Even With Just “Pretty Good Growth”, You Can Build a Unicorn After $10m ARR

One of the very firm SaaStr-isms what that while $0-$1m ARR is Impossible, and getting from $1m-$10m ARR is Unlikely … that getting from $10m to $100m ARR is Inevitable.

Let’s take a look at a version of that basic math.

Today, the very best SaaS companies are scaling faster than ever.  Often 200% or even 300% at $10m ARR.  Look at Zoom, Slack, Datadog, UiPath etc.  So that can feel like quite a hurdle to hit.

But what if you are “just” growing 60% at $10m ARR?  It turns out, as long as you have positive revenue retention, and keep at it, you’ll do just fine over time.  Here are a few scenarios with initial growth rates at $10m ARR, with a growth decay factor baked in:

The hyper-growth company really can get to $100m ARR fast.  UiPath did it.  But you know what?  They didn’t start there.  UiPath actually was founded in 2005!!  Mailchimp in 2001.  Similarly, there are others like Smartsheet that have grown to unicorns without ever having a Zoom-like year.

In fact, if you can get to 60% growth, maybe even just 50% growth at $10m ARR, and keep your net revenue retention over 120%-130% … you will get there.

It may take 8-9 years after you put in the time to get to $10m ARR.  But UiPath is on Year 15 and is now worth $10 billion.

Do you have something better to do?

A quick look at some growth rates at IPO from Alex Clayton.  These numbers are obviously at scale.  But they do sort of reinforce the point.

A bit more here:

Published on June 23, 2020