Jason Lemkin on SaaS, Venture and His 2024 Predictions

SaaStr founder and investor Jason Lemkin joins Harry Stebbings to review 2023 and predict what might happen in SaaS, venture capital, IPOs and acquisitions in 2024. The conversation was published in January 2024. Company figures, allegations and forecasts are attributed to the speakers, who have financial interests as investors; predictions are not statements of later outcomes.

Lemkin says he founded EchoSign and sold it to Adobe in 2011, then began investing and building the SaaStr community. He and Stebbings have co-invested. Their discussion moves between operating experience, portfolio observations and the economics of venture funds.

Lemkin names OpenAI as a standout of 2023, citing a reported $1.4 billion revenue run rate and an assumed $100 million starting point. He explicitly treats the starting figure as an assumption and notes uncertainty around margins. Stebbings proposes Midjourney as another example, citing an estimated revenue figure; neither figure is independently established in the interview.

They also praise HubSpot’s long-term execution. Lemkin recalls its evolution from blogging tools into marketing software and a CRM business he estimates at around $700 million. He sees the founders’ willingness to invest for years in a second product as the lesson. The numbers and his favorable assessment are his own recollections.

Stebbings argues personal financial security can help investors hold winners rather than sell too soon. Lemkin agrees that desperate downside protection can be harmful, but questions whether very wealthy founder-investors have enough financial incentive to work for returns from a small fund. Their examples are illustrative, not measured relationships between wealth and performance.

Lemkin illustrates the incentives with a hypothetical $80 million fund shared by five partners over a decade. After fees and a 3x gross result, his rough arithmetic produces a much smaller personal annual gain than a wealthy founder’s existing assets might generate. It is a simplified scenario, not a calculation of any named fund’s returns.

Asked which multibillion-dollar fund could deliver 3x net, Stebbings suggests Founders Fund because it can concentrate capital in a few companies. Lemkin calls that plausible but says he lacks current returns data to choose among other large firms. A gross fund multiple, net investor return and hypothetical outcome are not interchangeable.

For founder of 2023, Lemkin selects Nvidia’s Jensen Huang, admiring a long career in a competitive market. Stebbings nominates Coinbase’s Brian Armstrong. Lemkin disputes that choice and makes a broad fraud allegation about crypto yield programs; the interview supplies no evidence to establish that allegation or a finding against Coinbase.

Lemkin says established founders can be more candid about mistakes once their businesses have survived the vulnerable early years. He prefers interviewing leaders with significant scale because he believes newer founders often focus on promotion. That is his editorial preference, not a judgment that every early founder lacks insight.

He describes 2023 as a paradox for public SaaS: slower growth but rising share prices, with companies focusing on efficiency. He cites approximate average growth and stock performance figures without providing the underlying dataset. His explanation includes hiring freezes, cost control and existing-customer revenue, and should not be read as a verified breakdown for every company.

The next challenge, in his view, is finding growth after cutting costs. He says several large private companies in his portfolio became cash-flow positive but still needed to rebuild growth before an attractive IPO. He is skeptical that simply adding AI features will automatically generate revenue; his portfolio account has not been independently verified.

Stebbings worries that high seed entry prices and lower exit multiples make venture economics difficult. Lemkin recalls investing at lower prices in 2013 and says he is less certain current investments will make money. He paraphrases Bill Gurley’s view that investors need to recognize limited windows for favorable exits; he warns his recollection is not a precise quotation.

Lemkin has reconsidered his own advice to founders. He once tended to recommend holding a fast-growing company with low burn and strong retention. After seeing high offers during the 2020–2021 boom that may not return soon, he says founders should take attractive offers seriously instead of assuming valuations will keep compounding.

For early-stage investor of the year, he chooses Y Combinator and praises Gary Tan’s return as leader. He believes Tan’s founder relationships and energy can strengthen the organization. His references to Initialized fund returns are speculative estimates, not audited net or realized performance.

Stebbings highlights Kleiner Perkins and Mamoon Hamid. Lemkin admires what he sees as a disciplined traditional venture approach: select a small number of exceptional companies and avoid lowering standards to complete more deals. Both speakers discuss firms and founders within their professional networks.

They discuss the tension between staying within an investment strategy and building a larger organization. Lemkin notes that some firms can generate strong results without seeking public attention, while early-stage visibility can help founders find a fund. The appropriate level of publicity depends on the firm’s strategy.

Lemkin declines to name a best late-stage fund because he lacks sufficient current information. In his SaaS network, he recalls few outside growth deals at valuations above roughly $200 million in 2023, excluding AI and insider-led rounds. He stresses the limits of his sample rather than claiming a market-wide census.

His biggest surprise was large funds not taking their pro-rata allocations in some otherwise promising rounds. He speculates that fear of fundraising difficulty or reserve pressure contributed, but does not know the reason for any particular manager’s decision. A good company and the right follow-on price are separate questions.

He thinks the volume of highly valued companies created during the boom strained reserve models. A company growing well below its previous valuation can still need support, while a fund has limited capital for many such positions. His examples are hypothetical, intended to explain a dilemma rather than classify a specific company.

For founders, Lemkin recommends asking candidly at board meetings whether the business is fundable and then asking individual investors whether they would invest. If the answer is no, cash on hand may need to last longer. He says one committed investor can sometimes catalyze a round, although that cannot guarantee financing.

Stebbings asks whether investors supported founders in difficult times. Lemkin criticizes behavior on both sides of the cycle: he says some founders became overly demanding in the boom, while investors imposed harsh terms in earlier downturns. These are his generalizations and anecdotes, not evidence about all founders or funds.

They disagree sharply about a founder’s large secondary sale during the boom. Lemkin calls the reported Hopin transaction unethical and argues it can misalign incentives; Stebbings counters that willing investors offered liquidity and a founder could still retain substantial ownership. The exchange presents competing opinions, not an independently established finding of wrongdoing.

Lemkin argues founders should put employees, customers and investors ahead of personal liquidity, while allowing that a modest sale can provide security. His proposed dollar threshold is a personal judgment, not a legal or ethical rule. He also says investors enabled the deals they later criticized.

He distinguishes founder secondary sales from distributions of surplus cash by profitable businesses. He speculates that some well-funded startups would continue operating on salaries or return unused money, and notes an investor’s limited control over capital after it is invested. His estimate of how many companies fit that description is not supported in the interview.

Looking toward 2024, Lemkin worries that part of the slowdown in SaaS growth could be structural. Software cannot grow as a share of the economy forever, he argues, though he does not know whether saturation has arrived. This is a concern expressed at the time, not proof of a permanent industry ceiling.

Stebbings suggests AI could change what counts as software spending. Lemkin says the strongest expansion case would require accessing budgets outside traditional IT, such as contact-center spending. He reports a conversation suggesting some enterprises had no separate AI budget, but that anecdote cannot establish budgets across the market.

Despite his concern about later-stage scale, Lemkin expects early-stage founders to keep finding new problems and technologies. He predicts some exceptional seed outcomes will continue, while questioning whether enough companies can reach very large revenue at high growth. These are uncertain market forecasts.

He argues that after the 2021 boom, many post-seed funds had become focused on potential $10 billion-plus outcomes rather than merely $1 billion companies. He expects that orientation to persist if a few large winners support fund returns. His characterization is a view of incentives, not evidence about every investor’s target.

Asked whether Stripe might list in 2024, Lemkin says he thinks companies may stop waiting for 2021-style multiples and go public anyway. He also says he lacks inside information. Discussing Databricks, he suggests a company with significant reported losses might choose to wait; these were conditional opinions, not confirmed plans.

He highlights ServiceTitan as a potential IPO candidate and cites estimates of revenue, growth, cash flow and customer retention. He explicitly qualifies several figures as guesses or based on his understanding. His prediction and company metrics were not independently verified by the interview.

Pressed on timing, Lemkin revises his expectations: a wave he had expected in the second half of 2024 might instead arrive around 2025. He points to the preparation needed for a listing and the muted reception of recent IPOs. His changing timeline demonstrates uncertainty, not a confirmed schedule.

On acquisitions, he says he had seen buyer interest across his portfolio, including from private-equity-backed companies seeking adjacent products. He anticipates more mid-sized deals if financing and exit conditions improve, but says he does not know how much interest will translate into completed transactions.

After the abandoned Adobe–Figma deal, Lemkin expects large buyers to favor adjacent rather than directly competing products under the regulatory environment then in place. He acknowledges he is not an antitrust expert. This is his forecast and interpretation, not a legal determination about any prospective acquisition.

Asked whether a hypothetical Trump administration would be better for venture M&A, he says it might be, but cautions about unintended consequences and uncertainty over other tax policies. He describes his own experience of state-tax deduction changes. His comments were political and financial opinions before the 2024 election, not predictions of enacted policy.

He expects San Francisco to benefit from AI activity and founders associated with Y Combinator, while rejecting an overly dogmatic city-versus-city framing. His prediction about where future founders would settle is an estimate, not observed migration data.

On venture funding, Lemkin expects managers to deploy capital if LPs provide it. He and Stebbings distinguish institutions under liquidity pressure from family offices, sovereign funds and other potential new allocators. Both discuss this from their positions as fund managers; their views do not establish the circumstances of every LP.

Lemkin expects 2024 not to be dramatically worse for fundraising but doubts liquidity will immediately rebound. He notes an IPO need not promptly return cash to fund investors because lockups and distribution decisions can delay proceeds. Stebbings emphasizes realized distributions and a differentiated strategy when raising funds.

In quick fire, Lemkin says he has become less willing to back merely good founders and has marked down several investments. His evaluation of individual founders and unrealized marks is his own, not an independent assessment. He says uncertainty about a new deal can be a reason to pass or consider investing more in an existing winner.

He stresses urgency in repeat founders, arguing that a comfortable financial position can sometimes reduce the intensity needed to build another company. Stebbings shares a concern about well-funded teams moving slowly. Their views are investor judgments, not evidence that wealth inevitably reduces founder motivation.

Lemkin identifies a personal weakness: he says he is not persistent enough in pursuing founders once he has offered help and expressed interest. He describes investors who follow up repeatedly and a recent attempt to invest more that a founder declined. He is unsure how to copy that approach without feeling intrusive.

He says he may be a worse investor than when he started because he has become slower and takes portfolio problems personally. Stebbings argues close involvement can help an investor support later rounds; Lemkin replies that disciplined tracking can also reveal winners without a board seat. Their disagreement is about operating style, not a measured comparison.

Lemkin doubts an entire generation of investors will disappear, but expects some jobs to contract as fundraising slows and firms demand results. He argues a 3x net early-stage fund remains a strong outcome and criticizes unrealistic promises. His employment and performance expectations are opinions, not forecasts backed by a dataset here.

For 2024, he hopes to invest at his fastest pace since 2014 and to see marketing budgets recover enough to support SaaStr’s community. He says SaaStr generated about $27 million the previous year and describes a possible path toward $100 million by connecting more software buyers and sellers. These are company-reported figures and ambitions, not verified results.

He compares SaaStr with larger event businesses, saying he would like to create more connections but recognizes the trade-off between revenue and a larger workforce. He estimates SaaStr had eight people while some peers employed hundreds. The interview ends with a discussion of efficient content production and the value of comparing growth with competitors.