E597: The “Godfather of SaaS” Jason Lemkin shares his Saastr community, criteria for investing, analysis of SaaS startups & unicorns, and what’s next

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about this episode

Jason sits down with the “Godfather of Saas,” Jason Lemkin, to discuss everything from the SaaS (software as a service) industry to angel investing criteria, from Lemkin’s current venture Saastr, to what the field has in store. We learn about the history of SaaS, why we owe a huge debt to Salesforce, and why so few enterprise customers “try before they buy.” The two Jasons further discuss Microsoft’s foray into SaaS, why “lockin” is a myth, the successes of — and differences — between Slack and HipChat, Lemkin’s SaaS investments (including Talkdesk, Algolia), why founders don’t make great VCs, Lemkin’s criteria for an investment (hint: the founder has to be better than him) and Lemkin’s advice on lifetime value to budding SaaS startups. Finally, the Jasons posit what would happen if Google or Microsoft came out with a free Slack competitor (protip: do not get arrogant about your engineers), the hurdles in monetizing a free product, why an acquisition might cost nothing for a big tech company, the mistake many companies made in 2008 and 2009, why choosing the celebrity investor isn’t always the best idea, the sheer volume of startups today — and much more.

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0:00 – 3:44 Introduction/Welcome Jason Lemkin

3:45 – 6:03 What is SaaS?

6:04 – 7:24 Adobe and the Business Model of SaaS

7:25 – 8:50 Salesforce Started It All

8:51 – 10:44 Try Before They Buy

13:43 – 15:30 Microsoft and SaaS

15:31 – 18:45 Piracy, Marketing, Adobe, Materiality Threshold

18:46 – 21:17 Why is Slack so Special?

21:18 – 23:40 Zapier, LockIn

23:41 – 26:45 Slack vs. HipChat

28:36 – 30:37 Saastr

30:38 – 32:16 Conferences as a Pipeline

32:17 – 35:49 What to look for in angel investing

35:50 – 37:09 Founders aren’t the best VCs

37:10 – 41:50 Investment Criteria

41:51 – 43:51 Algolia

43:52 – 45:15 Zenefits

45:16 – 46:52 Box, Spending on Sales and Marketing

46:53 – 49:10 Lifetime Value Advice

49:11 – 52:07 Free Slack Competitor?

52:08 – 54:59 Sustaining the Projects at Big Companies

55:00 – 58:21 Entering a Space and Acquiring

58:22 – 1:02:24 MNA, SVP Deals

1:02:25 – 1:04:50 What does 2016 look like for unicorns?

1:04:51 – 1:07:11 Screwing up in ‘08 & ‘09

1:07:12 – 1:08:26  What It All Means for Startups

1:08:27 – 1:11:30 Choosing an Investor

1:11:31 – 1:14:50 Sheer Volume of Startups

1:14:51 – 1:17:38 ZenLearning, Working to Be Fundable

1:17:39 – 1:20:00 What’s Next for Lemkin?

1:20:01 – 1:25:25 Being an Angel Investor

1:25:26 – 1:36:36 Jason’s angel investing plans

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