Click here to listen to the full interview with SasStr's Jason Lemkin https://tcrn.ch/2TPZ7vK

With the markets in turmoil and fear running rampant through the global economy, you might not think that it’s a great time to start a company. According to at least one well-known venture capitalist, however, it’s a great time to start up.

TechCrunch recently caught up with former founder and active venture capitalist Jason Lemkin to chat about the world of software-as-service companies, better known by their acronym moniker “SaaS.” Lemkin swung by TC HQ in San Francisco to spend some time with the Equity crew to discuss all things SaaS, markets, and startups.

Long-time Equity listeners will recall that this is not the first or even second time that we’ve had Lemkin on. He was, after all, our first guest, and a repeat for Episode 100. But as it’s Equity’s third birthday, and his SaaStr conference was just around the corner (now postponed), we had Lemkin back to dig deep into one of our favorite startup categories.

So let’s get nerdy about SaaS.

Is now a good time?

After the jump you can listen to the full audio from our interview (it’s a little over 45 minutes, so feel free to download it and take it with you; there’s an excerpt in the main Equity feed as well). But I wanted to share my favorite portion of the chat with everyone, even if you’re not part of Extra Crunch.

When we spoke to Lemkin the stock market had taken lumps, albeit nothing quite like we’ve seen in the last week. Still, when we asked about the potential for a cloud slowdown, Lemkin was not convinced that a secular cloud slowdown (as SaaS’s penetration into enterprise IT spend, it’s growth rate will slow) would be bad for startups operating as part of the modern, subscription software movement.

Why? There’s so much spend left to build for that there’s lots to build. And, perhaps more importantly, incumbents SaaS firms are so large now that they can afford to let smaller companies get pretty damn big before they pay attention. 

“All the SaaS leaders,” according to Lemkin, “are at a billion, two billion, [...] in ARR. The Zendesks, the Shopifys, the Hubspots. And they don’t have time” to bother with small companies. Before, in his telling, a $5 million ARR SaaS company would have raised competitive eyebrows from market leaders. Today that bar has been raised to as high as $100 million.

That’s good news for your local startup scene. Hit the clip if you’ve had a long, hard week and want some optimism:

As you can see, I initially missed his point about market size, and what the growing cloud pie means for startups. But by the end I’d come around: Because the big SaaS companies need to add $100 million, $200 million, or even $300 million in revenue each year, small software startups just don’t scan. Think of it as temporary invisibility for all SaaS startups until you’re probably too big to stop.

In the full interview we also went over Jason’s current venture fund, investing cadence, discussed vertical SaaS, his advice for the middle class of SaaS, how to think about venture debt, SaaS consolidation, software in India, and the Slack versus Microsoft scrap. It’s a lot of fun, so let’s get into it.