Kellblog

The Era of Haves and Have-Nots

Posted on November 11, 2025 | 3 comments

Below I’m cross-posting an article I wrote for the launch of Topline Media, the media spin-out from Pavilion, a popular community for go-to-market (GTM) leaders. This article was originally published by Topline on 10/9/25.

Since this was written for the launch of a new publication, I made it somewhat more sensationalist than usual. It’s also shorter and tighter, without the usual deep-drives and asides.

The reception was not without controversy, in part because I touched the third rail by mentioning 996. Some hastily took that to mean, “some VC is telling portfolio companies to grind 996.” That I’m not a VC and never told everyone to blindly grind 996 seemed beside the point.

What I said was: if you’re in a winner-take-all market, then you need to win. Grinding 996 might be a part of that. But the point isn’t to work hard, it’s to win. You can grind yourself to death at a strategically doomed company and it won’t change much. (I’ve tried that. AMA.)

Here’s the article. Thanks to Sam Jacobs and Asad Zaman for inviting me to write it:

AI has created an era of haves and have-nots. AI-native companies with spectacular growth rates are grabbing all the attention, talent and money. Is this insanity? How long will it last? If you’re not among the ranks of the AI-native high flyers, how do you avoid becoming seen as a zombie, a living-dead SaaS company with uninteresting growth, little profit, and no future?

First, it’s important to understand the external environment. While the world may seem insane, it’s not. We are at the start of a major disruptive cycle on the order of client/server computing or the Internet. Such cycles come maybe every 20 years in my experience, just long enough for us to have forgotten what they feel like.

These technology disruptions create opportunities to build enormously valuable companies that will lead their markets for a generation. This is the system at work. It’s chaotic. It’s inefficient. It feels crazy when you’re in it. But always remember that from the wreckage of Webvan, Pets.com, and a hundred other dot-coms, sprung Amazon, Google, and Salesforce. Nobody said creative destruction came without casualties.

These cycles reflect the nature of venture capital. While fixer-upper private equity (PE) has always been about driving modest growth with ever-increasing EBITDA margins, venture capital (VC) has always been a hits business. I remember nearly a decade ago reading the prospectus of a top-tier fund which said that the internal rate of return (IRR) of their previous fund was 36%, but that dropped to 12% with the top two investments omitted. Most of what makes VC a great investment, worth the 10-12 year illiquidity, comes from a handful of fund-returning companies. While consistent base hits are the PE business model, the VC model is not just about home runs, but grand slams.

Viewed in this light, today’s ARR multiples seem much less insane. After all, if a company is going to be worth $20B at exit, it doesn’t matter much if you bought at a valuation of $50M or $80M. This is what drives the valuation insensitivity and fear-of-missing-out (FOMO) that we see today in AI. Moreover, if you remember that in greenfield platform markets, first place ends up worth 10-100x second place, and second 10-100x third, you should be willing to pay almost anything to get into the leader. And if you’re currently in second place, you should be willing to spend almost anything to get into first. Second prize really is a set of steak knives.

While some will question the durability of high-growth AI revenue, to many investors it’s surprisingly unimportant. Yes, a lot of the $100M in revenues (that a company hit in 18 months) may not recur, but 70% of something is worth a lot more than 100% of nothing. Thus, we are seeing a surprising lack of interest in traditional SaaS metrics and the very notion of ARR — particularly the recurring part — is starting to lose meaning. Increasingly, companies are just talking about revenue or product revenue because today’s pricing models (e.g., consumption, outcomes) no longer align to subscriptions and traditional SaaS metrics.

While we can’t help wondering how long this will last, that’s the wrong question. It will last until it doesn’t. Shorting bubbles is a dangerous business because the market can stay irrational longer than you can stay liquid. Eventually, some trigger will start an unwind cycle. And once again, we will learn that this time wasn’t different from all the times before.

If you’re an AI-native growth company, the strategy is simple: win. Take no prisoners. Grind 996. Grow faster than your competitors, blunt all attempts to overtake you. In the words of Larry Ellison, it’s not enough that you win, all others must lose. Hire people who are so aggressive they make you uncomfortable. Think: “you want me on the wall, you need me on that wall.”

But what if you’re not? Per Jason Lemkin et al., you probably can’t raise new money. Even T2D3 (triple, triple, double, double, double) — a growth trajectory that takes you from $0 to $100M in seven to nine years — is no longer interesting to 80% of VCs. Instead of T2D3, we hear of Q2T3 (quadruple, quadruple, triple, triple, triple). We now measure time to $100M in ARR in months, not years. And, by the way, do it with a tiny team, driving ARR/head of $1M+.

That the bar has been raised so high is a mixed blessing because now there’s no kidding yourself. There’s no pitching a cloud story while still selling on-premises. The bluff factor has been eliminated. If you want to raise money at an AI valuation, then you don’t just need an AI story, you need an AI growth rate to match it. Clear and simple, but far from easy.

If 80% of VCs aren’t interested in talking to you, how might you win over the other 20%?

Hunkering down is not good enough. Particularly if hunker means something like 10% growth and 5% EBITDA at $30M in ARR. Financially, that business might be worth 10-20x FCF, so $15M to $30M. That’s not bad if you’re bootstrapped and you’re a founder who owns 100% of the company. But, even then, that works only if there is confidence that the $1.5M in annual EBITDA will continue. That is, that you won’t be disrupted by AI natives who vibe code your replacement app over the weekend. However, if the same business raised $50M in VC then it’s effectively worthless, because the entire business is worth less than preference stack.

So how do you create value? One word: growth. Growth is what takes you from an EBITDA-based multiple to a revenue-based multiple. Mathematically, a point of growth is worth about 2.3x a point of profit. One way or another you have to figure out growth.

But how?

Make growth at positive FCF the top financial goal. Note that this is not a strategy, but a constraint.
Build an AI story. Do an inside round, raise debt, or even cut traditional R&D if you need to, but you have to find money to build an AI product and story. If you get it right, it will not only enable current sales but increase your value at exit.
Be relentless in sales model optimization. You are fighting for your corporate life. This isn’t about arguing with the board about how much to invest in growth. You are highly constrained, but let those constraints drive creativity. Do market research. Do win/loss analysis. Get good at listening. Figure out what you can do to improve sales productivity. Often, that will be doubling down on a key segment. Or stopping in an unproductive segment. Or changing key assumptions in your sales model (e.g., SC to AE ratio, AE hiring/cost profile) that might have been heretical to consider in the past.
Consolidate the space. Investors who have “no money” for operational experiments often do have money for new strategies. If you’re competing with the usual suspects in every deal and everyone is struggling, then consolidate the space. It should increase both win rates and prices.
Fresh eyes. You might think you’ve tried everything already over the past few years. But have you? And if you tried something and it didn’t work, was that because it was a bad idea or because you didn’t execute it well? Beware false knowledge that blinds you to solutions. Or bring in fresh eyes to challenge your assumptions. Yes, it’s not going to be easy, and yes you’ve tried a lot already, but you need to look at things with fresh eyes to find fresh solutions.

In a world of haves and have-nots, you want to be a have. And the key to doing that, no matter how many times you’ve tried before, is to figure out growth.

3 Comments

Posted in AI, Disruption, Silicon Valley, Startups, VC

How To Navigate the Pipeline Crisis

Posted on November 8, 2025 | 4 comments

Unlike many marketers, I’m not particularly prone to hyperbole, and thus “crisis” is not a word that I use lightly. But I think saying “pipeline crisis” is warranted today when discussing what’s happening in marketing and is a key underlying cause for the broader malaise in SaaS growth.

You don’t need to look far to find signs of a problem:

SaaS stocks, as measured by Bessemer’s Emerging Cloud Index are down 3.4% year to date.
Customer acquisition efficiency is down. Earlier this year, median CAC payback periods hit 57 months, implying a staggering almost five years to recoup the cost of acquiring a dollar of net-new ARR.
Pipeline coverage ratios are running below their required targets. The top reason for missing sales targets is insufficient pipeline coverage and Cloud Ratings shows stated coverage of 3.6x vs. target coverage of 4.1x. (I can hear the cries of CROs everywhere saying, “please, just give me more at-bats!”)
Articles about the web traffic crisis are ubiquitous, from Rand Fishkin’s must-read posts on zero-click marketing to CJ Gustafson swimming outside his normal lane with a post entitled Google Zero. The web is transitioning into a series of walled gardens and what’s left over is increasingly front-run both by Google search and, of course, answer engines such as ChatGPT, Perplexity, Claude, and Gemini.
Earlier this year, Andrew Chen put it bluntly: Every Marketing Channel Sucks Right Now.

Add it all up and you can summarize this rather grim picture — as the Exit Five newsletter recently did — with Nothing Works Anymore.

I see this every day in my work with dozens of SaaS companies. Because many companies are missing bookings targets by roughly the same percentage as they are missing pipeline coverage targets, I believe this is a pipeline crisis, and not a conversion rate crisis.

The struggle is real. If you’re facing it, you are not alone.

Against this cacophony we hear a lot of talk about “brand vs. demand.” The argument being that since demand generation programs are working less effectively, marketers should increasingly allocate dollars to brand programs. It’s not a bad argument — in part because I believe that marketers over-rotated to highly measurable marketing during the go-go days — and thus a swing back to less directly measurable marketing is a good idea.

(Aside: I’d argue that marketers didn’t over-rotate on their own. They got an assist from CEOs and CFOs who were only too eager to invest exclusively in marketing programs that delivered a clear short-term return and ignore the underlying complexity in B2B sales, effectively living-the-lie that is marketing attribution. We don’t sell toothbrushes here, people. Nobody goes to a tradeshow and buys a $250K enterprise solution — or even a $25K one — based on one interaction with one person. But I digress.)

The question, of course, is what to do about it?

What Others Are Saying

A lot of smart people are weighing in, so I thought I’d provide a few links before sharing my own take.

Kyle Poyar wrote a great post called The 2025 State of B2B GTM Report. (Subtitled “What’s Working in GTM? Anything!?”) My favorite part is the GTM Scorecard, a quadrant that maps channels by popularity and likely impact. The underlying report is full of good ideas, GTM tool recommendations, and survey data.
The aforementioned Exit Five post, despite its title, is actually about what is working with answers derived from an informal poll of community members.
Scale recently published a State of GTM AI report which provides survey data on AI within GTM, focused largely on high-level use-cases and a two-phase adoption model. (Jadedly, if we’re going to do less effective work, then let’s at least do it more efficiently.)
If your issues are more strategic, such as identifying and targeting sub-verticals, then you should read my friend Ian Howell’s book, Smart Conversations.

What Would Dave Do?

I’m going to build upon a popular comment I made on Kyle’s CAC payback period post. Consider this a sister post to What To Do When You Need Pipeline in a Hurry, but this time not focused on the hurry, but on today’s environment.

Here’s what I would do:

Think holistically. You might only be the CMO, but you need to look across all pipeline sources. The job is to start quarters with sufficient coverage and notably not just to hit marketing pipegen goals. If outbound is working, reallocate money to it. If AEs can generate more pipeline (e.g., formal targets, more direct routing of inbound), then do it.
ABM. Substitute across-the-board campaigns with targeted outreach on key accounts, leveraging both marketing and human channels (e.g., SDRs), both digital and dimensional assets (i.e., physical things like branded Moleskines), and intimate live events. As an old CRO friend says, “if by ABM you mean us picking our customers as opposed to them picking us, then I am in favor.”
Events. People are tired of working from home all day and champing at the bit to get out and press the flesh. This includes major tradeshows, annual user conferences, and roadshows all the way down to field-marketing dinners and sporting event boxes.
Get good at AEO. It’s quickly replacing and more effective than search. It’s also more winner-take-all. There is plenty of content out there on how to do it and agencies eager to help. Read these two articles for starters.
Leverage the CEO via social media (e.g., LinkedIn), podcast appearances, and speeches. And LinkedIn doesn’t just mean a few posts, it means an overall strategy.
Use your AI message to put butts in seats. We’re still in the stage where people are confused about AI and nothing puts butts in seats like confusion. Do educational webinars, videos, and content. Educate people but be sure to do it en masse.
Leverage AI tools and workflows. Review Kyle’s report, particularly the part on the GTM tech stack. Read Paul Stansik’s practical posts on AI, including how to avoid slop.
Build first-party audiences. If you can no longer pay a reasonable amount to reach other people’s audiences, then you’re going to need to build your own. While this is a slow burn, over time you’ll be happy you did it. Build a Substack, a YouTube channel, a quality newsletter, or a podcast.
Leverage partners. They can account for 20-30% of your pipeline and usually bring opportunities that close faster and with a higher conversion rate. If you have a partner program, leverage it. If you don’t, start building one. It’s another slow burn, but you’ll be happy you did it.
Check your nurture tracks. Long-term nurture is easily forgotten. Measure recycled leads. Report on your tracks. Ensure you’ve built specific tracks for competitive loss and bad timing. A/B test them, the flows, and the content.
Understand why you lose. While I believe most companies have a coverage problem, not a conversion problem, I like to win anyway and if your conversion rates are below 20-25% you need to understand why. Do quantitative win/loss via CRM reporting, listen to call recordings, and do win/loss interviews to understand what’s really going on.
Invest in customer success. While I know this doesn’t help with pipeline coverage (except for expansion), always remember that the cost to backfill churn is CAC-ratio * lost-ARR. Thus, if your CAC ratio is 2.0 and you lose $2M in ARR, it’s going to cost $4M to backfill it. The easiest – and most cost-effective — way to keep the ARR bucket rising is to limit leakage.
Join a community. In times of change it’s important to have colleagues you can talk to, so I’d not only keep in close touch with existing peers, but join a marketing community like Exit Five to engage in shop talk.

4 Comments

Posted in AI, Growth, GTM, Marketing, Pipeline

The Startup Board’s Hippocratic Oath

Posted on October 9, 2025 | 4 comments

The Hippocratic Oath is a well known oath of ethics taken by physicians. It requires them to swear, among other things, to do no harm in dealing with patients. While chatting with a VC the other day, it occurred to me that we should have a similar concept for startup boards.

Unfortunately, I think “do no harm” actually sets too high a bar.

To help startups succeed, boards need to challenge leadership teams, ask hard questions, and get them to consider new ideas and approaches. While I think boards should refrain from giving directive feedback, there is always the chance that a hard question leads the company down a path that ultimately proves unproductive. For example, if a board member asks if a company to consider a PLG motion for a new product, that could lead to the company launching a new sales motion that ultimately fails.

This example, by the way, shows both why boards should not give directive feedback (i.e., “do a PLG motion”) and why founders should not listen to them when they do. Think: yes, we’ll consider that, but only try it if we think it’s a good idea. Throwing a bone to board members by agreeing to try ideas you don’t believe in is a losing strategy. If they fail, you are more likely to get scorn for poor execution than credit for the openness in having tried. When results are the only thing that matter, only place your bets on things you think will deliver results. (And yes, the possibility that you threw good execution at a bad idea seems conveniently never to be in consideration.)

If “do no harm” sets too high a bar, then what oath might we use? After talking to my friend, I think I found a great alternative: do no demotivation. “I don’t want executive teams leaving board meetings feeling demotivated,” he said. And he was absolutely correct.

How do we want people to feel at the end of a board meeting?

We want the board to feel like they attended a well-run meeting, had a chance to help the company, and understand the plan to address current challenges going forward
We want the management team to feel like the board is knowledgeable, helpful, and supportive
And we want the management team to feel energized to go execute the plan

That’s it. If you get those three things, you had a successful board meeting. And demotivation is nowhere on that list. Demotivation doesn’t help anyone.

It doesn’t improve the odds of executing the plan successfully
It definitionally doesn’t make anyone feel good
It does make the e-staff start to question the CEO and each other
It does make people wonder why they’re grinding so hard
It does make the team feel unappreciated and potentially vulnerable

So I’d propose Do No Demotivation as the Hippocratic Oath for startup boards.

I’ll finish this post by listing some common ways that boards demotivate executive teams (and feel free to put more examples of your own in the comments):

Expressing surprise over things they should have known.
Asking trap questions: “do you think our sales productivity is substandard or very substandard?”
Placing blame: “clearly, since our CAC payback is so long, we have an inefficient sales organization.” (Maybe we do. Or maybe we have a hard-to-sell product. Or weak gross margins. Or something else. The high CPP is a fact. The reason for it is not always a bad sales team.)
Cherry-picking: taking top decile benchmarks, or public comps, or even just top quartile numbers but across 4 different metrics. It’s like comparing your child to the best mathematician, athlete, musician, and writer in the school. (It’s quite rare when one person is all those things.) Or, my favorite: benchmarking without regard for situation. Yes, our CAC ratio is high, but 75% of our deals are dogfights against a price-slashing competitor. And yes, I know what “sell value” means, thanks.
Expressing anger in pretty much any form. While I’ve seen some howlers, fights in board meetings are not OK. They demotivate everyone. And they take focus off the top busness priorities.
Ratholing, failing to take things to an offline meeting or working group. OK, I do this one from time to time. (“But I promise it will be quick.”)
Making easy things hard. When in doubt, if a topic is not strategic, just do things the standard way at the good-enough level.
Expressing negative or hopeless sentiments: “at this course and speed, I’m not sure we’re creating any value.” As opposed to: “we need a new plan that creates value and that means we need to find a way to accelerate growth.”

So before you attend your next board meeting remind yourself to do no demotivation. It’s the new Hippocratic Oath of startup boards.

4 Comments

Posted in Boards, CEO, Management, Startups, VC

Slides From My SaaS Metrics Palooza 2025 Session on Selling Work vs. Selling Software

Posted on October 8, 2025 | Leave a comment

Today, I presented at SaaS Metrics Palooza 2025 on the differences between selling work and selling software. I’d like to thank my metrics brother, Ray Rike, for inviting me to speak and I’d like to thank everyone who attended the session.

Topic covered include:

Defining outcomes
Contrasting outcomes vs. usage
The outcomes stack and intermediate vs. end outcomes
How a dating site would price based on outcomes vs. subscriptions
The basic trade-offs in selling subscriptions vs. outcomes
How to capture value created and share it between the vendor and customer
How selling outcomes can (radically) expand the total available market (TAM)
Jevon’s Paradox and what happens when we make things radically cheaper
Selling virtual humans vs. jobs-to-be-done
A long list of links to references for additional reading

You can download a PDF of the slides here. You should be able to see a recording of the session here. (Frankly, I’m not 100% sure that link will work, but you can try.) And I’ve embedded the slides below.

Slides from Balderton Webinar on Aligning Product and GTM Using Customer Value Metrics

Posted on September 24, 2025 | 2 comments

Today Dan Teodosiu, Thor Mitchell, and I hosted a Balderton webinar entitled Aligning Product and Go-To-Market (GTM) Using Customer Value Metrics. We are all executives in residence (EIRs) at Balderton — Dan covers technology, Thor covers product, and I cover go-to-market — and, in a display of cross-functional walking-the-talk, we came together to present this session on alignment.

The session was based on an article Dan and I wrote, by the same title, which was published on the Balderton site last month and about which I wrote here. The purpose of this post is to share the slides from that webinar which are available here and embedded below.

Thank you to everyone who attended the session and who asked questions in advance or in the chat. I’m sorry that we didn’t have the time to answer each question, but if you drop one into the comments below, I’ll do my best to answer it here and/or ask Dan or Thor to weigh in as well. I’m not aware if Balderton is going to make a video of the session available, but if they do I’ll revise this post and put a link here.