Evidence from 2023 shows that both elements of Sacks’ prediction broadly played out over the following year.

1. “Big contraction in jobs … around this industry”
   Tech layoffs in 2023 were very large, and a significant share were at cloud and SaaS firms. Layoffs.fyi–based tallies cited by multiple outlets show over 160k–220k tech layoffs in 2023, exceeding 2022’s totals.(indigilife.com) Major enterprise SaaS vendors—including Salesforce (10% of workforce), Atlassian (5%), Twilio (~17%), Zoom (15%), and others—are specifically listed in 2023 layoff roundups.(joltjournal.com) SaaS-focused reporting likewise notes that many SaaS firms had rapidly over-hired 2–3x in prior years and then moved to layoffs and hiring freezes as conditions worsened.(moneycontrol.com) This supports the claim that there was a big contraction in jobs in and around the SaaS sector during the year after December 2022.

2. “Vicious cycle … where seat contraction becomes the norm instead of seat expansion”
   On the customer/seat side, multiple data points and company disclosures show a shift from the prior decade’s automatic seat expansion to flat or negative seat counts at many SaaS vendors:

   • A March 2023 TechCrunch analysis of $2.5B of SaaS spending across 18,000 deals reported that recent layoffs had caused a “decline in seat licenses”, and concluded that in 2023 “a flat renewal is the new ‘upsell’” and that SaaS vendors should expect contraction at renewal, not expansion, as the immediate impact of layoffs on seat counts.(techcrunch.com) This is essentially the dynamic Sacks described.
   • Expensify’s Q4 2023 results broke out paid-seat movement: in 2022, existing customers added ~85,000 seats, but in 2023 the same cohort lost ~42,000 seats, with management calling 2023 “a brutal year” for customers and attributing the swing to customers hiring then laying off staff.(marketbeat.com) That is a textbook case of seat expansion turning into net seat contraction within a year.
   • A SaaStr breakdown of Dropbox at ~$2.5B ARR noted that seat contraction and churn remained elevated, with customers reducing seat counts even as the company pushed modest ARPU increases.(saastr.com) Again, this aligns with seat contraction/rightsizing at renewal.
   • The 2023 Zylo SaaS Management Index found that organizations on average waste or underutilize ~44% of their SaaS licenses, with large enterprises only using about half of their purchased seats. It frames cutting redundant and unused SaaS licenses as a primary lever to reduce costs during 2023’s wave of layoffs, reinforcing that many customers were actively shrinking or optimizing seat counts rather than expanding.(prnewswire.com)

   At the same time, industry-wide SaaS spending and revenue still grew in 2023—Gartner and SaaS-market analyses projected double‑digit increases in software spending, and one large dataset expected SaaS spend to grow about 18% that year.(techcrunch.com) So the sector was not in an outright collapse. But Sacks did not predict a revenue death spiral; he specifically focused on:

   • headcount-driven job cuts in and around SaaS, and
   • the shift from the long‑standing baseline of automatic seat expansion to seat contraction/flat renewals over “the next year or so.”

Given the scale of 2023 tech/SaaS layoffs and the documented move toward flat or negative seat counts and downsized renewals at many SaaS vendors—while acknowledging that effects varied by company—the prediction is directionally well‑supported by the data. Hence the verdict: right.