Episode Summary
Executive Summary: Jason Lemkin and the host dissect how COVID accelerated SaaS adoption, reshaped events, fundraising, and work, and culminated in Salesforce’s $27.7B acquisition of Slack. Lemkin argues the pandemic pulled years of SaaS growth forward, strengthened brand leaders like Zoom and Slack, and made big, strategic M&A inevitable for mature cloud companies.
Main Topics: COVID as an accelerant for SaaS (Priority: 5/5): The pandemic rapidly increased demand for cloud software, remote collaboration, contact centers, e-commerce support, and digital events. Lemkin argues the industry effectively jumped several years ahead in adoption and spending. SASTR event cancellation and force majeure (Priority: 5/5): Lemkin recounts how SASTR was one of the first major events canceled by COVID, losing about $10M. He explains how force majeure clauses became real business issues and how his team adapted with safety precautions and later outdoor planning. Why Slack sold to Salesforce (Priority: 5/5): The discussion centers on Salesforce’s $27.7B acquisition of Slack. Lemkin frames it as a relative bargain for a company that needed a strategic communications layer and suggests Slack’s single-product growth curve was slowing. Why Zoom beat incumbents (Priority: 5/5): Lemkin credits Zoom’s superior QoS, video-first design, aggressive freemium strategy, and Eric Yuan’s founder-market fit for beating crowded competitors like WebEx, GoToMeeting, Skype, and Google Hangouts. Work from home and the future of events/fundraising (Priority: 4/5): He argues remote work is here to stay because teams, startups, accelerators, and VC processes have become more efficient online, even if in-person interactions still matter for trust and culture. M&A, scaling, and founder evolution (Priority: 4/5): The conversation explores how founders must shift from building to buying, how large clouds use acquisitions to move the needle, and why companies need strong VPs and multiple product lines to keep growing after reaching scale. Diversity, access, and risk in venture capital (Priority: 4/5): Lemkin warns that virtual fundraising can reinforce existing networks and reduce serendipity for underrepresented founders. He advocates explicitly creating programs for women and underrepresented founders to broaden access.
Key Arguments: The pandemic pulled forward years of SaaS adoption, making 2020 an extraordinary year for cloud software. Brand now matters more than ever in SaaS; leading products become enduring companies because recurring revenue persists. Slack was a strategic bargain for Salesforce because Salesforce needs acquisitions that can materially move revenue. Slack’s growth slowed because it was effectively a one-product company without a second large product line. Zoom won because it delivered better quality, a video-first experience, and a freemium model that scaled unusually well. Remote fundraising and startup operations can be more efficient, but they risk favoring insiders and known networks. Founders should seek secondary liquidity or help when needed to reduce stress, not as a sign of failure. Large SaaS companies eventually need to buy growth or add product lines; building alone often won’t reach the next scale tier.
Data Points: SASTR conference loss: $10 million - Estimated all-in loss from the conference cancellation due to COVID. SASTR cancellation timing: Second week of March 2020 - The event was scheduled for the second week of March and became one of the first major cancellations. Masks prepared: 15,000 - Lemkin said SASTR had masks in its warehouse in preparation. Thermal scanners: Half a million dollars - Enterprise-grade consumer heat scanners used before events widely adopted them. Digital events funding: $300 million - Capital raised in the digital events software space over six months. Hopin valuation: $2 billion - Cited as a rapid rise in value during the pandemic. Hopin revenue growth: $0 to $20 million in 10 months - Used as evidence of pandemic-driven adoption. Talkdesk valuation increase: $1 billion to $3 billion - Example of a cloud contact center benefiting from remote work. Gorgias revenue growth: $3 million to $13 million - Example of e-commerce support software growing with Shopify. Salesforce acquisition of Slack: $27.7 billion - The central M&A topic of the episode. Slack annual revenue run rate: About $800 million to $1 billion - Calculated from $200 million per quarter as discussed. Slack acquisition multiple: About 30x revenue - Used to frame valuation relative to revenue. Zoom run rate: $3 billion - Referenced as Zoom’s pandemic-era scale. COVID hospitalizations: Over 90,000 - Mentioned while recording in December 2020. Vaccines: 3 or 4 vaccines - Referenced as evidence of eventual recovery. SASTR annual plan: September 19, 2021 - Proposed date for an outdoor in-person return at the San Mateo County Fairgrounds. SASTR attendance target: 50,000 visitors - Projected attendance for the outdoor event. Founder University attendance: 300 people - Virtual program scale compared with 50–60 in person. Investors attending virtual program: 750 investors - Shown to founders during the virtual accelerator format. LinkedIn in-mail messages: 20 monthly - Feature mentioned in the LinkedIn Sales Navigator ad read.
Pivotal Quotes: "“We were the first big event that got taken down by COVID.”" — Jason Lemkin: Describing SASTR’s early cancellation and the scale of the disruption. "“In SaaS, recurring revenue recurs. It never stops.”" — Jason Lemkin: Explaining why strong SaaS brands can compound into very large companies over time. "“You need a second product line that’s equally as big, [or you] slow down.”" — Jason Lemkin: His core explanation for why Slack needed a larger platform partner.
Implications: SaaS leaders that won during COVID likely keep those gains, but only if they expand product lines and execution. Remote processes are now durable, yet founders and investors must guard against network bias and underrepresented talent being left behind.
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.