Why employee happiness is a disappearing SaaS metric

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View profile for Dave Kellogg

EIR at Balderton Capital, Independent Consultant, Author of Kellblog, and Co-host of The Metrics Brothers

Overheard: "They're at Rule of 40 this year and shooting for Rule of 55 next year. They don't have a happiness index." I think the employee happiness index might be the fastest-disappearing SaaS metric out there. IMHO there are two ways to increase EBITDA through cost reduction: - Big-lever changes. Changing your sales model. Moving an R&D center. Distributing through partners. Relocating corporate functions. New products to leverage existing channels. Zero-based budgeting. And many others. - Relentless squeezing. Hiring freezes. Salary freezes. Making annual bonuses harder to realize. No backfills. Across-the-board budget cuts. Numerous small layoffs. I think that relentless squeezing results in a worse place to work than one that throws big levers. Remember, in these cost-conscious times, you want your company to remain a great place to work for the people you want to keep. Don't cut 20 people and eliminate kickoffs, raises, benefits, and perks. Cut 24 and keep them. In the end, it's all about the people who stay. Don't make them regret that.

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Adam Alfano

Executive Vice President at Salesforce

1mo

We have “unity and happiness” as a core value in our business plan this year (and last year)…I believe it has made a difference in how we orient the team and drive behavior.

Alex Ortiz

CMO | Hyper-growth B2B SaaS +AI | ex Salesforce, Tray.ai, Sendoso. | I engineer marketing engines.

1mo

This is a huge issue in companies and especially marketing teams. Lot's of burn-out and quite quitting and worsening company cultures where finger pointing is becoming easier than problem solving collaboratively. The fear based messaging about AI threading jobs isn't making employees feeling valued or appreciated. The impact: employee happiness and employer LOYALTY is sinking.

Ryan Flynn

VP of Customer Delivery at Level AI

1mo

No mention of increased automation with AI... 🤔 ❓ It's also key to hire/keep people with a natural inclination to be happy/engaged in your new culture. Happiness means many different things to different people.

Wait - measuring and tracking eNPS is not in vogue anymore? That's the definition of short-term thinking IMO (unless said companies are banking on their AI agents scoring 100 consistently.)

Jason M. Lemkin

SaaStr AI London is Dec 1-2!! See You There!!

1mo

For sure. But I do think No Backfills is the future. We are all going to try to replace any B players with AI going forward if we can.

Mike Berger

Founding Partner, Harmonic Message

1mo

Great advice Dave Kellogg.

Hillel Zidel

Managing Director at Kennet Partners. Investing in bootstrapped and capital efficient technology business

1mo

Nice post Dave Kellogg 😎

LeeRon Yahalomi

AI GTM Leader | CS to Revenue Architect | 5x Growth | Ex-Regie.ai, Textio, DreamBox | PE & VC-Backed Operator

1mo

 this is such an honest and needed take. Most exec teams don’t realize how fast “efficiency” turns into cultural decay. You can feel it when leadership starts celebrating cost control louder than customer wins. The energy shifts. The builders leave. The survivors stay quiet. I’d take one big, strategic lever pull over a hundred micro squeezes any day. At least it’s decisive. At least it signals a plan. SaaS leaders love the Rule of 40, but forget that happy, motivated humans are the only way to hit it twice

John Luis

Founder | Interim CFO and FP&A | 3X IPO | 7X Exit | 75+ M&A | Trusted Partner to IB, PE & VC | Networker SF Bay Area - Nashville

1mo

One of my old old favorites: Always cut one more head to save the free Bagel Friday, free Thrusday nite keggars.....🤣

Elad Leschem

5x Founder & CEO (4x Startups, 1x Corporate Venture) | Product + Commercial Strategy | Zero-to-One & Global Markets | AI, SaaS, Marketplaces, Enterprise Software

1mo

It reminds me the story from Ried Hastings book, where he says that in his company prior to Netflix, they fired tons of people and kept the best ones. That increased overall productivity, happiness and outcomes

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