So the past 24 months have been such an odd time in SaaS and Cloud.
Some parts of it are on fire, fueled by unprecedented AI spend. Other parts, more connected to the end-consumer economy, are seeing strong growth, from Shopify to Toast to Canva. And the parts that sell “classic” B2B2B into tech are often struggling the most. Many have seen NRR plunge well below 100%, net new customer count slow to close to zero, and growth fall to the teens or lower. It’s brutal.
A lot of folks in the latter category are waiting for a “downturn” to be over. And maybe it will be.
But here’s the thing, at a macro level, there is no big downturn:
- SaaS and Cloud spending are still up a massive 20% this year
- Folks taping into the trends where spending is up are on a tear. Wiz, Databricks, etc. are growing at unprecedented rates.
- AI spend is robbing budget from other departments. But for a reason. CIOs and others are looking for efficiency in AI, not more generic workflow tools.
Gartner: SaaS Spend is Actually Accelerating, Will Hit ~$300 Billion in 2025
What’s my point? That’s it time for you to adjust, not wait for the market to. The spend is still there. It’s just:
- Expecting more than ever from that IT dollar. It’s expecting even more efficiency, even more automation. So deliver more here. More products, more functionality.
- Less impacted outside of tech. So diversify faster here.
- Expecting massive efficiency benefits from AI. So be ahead of the curve here. Not a dabbling skeptic.
It’s just time. It’s time to adjust to the new world we are in today. Things change every 4-5 years in tech, including buying patterns. The dollars are still there for SaaS spend. They are just being spent differently. It’s time to rapidly evolve your product to where the spend is. And not … keep waiting for 3+ years for the “downturn” to end.
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Jason Lemkin, Khareem Sudlow
