Run the Numbers – Episode Summary

Podcast: Run the Numbers
Host: CJ Gustafson
Guest: Brett Queener (Partner at Bonfire Ventures, ex-Salesforce executive)
Title: Zombie companies, ARR, and broken SaaS economics
Date: February 5, 2026

Overview

In this candid, high-energy conversation, host CJ Gustafson sits down with Brett Queener to dissect the past, present, and future of SaaS business models—particularly focusing on the "zombie company" phenomenon, the shifting relevance of ARR (Annual Recurring Revenue), and the changing economics in a world upended by AI. Brett brings historical context from the advent of SaaS (having been at Salesforce when ARR was born), and both he and CJ lay out how new technology, market dynamics, and venture incentives are rewriting the rules for revenue, forecasting, talent, and go-to-market.

Key Discussion Points & Insights

1. Zombie Companies and the SaaS Afterlife

• Definition: Zombie companies are SaaS businesses that linger without real future prospects; unable to die quickly due to recurring revenue or heavy lock-in, but not truly thriving.
• Brett’s View: The product either does the job or it doesn’t—future SaaS and AI-native companies will have nowhere to hide if they don’t provide immediate, visible value ([00:04], [46:10]).
  • “The product either does the job or it doesn't. They're not going to buy and stick. You can't pass go. And so I just think these companies are going to die.” — Brett, [00:04]

Why the Zombie Phenomenon Is Ending

• With the move to highly agentic (AI-driven) solutions, product-market fit is more black-and-white; churn is harder to mask.
• Buyers no longer get boxed into long-term contracts with lackluster solutions; SaaS “smoothing functions” are breaking down (e.g., QBRs, swag, and G2 reviews—[46:10]).
• “Product market fit is far less deniable. Like, the product either does the job or it doesn't.” — Brett, [46:20]

2. The Origins and End of ARR

The Early On-Demand Days

• SaaS was born out of on-premise software’s inefficiencies—heavy upfront costs and crazy consultant spend ([03:41], [07:15]).
  • “If you bought a dollar of software per dollar software you spent in Siebel, you spent 10 to 15x... on databases, client servers, consultants…” — Brett, [07:32]
• Salesforce pioneered “on demand” contracts—month-to-month, not annual ([06:14]). The move to annual contracts came later and changed sales, comp plans, and predictability.

How ARR Changed Everything (For a While)

• Created cost predictability for buyers and repeatable business for sellers.
• Enabled sophisticated quota, comp, and hiring practices.
• Allowed hiring of top-tier sales talent by amortizing commissions ([11:01]).
  • “We could come up with comp plans... four times OTE and accelerators... and then we were able to amortize that commission expense over a two- or three-year period.” — Brett, [11:52]

ARR as a Crutch and the Next Phase

• Lock-in sometimes replaced product focus ("Success is the CSM's job as opposed to the product org's job"—[12:55]).
• The explosion in contract, usage, and pricing models means old metrics and playbooks are breaking ([18:00], [19:59]).

3. Forecasting, Compensation & Go-To-Market in the AI World

Forecasting is Harder, More Iterative

• The classic annual plan is losing meaning; teams must operate on much shorter planning cycles due to rapid product evolution ([26:08], [33:35]).
  • “We have a high level annual plan that roughly makes sense. But we're doing really a first half plan or a quarterly plan and we're doing check marks.” — Brett, [33:35]
• Sales, product, and operational roles are blurring and collapsing; old headcount heuristics are obsolete.

Comp Plans: Uncharted Territory

• Traditional comp models (one third each for annual, cash, multi-year) don’t fit when usage, outcomes, or agentic jobs are at play ([35:00]).
• Many companies are experimenting with high base pay and little-to-no variable for sales—something Brett sees as potentially problematic ([44:54]).
  • “I still believe your best Salespeople, whether they're SEs or the rest of it and your best engineers make the most money.” — Brett, [45:01]

Sellers vs. Solutions Engineers vs. AI Agents

• SEs (Solutions Engineers) drive product trust and value; as software becomes more agentic, the need for classic sales “ceremony” and large account teams diminishes ([41:00]).
  • “We do have fewer classic enterprise ceremony roles.” — Brett, [42:06]

4. Broken SaaS Economics & Investor Behavior

• Large VCs are funding companies with minimal ARR and headcount in pursuit of “king-making,” aiming to pick winners early and crowd out competition.
  • “I'm going to put 50 million in this fender and I'm going to crowd out everybody else.” — Brett, [63:31]
• This raises the bar for founders, can restrict exit options, and removes productive constraints ([62:36]–[64:43]).
• Investors may be underestimating how quickly competitive advantage erodes and how the required pace to hit product-market fit has accelerated.

5. The Collapse of Old Layers, the Rise of Context-as-Defensibility

Commoditization of the Stack

• As AI/agentic computing and LLMs commoditize reasoning and UX, where does value accrue? ([51:07])
  • “Now if reasoning is getting commoditized… if UX development or coding is getting commoditized, then what the hell is a defensible application software?” — Brett, [52:05]

Context as King

• Deep customer, schema, or workflow context is now the strongest moat.
• Vertical SaaS and agentic solutions that truly understand the customer can command higher prices and displace legacy processes ([58:44]).
  • “If I can train a voice agent that understands all of my schema...they probably gimme 25 grand for that or more.” — Brett, [58:50]

6. What Departments Will AI Transform Next?

• Support and engineering started the agentic revolution (companies like Decagon, Sierra, Claude, Cursor).
• Product marketing and sales enablement are primed for the next upheaval—AI can now synthesize and personalize messaging at scale ([56:07], [58:41]).
• Verticals like tire shops (Tire Tutor) and legal (Supio) show massive potential due to complex workflows and schema needs ([58:44]).

Notable Quotes & Memorable Moments

• On Product-Market Fit and Zombie Companies:
  “Product either does the job or it doesn’t. They're not going to buy and stick. You can't pass go.” — Brett, [00:04]
  “In this world I have founders that have to find and refine product market fit every six months. And if you don’t hit, you’re going to be a loser. Reminds me of Talladega Nights: If you’re not first, you’re last.” — Brett, [00:39]; CJ, [01:05]

• On AI-Driven Workflow Transformation:
  “All of this software sucks...what is changing when you think of agentic...they're doing the work. So you are hiring them to do the work.” — Brett, [20:51]
  “The natural conclusion is if you’re hiring them to do the work, we have to rethink through contracts, pricing and packaging, ARR and the rest of it.” — Brett, [21:55]

• On Context as Moat:
  “Context is king… If you have that, that's the context… and it's the ability of those founders to have what I call iterative velocity. Can they run a marathon where they're sprinting the entire time?” — Brett, [51:07]

• On Private Equity and the Rule of 40:
  “There’s one world that says the classic model gets completely punched in the face... churn is now 50% as opposed to 10% and you gotta pay off the debt... But interesting opportunities… If you invest in Agentic at the top layer, you can actually deliver a unified solution that has all the know-how.” — Brett, [48:56]

• On Large Funding Rounds and their Downside:
  “King-making...I’m going to put 50 million in this fender and I’m going to crowd out everybody else… You kind of screw the founder because if you have so much capital you're not forced into the world of constraints. And constraints is still very important.” — Brett, [63:39]

Timestamps – Important Segments

• [00:04] — Defining zombie companies and binary product value
• [06:14] — Early Salesforce "on demand," month-to-month contracts
• [11:01] — How comp plans drove the move to annual/multi-year contracts, and buyer/seller dynamics
• [20:51] — “All this software sucks...” The seismic shift toward AI-driven/agentic software and implications for contracts, pricing, and value
• [26:08] — Forecasting headaches in the new world: why annual plans don’t work, role collapse, and talent questions
• [33:35] — Why hiring plans and ARR heuristics are breaking down
• [41:00] — Changing roles for sellers, SEs, and sales process with agentic products
• [46:10] — Why zombie SaaS companies will finally die off, and why old smoothing tactics will fail
• [51:07] — Context as the new moat as reasoning and UX become commoditized
• [56:07] — Next B2B department to have an “aha” moment from AI
• [58:44] — Vertical SaaS (Tire Tutor, Supio) and the economics of context
• [62:36] — The paradox of billion-dollar, ultra-lean startups vs. massive funding rounds for low-ARR companies
• [69:56] — Brett’s final reflections and advice to founders (“Choose the path of energy that’s comfortable for you”)

Tone and Style

The conversation is fast-paced, sometimes irreverent, deeply knowledgeable, and a mix of old-school war stories and forward-looking strategizing. Both CJ and Brett use colorful metaphors (e.g., “sitting at the dinner table between Jesus Christ and Charles Darwin,” “granddad called and wants his DeLorean back,” “run a marathon while sprinting the entire time”), keeping the chat lively and relatable for SaaS operators and founders.

Conclusion

This episode offers a raw, insightful tour through the evolution—and impending revolution—of SaaS economics. The rise of AI/agentic tools is not only changing what software companies sell, but how they sell, whom they hire, and how founders and investors should think about defensibility, planning, and exits. Survival in this new environment means real value, rapid iteration, and deep context, not resting on the smoothing cushions of old ARR models. The “afterlife” is coming for the zombies.

Find Brett Queener’s long-form writing: queener.substack.com ([70:02])
Closing philosophy:
“Choose the path of energy that's comfortable for you… You didn't start a startup to have a multibillion dollar exit. Hopefully you started a startup because there was a problem you couldn't imagine not solving.” — Brett, [69:56]