The 6 Things The Old Me Would Tell The Young Me
Young Me, 2011: $100m ARR seems so very far from our $10m ARR today. Very far from today.
Old Me, 2020: It does feel that way. But what you don't 100% get yet is that It Compounds. That is a force of nature in SaaS that is incredibly powerful. Even if you can't feel it at the moment, not fully. In 2020, that same business will be doing $300m ARR. Possibly much more.
Young Me, 2011: But what if we can’t IPO? What if we're not that good?
Old Me, 2020: There will be other options. You will be able to sell to PE like Vista or Insight or Thoma Bravo or many others that will emerge in the coming years, or to many other SaaS companies that will IPO. You will be able to do a secondary sale of some of your shares if you continue to do well. Don’t worry so much. Also, once you cross $20m-$30m or so, new acquirers will get interested, even if they seem unlikely today. The Cloud is getting huge and everyone wants to be a part of the success stories, even the imperfect ones.
Young Me, 2011: I don’t really want to do another VC round. That will be 3 VCs on my board. I don't want to give it all away, for it not to be our company anymore.
Old Me, 2020: I hear you. Then just hold out a bit to $15m ARR-$20m then. You could use the money now for sure, but you can also wait. Raise at a $150m or $200m valuation later on more favorable terms, and then you won't need to give up a board seat. Raising money isn't binary. You can also just do it later, like Atlassian will do / did.
Young Me 2011: The competition just raised $50m+. They will outspend us.
Old Me 2020: Indeed, that is stressful. But even if they do, as long as your customers remain happy, your revenue base will still compound. That's the thing. You will still get to $100m+ ARR in 5-6 years at the latest. 120%+ net revenue retention at $10m ARR with happy customers will drive you there. That's just math. Even if the competition does just as well.
Young Me 2011: But a lot of my team is tired.
Old Me 2020: I know, I know. Recruiting is hard. I hate to tell you this, but actually, it never gets easier. But push through it. Go find a great COO or SVP to help you. Just one more leader will make a profound difference. It will refresh the team. And you. And try not to let anyone great leave, if you can.
Young Me 2011: The other CEOs around me, like Box and Veeva and Yammer, are doing so much better.
Old Me 2020: I guess they are. Or at least it seems like it. But it doesn’t matter. You are doing plenty well to build a unicorn. It will just take you a bit longer than them. So what? It won’t really matter in the end.
CISO| LLM Security CTO|Data Science|Identity&AM |CyberProducts|GCP, Azure,AWS |AI & Machine Learning. Ernst & Young-Savvis-Juniper Networks Ericsson-Cognizant
4 年Excellent, normally I delete sales looking notifications as soon as they hit my inbox, but I glad I scrolled through this one and linked to the article. Thanks Jason M. Lemkin great points and much needed today. In a venture I'm involved with, we have a leader dedicated to getting funding for a startup. He got a call set up with Fund that depends on one individual for tech input. mind you, no cyber in this fund's portfolio and the individual was an arrogant jerk whose claim to fame was an investment in a SIEM platform, that's been around for over 16 years, with no recent tech or cyber, a red flag for me going in to the conversation. As a founder the drive to get funding is paramount, but what I've learned from my time in the corporate world having sat on billion dollar plus acquisitions, is that common courtesy and professionalism goes a long way on both sides. If someone is a jerk, the question to pose to yourself is what is the point of such? There are quite a lot of VCs and Fund Managers who are professional and courteous. The mindset of you need my money so I can act however, is only an indicator of what one should not be working with... As an investing founder, what I've learned on this 3rd venture I'm on, is that, the success rate of pitching to a fund with background or insights into what you are building gets you an ROI no matter if there is no investment. Just nuggets from the conversation will help you as you keep moving on. Also faith in what one is building and focus on vision is one thing that warrants staying the course, and don't be hesitant to push back, the worse that will happen is a no. Nothing else. And move on, taking lessons learned to better the next conversation. All it takes is one to say yes, and we're off...
Cloud Security @ Upwind Security
4 年this post is so timely. thank you!