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The SaaS Revolution Show
How AI is reshaping SaaS product and pricing, with Nue CEO Mark Walker
00:27:44
In this episode, Alex Theuma and Mark Walker, CEO of Nue, discuss how AI is accelerating the pace of change in SaaS and the knock-on effect this is having on pricing and monetisation. Mark explains how Nue has become a critical part of the infrastructure powering many of the world’s fastest-growing AI-native and scaled SaaS companies, including OpenAI, Anthropic, and Jasper. Drawing on learnings from these companies, he unpacks how usage-based models, committed spend contracts, and rapid product experimentation are replacing traditional SaaS playbooks. Alex and Mark also reflect on life as an entrepreneur, scaling teams, managing stress, and the need to embrace constant change. - Why AI has disrupted product development cycles and changed how SaaS companies create value. - How faster product iteration is forcing new pricing and monetisation models. - The rise of committed spend, consumption-based contracts and experimentation at scale. - Why you should build revenue systems for...
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- [00:02]
Mark Walker
Speed is the ultimate feature now, right? Think about it in your products, think about it in your integrators, the people who work with you to help you roll out technology for your company. Think about the technology that you acquire for your company. OpenAI went live with us in eight weeks. Multi billion dollars, multiple jurisdictions, multiple currencies, multiple product lines, multiple teams. Eight weeks, right. And that says an awful lot about Keith Jones and the team of Ansella and the team over there and their incredible execution culture.
- [00:31]
Alex Diemer
Welcome. Welcome to the SaaS Revolution Show, a podcast by SaaS Doc. Here we interview SaaS founders from around the world who've been there and done that as they share the ins and.
- [00:42]
Podcast Narrator
Outs of how they built their businesses.
- [00:44]
Alex Diemer
Their operations, their path to securing investment and more. Our mission with the podcast is to help you, the founder, learn how to.
- [00:51]
Podcast Narrator
Scale your SaaS, maintain your wellbeing and navigate the complexities of this ever changing industry.
- [00:56]
Alex Diemer
I'm your host, Alex Diemer and together we'll explore the good, the bad and.
- [01:00]
Podcast Narrator
The ugly in the journey to SaaS success. Ready to connect directly with AI and B2B software decision makers who need solutions like yours. This April, sasdoc USA is home to hosted meetings, performance based sponsorship that puts you face to face with qualified AI and B2B software founders and C suite executives who want to meet you. Buy packages of pre scheduled 15 minute conversations with buyers who've opted in to meeting you. And the best part is you only pay for meetings that actually happen. It's event sponsorship built for results. Connect with the decision makers who matter. Secure your hosted meetings at sasdoc-usa.com forward/hosted meetups.
- [02:03]
Alex Diemer
All right, welcome back to the SaaS Revolution Show. I am your host, Alex Zuma, CEO, founder of SaaSdoc, also general partner of Back Future Ventures. Delighted to be joined today by Mark Walker, who's the CEO of New. How you doing, Mark? Hey, Alex.
- [02:18]
Mark Walker
I'm great. Thanks for having me on the show.
- [02:19]
Alex Diemer
Yeah, good to have you on. Where are you calling in from Mark today?
- [02:23]
Mark Walker
I'm at my home just outside of Toronto.
- [02:26]
Alex Diemer
Okay.
- [02:26]
Mark Walker
Company's based in California, we can talk more about that later.
- [02:29]
Alex Diemer
Okay, very good. Yeah, well actually maybe I would just jump into that now. So companies in California, you're in Toronto, that's where home is. Is the company remote? So a hybrid, you know, how do you operate that? What does that look like?
- [02:48]
Mark Walker
Because we have people all over the world and all over North America, we're somewhat hybrid. Right. So, so I mean we're moving so Fast that the time together is something we really prioritize. So we have an office in Toronto, which I'm going to right after this. We have an office in San Mateo and then we have, you know, teams in Calgary, in Chicago, in New York, although it appears all the New Yorkers are moving to Colorado for some reason. But anyway, but the. But not all of them. There's some great people still in New York. So we work really hard to get people together. And so there's a lot of travel, but also a lot of socializing and good teamwork time.
- [03:37]
Alex Diemer
Looking at your sort of profile, Mark, and in the email before we sort of book this, you're a serial entrepreneur. You're doing it again at new. I'm an entrepreneur, but on my first business, 10 years in, but on my first business, right. And you know, it takes a lot out of you, right. It's tough being a CEO. It's tough being a founder. I always feel like, you know, if and when the time comes in the future feels like I need a really long break, I'd be mad to consider going again. But you do you see it. I mean, it's obviously present with yourself, right? You've. I don't know if it's sort of, you know, third or fourth time, but most entrepreneurs that I know that have sold their businesses over the last two years have taken a little time out, a couple of months and then they're looking for the next thing. Why is that and why is it for you personally?
- [04:29]
Mark Walker
I think the attraction is the people you get to work with, you get to do. It's basically imagine you make it to the Premier League or you make it the NFL or you make. To any elite level, right? And, or even frankly, you know, to the, to the, you know, the championship and the, and the leagues below that. And you then get the opportunity or somebody says, okay, well now you've done really well and you won the championships. Why don't you just stop, Right? Well, you were never doing it because of that in the first place anyway. Like, if you were doing it, if you're doing it for the money, it. I mean, yes, tech is super lucrative, right? But it doesn't work that way. You have to be completely, passionately committed to the customer in order to win. And so the money part is just the output. It's just the, the result of, of of that commitment. So you get to go and, you know, would you want to play on, you know, would you want to never play football again? Regardless which football it is, if you, after you won the championship? Of course not. Right. And so I like to say sometimes like you get to work with these crazy people who are self selected for high risk tolerance, high energy, creativity and you get to work with those people every day. And I think of New New is a great example, but every company I've been at has had these amazing, incredible people and they're all, all the mixes are different, but the overall thing is that they're these crazy, what we call startup people. Startup people and not startup people.
- [06:13]
Alex Diemer
I, I, I, I get it. And then, you know, we're too, we're, we're both too young to not, you know, to stop and not do anything, right? And we're probably not going to, you know, go, having been founders and CEOs go and work for, for somebody else. You wouldn't rule it out, but it's unlikely, right? And we get, you know, working in startups, it is an incredible thing. It's also very, very difficult. One thought, I don't know if you, if you have ever have this thought and how you manage it, but one, one thing that I do have, right, and maybe I read too much without checking the facts, is that I understand one of the biggest causes of what the opposite of longevity, I don't know, mortality, right, is, is chronic stress. And I don't know for a fact if being a CEO or a founder is more stressful than actually being a CRO or, you know, being a cmo, like, who knows? But I do look at my OURA ring and the data and I'm often in an engaged stress state when I'm working, right? And my consideration is like, well, I've got 10 years of probably being very stressed, right? And am I going to do another 10 years and is that going to shorten my lifespan and time with family? And do you ever think about, you know, things like that and something like how you, how you manage that?
- [07:36]
Mark Walker
Yeah, I do from time to time. I mean, some people, somebody once asked me, they go, literally, they go, what about the stress though? Like their answer, this is a very common question when you have to say, I get to work with these super crazy people. And they go, yeah, what about the stress though, right? And I sort of say the complaining about the stress of running a startup is like complaining about the snow at the top of Mount Everest. Like you knew it was there. You worked incredibly hard to get there. You literally stepped over bodies in the case of Mount Everest to get there. And then you're like, oh, it's cold and snowy up here. Well, it is, Right. So I think the people who thrive in this, not just the CEOs, but all the people who thrive in startups, I think there's a concept of eustress and I don't know what the other one is like. Bad, bad stress, right? Yes, there's some bad stress, but most of the like, I think the way that you were talking about it is you, you were hyper engaged. Like do you think like going back to my analogy, do you think being a Premier league or NFL, you know, football player is not stressful? Of course it's stressful. Of course it's stressful. And the question is, the question is, are those people super happy when they're no longer a Premier league or NFL football player? No. Mostly. Right. And so look, I enjoy what we do. I get to work with incredible people and every once in a while though, my aura ring does also tells me like, you know, I'm, I'm engaged. But actually what's really interesting is I have crazy, crazy days and my oura ring actually tells me that I'm hey, you had a really relaxing day today because I think I manage stress pretty well and I've learned, I've learned basically bad things are going to happen and.
- [09:16]
Alex Diemer
Yeah, I guess you've got, well given that you've done multiple businesses, more experience than myself given I'm in my first. And so that helps you manage it as you know, you've done it, you've done it before, you know how to manage that perhaps a bit better. I'm getting better at it though, Mark. And so Nuri is as you said, a very fast sort of growing company. Can you just maybe paint a little bit of picture to our audience, a bit of like some data points or something about, you know, where you're at, you know, at the moment and then maybe perhaps we can talk about maybe some key insights into how are you growing fast, you know, in this market? What are you doing, you know, to get to the point that you're app and to where you're going?
- [10:02]
Mark Walker
Yeah. So news and end to end quote to cash self service to cash agentic to cash, you know, order to cash machine. Right. Known for, you know, two major things. Right. One is basically everybody you've ever heard of in AI, almost everybody say 80% of them, some part of their business process runs through new and so that's, you know, openaianthropic Glean Jasper Lagora Cursor coder Sierra I was too bad doing this list because I leave people out Anaconda recently. So all these, all these AI companies are using us and then also fully scaled 3 or 4,5 600 million dollar companies. Now the funny thing is a bunch of the companies I mentioned are also 100 million dollar to billions of dollars of revenue companies. They're just like four years old. So, so we're known for having a big footprint in both of those markets. You know, essentially the thesis of the entire company was that the pace of change, of the pace of change was going up really fast even before OpenAI emerged with the first chat with ChatGPT. But now that's on hyperscale and that therefore the old systems, you know, the Salesforce CPQ system, although we are, you know, on Salesforce and are a big fan of that platform that by the way, that's the thing we'll talk about later. Everybody counts down the technologies that drive AI and leave out Salesforce. Not in the way people think. We can talk about that later. But the, but you know, we basically were built for this time when the old systems would not be able to change fast enough to accommodate the new pricing models. And so now what's driving our growth is, is basically people going, oh my God, I have to, I have to be able to do the old stuff and the new stuff and I don't even know what the new stuff I want to do is. I have to run experiments. And that's what's driving to go through our business. To give an idea this quarter will be bigger than the entire history of the company in terms of new business, like that kind of acceleration, which is frankly, if we go back to our conversation about stress, pretty bonkers, right?
- [12:21]
Alex Diemer
Pretty bonkers. I mean on a, I guess similar note, and we're seeing a lot of this or certainly there's examples of this, but I think there was news from 11 labs this week where only a couple of months ago they got to 200 million ARR, and now they're at 330 million. And it's just like pretty insane growth with some of these top tier AI native software companies. Right, So I get a good question then Mark, in terms of that new is this CPQ which is built for this new way, right? Hence I guess kind of like the name.
- [12:58]
Mark Walker
Well, new has a cpq. We have a lot of other things too.
- [13:01]
Alex Diemer
Did you like, I guess with AI, you know, it is, we're in the AI era. It is new. You know, we're at the beginning, but generative AI was like, what was it?
- [13:13]
Mark Walker
20, 20, 20, November 2022.
- [13:16]
Alex Diemer
2022. So did you envision when, when starting the company? You know because 2022 is then only three years ago, you've been around four years ago that there is going to be this new B2B software requirements that you'll be able to fulfill that the other CPQs can fulfill. Like did you. Yeah. Just curious to know around that.
- [13:35]
Mark Walker
Yeah. So I didn't start. The company was started by incredible woman named Tina Khan and it's very unusual that you'd have a CEO join a company at the seed stage which I really did. So they'd raise money. They'd been running for about two years and then, and then I joined raise a bunch more money and then raise a bunch more money. But you got to think about new and people were famous for our cpq but you have to think about new as an end to end system. It's just an end to end system where all the pieces are amazing. Right. So people will buy the CPQ just as a cpq. Right. But going back to your question, but they'll buy also they'll buy CPQ plus self service or they'll buy CPQ plus billing or they'll buy the whole thing. Like we're swapping out the entire infrastructure for people like Chili Piper and DTN and all sorts of scaled companies. We have this strange thing from startups literally didn't exist a year ago or two years ago to multi billion dollar public companies. It's a very weird icp. So yes, but the answer question is yes. So one of the things attracted me to join Tina was she basically described the problem this quoting and by extension self service and usage and consumption models are configuring billing. That's what we're doing. People like that's what we're doing. Nobody's in the business of issuing quotes. People are in the business of issuing invoices and getting them paid. But one of the big gaps if you start changing things really quickly is you could change things on the revenue side that the, that the billing side didn't understand. Like and this is. And what is the pricing changes we'll get into later that's happening in spades right now inside companies.
- [15:26]
Alex Diemer
Right.
- [15:26]
Mark Walker
Where there's actually blockage of the ability to roll out new products or to monetize those products because of these, these challenges. So her thesis was that at the pace of change that was going on that this was already breaking and that. And that was going to cause the legacy systems to basically no longer be practical and therefore there was an Opportunity for somebody to come in and build an enterprise grade system. In a way there almost never is like you almost never do. You get to come into a market that has existing incumbents and go I'm going to build something for big companies and small companies. And, and that's what, and that's, that was her vision. And so even the companies that buy us for just cpq, which is significant is how people often enter, they buy is for CPQ because they know that all the billing constructs are built into that cpq and in fact there's a billing engine so there's literally nothing they can bill. Like if their own billing system can't handle it, news billing system can. And that's, that's how a lot of companies, so they're, they're, it's a very hard thing to change a billing system. So they're sort of like, you know, sneaking into it and going well I can run my experiments over here. But then they, after a while they go well why don't we just switch over?
- [16:39]
Alex Diemer
Completely different makes sense. And you've got this viewpoint I guess of seeing inside, you know, a lot of software companies. What are you seeing of the changes, you know, the sort of, maybe even over the last 12 months because it's such a fast paced change industry sort of like right now just around how AI is impacting SaaS revenue but also maybe on the pricing side as well. So yeah, be curious to know what you're seeing on that from your viewpoint.
- [17:13]
Mark Walker
Yeah, we really do. Like we basically get to work with some of the most. Well actually I would say we get to work with the vast majority of the most exciting, fastest growing companies on earth and some amazing, like I said before scaled companies and the challenges that they're grappling with are actually kind of the same but they're just at a different level of, of intensity. And the larger companies have, have, have multiple problems that the, that the fast growing companies are just basically getting into. They don't have yet. So let me explain what I mean by that. So the fundamental problem that everybody's grappling with is not a pace of change of pricing. Even people keep talking about this. That's not the fundamental problem. The problem is the fundamental pace of change of product. Right. So if you can actually using in fact products for many of our customers, build software incredibly quickly and adapt it and change it and build software that does things that it didn't do before and as you enter those markets you can then rethink your pricing because your cost of building the software went down because you were able to build it so much more quickly and with less engineers or higher quality, with the same engineers or whatever way you're thinking about it, then what ends up happening is that is what causes the pricing problem. Because now you go, well wait a second, let's imagine that you have a $500 million rolled up company that probably acquired a bunch of divisions. There's things that were core and there's things that are added on. And let's imagine now that you're looking at your portfolio of products and somebody can actually start a startup that goes right after your portfolio, part of your portfolio. Well, you have to basically defend that space and grow, right? And the two strategies for doing that we see in scale companies is to introduce new products and make and the second one is to well actually introduce new AI features on products or AI products that cement the future looking value. So your customer goes, I don't need to go to startup A, I can stay with the trusted vendor I already have because I can see that they're listening to the market and they're forward looking. And then you have to figure out how to monetize that stuff. And the second, and the second one is to build new pricing models that are the pricing model that your customers that the startup is going to attack you with, right? This, those are often, you know, when people talk about outcome based pricing, those are the types of changes that people are considering. If you're in the AI problem, if you're in the AI space, you have the same problem but at a breakneck speed. Like so what's happening is people are forming contracts. What people used to say is you can buy product A and I'll charge you this and try product B and I'll charge you this, right? Well you don't even know what product A and product B are going to be like. Like you think of the, you know, if you work with the major AI vendors, they are rolling out models and capability models and differentiations of the capabilities of those models like on two to three month cycles, right? And so that changes the nature of the contract. The contract becomes, hey, you're going to, we call them committed spend contracts. And new is world class at doing this where basically your people are saying, okay, you agree to pay and spend $10 million or $1 million with my company based on that spend level, I'm going to discount everything that we sell at a certain level. Right? And that seems really easy. Okay, you make $10 million and then people go, okay, well Wait a second, what happens if they don't actually consume $10 million? What happens if you have to rewrite that contract or they're way past the $10 million? The changes that become really complicated. So the two threat, the two things are in scaled companies, they need to run experiments really, really quickly without cannibalizing their entire existing customer base. And then in the very high growth AI companies, they are actually reimagining their products incredibly quickly and therefore they have to catch them up. Now underlying all of this is increased efficiency of AI based features and increased efficiency of development generally, which is causing a downward pressure on the cost of all software anyway. So that's the sort of complicated world that, that people, that we see people in, but most of our major larger customers are coming over going, yeah, I want that, but I need to actually do all the stuff I do today because I've got hundreds of millions to billions of dollars of contracts today that I need to continue to manage. While doing these experiments, what was it.
- [22:07]
Alex Diemer
You touched on a point around sort of Salesforce earlier that you spoke about elaborating on sort of later. So what did you want to share specifically? Just around that sort of like use case.
- [22:20]
Mark Walker
It's a really interesting thing. If I, if I could walk around in a room full of CEOs in tech and ask them, you know, what technologies does AI run on? And a good chunk of them, at least in the Valley anyway, would go, oh, that's pretty straightforward. It's new, Metronome and Stripe, right? It is like, it literally is like, it's basically the overlap between new and Metronome and Stripe in this Marketplace is almost 100% right. Like they're incredibly common and we have great partnerships with those companies and they're great, they're great vendors, right? And Salesforce, literally nobody would say Salesforce, right? It's really fascinating. Like, basically like literally nobody above, like, I don't know, like 10 million bucks or something in this space that I've run into is running on HubSpot and the, and there's a really good reason why if you're growing crazy, crazy fast, then you're gonna have to describe complexity. Your business can get complex fast, right? And even though for, you know, people go, oh, it's Salesforce, it's like you know, 30 year old technology or whatever, they, they have to, they hit on Salesforce and, and 100 of the companies that I described, in fact, 100 of our customer base run Salesforce and literally nobody talks about it. And I think that's a really interesting thing. The reason why is standing up high scale configurable data models securely is hard. It's really, really hard. Like you know, so people, so maybe there will be in the future somebody comes along with a better, you know, central point of data that's configurable and all the workflow advantages and all that. But I would say that right now, you know, there's, it's like, it's like 95% Salesforce, maybe 5% something else, which is something that people aren't talking about.
- [24:13]
Alex Diemer
Final thoughts as we come to the end. Sort of mark, to those that are building B2B software in this AI era, let's say specifically narrow it down to founders and CEOs. You know, what perhaps advice, you know, could you give to them, you know, as we look ahead for the, the next 12 month period. Again because it's so fast changing, very difficult to look much further than that.
- [24:40]
Mark Walker
Couple of things I would say first of all, plan your systems for the company you want to be, not the company you are. Because if you are going to become the company you want to be, you won't have time to fix your systems while you're going there. You may be able to tweak them, but you won't be able to swap them all out. That'll be too complex, too expensive. Second one is speed is the ultimate feature now, right? Think about it in your products, think about it in your, in your integrators. The people who work with you to help you roll out technology for your company. Think about the technology that you acquire for your company. The fact, you know, OpenAI went live with us in eight weeks. multi billion, multiple jurisdictions, multiple currencies, multiple product lines, multiple teams. Eight weeks, right. And that says an awful lot about you know, Keith Jones and the team of Ansella and the team over there and their incredible execution culture. But it also is, they would say has to do with the technology that they chose. So optimize for that. And the third one is understand that your fundamental operating cycle has to be to embrace the pace of change. Don't like, don't think, oh 300, 500 million billion dollar software companies, oh, they've got a real problem because they won't be able to adapt quickly. Everybody has a problem. Like you know, I'm completely paranoid and devoted to understanding what our customers want because I understand that now the pace of innovation is going to drive hyper focus on customer value. And it's probably that's overall that's a good thing. But it does mean that you have to basically understand that even if you think you're the hot new thing, there's another hot new thing, like right behind you now. And, and if you were a starter person going back to our original thing, that's a good thing. That's a, that's what makes it fun. It's like basically going back to our Premier League NFL analogy. Yes. You want to play against great teams.
- [26:32]
Alex Diemer
Awesome. There's a great, I don't know what you call it in comedy, but where you, you bring that back to, to that original point that we started the podcast on Bart. But thanks for sharing your insights, you know, with the sasdoc community coming on the show. Really appreciate it. You know, congrats on all the success so far. Looking forward to following the journey as you go. So thank you so much. Mark Walker, CEO of New, for coming on the SaaS Revolution show today.
- [27:01]
Mark Walker
Thanks for having me on, Alex. I really enjoyed it.
- [27:04]
Podcast Narrator
Thanks for listening to the SaaS Revolution Show. If you enjoyed this episode, please leave a review and follow the show. It helps more AI and B2B software founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry. For more resources and to join the SASDOC community, head to sasdoc.com.
- [27:32]
Alex Diemer
It.