Episode Summary
Executive Summary: In this podcast episode Jason Lemkin the Godfather of SaaS discusses the seismic shifts in the SaaS industry driven by the pandemic and key acquisitions including the $27.7B Salesforce-Slack deal. The conversation covers how SaaStr lost $10M when its event was cancelled, why Slack couldn't remain independent, Zoom's rise, the future of remote work, and investor psychology. Lemkin emphasizes that after $10M in revenue a company's success depends on its VPs and that brands and recurring revenue create lasting value.
Main Topics: SaaStr Event Cancellation and COVID Impact (Priority: 5/5): Lemkin shares how he lost $10M when the massive SaaStr conference was cancelled due to COVID and how they adapted to digital events. Why Slack Got Acquired by Salesforce (Priority: 5/5): Analysis of why Slack couldn't remain independent despite 50% growth: single product, lack of second massive product line, and Salesforce CEO Marc Benioff's willingness to 'pay up' for strategic purchases. Zoom's Rise and Product Edge (Priority: 4/5): Zoom won because of superior engineering from WebEx veterans aggressive freemium strategy and a focus on video-first communication. Remote Work is Here to Stay (Priority: 4/5): The pandemic permanently shifted startup culture; many processes (accelerators fundraising) are now more efficient remotely. Balancing Diversity in SaaS Investing (Priority: 3/5): Lemkin expresses concern that remote fundraising may exclude underrepresented founders and advocates for explicit platforms like Founder University for women and BIPOC. The Power of Brand and Recurring Revenue (Priority: 4/5): Once a company reaches $10M ARR and has a strong brand it can compound to $1B+ because customers keep buying.
Key Arguments: Slack's $27.7B acquisition is a 'relative bargain' because Salesforce needed to move the needle with a $2-4B revenue addition and Slack's enterprise growth was strong. Zoom succeeded because of better quality of service (proprietary video infra) aggressive freemium and a video-first mindset unlike competitors focused on screen-sharing. Remote work is permanent because of momentum and efficiency gains—e.g., Launch Accelerator saw 5x more investor participation virtually. Founders should take secondary liquidity to de-stress not de-risk; investors want founders committed for another 5 years. After $10M revenue a CEO's output is critical but the company rises or falls based on the quality of its VPs. Brand and recurring revenue compound: existing customers keep buying if satisfied making decacorns possible from $10M ARR start.
Data Points: Loss from cancelled SaaStr event: $10M - The conference was cancelled due to COVID in March 2020. Slack acquisition price: $27.7B - Salesforce acquired Slack at ~30x revenue (Slack doing ~$1B/year). Zoom's run rate: $3B - From $0 to $3B; ~40% from consumer use cases. HopIn revenue growth: $20M in 10 months - Raised $100M+ at $2B valuation. Launch Accelerator investor attendance: 750 virtual vs 150 in-person - Virtual events attracted ~5x more investors. Gorgeous (e-commerce Zendesk) revenue jump: $3M to $13M in 2020 - Benefited from Shopify explosion.
Pivotal Quotes: "There's only so many consumers. Ultimately, the ones that approach a billion and don't have a second product line that's equally as big, slow down." — Jason Lemkin: Explaining why Slack couldn't remain independent—single product hits ceiling. "If you can get to 10 million in revenue, you can get to 1,000 million in revenue. The first 10 million is the hardest." — Jason Lemkin: On the power of recurring revenue and brand compounding. "We need people to have long-term greed, not short-term greed." — Jason Lemkin: Advising founders to take secondary to de-stress but keep building for decacorn outcomes.
Implications: Founders should focus on building a strong brand and retention to compound ARR past $10M. Remote work and virtual fundraising are permanent changes—leaders must intentionally include underrepresented founders. Acquirers like Salesforce will pay up for strategic assets that move the needle by billions.
About This Week in Startups
Jason Calacanis covers startups, tech, markets, media, and all the hottest topics in business and technology. He also interviews the world’s greatest founders, operators, investors, and innovators.