So I know we’ve all become stock market, interest rate, ZIRP and fed experts over the past 24 months. Just as we were all geniuses in 2021.
So everyone has their crystal ball now on where the markets are headed in SaaS and for Cloud leaders.
Me? I don’t. I don’t have any idea.
- First, in the history of SaaS, things weren’t always easier when interest rates were lower. It’s not the whole story.
- Second, 2023 was a weird year. Some spaces got hit hard (sales, marketing, etc) but others were barely hit at all (cloud infrastructure, tech outside of SaaS like Monday.com). The pain wasn’t evenly distributed.
- Third, the markets to me at least aren’t as rational as they look.
Let’s take a look at two of my favorites, Shopify and Klaviyo. Both had an epic year. Shopify stock is up a stunning 116% (!) year to date. With 49% gross margins, and trades at 20x ARR.
And Klaviyo, the #1 player on the Shopify ecosystem? With much faster growth at much higher margins, and 70% of its revenue on Shopify?
It’s down -16% since its IPO this year, and trades at a much lower multiple (8x-ish).
In my world, they should trade in tandem. When Shopify accelerates, as it did in 2023, its top partners should as well. And in fact, they did. Not just Klaviyo but others as well. I’m on the board of Gorgias, another top Shopify partner, and they growth radically accelerated in 2H’23.
But why don’t they trade in tandem? Klaviyo should almost be a Shopify tracking stock. Maybe at a discount, since it doesn’t own the platform. But still.
I don’t see the markets as efficient or perfect. I see them as — what they are.
So let’s all carry on. We don’t know what the next year or two will hold at all. Whatever it was or is, it’s not all ZIRP and interest rates. What we do know is this — we’ll all buy a lot more SaaS products next year than this one. That’s a powerful trend.
What multiples it brings, and what stock market, I think we have no idea.
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Jason Lemkin, Khareem Sudlow
