← The Official SaaStr Podcast: SaaS | Founders | Investors
The Official SaaStr Podcast: SaaS | Founders | Investors
SaaStr 835: AI + B2B in 2026: Find the Tailwinds or Get Left Behind with SaaStr CEO and Founder Jason Lemkin
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Welcome to the official Saster podcast where you can hear some of the best Saster speakers. This is where the cloud meets up today on the Saster podcast. Frankly, if you didn't accelerate growth at all, you get a D because you had a year. You had a year. I, I give everyone a pass for last year. I give everyone a big pass for 2023. All these tools were kind of terrible in AI. My one gets a pass this year. You saw it coming, you saw it changing, you saw these agentic tools getting better. If you didn't re accelerate and you weren't in market with a great agent, a great agentic product. This year you get a D minus but you don't get an F because you got through the year but you can't get a D next year it's you're late. So this is your job to go find it, right? Find the tailwinds.
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Hey 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 Saster 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.saster annual.com or just use code Jason100 when you check out. See you there. Saster annual and AI summit 2026 it will rock. The theme of this session. So much of what we've done has been tactical. This will be tactical in a different way is what's your job for next year. And I think a lot of folks that have already been here today and yesterday have come out and my job is to bring back a couple of agents Next year, my job is to automate gtm. My job is to move faster and use these tools. And that's all great. And the rest of the year, our whole theme will be very tactical. How do the tools work, what works, what are the blockers? But I think the most important thing strategically for folks here, if you have not ex. Re accelerated or accelerate this year, is you've gotta find your tailwinds. You've gotta find your tailwinds. And, and I'm gonna walk you through this in the next slide that we're almost in a time of a paradox. We are at a time of an Almost paradox in 26. Some things are much easier and certainly much faster than just 18 months ago. Some things are harder. And I wanna walk through why that's confusing. When you dig into trends, dig into data and dig in what's happening. And I'm gonna, I wanna spend 25 minutes or so walking through what's really happening, from buying to funding to VC and more. But your job is to grab some of this AI mojo if you don't have it. We're not all clay or artisan or anthropic or gamma, and that's okay. But there is budget out there and there is incredible demand. And even if you're not seeing the demand for your own product, you can feel your own demand for other vendors. There is budget there. And your job is to friggin get it, to attach to those headwinds for real. I'm sorry, the tailwinds for real. Not battle the headwinds, not battle people that don't want to buy your product anymore because it's not a native or doesn't do you want. Your job is to radically increase the functionality of your product so you can tap into what buyers want to buy right now, not what they wanted to buy in 2023, let alone 2021. That's your job. Your job is to find these tailwinds because they're there, but it's not obvious. So let me kind of summarize this and then I'll dig into it. And I know you may know some of this, you may know a little bit, but I'm going to go to it in some depth, which is one of the things most confusing, especially if you're on the social medias, the X's and LinkedIn is what the F is going on in venture capital. Because every day we read about, you know, Supabase, you know, database for AI, 5 billion last week, 2 billion the week before, 1 billion before that. We see rapid level from 0 to 200 million this year, going from, you know, in some cases nothing to $4 billion valuation. It's got to be easy, right? It's got to be easy. I think most people in this room will tell you it's actually harder to raise capital despite these big deals because a handful of big ideals are absorbing all the capital. And I'll show you the data very crisply. So it's a weird time if fundraising matters to you, if raising money matters to you. Because in some ways the dollars are back to the craziness of 2021, but it is not distributed evenly. Half of all the venture capital this year is going into four deals. Four deals. And 2021 was so different than today. It was demand, it was being locked down. There were so many things. But beyond all that, it was very distributed. There were basically any SaaS company that could get to 20 million or so ARR back then was going to grow triple digits and it was going to get funded and was going to become a unicorn. I remember sitting with a leading VC in 2021 and he was telling going down his portfolio to say, well, this one will be unicorn about 90 days, this one will be unicorn about 110 days. And that's just the way it worked. It was very distributed. And there's almost a thousand of these unicorns from 2021 waiting to possibly never go public. Okay. It is not as evenly distributed today. It is very concentrated in the very top and it doesn't necessarily make most folks lives easier. And I'll show you the data. Half going into four deals. If the numbers the dollars the same. But half going into four deals is nothing like the last, the last wave. This one's really important. I'm going to show you the data. Software spend is accelerating to a record level next year, especially the enterprise, a record level. It is re accelerating the CIO's budget. But in 2021, in 2022 it was evenly distributed. Everyone got some, you know, every GTM tool, every E signature tool, every zoom in tool, everyone got some of this budget, not the way it's working now. Of this record budget increase, according to Garden, which I'll show you, half is going into price increases, right? A few years ago, not Everybody increased prices 7 or 8% every year. Now everyone's doing it to fatiguing their base. So half of this record spends going to price increases. And it's not quite that simple. It's not just raising prices per seat. It's also additional offerings from the vendors which we'll dig into. So half of this bonanza is going to existing inventor in vendors which you don't get. And 30% of it is going into new AI tools that they're bringing in. Doesn't leave much left for all the rest. And in fact, what I'll show you is if you're not in existing invest vendors that are able to increase pricing and you're not in a top initiative, the number of vendors, you're shrinking or flat, it's harder, your job is harder. So you're only going to get tailwinds if you're in one of these two groups. Okay, we'll show this one. This is a version. The first one, interestingly, feels like unicorns are back with a passion. And then decocorns and center corns are even more of, but it's concentrated. It's almost as much money in dollars, but not deals. IPOs, man. I don't know how many of you guys listen to the podcast that we've done with Harry and rory. For about five or six months we started doing it. The IPOs just started to come back. And then we had figma, which rocketed 4x right? I haven't checked today, but Figma's back down or below its IPO price. Despite incredible growth, Klarna IPO got out. I think it's down 48% as of today from its IPO. So all this great IPO energy that we had that kind of culminated in Figma, but. But there were others. A lot of them are still up and some of them, like Core Weave that are AI related are still strong, but they're all down from their peak. And IPOs are ending the year, unfortunately. With a whimper. With a whimper. We didn't, we didn't open up the floodgates for IPOs. And it might have felt like that on social media, but the reality is it's not going to make it any easier for most folks to go public. It is what it is. It's life as founders, we roll on. It's been worse, but this was not as great as it seemed for IPOs. And then the last one here and then I'll dig into the data, but this is the tough one. It's almost the paradox. It's literally never been easier to scale to 100 million quickly as ever. But only for a select few. Only for. Again, listen, there were crazy, there were, there were the, the crazy hop ins that went up and down. There was the zoom hysteria. There was a lot of, lot of stuff that happened in 2020 21. But, but we were more on the same journey then. And a Gamma will already went from 0 to 101 to 100 this year. Replant and loveable 1 to 200 million already this year. You know, I'm, I'm a small investor in a video app called Higsfield. I, you know, I just thought they did a million dollars on Black Friday and I already got to 100 million this year doing video. And they have tons of competition. I mean it's a great app. I love this app. I've been a user since day one, an investor. But it's not, they don't own the market. I mean it's one of the best, best teams. But already 100 million this year. So if you nail this AI product market, fit this two by two, literally in our lifetimes has it's never been easier in air quotes to get to 100 million to super cycle. But there's so much competition. Folks are getting cloned so quickly and there's, there's a, there's a friend of mine that a company invested in here that totally awesome AI, very disruptive I think launched about 60 years ago, so has four clones already now none of them are as good. But again we talked about a little bit this morning. It's just faster. Everything's faster. So it's faster. 100 million less stable and more concentrated. So you could say what was me? You could stare at your shoes, you could blame the economy, you can blame everyone else for raising prices or you can figure out what the F everyone else is doing, go get a little, your job is to get some of that. To go get some of that. And you had, frankly, if you didn't accelerate growth at all this year, you get a D because you had a year. You had a year. I, I give everyone a pass for last year. I give everyone a big pass for 2023. All these tools were kind of terrible. In AI, no one gets a pass this year. You saw it coming, you saw it changing, you saw these agentic tools getting better. If you didn't re accelerate and you weren't in market with a great agent, a great agentic product this year you get a D minus. But you don't get enough because you got through the year, but you can't get a D next year. It's your late. So this is your job to go find it, right? Find the tailwinds. Okay, so let's dig in. It's the whole presentation. If you want to leave now, go do something more interesting. You can. Okay, now I'm just going to, just going to dig into some of the numbers. You don't have to say or you can ask questions afterwards, but just to show it visually. These are some charts from Saster and these two I, I regurgitated from Crunchbase, but it'll kind of show you I didn't have that. We just ended November, but October 2025 was the highest on the right, the highest valuation, total capital raised by new unicorns in three years. So you get it. We're not quite back at 2021 peak for dollars into unicorns. I think we will be next year. But it's a number two. But look at the left. The deal count's like a fraction of what it was, the deal count. This is just a visual representation of the concentration. The money's going back. So many investors that I've known over the years, so many actually classic SaaS and B2B investors that used to do C knit, they're doing anthropic at 80 billion, 100 billion, they're doing ramp at 32 billion. Like these used to do A deals and like, why are they doing this? Are these stupid people? No, that's actually where the easy money is, right? I mean, just said today Anthropic is going to raise at 300 billion. So if you were a VC and you invested at just 60 billion or 80 billion, you're looking like a genius rather than invested in some new startup at the A stage and you're just hoping your money doubles in two years. Like it's just, I know it's air quotes, but it's where the easy money is. And not only is it easy to get, if you get into an anthropic or whatever, not only is it easy to see your asset appreciate on paper, it's easy because there's liquidity. You can actually sell your shares and. And it's easy because. And here's what's happening in venture. You can put so much money in, right? It's great. If you put $5 million into a startup at 50 million and then it doubles to 100 million, your five turns into 10. That's great. The profit to the whole VC firm is 20% of that 2 million. If you're able to put 100 million into anthropic and it triples, right? Then you've made 40 million bucks for actually less work because you didn't have to find the company from scratch. So it's less work to make ten times more money. That's just math today and you're seeing it here. And so what if you talk to investors here, you listen to the podcast you do with Harry and Rory, what you'll hear is and you'll see it if you're an investor. Most startups are not doing great today. They're not. But the ones that are really breaking out at this crazy level, the investors are just frothing at the gums to put more money in. They shove money down founders throats and it's just because there's, there's no ceiling to the best of them, right? Anthropic isn't topping that at a billion. Open AI isn't topping it at a billion, they're chopping at a trillion. And so you can just shove so much money into companies now. That's the game today, you see. And you just got to be aware of. Almost seems silly to do early stage investing. On our pod we say seed is for suckers. It's resonating. It just seems so silly when you can just put the money into, into a late stage unicorn AI company and it quintiples in a year, one year, one year. Why would you do anything else? Why would you struggle to find a startup, meet the founders pre revenue, figure out if their 3k of MRR is going to go to 30, learn the competition. Why would you do that? If you could just invest in a leader and have your money quintuple like you, you could argue that it's. That it may come down. But if, but if you look at all the data, it sure doesn't feel like this AI super cycle is going to end next month or next quarter or next year. So don't expect venture capital to change and so don't expect. I've said it a lot on the pod and others are talking about it. Don't expect the classic triple, triple, double, double startup which is you do them D2B. Don't expect it to get more attractive to most VCs unless you're doing even better. Because it doesn't make any map if you think it's just a hard way to make money. We're all kind of lazy. We're all kind of lazy. Like we're not all super lazy. You're here, you came here. But we all want to find the fastest path to A to b. You know, VCs at the end of the day are like sales reps that get a hundred leads but one of them's a million dollar deal that's going to close in Q4. Where are you going to put all your time? All you put 80% of your time just standing around waiting for the email. Did it get E signed? Okay, this version VCs are doing today. It's just, it's the easy money and, and this is just a different one. I, I, I took this from Excel's recent analysis. It's up on Saster. This is another way to see it on the right, which is that total VC dollars in are projected to be about the same in 25 as 21 according to Excel. And that's great. Excuse me one sec. So in a sense we're back, right? And again, I think 26 will be even bigger. So we'll surpass the dollars of 21. But look at the top four deals are taking half the money again, Anthropic X AI. They're just absorbing so much money because you just put your a couple hundred million bucks on the table and you double or triple down on a lot of money. They're just absorbing so much money like overall dollars back. But again it's into less, less than half the companies, right? It's the rest of the money is only going into half the company. So a weird, a weird market when 59.6% of the model companies are taking all the money. And okay, we kicked this one actually just made this slide like a week ago. It's gotten worse, it will get better. But this is the IPO story. So just because ultimately, listen, one of the great things about being a, in a startup is you can kind of ignore a little bit of the externalities. As long as you have Runway, as long as you have time, you don't really have to worry about where NASDAQ is today. You don't really have to worry about IPOs. It seems a while away. It's, it's kind of. Startups are harder than big companies, but in a way you're in a bubble and it's kind of comforting to just be in your lane and just do like the competition's killing you, you don't have enough people. But at least you, at least you don't have to worry about all the externalities. But this is again, I saw this one, the Excel and analysis Excel scape, It's on faster. IPOs came back, but not much. Okay, so there was a point in 2021, the peak moment, I forget when it was when it was an IPO a day. It obviously wasn't the whole year. It would have been 365, 46, but it was an IPO actually I think it was an IPO a day outside of tech. This is just software and AI. So it was an IPO a day in 2021 and then HashiCorp was the last one in December of 2021 and then the door just slammed in 2021 and it was actually really weird because if you, if you were in the market back then 2022, things are actually great for business. Like people kept buying software so in some cases growth came down a little bit. 23 it started to get hard to sell the same old boring B2B products. It was still easy in 2022 but man, the IPO market slammed shut00. I don't see any zeros going back for more than a decade. That was a crummy year for tech iPodOS. I don't know what happened in 23. 24020 was 23 Klaviyo. Maybe Klaviyo is not on this. And did anyone know what is with Klaviyo? 23 or 24 might have been 23 Klaviyo came out of nowhere. It's the HubSpot for the Shopify ecosystem. HubSpot for e Commerce. Great company. 1.2 billion in revenue, growing I think almost 40%. They IPO'd and then we had a few in 24. Rubrik and Service Titan were great ones. One stream, an interesting small one. And then it seemed like it was coming back in 25 but maybe we'll end the year at 9 or 10 in tech it's not that much. And worse on the right and again this is a couple days ago. This is the, this is the performance from the peak. So Figma, which is for many of us probably the best one on the list, 74% down from its peak. Chai -30 Karna is even worse. It's 47% today. So like if you're, if you're a public market investor now listen, only so many people buy at the peak, right? But this doesn't get you excited, does it? It doesn't make you like froth at the mouth for another 10 IPOs or 20 IPOs next week. It just puts a damper on the market. And so we just have to adapt that 2026 might be a banner year for IPS. 27 might be but we the data didn't end up being so great like, like we might have thought it was mid year and this one's a tough one to internalize. This is by if you talked and again ventures. Venture is very important but It's a very small slice of the world. But this is a tough one that I don't have a lot of answers to. Today's about a lot of answers. How do you do AI, SDRs, BBR, AI rev ops scale your team? We got a lot of answers here. This is the one that's tough which is that because the new AI companies are growing so quickly, the winners are getting younger. The winners are getting younger. 65% or 0 to 3 years old now it's not universal, you know. On the, on the right I took the Screenshot from lovable one year to 6.3 billion. Right. Seems pretty, pretty, pretty crazy. But I use Replit. They're both great. I actually don't really have a horse in the race or an investment. Replit actually I think is almost 10 years old and I think it was 6 years old as an ide and then it, and then it was around and its timing was perfect. When Claude foreign everything worked and it blew up equally as well as lovable. So not everyone is the new kid on the box. There are plenty of folks you've hear today and they're for every, for every lovable there's a replit or Gamma Gamma that was around for a long time and then AI worked and it blew up. But overall the kids are younger these days, not just in age. There's some truth to that. Certainly if you go like to Waikama or in the Bay Area you meet a lot of 18 year old, 19 year old founders dropping out of Stanford your first year. Seen as very cool. It's a change but really it's that the companies are so young and why is this kind of a bummer? And it's great if you, if you did the lovable round a year ago, right? But what it means is and maybe this isn't all bad, if you've been doing this for a while, your VCs are just going to check out on you. They're just, it's just not again like putting all your money into anthropic. It's just natural. If Your company's around 6, 7, 8, 9, 10 years and you're looking at this chart, you know what your job is as investor. Go find the next lovable, go find the next level. Now it's not all bad. Okay? The flip side is if you're older and you're not a rocket ship, your VCs probably just don't. Your investor probably mostly at least in the US they just don't care anymore. Do whatever you Want make a little bit of money, run the company how you want grow 30, 60, 10. As long as you don't need more money, more power to you guys. So I don't see, you know, pre 2000, 20. I think when, when, when growth slowed when you were older, VCs would get agitated and they, they'd have meetings and they talk forever and maybe even talk about bringing a new CEO or something. I haven't heard anyone in years talk about putting a new CEO into a venture backed startup. They just stop showing up. Just I'm a little first, I'm like, can I do the board meeting? Zoom. Then they move to Zoom and they're just there. And as long as you don't need it like to, to me when I was a founder, I took all this stuff personally. I still take it personally today. If you don't take it personally, it might not be a negative. You might have some freedom. But just be aware when you look at this chart, it's just natural as an investor, not just to chase the shiny object. We're all human beings, but it's just where the money is today. For now. Today it's not that long tail. And so it's complicated. It's complicated. It's also complicated for the thousand unicorns from 2021 that maybe aren't quite growing at the Figma level. Because if you go back for A second, if Figma's down 74% from its IPO high, you know how many B2B companies are better than Figma? Like approaching nuns. Okay, like very few. So many of the unicorns in the pipeline are very, very, very good companies. They're just not quite glowing. At the rate figma did at a billion, who's going to be excited about them? Unfortunately, it's got to be you. You've got to find your own excitement because your investors in the markets for the moment are not going to be excited. Okay, let's come back, let's, let's dig into this dichotomy. This is the latest Gartner report I could find. Folks sometimes make fun of Gartner. Don't, don't. Because yeah, sometimes it's, it feels kind of like a scam when you have to pay for the to be show up in the report and everything. But honestly, I don't know anyone that talks to more CEOs and buyers of software than Gartner. Okay, do, do. Are their predictions always off? A little bit each year? Yes. But so am I. Not even a lot of your plan. You Are a lot of your plans on 1231? We're not exactly where you thought they'd be at the end of the year. No one talks to more buyers. So I think the trends and the rough data they see is about as good as it gets. As soon as I talk to the most and this is pretty crazy. Software spend slowed for a while. It re accelerated in 25 because of AI to 11.9% at 1.2 trillion. That's a lot. Okay, that's a lot. That's not growing 12% at your ARR. But okay, this is an insane amount of additional buying. Okay, this. And they're predicting it's going to re accelerate to 15.2 for software, 9.8% overall for it. That's a lot because for a million reasons, including the fact our overall global economy is not going this quickly. Right. So we're going to put more and more of an ultimately a fixed amount of revenue in the world and in, in companies into software and into technology. That's the good news. This is a lot. 11 to 15% of this level. That's an almost unprecedented level of additional investment into software. That's the is unless you do something and get any of it. Okay, so let's let me. I tried to summarize all the leading analysts. ISG 30% of the budget increases into AI. Deloitte sent 36%. McKinsey came in low at 20. That's still a lot. BCG Boston Consulting Group is the number one being reallocated from other categories. Gartner top one to two priorities across almost all its CIOs. They're saying their incremental budget though is only going up 2.79% and they're budgeting 9% price increases for next year. 9% price increases. So what does all this mean? You've got to steal this budget from some of these people. You got to steal it from other AI native. We got to be a top three initiative or steal it from the price increases or you're not going to get it. So I said steal or be stolen, it's up to you. But you can't just stand around like in past years and build a great product. A great product that optimizes workflow, that has an ROI calculator on your website that makes your team more productive. There's just no frigging budget for it. Okay. AI is about more than being productive. Ultimately it's about replacing or augmenting humans and delivering relatively rapid and massive roi much more than traditional workflow. And database software so you either got to be in this game or or the budget's going to be stolen from you for price increases and to free up money for AI because there's only so much so here I collected it a little bit just to show it to you in a different way. Even though spend into software is going to be a was a record this year growth of 11% and 15% next year at this scale at over a trillion the average public cloud companies growth is coming down. You know this but it's worse than this because they're not grabbing the budget Palantir is securities other things are going well. Klaviyo is tying to the great growth of E commerce as a Shopify Figma's got some of it. These are the winners these are the like five of the top winners with the best error multiples that are public companies but overall we're. We kind of get a D minus the leaders the public companies get a D minus for this year too. It's not just a few of us a D minus because they didn't tap into all that great budget. Where's that acceleration? You see it in this chart? I don't see any of it. I see consistent deceleration. There are examples MongoDB tapped back into it this year they re accelerated. Even Twilio came back a bunch but no one really crushed it. They they let all this money go to newer entrance okay it it's a more power to our investments and our friends that made money from it but pretty bad job by incumbents not just some startups and unicorns but. But the puppies. There are some exceptions obviously snowflake databricks on the private side Palantir is crazy but we really didn't get it all and so you got to do it next year and I know this but I wanted to break out actually if you go to Saster AI our newer site not.com we're still maintaining both we can talk about it if you want but we have market data where we pull all these top companies and we show you exactly what's happening every day. If you want a real time you can even get a real time newsletter. We show you multiples. It's just for B2B it's pretty cool. So I literally just copy this from Saster AI slash markets and we update this every day live but it just so. So not only are we sort of in an AI and non AI world in many cases in B2B like there's this massive multiple divergence in today's world. Now this has always been true. Faster growing companies are worth more than slower growing companies. But it's just, it's very diverse per se. So these are public companies. You've got to scale these numbers up. For startups. Obviously small companies have to grow faster than big companies, all things being equal. But if you look at the left, if you're in the top bucket, the ones at a billion plus that are growing 30%, Rubric, Palantir, Figma and others. Figma is actually the low trader in this group. They are still trading at 23 times AR. That's pretty damn, pretty damn good. Now it's kind of Palantir warps it as does Rubric a little bit. But the growth, but they're growing 43% as public companies. Public companies. That's a lot at that scale. Actually the ones in the middle are holding up surprisingly well. The ones that actually we saw a lot of deceleration. The ones that aren't decelerating, that are growing 24% are growing almost, are almost 12 times ARA. That's a pretty high multiple. And then you're just getting flushed at the bottom. You're getting crushed. When growth is less than 20% 4.9 times ARR. I wrote up pager duty this week growing 4% and now profitable, trading at 2 times revenue. 500 million in worth a billion event price today I think sold at one time. Revenue bending spoons. Okay. So like the markets, the public markets only expect pretty good growth. And actually it's. You get a great deal. You actually don't have to grow at 2021 rates to get really high multiples. But you've got to grow. This will help you triangulate the buckets. Huge premium for growth. If for some reason, even after this year, you think being profitable is enough. It may be. If you're bootstrapped and you're making a lot of money and put it in your own pocket, if you know, if your valve or someone like that, you know and you're bootstrapped and you just buy yourself a 500 million dollar yacht last month, more power to you, right. I don't know whether it really matters how much steam and valve grow when you're making us $4 billion in profit a year, 4 or 5 billion, 6. I mean you want to grow, but maybe 4 billion in profits enough with 300 employees. Okay. I don't know. But most of us are not like that. We have to grow. And so listen, a lot of, a lot of folks had to cut or get fit because their runways were shortened. They can't raise another round for the reason we're talking about. But profitable is not enough unless you're utterly, insanely profitable, like Zoom. For every dollar Zoom brings in, 50 cents goes to the bottom line. Okay? Pager nudity and others don't do that. You've got to grow and otherwise you're going to be worth 2x like pager duty or 1x like a member. You don't want to be in that box. You just don't want to be in that box. Massive split in valuations. Here's another one that looked good at first if you didn't dig in. This is from like a week or two ago. Adobe, trying to get into the AI game on the marketing side, buys SEMrush. SEMrush because. Because they wanted to be into Geo Lam LLM optimization. So even though Semrush is. It's actually bootstrapped, kind of a cool story. Even though they're older, they do have a lot of good instrumentation to sort of see where you show up in, in, in the LLMs and ChatGPT and, and, and Claude and all that. And, and Adobe needs something today because actually 30% of Adobe's revenue is selling to marketers. It's not, it's not Creative Cloud and others. It's the whole marketing, more enterprise side. So they buy them for $1.9 billion. Sounds like a lot, but it's only three times the next 12 months sales. Even with a huge premium. This is pale because when you buy a public company, nine times out of 10 you have to pay higher than the public stock price or most folks won't sell. Like even with Eventbrite selling at 1x today, I think it was still like a 50 or 60% premium that bending spoons had to pay. A lot of people just won't. They won't fill in their proxy form or sign the deal. So even with. They'll be paying a huge Premium with only 3x revenue. Note, we don't want to sell for 3x revenue, guys. Okay? We don't want to do it. So. And there's just some split in valuation for growth. Let me summarize a couple other things. I know this scene might seem obvious to some folks, but I still think 90% of folks don't get this. Even maybe don't get it. That is the wrong thing. Maybe they want to believe something that isn't quite true that they want to believe. Folks I've talked to here today and yesterday they get it. They're here. They're obsessed with AI from B2B and they're a little behind. They didn't build gamma or replit or, or whatnot and they want to build a copilot. They want to build a little AI that makes your product better. And listen, those are great and all of us should have a copilot. I personally, honestly, if. If There is a B2B app and I can't talk to the app and solve my problems, if I have to like figure it out from a clunky UX or like a help menu, I don't even want to apps 2025 I, I want to talk to the app. I want the app to tell me how to use it and be better. But I'm not going to pay you two or three times as much because you have a cool co pilot or a nice chat. That's not enough. It's not enough. Like AI features don't count. They're necessary but not sufficient to grow. And we just. I don't want to pick on pager duty but 500 million only worth a billion. Look at Patriot Duty's website right now. If you want page it says AI all over it. They've got AI monitoring a uptime, monitoring AI this, AI that. It don't matter. Unless you're replacing a large part of DevOps humans with AI, it doesn't count because there's no extra budget. So where is this budget coming from at the end of the day, you know, I break it up into three groups and which one are you? A copilot is none of them. A feature alone is none of them. Where do you get this budget? The part that Gartner is talking about replacing humans. It's brutal but true. You know, two things took off quickly in AI software development. We all know cursor at a billion and all the rest we could talk about if we want. But also if you, if for some reason you don't follow it, you probably do. Contact center blew up support. You know, the existing investors. Zendesk re accelerated even though it's private. Sierra went from nothing to 100 million in one year. Decagon lots of others. Intercom was just Here fin their AI products at 100 million right after the company growth slowed. We just, we used token chief product officer today. And is it because the AI is cool? No, honestly, they're cutting half their support teams. You know, Marc Benioff said even at Salesforce they're growing. They're adding more headcount in sales and marketing. But I think he's. I don't know the numbers. I think three or four thousand folks in support they already replaced with AI and their own AI and support coordination force. But that's thousands of humans now. They reskilled some and moved them into other apartments and moved around the headcount. Salesforce is investing. That's a lot of change. Okay. And people didn't buy this AI support software because it was cool or because it was a copilot. They bought it to get rid of Headcount and that is going to accelerate next year. And there's. If you can, if you can get rid of 100 million of head, there's probably room for a couple hundred thousand dollars a year of your tool. Okay, two, and these are different. If you truly augment humans dramatically. I should have put dramatically in the color. Not, not augment humans dramatically. You know, I don't know how many folks here use cursor okay enough or similar. Right? I mean I'm more, I'm not. That's that, that I'm not technical enough. I use replit but it makes you so much more effective. So much more effective people. If you guys haven't used any sort of vibe coding tool or cursor or, or for non technical folks replit or lovable or something, you might not get it. Like when we, even in May when we were at SAS annual people, you know, the idea was oh, I'll make my developers 30% more productive. These tools. Okay, like, like okay, I, I'll spend a couple hundred bucks a month, maybe 500 bucks a month and they'll magically be more productive. Like they'll just create more features and there's truth. But it's much more than that. Like if you're deep on cursor or other tools, you're never going back. It fundamentally changes the way we build software like Cursor and all these other tools are up in a level. Have ingested every piece of open source and probably a lot of closed source software if they have all of it. So anything you want to build that has been built before can be built in minutes or moments. So if you're Yesterday, yesterday morning I built a game called vaporsale that I try it right now. It's super cool, it's got cool music. You sell a product that should exist but doesn't. You've got to convince prospects to buy something that's AI and trendy, but it doesn't work. It's kind of a fun little game. I mean, I built this in one hour. I actually built, I built it in less. And why? Because honestly, it's just stealing someone else's code. It's got a fresh skin on it. I gave it the right prompts and the right ideas, but it's already in the code. And so why would anyone go back to like writing this code from scratch like you had to do a year ago? You wouldn't. Right? So this is radically augmenting humans, these types of tools. I mean, you know yourself, even if you don't chat, GBT or cloud, you're not going back. Right? You're not going back. But this is radical augmentation or three, an incredible level of productivity. So when we, when we talk about our stack, we talk about a bunch of these. But like, and I, I don't mean to keep going back to the well, but like, we use Gamma to make all our sales collateral instead of Google Slides or PowerPoint. It's not like a little bit better, like in five minutes and pulls all of our data from our CRM and otherwise it knows everything about the prospect and it creates a beautiful dynamic presentation completely customized for them in five minutes. We pay 100 bucks a month. That's like one of the best deals on planet Earth. We're not going back. But most folks, classics, they're just not going that far. They're only making their products better. I'm sorry, that was enough in the old days. Ain't enough. You've got. This is where the budget is. It's not enough for AI to make your product better. You got to replace humans, turn us into like cyborgs, I guess. I'm going to rename Section two cyborgs. I'm human AI hybrid and quad or replit, maybe even Harvey. Arguably we're hybrids, right? We work together. And more insane productivity order of magnitude more productivity before. Honestly, sit down and ask yourself, are these the tools you built this year or do they just make your product nicer? If you did, if you've spent this whole year building AI tools for your B2D product and you didn't see any additional growth, I bet you were in the fourth bullet and not. And not the first three. And okay, another way to think about this. Maybe this is my penultimate point. People call this a super cycle. VCs call it a super cycle. But why is this a super cycle? This is an important point. I've talked about this a couple of times in the 20 BC pod that we're going to do live in about an Hour and. But this is the, this is why you got to be in market with an AI product A and B, because everyone's in market at the same time. So what, SAS blow up in 2020 and 2021, right? It wasn't just that for a few months everyone worked at home, okay? It wasn't just that because half the US economy was essential workers, half of folks still had the same jobs. They still went to Starbucks, they still went to the hospital and they still do all these things. And that ended in a lot of red states by the end of the year, okay? I was split, I don't know about you. In 2020, I was split between blue and red, okay? I'm not political, okay? Up in the Bear, it was like a sci fi post apocalyptic. Half the time because of family reasons. I lived in Orange county in Southern California. It was like that never happened. Six people were playing, taking school buses, they were eating inside in restaurants, even though it wasn't even allowed. It wasn't what happened wasn't just this, it was what it drove a thing where everyone who was in market at once, every enterprise decided they needed these tools. Every enterprise, there was so much change. They needed a contact center where you didn't have to come to work for a while. They needed E signatures, they needed zooming was the most crazy one. They needed all of it. And what happened was instead of the traditional 5 to 6% of prospects being in market a month, which is a way a lot of marketers think about things, right? I'm going to, I'm going to try to reach everyone in my, in my universe, but the only 20% are really in my ICP. And of that 20%, maybe 4 to 5 to 6% are in market, right? So if you start doing the math, you're lucky if 1% of your list, your database actually is going to buy this year, right? Because you think about how many folks are in market, you know, because you know if your tools are working great, it might take five or eight years to even decide to switch them out. When I was back when I was at Adobe and we moved to Salesforce, it took it over five years just to move to Salesforce, a big company. How long would it take you? They're never moving up, but if you were going to move off, it would be like a decade, right? So folks are rarely in market, but in 2020, 21, everyone was in market. Now it's happening again with AI and some of it is productivity, but a lot of it is just, you know, this from your customers, CIOs on down have a massive initiative to drive to bring AI innovation to the company and have massive productivity gains. And so everyone's in the market, but you've got to be a need. A need. And I just kind of wrote this up to myself. I need. We've heard this today. So many sessions, so many folks I've talked today need an AI GTM tool. Do they really need it? Will their companies die without it? No, but they want a clay or qualifier artisan or other folks you've talked to. They need it, they'll find it. They want to bring this tool and I need it. I need AI support we talked about. I need a legal review, I need a coding. I need AI security. Not only rubric and Instagram, we had a keto security this morning. That's that that's blowing up because they need this for AI. So are you this. Are you one of the categories of products that buyers feel feel right or wrong? Just like we didn't. Maybe we didn't really need all these products during 2020 and 21. The world, with hindsight, was more normal than we thought. But do they feel like they need this product right now? If not, you're not gonna get any budget. So how do you be? I need this for AI? That's what you've got to build in the first half of next year so you don't become obsolete. Another couple points. Why some of the best ones are blowing up and why others are struggling. The best B2B AI enables TAM expansion TAM expansion so a lot of those public companies, they've reached TAM saturation often because they're only single product or double product. They don't really have a suite. They can't build as much as Datadog. They can't build 12 products or 20 products they've saturated. They've gotten to double digits of their market. But because the best AI products do so much more, they can charge more. So gam at 100 bucks to see which are the our PowerPoint AI tool. Like 100 bucks is not that much money compared to what a lot of you charge. But it's a lot more than Google Slides or Canva, which are basically free. We already pay for G Suite. It's free. You may already pay for office, that's free. Can you get everything for like nine bucks? Okay. And we're still paying a hundred bucks a month. That's a lot more. Tim Cursor et al Cursor. All. All the rest, Windsurf, all these other Tools. It's so much. Think about it for a minute. Atlassian got incredibly successful selling JIRA and other products for five bucks a month with discounts to folks at companies. Now folks will spend $400, in some cases $5,000 on cursor. That's why it goes to a billion. It's so much TAM expansion. It is so much more than a project management tool or a bug tracking tool. It is so much more TAM by that productivity. Almost ad nauseam here about AISTRs and BDRs. These products ain't all cost a lot more than one seed of sales of HubSpot or one seat of Salesforce or one seed of Zoho CRM or pick your seat. I mean, do you know any, any serum that costs 50k to 100k a year for, for one. I'm slightly exaggerating. It's not really one seed. But these, these guys are blowing up because the products unlock huge TAM expansion. Huge TAM expansion by replacing a lot of humans, a lot of sdr. And none of these guys would be remotely as successful if they had to charge like traditional SaaS companies. You know, if all these folks out here had to charge five bucks a month like notion, they wouldn't be here. Most of them, they couldn't afford to be here. They couldn't afford to fly anybody out or come out here because of TAM expansion. And so this is the way the game has changed. And so if your co pilot isn't really letting you charge more for your product, it's not because your sales team isn't good enough or your product marketing. You don't have the right gerunds and vowels and colors on your website or the right, or the right fonts. It's because you have added so much value that you unlock so much tam. So much tam. Some of these guys, their software is better than you, but it's not like they're so much better at sales and marketing than you. They just unlock so much time. So you've got to be honest. Does your AI product for 2026 enable you to charge five times or more than what you're charging today and earn it? Not shove it down people's throats, but earn it, earn it. That's, that's the unlock here. Charging for your co pilot that no one wants, no one want. Microsoft learned no one wanted to pay an extra 20 bucks a month to talk to Word. Okay? That was the great innovation. And even Microsoft couldn't get people to buy that. Okay? It doesn't work. No one Wants a mediocre copilot and a couple more points I'm talking about 2026 because even though listen you guys all get a pat, we all get a pass but even though some folks are getting D minuses or Cs for this year I'm sorry to be direct. I'm just trying to be helpful with love. It's all said with love. There isn't infinite but there's still time. There's. We are early here. I don't know if we can all catch cursor okay might be a little late but there is time. I picked two examples Cleo Jack Newton old Saster OG from the beginning legal tech really they they added fintech in a work for him and they raised a 3 billion and then they added AI to their product in the last year and legal for. For legal case management 5 billion founded in 20082008 Gail I've talked to her too much but founded in 2020 didn't really work before AI now 100 million and with just 50 employees. There are a few of you who are. Who probably no one here you wouldn't have come. There are a few of us in the broader SAS community that have already lost to AI n to so called AI native folks. You've lost again. Woe is wo is us. I don't think it's true for most folks you have time. You don't have infinite time. But it's early. It is early. What I can tell you the Salesforce team he was here with Asian Force what I've learned and is that learned it from Mark and lots of others is like yeah, there's a segment of salesforces 44 billion of AR whatever they're at that needs these tools tomorrow. But a lot of the traditional industries haven't even started right? I'm not telling you to go buy public stocks but I'd be long on Salesforce even if the market wasn't true this year because it's just getting going with this price the demand is just getting going. So find like don't go and directly compete with the folks that already get a couple hundred million this year unless you know you're on the better engineering team than them. But so much of this is still early. So many folks are found their wind this year. This should be you next year it is not too late but eventually if you don't catch up with your agentic product with your native AI product if you don't catch up next year your direct competitors will and then you Will lose market share. You will lose market share. And the one thing, the honest thing to ask yourself and if your founders maybe not even to share with you below your management team at the end of each year, you have to be honest. Did we gain or lose market share this year? Did we gain or lose market share this year? Even if you grew 50% this year, if your competitor grew 100% and you know you're at the same AR. Sorry, normal. You lost this year. Okay. Did you gain market share every year? That's important. But in the world of AI, it's even more important because it can sneak up on you. Be honest. There was one startup I worked with that has just crossed 100 million. Pretty good year, pretty good AI product. A couple quarters ago, they started deleting the competition slide from their board deck. Where did it get first? First time it was a hidden slide. You know, went from shown to hidden slides and then it disappeared. Why? They weren't gaining share anymore. Okay, now I kind of gave the CEO a pass. I brought it up between me. I wouldn't bring it up from the team you got. If you're not honest about gaining share, you won't gain it next year. You'll lose it in today's world. So ask yourself honestly. Figure out who your direct competition is. Find a way to track your share. Figure out their era, figure out their growth. Go on the Internet. Figure out every metric you can. Find out number of customers, scrape it. Use tools, even if you have to, use web traffic as a crummy proxy. But make sure in the age of AI, you are gaining share. And don't hide behind it if you're not. Okay, maybe a couple other paradoxes and then we really will wrap. This is just a trend to think about as we for 2026. It's complicated. Leaner teams are real. Now, Gamma just said, I'm not, I'm going to gamble. But I just noticed the last, you know, 2 billion valuation, 100 million ARR. 50 employees. Lovable and Replit. Both under 100 employees. Cursor. I think it's a little bit confusing, but whether they're under 100 anymore, they were under 100, they'll be under 300. These, these are very lean teams. But some of them have a hundred percent inbound dramatic demand and no sales team. Okay, so if you have no marketing costs and no need for a sales team temporarily, you can, and you have one product, you can actually be pretty lean. Right? One product, no sales team, no marketing expense. It is easier to be A little lean than a traditional B2B company. But everyone is getting leaner. And this isn't about layoffs or, or just getting more profitable, because as we just talked about with pager duty and slow growth, just being profitable isn't enough. It's not going to give. You know, selling for one times your revenue is not worth it. You've worked, you've all worked too hard to sell your companies for one times revenue. So this isn't just about getting fit. 2022 and 2023 was about getting fit. Because now you can say this without getting your head cut off. We were way too. We were. We had way too many employees running around in 2021 doing nothing. We had two way too many marketers spending 90 days doing an infographic. Okay? We just were. Everyone was bloated. Okay? Everyone was bloated. There's a million things going on now. Some of it is replacing humans with AI. Some of it is, is other things. But we're just all going to get leaner and leaner and leaner in terms of employees. ARR. Per employee. It's not going to reverse itself. There is no trend to reverse itself. So the new guys are getting more efficient, but everybody is essentially getting much more efficient. What? There's a little too much chart going on on the right. It's showing up more in early stage companies and late stage companies where there's more bloat, but it's still happening. And then just briefly, I don't want to go too much into this because we've had a lot of time. I guess I didn't need the whole hour. But a weird thing being this, just this turn on the right. I've talked a little bit about it before, but it's something important to not be, to not accidentally be arrogant about or pat yourself on the back. Yes. Are a lot of AI companies burning a lot on tokens, Burning a lot on inference, burning a lot on AI? Yes, but. But their burn multiples are lower than traditional companies because they're growing so quickly now. You've got to keep that, that wheel going. But if, oh my God, you're like, oh, you can make fun of this AI strap. Those guys burn a million bucks a month on inference. Okay. That's not sustainable. Their margins are 40%. Yeah. But if they added 50 million of ARR, it's wildly efficient. Okay. If they slow to 10%, you get crushed. But another almost paradox. The fastest growing AI companies are Bernie Moray, and their gross margins are lower, but their burn multiples are also lower because they're adding so much revenue. It's worth it, it's worth it to win this AI war, at least for the next couple of years. And here's two versions of this. Here's HubSpot and Salesforce. Obviously, probably every single person in room uses HubSpot or Salesforce. So I pick them. Since 2021, this is their efficiency ratio, their revenue per employee. HubSpot up 2.6x. Even Salesforce up 2.2x. Microsoft, old Microsoft has passed peak employee and is coming down. Not only is Microsoft's efficiency going down, its absolute number of headcount is going down and trending down. I mean, it can't go down to zero. I mean, Microsoft's pretty big company. Everyone is. It's not just the startups, it's not just gammas and cursors. Everyone is getting radically more efficient. And what that all means, how you all do it, I don't know. But this is not again, this is not about layoffs and it's not just about agents. This is just how we're building software today. We're building it radically more efficient. And honestly, the toughest thing, the most honest thing I can tell you for 2026 is if you go into 2026 and you still have folks on your team and I still see this at startups and you want them to double next year and they need to triple their team, move on from that executive if they want to double next year and they need to increase their team 50%. Sounds good to me. Okay. I'm still in too many conversations where the excuses I hear from zeros, from CPOs, from CMOS is I just don't have enough headcount. Like these are companies that are not that efficient. They're not running out of money. They're not that efficient. And why aren't you growing quicker? Well, I need another 100 people. I need another 200 people. I need another 40 product managers and another another 30 people on the marketing team. Just kindly thank them, give them a package and move on for them. It's not the world that is the pass. They're still living in the past. So my summary and then we will break the growth is there Gardner says can be record software spend next year Almost record total IT record software spend and re acceleration. It's growing 50% faster next year software spent that is an epic amount of dollars to go capture hundreds of billions of dollars going into software. There's hundreds of billions of new revenue. Can't you get a little bit of 100 billion just you don't need all 100 billion, you just need like some millions. It really is around so the dollars are there. This should have this is the best of times. But not not for not for all of us. It was the best of times for almost everybody in 20 and 2021. Almost everybody. It really was. You just needed a CRM, a call center, a support desk, an E signature tool and you were a genius. It's only for the AI beneficiaries. So guys in 2026 be one. Thank you.
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