GET funded ➡ $200m https://teapaw.org/t.co/AVvPIrIdFP🦄🦄🦄🦄🦄🦄🦄 Seed/Early A AI+B2B The Agentic Life
Palo Alto, CA
Joined April 2007
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Boom!!!
Proud to have led seed at @saastrfund
Sh*t Agents Do:
Me, Monday: “Haiku 4.5 HAS to go. It's been deprecated.”
The agent, Tuesday: still calling Haiku 4.5.
New!! A Critical App We Pay For Went Down for 2 Days. They Never Offered a Credit. I Won’t Forget.
Outages happen. Customers get that.
A $330 credit on a $60K contract costs nothing. Making them ask costs you the renewal.
saastr.com/a-critical-app-we…
Yes, competition is up.
Yes, CIOs are still looking to cut vendors
But per @gartner, overall software budget is accelerating at a rate like we've never seen before
The latest estimates are that spend will grow a stunning +14.6% to $1.68 Trillion next year
It's your job to grab some of that. It's there.
A VC sees 20 to 50 decks a week. Yours gets one read, usually on a phone, usually between meetings.
SaaStr AI shows you what survives that read and what doesn’t.
saastr.ai/ai-vc
Top 10 agent learnings from this week
1. Never tell an agent to "queue" work. Replit told us our approved fixes were "queued." It stopped overnight and built none of them. Now every prompt says "do it now."
2. We moved to cheaper models, and AI spend still went from ~$35 a day to $84. Call volume went up faster than the price per call came down.
3. I told the agent the old model HAD to go. A day later it was still running. I don't count it done until the call log shows zero calls in the last 24 hours.
4. Our AI fact-checker flagged 18 of 30 accurate notes because it treated opinions as factual claims. Every flag triggered a rewrite, so we paid twice for worse copy.
5. Each of the agent's daily reports said "no schema changes." The build broke anyway, on a table left over from an older change. The reports only checked each day's own work.
6. When an agent says data is missing, check the database first. This week the data was there all along, and the step that displays it was what was broken. Check the record before you pay to re-enrich anything.
7. Scout, our email agent, now acts on plain-English replies like "intro me" or "pause." It runs the same code as the buttons in the app, not a separate version.
8. One of our agents was answering emails sent to another agent's inbox for days before we caught it.
9. We canceled Canva after 12 years. We'd stopped using it a year earlier but kept paying, and two of us had separate team plans without knowing. We were paying about 4x for nothing.
10. 10K started as our AI VP Marketing. This week it pulled together SaaStr's financials, and it already runs invoicing, collections and commissions. We never planned any of that.
Your first sales reps have to be folks you yourself would buy from.
For real.
"In the founder-led sales stage, the #1 criterion what sales reps to hire:
Who you, personally, buy your own product from them?
Be honest. Leads are way too precious to waste in the earlier days. Don't hire them because of where they worked, or the way they talk.
Ask yourself ... would you buy your >own product< from them?"
New!! Top 5 Learnings from Vercel’s COO: 10 SDRs Down to 1, a $5K-a-Year Lead Agent, and 93% of Support Cases Handled by AI
10 to 1 on lead qual. For under $5K a year.
SDR quotas up 30%. Support handles 93%.
saastr.com/top-5-learnings-f…
✅ Your customers will forgive you for:
A critical app going down for almost 2 full days
An outage caused by a bad deploy you rolled back fast
A status page that took an hour to update
A root-cause note that took a week to write
❌ Your customers will NOT forgive you for:
VC math really is all over the place
A traditional pre-seed / seed fund is fairly diversified, and that means to just do "1x", just return what's invested, you need one 50x exit
That's to get to 1x. Not the 4x+ you aim for.
For me at @saastrfund, I put 10% into the winners.
The means a 10x of what I put in, roughly, returns the entire fund.
But that has its own risks. You are pretty darn concentrated, and if a seeming winner stumbles, it's painful
A company in my portfolio just sold for 11.6x what I put in.
I wasn't happy about it.
That sounds insane, so let me explain how this actually works...
I run a pre-seed fund. I'll back 40 companies knowing most of them won't return real money. The math only works if a couple of them go enormous.
An 11x exit gets the money back and a little more.
For Seed VC funds, that barely moves the needle.
#VC #VentureCapital
The other odd thing about VC math is ... the vibe
Imagine you are doing well in a mature fund, already at 3x or more
Then any exit is gravy. It gets you to 3.1x or 4x, it's all good. 4x is better of course, but any exit is good. "Great job!" is the vibe, whatever the exit. Including no exit.
But in general, it takes a lot of time and stress and risk to get there, to 3x+ land.
Imagine instead you have a couple of potential winners, and they exit at 0.2 of the fund (like Itamar's example)
That's OK but it's also stressful too as they don't even get you to 1x the fund. And you only have so many winners.
Vibes are all over the place, and hard to grok from the outside
Imagine now a $400m fund
They buy 10% of you at $50m post, and you exit for $400m years later. They put in another $5m at $150m post.
Net of dilution, that first check is a 6x. Pretty darn good. The follow-on is maybe a 2x.
Blended, $10m in, about $40m out. A 4x.
That’s 10% of the fund. Barely. 0.1x
You better have a lot more of these in the fund to get to 3x.
Ok this is brutal to say, brutal
But almost every investor that been doing this a while and has seen it will likely agree:
😢 Almost every layoff is too small
Layoffs suck man. They are a failure of management, period. Period. Management's fault, period.
But almost every time, they are too small. Folks want to protect their teams. We want to protect the folks that work for us.
Almost every single time, 2-5 months later, the founders wish they'd cut harder
Not to save money. But to free up more budget to hire the folks they really need.
Almost every single time.
One lesson for me over past 12-18 months:
B2B still has plenty of moats
It's just, B2B moats aren't enough anymore. They don't work as well as they used to:
1/ They don't stop new, strong competitors popping up at a rate like we never saw before AI.
So moats don't really help as much as they use to with new customer acquistion. AI, LLMs and agents make next gen competitors so much stronger than they used to be. In the old days (until 2023/2024), new B2B competitors were almost always super feature-poor.
Now that can be feature-superior.
2/ They don't make upsell magically easier.
You can't force customers to buy agents and AI products from you. They won't if they aren't close to best of breed and/or move the needle.
You used to be able to sort of jam new editions, modules, and products through your existing customer base.
Now they just aren't remotely as receptive around buying agentic products from their existing investors.
Investors swore they'd never back AI model companies. "No moat."
a16z's Martin Casado says they got it wrong, and explains why.
Casado, General Partner at a16z:
1. In a growing market, companies don't fight. They move into new white space
2. When a market shrinks, it consolidates whatever the moats look like
3. So defensibility rarely decides the outcome
4. Investors said models would never accrue value. Look at Anthropic and OpenAI
5. They said the same about neoclouds
In a market growing as fast as AI, the size of the market matters more than the moat.
Full breakdown here:
theaiopportunities.com/p/ins…
Raising a seed or Series A in the next 6 months?
Upload your deck to SaaStr AI and get a slide-by-slide grade, the questions a partner will ask, and what to fix first.
Free: saastr.ai/ai-vc
If you aren't seeing your agents deliver the results we do ... it's not the tech or the vendors
It's that you don't have the right person managing them
(And that's a hard resource to find)
"AI sales agents and GTM agents really do work now. Especially for qualification, outbound, and campaigns.
So the bigger question is ... who will manage them for you?
Who has the skills to? The aptitude? The curiosity?" with @lennysan
The impact of 1 truly great hire never ceases to amaze me
The impact of 2 truly great hires, sometimes you almost have a brand new company
A lot has changed in venture in past 18 months
This hasn't
"How seed VC works:
You have to find one true decacorn founder a year. See it, find them, pick them.
And they have to pick you back" with @HarryStebbings
New!! 20VC x SaaStr: OpenAI Cuts to $1.25 Trillion, Anthropic’s Growth Goes From 12x to 2x, and Why Agents Are an Existential Risk to DoorDash
OpenAI cut its price. Anthropic growth halved.
And agents may bypass DoorDash entirely.
saastr.com/20vc-x-saastr-ope…
The worst advice for who to hire for CRO / VP Sales will often come from your VCs and your Board
They'll often be overly attracted to the fancy names on the LinkedIn, and the endless talk about how they did it there
And they often don't know how to do sales ... themselves
You've been warned
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