"Why shoud I worry about what's happening in the economy?"
Is it time to panic? Who's dead this time? Recess.. what?
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Let’s talk about the global economy for a change from a product & growth leaders perspective.
I’ve written quite a few high-level perspectives on where I think B2B SaaS is going on an organizational and go-to-market perspective as a result of AI and Product-led Growth, and how it’s important to understand not only the customers but also the business as product leaders.
To make matters even more “interesting,” we’re now also dealing with a macroeconomic environment that seems to get more complicated globally.
Should you, as a product and growth leader, worry about the broad economy?
Yes, absolutely.
We need to be educated about this part, now more than ever, because it influences how we plan, budget, and which risks we are willing to take.
Let’s map it out:
Fear & Greed
Facts & Opinions
Recessions & B2B SaaS
Product & Growth time horizons
Strategy & Careers
“Investors only know two emotions: ‘Fear & Greed’”
The “Fear & Greed” index shows you what’s driving market movements.
Fear means erratic movements in the market because people are afraid of losing their investments for whatever reason.
Greed means investors are collectively agreeing on a positive outlook, similar to a gold rush, where people don’t want to miss striking gold.
When we fundraised at Jua.AI, the CEO Andreas Brenner told me:
“Investors only know two emotions: ‘Fear & Greed’”
It’s a great first principles thinking that applies also to the broader market, I think about it this way:
If you understand the “Greed” you understand where the market can go (potential). It’s a window for innovation and big bets.
If you understand the “Fear” you understand how much risk you should consider. It’s a window for optimization, quality and holding on what you have.
Facts
So what are the facts, and how should we think about them without having an economic degree?
Everyone has their own methods, mine has everything to do with specific stocks, for instance, Hubspot:
Hubspot is selling software to small and medium businesses (SMB), which are, for the vast majority of my clients and companies I work with, their ICPs. Hubspot also tends to be quite stable in its own performance, quarter of a quarter, and I follow them quite closely from a personal interest point.
(If you want to have something similar but more serious, I’ve heard this index being mentioned a couple of times: The Fiserv SMB Index)
The current outlook for B2B SaaS is a mixture of three factors, which all point towards major changes in a relatively short time (we talk about this later why that’s important):
The broader economy and whether it has a positive vs. negative overall outlook. (which this article is about)
AI technology jump & overall commoditization The outsized effects on tech companies, “how and what we build in SaaS”, and the explosion of software solutions → My talk at MTPCon about it in March 2025
The outlook is pointing “somewhere” rather than just up for smaller businesses (depending on the time horizon you’re thinking).
You can think about this in simple terms of what it means to be in a recession, worst case:
What is a recession?
The popular shorthand definition is "two consecutive quarters of negative GDP growth."
While economists may debate the precise definition, here's what it means in practical terms:
In the United States, economists typically look for declines in real GDP, income, employment, industrial production, and wholesale-retail sales.
Think of a recession as the economy catching a cold.
Activities slow down, businesses become more cautious, and everyone tightens their belts a bit. The business cycle naturally moves through expansion (growth), peak (the high point), contraction (slowdown), and trough (the bottom) before starting to grow again. → More in-depth explanation from Business Insider
Recessions are normal parts of the economic cycle, but that doesn't make them any less challenging when they arrive. The good news is that historically, periods of recession have occurred much less frequently than periods of expansion and growth.
What does that mean for B2B SaaS companies?
For B2B SaaS companies, the effects of a recession follow a predictable pattern:
First, consumer markets take the hit. B2C companies feel the pain immediately as consumers reduce spending
Then businesses start laying people off, further impacting consumer markets in a negative feedback loop.
B2B companies feel the effects later. B2B SaaS is typically insulated from immediate impacts because the market is larger, but eventually, the slowdown reaches all sectors.
The data shows both B2B and B2C markets experiencing two major effects:
Sales (new customer acquisitions) are slowing down.
Cancellations are increasing (decreasing Lifetime Value)
A good report on this is Forrester’s B2B marketing and sales predictions from October 2024. (Which was even before the current added drama we are experiencing.)
Opinions
Aside from specific stocks and fancy curves, there’s also a collective “feeling” that we’re getting, which is a mix of what other smart minds are saying about the economy, what investments are made, and how conversations with business leaders are happening right now.
It’s impossible to quantify those, but they are important to factor in because they change how I personally advise, lead, and think about investment opportunities.
Interestingly, the conversations are dramatically different when I talk to other product leaders vs. more economic functions like CFO’s and Investors.
Product and Growth leaders often tell me generic stuff like “Build for your customers, that’s all you can do, there’s no generic advice that will help you”. Well… I agree on the first part, but disagree on the second.
Economic situations can fundamentally change what customers' needs are, but they definitely impact what is considered to be a reasonable investment of resources against them.
If you work in product in 2025, you have no business to just chase opportunities and customer needs without knowing how to assess them against their costs and risks.
In the past, our best friends were the user researchers and customers. Now you have to add your CFO to that polyamorous relationship.
But why all of a sudden, when you could get by with just thinking about “customer problems” and be fine?
“Not my Job” time horizons & Growth
One of the best frameworks I’ve picked up from
’s “High Growth Handbook” interviews was how someone can look at seniority in terms of their time horizons:ICs / Operators look towards quarters
Directors (Middle Management) look a year forward
C-Levels consider 2 years+ forward
This matters because you have to plan for projects and investments differently. Something big you want to achieve might require so much hiring and shifting of other resources because of the investment necessary that you might have to plan for it a year ahead instead of a quarter.
If you expect within your time horizon things to shift around economically then it’s very much “your job” to know about them and adjust for it.
AI and the current volatility globally are affecting the markets we build for not only drastically but also in a relatively short time.
What’s a product & growth team’s job again?
“To build a solution for a future market that stays long enough for it to pay off.”
This is another phrasing for “we have to build sustainable, repeatable things, not hacks”. It’s the definition of good Growth. One-off hacks are getting you nowhere, but repeatable things are also only worth it if they can, in fact, work for long enough.
Take the COVID-19 crisis, for example.
A lot of companies built services specifically for the crisis when it was already in full swing. Most of them were too slow, and by the time they shipped something, the market for them was already in decline.
It wouldn’t have mattered that much to be delayed in more stable conditions, but for something “temporary” like a pandemic, it matters a lot whether you can go into the market fast or not, to maximize the chance for the conditions to be around long enough for it to pay off.
If you are a middle manager or aspiring product leader (or one of those rare IC’s that contribute to the strategy) and are not factoring in the current economic risks, then you’re missing a big data point that can turn things sour very fast.
Strategy & Careers
You might now think that you are safe from all of this if you’re an individual contributor to a team following my graph above. Unfortunately, there’s a new allergic reaction in B2B SaaS towards middle management.
A lot of companies are cutting them completely out (or never hiring them) because they think they don’t need them due to AI efficiency gains and out-of-context half-truths from CEO’s like Jensen Huang claiming he has 60 direct reports and no 1:1s.
This article by Forbes is a good read on what happens when Middle Management is getting cut out when you need it. It means middle management responsibilities are starting to fall on individual contributors’ shoulders and unrealistic expectations.
This includes worries about yearly planning, which now also includes economic considerations.
So let’s say you are one of the lost souls who has to worry about all of this… what can you do?
Focus on Customer Success Metrics and Health Scoring system. Analyze early churn signals to predict who is leaving before they do. Retention is king now
Re-examine your value proposition: During a recession and downturn, demonstrating ROI quickly is more critical than ever. Position yourself as essential, not luxury. (Source)
Consider your pricing Strategy: If you expect your customers to feel the effects of a recession, consider more flexible contract times and usage-based pricing that scales with their needs. You don’t want to get the attention of their CFO when they use the axe to cut costs.
Prioritize Features that deliver immediate value. Reprioritize the roadmap to cut “nice-to-have” features like you never have.
Help Sales and Marketing articulate economic impact. Work with your go-to-market teams to develop clear messaging around the economic benefits of your product. Create ROI calculators and case studies that demonstrate cost savings or revenue generation. Don’t let them figure it out themselves!
Careers
Focusing on these five points, or whatever is applicable to your job, is a great idea to position yourself within your company or for future careers.
We have to realize that companies do account for the risk of a recession, whether it happens or not. That means less budget for big throws including salaries. It’s a good idea to make sure that you are becoming essential for a budget, and not a nice-to-have feature yourself.
At least for the next couple of years, profiles that have a good understanding of these mechanics will shine against others that just emphasize how fast they can ship and cross off Jira tickets:
For Product Leaders: Understanding Churn and Retention. Ability to be reliable in resource and time estimates
For Growth Leaders: Understanding Pricing / Packaging, focus on delivering value fast.
The worse the outlook, the more you should seek a smile from your CFO, as they are a major stakeholder in assessing the risk against what they believe to be true before budget season is coming around.
The more they can believe what you say, the less buffer they have to account for when dealing with the market conditions, and that helps everyone.
Upcoming deep dive with CJ Gustafson & your Questions
I am recording an episode with
my favorite neighborhood CFO, we dive into the specifics on a couple of these topics:R&D Budgetting: How much should we allocate for Research and Development?
How the macroeconomy impacts the microeconomy. Recessions & Hypercommoditization
Which metrics are now important vs in the past?
How AI is impacting Budgeting & Planning
Risk profiles and what matters to VCs & PE Funds
If you have any questions for CJ, drop them here in the comments!
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Sync your email and watch Attio build a powerful CRM - with every interaction you’ve ever had, totally enriched and organized.
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Good essay overall except that it makes a very bold and somewhat misleading point that ICs only look “quarters ahead”. Always be careful of broad strokes generalization.