SaaStr 843: Software Stocks Have Massively Crashed. Here's What Founders Need to Know.

0:01Welcome 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 Sastr podcast. So here's my simple rule, guys. If growth isn't accelerating, you're not an AI company. This is the flaw with the publics. All the performative stuff, all the public companies you guys talk to and follow has growth. Great that you built an agent. Great that, but is growth re-accelerated? And that's the good case for Meta. I mean, that's the bold case for meta. They did accelerate growth. They're spending a ton on CapEx, but there's clearly the AI that they're baking into the ad matching platform is helping accelerate.

0:41And so it's working. And the retail advertisers that are generating the ads.

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1:21Hey, everybody. Saster Annual will be back May 2026. the world's largest SaaS and AI gathering for executives. Just as last May, we hosted 10 ,000 attendees with 68 VP level and above attendees, 36 % CEOs and founders, and 25 % were AI first professionals. It's the very best of S-tier attendees and decision makers that come to SaaSter annual and AI summit each and every year. But here's the reality, folks. The longer you wait, the higher ticket prices get. They're cheap now. They're cheap, so just get them. Early lock in your spot today. Use my code Jason100 for exclusive savings. Get your tickets at podcast.sasteranual.com or just use code Jason100 when you check out.

2:02See you there. Saster Annual and AI Summit 2026. It will rock. I'm super excited to be here, guys. Thanks for having me. I'm so happy to have you. Long, long, long, long overdue. I'm so happy that we were able to commiserate over the fantastic business that Davos is. and now we have our planning session. We just talked to Tyler Cowen about how you're supposed to keep everything a secret, but here we need to do some open brainstorming. We need to do some open brainstorming about how we drive to half a billion in revenue because apparently that's what Elvis is doing. I'm sure you want to stay on point.

2:37If you want my advice, which you should ignore, starting next year, take some off the table. Okay. Listen, TBBN is on fire, right? It is great. You've reached the point where you almost have too many sponsors. you have to turn them away. Sure. But listen, if both you guys could take out, say,$4 million next year, just put it away, might not be the worst idea for a media business, right? Yeah, yeah, yeah. A small bit of advice. When did you get into media? Like, what was the inciting element? We were the opposite. I mean, there's good and bad for being in the early days or old school, right? You don't know what you're doing, just like the early days of, like, SaaS.

3:14But we just did meetups for our community in 2013, 2014. like a thousand people would show up to a meetup. And now in SF, it's like, well, at least last year, it wasn't a big deal for AI. But imagine in 2013, a thousand folks coming together to talk about enterprise software. It was nutty, right? And so it built a community and then accidentally did events, which you guys should not do, and then did media. But I did it backwards, right? You guys were very intentional and it's pretty cool. I was utterly accidental and dragged into it, but it's convergent evolution. Yeah. What are the best practices for events?

3:47I mean, people talk to us about it. We've said, no, we're staying focused. There's plenty of events. We get invited to a bunch of them. I have to say no to too many already. There's a good event in most spaces, and I'm wondering what you think makes for an actual good event. Well, you mean from a business model perspective or from a quality of attendance perspective? They're perfectly aligned, right? Yeah. They're not aligned. They're arguably poorly aligned. Okay, let's start with the consumer. No, no, no. and we've experienced this because we haven't done any events and and we've we did one that was not yeah but it was basically like a cocktail party exactly uh and and like it yeah you you uh i feel like too many people like you got to really know what you're in you can be in the events business yep or you can do events and if you're just doing events and you're doing events that you really want to be at and participate in and you're making events for yourself it's very likely that it's not a great business, right?

4:45Because it's very possible you don't want to charge for tickets, right? Or you're charged for anything or all these things. A lot of conflicts, right? Well, look, I thought we might be talking about AI agents or the SaaS market crash. We can do whatever. We want to get to that. But if you want me to summarize learnings for events, which you guys have, there are a handful of public companies in the space which are boring but have very high operating margins. They tend to get bought out by key firms and go public and go private. Here's the basic thing. there is a nut for these large events like con lions and money 20 and even saster and it's going to cost you 10 to 15 million dollars maybe even 20 to turn on the lights well just to turn on the lights so if you bring in 10 million yeah or 15 million like a lot of corporate events do dream force they lose money right if you can build that well they're also taking on extreme risk because let's say you have some black swan or whatever you have a bunch of 10 million in covid we lost i lost 10 million as the majority shareholder i lost 10 million dollars it wasn't that fun yeah that's but if you get over the nut yeah you think about the nut and they're high this is why it's a terrible business yeah but if you get over it it's almost pure profit that extra person you charge a rip-off ticket to for 2500 bucks that costs you 80 bucks right um but getting there is it wrecks the ships and if tbpn has money it's the last thing you guys want to do is to struggle to make 200 grand or 500 grand off an event because it's totally distracting right but if you get massive and you keep your heads down these these things uh cool they're you know the best of anything makes a lot of money doesn't it of course that's always the nature of these things that's why we like focus that's why we're not doing events uh i am i am interested in your reaction to my my take that uh like the the dream forces the meta connects the google ios like this has put pressure on the cross-platform tech conference.

6:39Mark Zuckerberg doesn't need to go to CES to announce the MetaRayBan displays. He hosts his own conference. Even Sony and Xbox, they don't need to go to CES. Even if they have a presence, it takes away from the aura and importance of those events. Is that something that resonates with you or is that sort of overstated? Well, I don't know that events have worked for a product launch since Steve Jobs. It's now performative. It's very mimetic with Steve, yeah. Yeah, Satya getting up on stage and talking for four hours about what's at Microsoft. It's already been leaked on TBN and everywhere else yesterday.

7:10There's no energy. But so I think that, and to the extent events are still doing that in the age of AI, they feel very dated. They feel super dated. But the meta question is, in the age of AI, when literally at SASHA we have 20 agents that replaced eight people. Okay. We're running it all the time. We're at the bleeding edge. when and why do we want to meet people in personal and business lives and meeting people i mean you know you i mean you you guys know i mean you we're meeting over zoom yeah it's not a tenth as valuable as if i was there in person with you and we're friends forever right we're fake friends right now and so what what does that mean what does that mean for building relationships business relationships pretend relationships well yeah so getting people together is super important yeah Yeah, to maybe say it differently, AI could be incredibly bullish for events businesses because if you're just constantly online being just completely flooded with inbound and bots and bot phone calls and all this stuff, and you don't know really who's real and who's not, then in order to figure out actually who you want to partner with, who you want to make, how you want to make decisions, maybe you do need to get together in person.

8:20You do. too the the thing that um just like a lot of things in ai that the surface level misses some of the complexity the flip side is as as humans as culture and tech you know since 2020 we just don't want to get out of the house we don't want to go anywhere we don't want to travel we don't want to meet like sales folks don't want to meet customers in person anymore right and so even if we know we need to do these things to go to these like we just we all we're either 996 or we want to work from home in our pajamas. There's nothing in between these days. And so it actually creates a challenge for all the reasons we need to get together.

8:5399 % of us would rather be working from home. So we'll see. I don't know. Yeah. Yeah. What, I'm sure they're all wildly different, but what are your conversations like across the portfolio today? You have a bunch of new AI native companies that in those conversations look one way And then you have, you know, a massive portfolio that all is navigating AI in different ways, capitalizing on it. Maybe AI companies are becoming SaaS. The SaaS companies are doing AI. Everything's bleeding together. Sort of. Sort of. Sort of. So here's my simple rule, guys. If growth isn't accelerating, you're not an AI company.

9:35Oh. This is the flaw with the publics. All the performative stuff, all the public companies you guys talk to and follow has growth. Great that you built an agent. great that but is growth re-accelerated and that's the service now meta but i mean that's the bold case for meta like they did accelerate growth they're spending a ton on capex but there's clearly the ai that they're baking into the ad matching platform is helping accelerate and so it's working and they are in a and the retail advertisers that are generating the ads well sort of but like let's look so so that's for sure that's why but let's let's look at why Microsoft crashed and I never know why Publix react the way they do.

10:16But on the one hand, the AI side of the business is still blowing up, right? Granted, a lot of that money is coming from open AI, but they did miss on the software side. Yeah. So it's not, you know, there's nervousness and you talk about advertising being up the worst performing software stock of the last 12 months is the trade desk. Just destroyed by all of this. It's complicated. So my advice is last year was deeply tough love. Now it's just tough. It's like you've had a chance to re-accelerate growth. Like, yeah, everything got better since Claude 4.5. It got really good at 3.7. That's why Replit and Lovable blew up.

10:52That was a year ago, guys. You had a year, whether you're Agent Force or my startups, you had a year to re-accelerate growth. And honestly, Salesforce is doing better than some startups. at least at least we're actually probably the only organization of our size using agent force for real like we use it every day and it works i i can't tell you how many startups their agentic product is like it's a co-pilot interesting yeah so did revenue grow you had a year you had two years you're supposed to be agile digging that uh the the tough love to just tough transition i feel like there's a lot of there's a lot of sass founders who uh got to growth stage they got to scale uh maybe they started a decade ago and ai did reinvigorate them they got sort of back in the arena maybe they never stepped up step down or step back but they just it was it was a new reason to go into the office fire get fired up be tinkering with the tools pushing the team harder uh is there any is that just something that's innate to the tinker a specific type of founder leans into that like what are you seeing across the portfolio i well okay maybe two things first First of all, that's a great narrative.

12:00I don't think in the real world it's that common. I talked to behind the scenes, off the record, I talked to public company CEOs and B2B, my own portfolio. There's a lot. Since our agents blew up, everybody thinks we're some sort of, at least for GTM, we're the aging gurus. Okay, it's pretty interesting. And everybody says 80 % of their team wants to work like it's 2021. It's not simple. Everyone has to create a skunkworks team or something. and everybody's complaining because here's one reason the AI native companies are doing so well is they don't have to deal with the 20 ,000 customers pre-AI who still have feature gaps, who are still using clunky software, who are still have other competitors.

12:37And all of a sudden you have 10 ,000 new AI competitors that don't have to deal with that old stuff. And I would love to say, I know so many folks that have that, you know, beginning of 2025 were growing 40 % and now they're growing 80 or 110 um i can only think of a handful yeah how are you how do you advise around competition in specific markets uh earlier this week i forget who we were talking to but uh i had been talking to a founder uh and he had some idea and i was just thinking to myself like sounds like a great idea but i can guarantee that four different yc companies are going to end up on this problem and you're going to be going head to head and it's just going to be like a 996 versus 996.

13:21And like, it feels like, you know, somewhat of a coin flip who will come out on top, even though you're super talented, super experienced. What's your view on, you know, the current state of, you know, if a category is exciting, it'll have 10 companies kind of running at it aggressively. It's worse. Like that was, I think that was the problem six months ago. The problem today, and literally a seed investor who's very successful, relatively new, said to me yesterday, I'm giving up because everyone can vibe code something. I can't even tell the difference. I can't tell it. Now, I vibe coded 20 apps that have been used over a million times.

13:57I'm in the top 0.1 % of rep, but I know a little bit about this. And we'll run out of time. You're not going to vibe code sales horse. We're going to hit the gong for your compliment. Yeah. Man, that's worse. huge numbers you're not gonna vibe code salesforce for real but you know what you can vibe code something for demo day that looks really good yeah real and the stuff that like even 18 months ago you'd be like i want to fund that oh my god this is an agent for dental follow-ups that's all like my god your jaw would drop 18 months ago um and you know we're talking about um claw bot and and open claw and all this stuff today you were just talking about it right yeah i mean i built my own version on repli a week ago i thought it was pretty cool and now it's obsolete today for real it's called ran yeah i built it a week ago and now it's worthless well so so i mean demo day is coming up like what metrics uh i mean obviously you can have a polished product so does this shift to being able to control narrative are we in the age of storytelling do we need to be focused just on arr or cash flow at the earlier stage like what changes about because there will be companies that are created today and wind up being successful.

15:08I'm sure you're not bearish on just startups generally right now, but the landscape is different, right? So what's different? Look, here's the challenge. The challenge isn't even all the clones. I think we've accepted there's a lot of clones. I think we've accepted there's a thousand competitors now. The challenge that, I mean, you guys know from the show, but not all founders have internalized, it's just investors are expecting insane levels of growth insane levels of growth right they want like the idea that you can go from one to a hundred in a year is now seen as what you want to invest in it that used to be almost unprecedented it did happen in the old old days right now there's there's companies that like i invent invested in early like higgs field for for for video people never heard higgs field and it's a hundred and something million it's over 200 now but that's not like harvey which we're talking about every week right or lovable or replet and so you and then and then the problem guys is you look at figma and it's terrible but figma figma is almost soul crushing for investing because you can't get much better than figma it's down from its ipo it's trading less than 10 times revenue and that's for get owning and creating a category who's invested in something much better than figma i mean not me sure sure the best times of others on the other hand it's like figma isn't good enough like let's let's let's let's call it a day guys and do media companies because it's too hard yeah i mean i've had at least a couple times over the last year where a portfolio company is like a company that is maybe a pre-seed company trying to go out and raise a seed or maybe an a and they're they're like hey can you look at can you look at my deck and i'm like the deck is beautiful but you're projecting to grow 3x this year and that's going to be a nightmare for you because it just doesn't look like it just doesn't look like the business is best in class anymore even though you're like wait i'm like i'm gonna 3x revenue this year just yeah it's uh and unfortunately there's no great answers to this right there's no great answers to the question that some great businesses will compound to epic rates but they're unfundable now and they would have been unfundable two years ago There's literally, I don't know what the answer is today.

17:21What about how, what do you think is going on? So staying there, doesn't that just mean that maybe there's the same amount of entrepreneur, same amount of building, but just more founders opting out of the traditional venture capital track? Because if they don't actually have a solid use for capital, they should get profitable earlier, monetize earlier. I mean, integrating payments is easier with one line prompt. So just do it and actually pull your roadmap forward and stay lean and be higher leverage. I don't know. Is that not an unreasonable conclusion that you'll just see more bootstrap successes?

18:01You know, of course, that's the dream, right? Don't raise too much money for TBPN. Keep it lean. And I think for a little while, when everything was easy, but when things were growing well, but the markets were down late 2022, 23, and 24, that was the dream. Guys, listen. If the markets have fallen out of love with us, we'll just do the MailChimp. We'll just get to a billion in revenue on our own, pay us all out a couple hundred million in dividends and see what the Lord brings, right? The problem today is that the pace of software development is so fast that you better have, one way or another, you better have four or five amazing folks on your team.

18:39You're going to get crushed by the kids at Y Combinator. Bootstrapped or not, there's no time. And I remember back in the day, Michael Cannon Brooks, who was the co-founder of Atlassian, came to Sastra Annual way back in 2019 or 2018. And he said, I was lucky I had five extra years. Like, if I had any competition in the first five years of Atlassian, we wouldn't have made it. There were three companies. That's crazy. What do you— That's hopeless today. How are you going to compete when people are pushing out crazy agentic products weekly? How are you going to compete? So I want to get your take on this.

19:13So we were on a podcast that got released earlier this week. John was talking about something that has informed our strategy with TVPN from the beginning, which is that media is now a barbell. You're going to do great if you're a platform, a Spotify, a YouTube, Netflix, et cetera. And you're going to do great if you're a personality individual, low op-ex. You're just like Joe Rogan. You're creating content. But if you're in the middle ground where you have like, you know, a 200 person team and you're kind of competing with personalities and the platforms, you're going to be in a rough spot. A buddy of ours, John Palmer, was saying yesterday he thinks that software could go in that direction where if you're one or two lean, lean, lean operation, you're competing with big companies, you could do well.

19:58if you're a huge platform with distribution and scale like a sales force or google you're going to do well but there's kind of this this messy middle that uh could could get kind of uh churned through well it's just well first of all i think all of this vibe could and i think people miss the point because they're not really doing it right um and um you had the great guy the economist on before me who was yeah he was great and you asked him maybe have you actually used any of the enterprise it was like no it was honest right good kudos to him right most folks talking about it haven't um what vibe coding is already unleashing um is if you want to to your to your point if you want to build a super niche app for real i want to build software for uh web broadcasters with scale okay there's 11 customers there's tv tvp and antenna that's all i want to do for my dream if you are willing to to to do it for real not for an hour not one shot it do it for real you can now build that software without an engineer so that is amazing and so we're seeing whatever a thousand flowers bloom um i was the first investor in a company called rev revenue cat that does um powered folders for 50 percent for 50 percent of mobile apps and andreason published basically the same data this week at the end of last year just all of a sudden the number of mobile apps like quintupled at the end of last year because of vibe coding and it's just starting and so the very bottom of the market if the three of us want to get together and build an app for real uh we can do it now it's very exciting um and salesforce isn't going away but that middle is going to be harder it is it's it's a good point um and uh there's just what a really want to build it today, you can, and it's super exciting.

21:42What's going on in PE land? I would hate to be a private equity firm with a bunch of legacy SaaS, and you're having to explain to your LPs that, no, everything's fine. We took this company private. We'll take them back. It's fine. The Toma Bravos of the world, I'm sure they're very savvy. How do you think they're thinking right now? How intense is the fear? Where is it sort of unwarranted? Well, there's one thing I know for sure, like for a thousand percent sure, and this is slightly inconsistent with the data Carta and others put out and others on the internets. These B2B companies, pre-AI ones at 50 million, 100 million, 200 million, 800 million, no one wants to buy them.

22:33It doesn't matter. Hooray, you got profitable. Thank you. That means you're not going bankrupt. You have not solved your existential problem in the AI. I mean, literally, I'm an advisor, a friend to a company about$140 million in revenue. Pretty good growth, but not AI growth, but pretty good, right? And we were doing a review the other day on M &A, and I was shocked with the folks on the block. That would sell folks much bigger than that, much bigger than$130 million. Oh, to sell to them. So to sell, okay. They've already gone to Tomo Bravo and Vista and Insight. They ain't going to 140 million ARR for a weird crammed down combo exit unless everybody else in the PE chain said no, right?

23:16It's rough out there. And I, you know, until even late 2023, you got to 20 million in revenue. You were still growing and you were efficient. Someone was going to buy you. And the question was, was it 5X, 6X, or 10X? And that playbook died for PE and it died for exits. I do think the Tomo Bravo will be, they will figure out how to accelerate AI in their portfolio and go deep and it will work. I really believe if you can own the agents on your platform, that's how you re-accelerate. You have to own the agents on your platform or the agents will take away all the value. But man, the P has just said goodbye to B2B and it's terrible.

23:55I don't mean to be so draconian in 2026, but I talked to so many founders that are in La La Land and I think it was okay last year. But at least at some point, just be honest that PE is not coming to the rescue, unfortunately, for 95. I mean, everyone's on the block, guys. Is PE ever coming to the rescue? It's like it's more of a Grim Reaper scenario, typically. It's just so exciting to be building things today. Sure. Right? And there's either a malaise in these companies because they're building nothing, or you turn around and you can't believe what they built last week. Yeah. Right? I mean, Ramp's your big sponsor, right?

24:31Even though Ramp is old, look at the pace at which they put out software now. It's crazy. And anything from Ramp is going to die. It's going to be atrophy. Do you ever go around to your portfolio and say, hey, guys, why am I using AgentForce? Nothing against Salesforce, but I was surprised to hear you're trying everything, using everything, building your own agents. And yet you're sitting here saying, yeah, we're running everything on AgentForce, and it's great. Well, we run, we will actually, and this is a risk for everyone. For the moment, you can be promiscuous with agents. So we are running four different sales agents.

25:11We're running Agent Force. We're running a hot YC company called Artisan. We're running a company called Qualified that Salesforce just bought for almost a billion to get more reach. And then we're running a bit of Clay, which just raised at five billion. So we're actually running them all. It's work. We're running them for different use cases. and that's actually good for startups because in the short term, they get more customers, but overall, it's hard at the moment to dominate. So it's not just AgentForce and I think that's the risk. That is the risk that, I think AgentForce is going to work.

25:45I can tell you why as someone who's actually using it, not Sony Baloney, but we're using four vendors instead of one. Yeah, can you give more - There's risk as well as opportunity, right? Can you give more concrete examples of how you're using AgentForce, what it's doing for you? Is it sending emails? is drafting emails what yeah that's all it's doing is sending and drafting emails we gave it the use case um which is is a good one and which is the one mark talked about in the early days we gave it reactivations okay so and this will resonate a little bit with you guys folks that used to be sponsors or used to come to our events this is very simple and atomic that a human being was too lazy or unwilling to follow up with and um but they were good ones so we scored them and sent them out and we got 70 % open rate.

26:28Wow. That's great. It's pretty powerful. This is something when we had eight people on our sales team. Now we have one in AIs. We went from eight to one in AIs where it just wasn't worth the human's time. It just wasn't worth John and Jordy's time because they're hunting the big deals at Vanta and Ramp. They don't want to haunt the little deals or there was turnover at Brex and they don't know how to meet the new Pedro's gone. So the humans give up, but the agent doesn't quit. Sure. The agent just looks up who replaced the person at RAM, or Brex. They follow up with them. They have no shame. And we had an agent that closed a 100K deal on Saturday night.

27:02I mean, we want to close a deal. Yeah. For real. We just want to do that. Wait for the eSign document to come back. But how many of them are going to do the work on Saturday night? They're streaming, right? Yeah. What about, do you think we'll see any, are you excited about any turnarounds, public market companies that have been, you know, completely beaten up but we just had Jim on from Yahoo and that's a business that people don't, you know, aren't talking about. Certainly the tech media isn't spending a ton of time talking about Yahoo, but he's sitting there being like, growth is great. We've got hundreds of millions of users.

27:35We have all these opportunities to put AI in across the ecosystem. And you have to imagine there's a bunch of companies that have been beaten up in the public markets that maybe founders, you know, people just want to start something new. They don't want to try to deal with a legacy platform, but I'm sure you've been pitched random ideas like that. Well, look, there's a bull and a bear case here, right? And the bull case is AI is so early, and especially in real enterprises. Not all the tech folks buying these products on a circular basis. Everything's circular, right? Including GPU sales and everything's circular.

28:15If you go out and talk to the real world and bring folks from Archer Daniel Midlands and whomever on the show, they're going to tell you it's early. They're experimenting. And I think that is going to benefit Salesforce and service now. It's not too late for them at all, right? There's a lot of stress at those companies today, but it's not too late. The flip side, though, I got to tell you now that we're in 2026, you've had time. Where's the turnaround? Like, hooray that AI can do all these things at Yahoo, but it's already utterly changed video and audio and everything. Show me the money. Show me the lift in revenue.

28:50And I have lost patience with founders and 1 million, 10 million public companies that have not seen the lift because, great, but 11 labs just crossed 350 million. Show me the money. Like, enough talk and enough arm waving. And, you know, AI doesn't count if the revenue doesn't grow. The problem is, here's the tough part for everyone, including Yahoo and most startups. It's hard enough just to keep up. It's hard enough just to ship an agent. It's hard enough just to achieve parity, figure out the guardrails, figure out how to make this product work. And then the other guys have pulled ahead. You're almost bailing out a leaky bucket.

29:26And so I know we want to be optimistic that there's so much agentic opportunity, but I'm at the point you got to show me the money. I don't need to see you go from, and look what happened. Like Mongo dramatically reaccelerated. Yeah. In the age of AI. I'm not looking for you to go from Mongo from down to like the teens to the 30s or whatever they did. I'm just looking for a little bit of gain. Yeah. Even truly a little bit. What about, how are you thinking about AI discoverability? Are you paying a lot of attention to this with your business? To find vendors? We need to get business? Well, yeah, yeah.

29:59Just like how you're showing up in LLM queries, all that stuff. Do you think it's, are you advising portfolio companies that they need to pay a lot of attention there. GEO broadly? Yeah. I think people are underestimating this. I think GEO is, it's almost a disservice. You don't just want to show up randomly in what's a next generation media company focused on tech. And it says leaders include folks like TBPN and the others. That's not, like you got, that's nice. What you really want to show up for, like I'll give you a very specific example. I did this as a use case yesterday. I went into Replit and I said, what's the best CRM for me to use?