tough. Your CMO is still running the same human content SEO team from 2021, and that's his best idea today, is not going to make it. Not going to make it. The CRO that doesn't believe in AI and the sales team, except for some maybe enterprise stuff, is not going to make it. Certainly, we have a great CCO summit coming on here today, hundreds of the best CCOs. Folks that think that customer success experience from that junior focus city had one hour dude next week, they're not going to make it. They're not going to make it. So I don't know how this will all play out, but I think the notion that everyone wants to be re-skilled, a lot of folks don't want to be re-skilled.

19:34A lot of folks are comfortable working in slippers from home three days a week. They don't like it when I say it on LinkedIn, so I'm just saying it among friends. I don't believe they want to be re-skilled. I don't believe they want to learn. I don't believe using ChatGPT once a week to ask about recipes is the same as being re-skilled. So this is not only do everyone have to move twice as fast, but it's tough. I don't think 20 % to 40 % of our teams want to change. And we're going to see, people are like shocked that Microsoft did a 3 % layoff this week. 3 % layoff, okay? But those are folks that can't change.

20:08They need new people to change. We're going to see this trend accelerate. We're going to see more and more layoffs of companies that are doing well. And the net headcount is not going to go down. They've just got to reskill people. It's brutal. But if you don't do it, you're going to fall behind. you're gonna fall behind. And if you're still skeptical, hopefully you're not skeptical. I just wanna highlight this one thing that's maybe obvious and I'll tie it all together. If you haven't seen what's happened in coding and support, it's radically changed. If you're not seeing your vertical SaaS, if you're not seeing it in your segment, literally 20 to 40 % of support is all done on AI today.

20:43And it's great. It's great. It's not perfect. Everyone that is doing support at scale, Well, there's folks here, you can talk to Decagon tomorrow, the CEO's here, which is at the cutting edge. But almost everyone has humans in the loop, okay? That's not the point. The point is almost 40 % of humans are often already replaced with AI. Look at coding. I keep picking on Miguel because he's in the front row. But at RevenueCat, which has 40 % of all mobile subscriptions use them, they've increased software productivity about 50 % using AI tools, using cursor and friends, up 50%, 30%, 40%. That's a lot, though.

21:16So I was literally at an investor meeting not too long ago with the VP of engineering. I'm not sure. I don't know if this stuff's really a good idea. I don't know if it's going to work. I'm like, imagine you get 30 % gains this year and 30 % next year. And like, it just compounds at an epic rate. So my real point is it's here. It's here. And my son's here. My son's here. The only thing he pays out of his own pocket is cursor. He's pretty smart. Now I can do 90 % of my coding with AI. So that's what you want on your team. Him. Okay. And again, with our own little AI, play with it. We did 139 ,156 conversations that did not tell anyone Sastra was next week.

21:57Not one of them. Not one of them. Now it did, now for fun, it did make, it's really good. It's trained on 12 years of content. This session will be in it. Everything, every session will be in it. Every tweet, every LinkedIn. Are there some errors? Yes. For example, here's just a fun one. Every question about this event, it got right. Okay. But we do a Europe event and we haven't publicized on the web when it is yet. We haven't put the date up. So people keep asking when SaaS to Europa this or when SaaS to London, it makes it up. Okay. No, five, 2 % or 3 % are wrong. It says it's in September, 2025.

22:32It's in June. It doesn't know. It's guessing. I'm not really an expert on how you vectorize this information and rag it. I don't know, but it's guessed wrong. Okay. So after three times, I just go and I train it in five seconds. I ask the question, it's in December, it's Christmas in London. Now it gets it right. Don't sit in your saying, oh, it doesn't work. Okay. 128 ,000 of these were right. And a couple of things that made up, we fixed it. It's fixed it. And then the meta point here, maybe this is all the point. I know maybe it's being redundant, but just don't think I could say this enough time is this is what I smell in fear.

23:05I see it in board meetings. I see it in investor meetings. I see it all the time. I call it the AI slow roll. I just see it everywhere. It's folks that don't want to change, aren't interested in changing, and they're just, I don't know, this will be on video, sharding, sharding on AI. Okay. And I talked with a lot of like CTOs backstage here. And they're like, yeah, a lot of times it's actually my more seasoned folks in my team. They don't, they want to do it themselves. They don't want to change. Seasoned CROs, seasoned folks, they don't want to do it. Maybe it's the junior folks too. I'm not trying to word as a sack.