The â2023 Passâ is Coming to An End
"If growth was mediocre in 2022 and 2023, but you had 5+ years of cash runway? No one cared anymore"
So times havenât been tough for everyone in SaaS the past 12-18 months.  If you were in AI, if you were in hospitality, if you were in parts of e-commerce, if you were in mobile ⊠things mostly have been Pretty Normal:
But other segments have been hit with a sledgehammer. Â In particular, folks impacted by The Great App Layoff, where 10% or more of many orgsâ app stack was cut.
Many SaaS leaders in sales and marketing spaces saw growth go from 100% to 10%, from 50% to 0%. Â I do think weâre mostly over it, although Godard Abel, CEO of G2, and I had a deep dive on the topic the other day, and they arenât quite seeing an end to the marketing slowdown yet on their side:
The biggest impact of all was to private unicorns with high burn rates that hit a wall. Â Thatâs probably about 20%-30% of them, based on rough data I can see at SaaStr.
And so VCs went into triage mode. Â All of their time got sucked up in late 2022 and 2023 on dealing with the huge bets theyâd made on unicorns that looked to be potentially going under. Â All of a sudden, massive changes had to be made when it was clear another round of venture capital was never coming.
And so what happened is everyone else sort of got a pass in 2023 by VCs and others.
If growth was mediocre in 2022 and 2023, but you had 5+ years of cash runway? Â No one cared anymore. Â VCs stopped pushing, pushing, pushing for ever higher growth, and basically left startups alone that werenât burning much.
Net net, every VC-backed startup with mediocre growth but a low burn and a long runway got a pass in 2023.
That pass is now ending. Â Itâs time to grow again.
The bad news is some startups wonât readjust. Â Many have settled into low or even no growth mode. Â Theyâve adjusted and now can stretch their cash for years. Â But culturally, they arenât really wired for growth anymore.
The good news is weâre lapping a low year in many cases. Â If you grew 10% last year, it canât be that hard to grow faster as demand reflates. Â Even if demand only reflates slightly in the next 12 months in your category.
So pick up the pace. Â If nothing else, commit to growing faster than the prior 12 months. Â Itâs OK to have a Year of Hell, many of us do. Â But you have to find a way to pick yourself up after that and grow again, for real. Â Some of the team may not want to. Â You may need to leave them behind.
At the end of the day, SaaS spend is massive and grows every year. Â If your app really matters, if it really changes the game, there will be at least more budget for it next year than last.