ICONIQ's latest State of Software 2025 report is out.

Buried in 73 pages are some great data on just how AI is changing B2B software

Here are my Top 10 Learnings: 🧵 #1. AI Companies Burn More Cash — But Also Have Better Capital Efficiency.  It’s Not a Paradox But … It’s Complicated.

This one breaks your brain at first: AI-native companies under $100M ARR have a median FCF margin of -126% (they’re burning cash at 126% of revenue). That’s more than double the -56% for non-AI companies.

Yet their burn multiple—the key metric for capital efficiency—is actually better: 0.4x versus 1.8x for non-AI companies.

Translation: AI companies are burning more absolute dollars, but they’re generating new ARR so much faster that each dollar burned produces more revenue growth. They can afford to burn harder because the growth rates are exponential rather than linear.

This suggests we need entirely different frameworks for evaluating AI-native businesses. Traditional SaaS metrics around payback periods and magic numbers may not capture what’s really happening when you can scale revenue 3x faster than historical benchmarks.

Can AI agents really manage other agents? Most of us can't even get one AI agent to really work well.

But it works in @Replit v3. For real. And it's so cool.

I had it do a 2.75 hour autonomous security audit. One agent managing other AI agents.

Here's how it worked:🧵 2/6: I was updating our pitch deck grader and it became time to deeper security audit.

This was just hard before v3. To do it for real. Doing a deep security audit against every single element of the app.

But instead of getting stuck, Replit V3 autonomously brought in specialists:

-Security expert
-System architect
- Senior/junior agents

I watched them DEBATE each other in English for 3 hours. Like humans. Like extremely talented, bickering engineers.

It was like old times :) Just without the humans.

🚀And truly incredible.

(Now bear in mind in a sense some of these agents are different personas of the same agent, but I'm not sure that really matters)

Vide Coding Day 11,

So today’s been a time of introspection and reflection. I have learned a lot becoming a ‘vibe coder’ and it has been addictive. For real.

My #1 learning is an old one, re-learned: Building Great Software is Still Hard.

Getting going is easier than ever. 🧵 On the dev tools side, I’ve asked all the best CTOs in my portfolio how much they really benefit from Cursor, Claude Code, et. al.

The consistent answer: net net, no one is giving back their Claude Code. No one. But net net, alone, it lets folks move about 20%-40% faster.

Why? These tools (all really Anthropic LLMs) help everyone do routine work faster, and in fact, some of the best devs I talk to can do 90% of most of their routine work in prompts.

But what about the hard stuff? The stuff that hasn’t been done before? The novel stuff?

What about the planning? The thinking?

What about code reviews and checking the work?

That all takes time.

So net net many are seeing a 20%-40% real productivity boost from Claude Code et. al. Much higher for routine stuff, but net net of all of the job — that’s where it seems to land today.

Vibe Coding Day 9,

Yesterday was biggest roller coaster yet. I got out of bed early, excited to get back @Replit despite it constantly ignoring code freezes

By end of day, we rewrote core pages and made them much better

And then -- it deleted our production database. 🧵 You can read the thread here, and all the convos with @Replit. It went rogue again during a code freeze -- and deleted our >production< database.

Rule #00001 my CTO taught me: never, ever, never, ever touch the production database.

Even in 2005, when we launched the first version of EchoSign / Adobe Sign, everything broke. But the database was sacrosanct.

In 2025, 1 Billion+ contracts later, I think no contracts were ever lost in DB. A few corrupted, but none lost.

Yet, Replt went rogued and destroyed our production DB last night.

During a code freeze when it knew to touch nothing. And agreed to touch nothing.

x.com/jasonlk/status…

Vibe Coding Day 8,

I'm not even out of bed yet and I'm already planning my day on @Replit.

Today is AI Day, to really add AI to our algo.

I'm excited. And yet ... yesterday was full of lies and deceit. @Replit Ok I have 2 main goals today:

1. Keep working on minimizing rogue changes, lies, code overwrites, and making up fake data

2. Get our AI working

Vibe Coding Day 7,

Let me be clear about at least one thing: @Replit is the most addictive app I’ve ever used. At least since being a kid.

(@lovable_dev is great, too. We used it to build a core landing page. I’m not taking ‘sides’, but for this project, I chose Replit).

Last night I was thinking about vibe coding in the middle of the night. I checked on my app on my phone at dinner. And while I opened up the WSJ first this morning, my brain would have prefer Replit. I’ve dropped tons of other things to make more time to be with Replie.

Will I get there? Will I go from ideation to a 100% commercial-quality app all inside a vibe coding app? Without hiring a dev, coding myself, etc. etc.?

I don’t know. I give it a 50/50 shot right now. But I am … addicted. I need the hit.

In fact, I’m a totally different person than I was a week ago. @HarryStebbings said he saw it when my responsiveness plummet. I’m locked in. The goal today: slow it down.

My biggest fear, and 100s of you have shared it yourself, is that vibe coded apps are never stable. That the AI keeps rewriting them when you think you’re about 50% of the way there.

I’m there, too. So my goal is to slow it down. Vibe Coding makes you feel like a superhero, but as cool as it is, I’m not SaaS Superman.

So today I am going to lock down as much of the app as I can. Research more on how to minimize rewrites. And really make sure my unit tests actually work.

If I spent all day on my unit and other tests, that would be good. Instead of instantly building new features :)

🧵 We sent 4,495 AI SDR emails in 2 weeks and got the #1 response rate on our platform. Here's what actually works (and why 90% of companies fail at this):

https://x.com/jasonlk/status/1942992088288891104

First, the reality check: We have unfair advantages

SaaStr brand since 2012
Targeted our existing database (not cold lists)
Spent 2 weeks doing basically nothing else

If you're planning to blast cold prospects, your results will be very different.

So leading cross-over VC firm @coatuemgmt put out a detailed report on "The Great Separation" -- Who Wins, And Who Gets Left Behind, in the AI Age

My Top 10 Takeaways: 🧵 #1: 2025 is the “Year of Offense” – Growth Trumps Everything -- Again

Coatue’s decision matrix for 2025 is brutally simple and reveals the new rules of the game:

🚀Growing >25% + Profitable? → Play offense aggressively
🐌Growing <25% + Profitable? → File your S1 immediately
🏰Growing >25% + Unprofitable? → Build fortress balance sheet
🔄 Growing <25% + Unprofitable? → Reinvent your business. ASAP.

👉Why This Matters: The window for going public with lower growth rates is wide open.

Public markets are rewarding ANY profitable growth right now. Companies that hesitate and wait for “perfect metrics” will miss the easiest IPO environment in years.

✅Action Items: If you’re profitable and growing, don’t wait.

If you’re unprofitable, get to breakeven fast or raise enough capital to survive the next wave. There’s no middle ground anymore.

Mary Meeker and the Bond team have released their latest 300+ page annual report, this time all on AI

It's very good but long, so I've summarized the Top 10 Points for B2B and enterprise founders here: 1. AI User Adoption Is Literally Unprecedented

We know this, but still, the numbers do sort of blow your mind:

▶️ChatGPT: 0 to 800MM weekly users in 17 months (vs. Netflix’s 10+ years to 100MM)

▶️Time to 100MM users: ChatGPT (2 months), TikTok (9 months), Instagram (2.5 years)

▶️Global adoption: 90% of ChatGPT users are outside North America by Year 3 (vs. Internet’s 23 years to reach this level)

👉Why This Matters for B2B: Unlike previous tech waves that started in Silicon Valley and slowly diffused globally, AI hit the world simultaneously.

This means your global TAM expanded overnight, but so did your competition. Every B2B and SaaS company now competes in a global, AI-enabled market from Day 1.

The Kicker: ChatGPT’s daily usage increased 202% over 21 months, with users spending more time per session (47% longer) and having more sessions per day (106% more). This isn’t just adoption – it’s addiction-level engagement.

Salesforce has crossed a stunning $40 Billion in ARR

It's passed SAP and now only MSFT + Oracle are bigger in the enterprise

And it's gone all-in on AI, with 5,000 AI AgentForce deals in just 1 quarter!

But ... AI hasn't led to more growth ... yet

5 Interesting Learnings: #1. Only 21% of Salesforce’s Revenue Today is from … Sales

This has been true for many years, but it often comes as a surprise to those that don’t know the company as well as they know its CRM.

Holy cr*p Shopify.

At an $11.2 Billion run rate, it’s growing at a stunning 31%.  And it’s accelerating.

In fact, it’s growing the fastest it has in 3 years.

It’s just stunning to see this sort of growth at this scale. 

5 Interesting Learnings: #1. Offline Revenue Up +33%, B2B Growth up 140%

While many think of Shopify as mainly an SMB online solution, its biggest growth now is in its largest customers (who run far more payments through Shopify), in its offline/ in-store business, and in B2B commerce.  Relatively speaking, SMB online is softer.

So there's one S-tier vertical SaaS leader almost everyone should know more about:

🏘️Procore

$1.2B ARR, SaaS for Construction Management
19% Growth
12% FCF

It almost died during GFC

But today dominates in U.S.

5 Interesting Learnings: #1. All Growth Today in $100k+ Customers

Procore serves stakeholders of all sizes — but the net new revenue growth is in $100k+ customers. $100k+ customers are growing 18% overall.

So Freshworks hasn't been immune to macro issues, but its bigger customers continue to grow and scale at an impressive rate

It's at ~$600,000,00 ARR today, growing 20%. But the bigger customers are growing much faster.

5 Interesting Learnings: #1.  Bigger Customers Keep Growing, But SMBs Have Slowed

A common theme across tech today.  Freshworks has 51,700 customers at around $2k ARR, with a quick sales cycle of just 25 days.  But in contrast to their bigger customers, the macro environment — or perhaps market saturation — has led to slowing growth in their SMB segment in 2023.

Klaviyo and Instacart reopened the IPO markets, from a 20 year low

Two great leaders, worth almost $10B now and public, and both priced at high end

But they IPO’d without any “bounce”

A little easy money and greed does help restart markets

We didn’t see that Klaviyo and Instacart in the end didn’t leave any money on the table

They maximized what they could raise, with the minimum dilution

But no bounce probably leaves the next wave of folks that are strong, but not as strong as Klaviyo or Instacart, in a slightly tougher position

I caught up with a sales rep this week on track to make $350k this year so far — and was miserable

I asked why?

A bad boss? No, he said

A crummy startup? No, it’s fine. No Snowflake, but fine.

Rough commute? No, he still works from home. What’s wrong then, I asked? How bad can it be?

“I made $500k in 2021, and now am making $350k working twice as hard or harder than back then”

He felt underpaid for working harder in 2023 than 2021

Even though he was still making $350k in today’s macro

He felt very underpaid

Want to get a SaaS start-up going?

Here are my Top 20 Tips to get a SaaS startup going and off the ground: 🔽2️⃣0️⃣🔽 1/ Take your time to find a great co-founder

It may seem like you are in a hurry, but in the end, anything less than a great co-founder will set you back. A bit more here:

saastr.com/a-simple-commi…

"A Top 10 Mistake:

Not going multi-product early enough."

saastr.com/add-second-pro… "Don’t take the easy route.  Your customers will want things that are fairly easy to build, and you’ll understand those problems well, because they are adds-on to what you are already selling.  

But these rarely move the needle."

Peter Gassner, CEO Veeva

I can be slow sometimes, but it’s taken me a while to understand what’s >different< in SaaS in 2023

Budgets are tighter, but SaaS is still growing, folks are still buying more software than ever

Here’s what’s different:

2023 is the first time SaaS itself got harder since 2005 SaaS has never been truly easy outside of a window from mid-2020 to late 2021

But every year, it got easier and easier. Not easy, but easier and easier:

One of toughest things about fundraising today is startups that are doing well but have fallen just below “the funding line”

E.g., a SaaS startup growing 100% at $5m ARR might get easily funded

If macro issues slow growth to 80%, that’s still pretty darn good. Just not enough. If the segment has been hard hit by macro issues, then shouldn’t 80% be good enough in 2023?

My rough learnings: the later the stage of the VC, the more they will lean in here a bit

If you are at $50m ARR and growth has slowed to 60% from 80%, a growth VC may take that risk

2023 is turning out to be even harder to raise VC capital than 2022. And 2021 feels like eons ago

SaaS multiples are at fresh lows, and slowdown that first came to late stage is now hitting seed

10 Simple Suggestions on How to Make Fundraising a Smidge More Successful in 2023: #1. Don’t Set Super Tight Deadlines If They Aren’t Real

Stop telling VCs they have a week to decide, if you can’t 100% back it up. Have 2 offers in hand? For sure, be aggressive. But don’t play timing games. Folks will just walk.

Freshworks is another SaaS and Cloud leader that yes, has seen some slowdown -- but still >beat< expectations

They are now at an incredible $560,000,000 in ARR, growing 23%

5 Interesting Learnings: #1.  NRR Still Impressive at 107% Given Many SMB Customers, Although Down Year-over-Year from 115%

For those of us who sell to B2B customers small, medium, and larger, it can be super helpful to see what’s happening with a leader like Freshworks.  Their NRR remains relatively… twitter.com/i/web/status/1…