Clouded Judgement: Market Cycles and SaaS Valuation Multiples

The article analyzes SaaS market cycles, identifying expansionary phases (driven by growth-at-all-costs mentality) and consolidation phases (focused on cost efficiency and vendor consolidation). Using detailed quarterly earnings data and valuation multiples, the author argues that current market conditions favor growth-stage companies while warning that consolidation will inevitably follow, making it critical for founders to distinguish sustainable competitive advantages from mere tide-riding.