“Zero to $1M ARR in how many months?!”

It's been exactly one year since we released our (pretty embarrassing) MVP, and the quest for product-market fit began. We iterated and iterated, and for a moment there, around Q3, it started to look grim. Money was running out, traction came and went, and pm/f was this vague concept that felt so far away. It really wasn’t certain we were going to survive the year.

By the end of ‘22, we started receiving some positive signals from our market about the product and decided to start experimenting with a few price points.

The pricing scheme was simple: $49/mo. Single tier. Self-Service. Try for free with no credit card, and if you like it - subscribe and Munch!

January ended with a $27K ARR. Nice start. Nothing fancy.

Then, February started with a large TikToker we never heard of making a video about Munch. Traffic spiked.

February ended with $150K ARR! Nice! We set a stretch goal for the end of March: $250K.

March ended with $280K ARR. Wait. What?!

Our next goal: $500K by the end of Q2.

We flew by the $500K mark two weeks later ??…

April ended with $770K ARR. Holy crap! ??

$1M ARR is on the horizon. But how long would it take?

Well, about two weeks, as it turns out...

4.5 months $0 to $1M. A team of 4 full-time employees and 5 super-dedicated part-timers.

This is mindblowing. But there aren't really miracles in our space. Especially not in the current environment. So how did it happen?

1. Grit: I’m going to try and do this BS-free. Yes, every founder and founding team needs tenacity and resilience. But what makes true grit? Possibly when every day you're seeing death trying to eat your face, getting negative signals all around, friends and family telling you it’s about time you let go - and you're pushing harder. This was Q3/22. Everything went sideways. Nothing seemed to work for us, and money was running out. Fast. It wasn’t an automatic decision to just keep pushing, and we needed small sparks of success to keep us going, but there was resolve and an underlying feeling that this would be worth it. We had Cardumen Capital and Remagine Ventures by our side, and they became an active part of the team. They contributed (both materially and mentally), and they are a large part of the reason we survived and later on, succeeded.
2. Team (extended): We are blessed with a truly talented and very engaged team. The (quite crazy) culture is already in place, and everyone is working in harmony to achieve our common goal (yeah, I know it’ll change in the future, let me enjoy it while it lasts). But for every company, there’s an extended team. They’re not involved in the day-to-day, and they don’t have a formal role. But they do have a critical role in the company’s success and, therefore, should be treated as part of the team. No, I’m not talking about the sanitized monthly investors update email (I’m not doing those actually). I’m talking about constantly being in touch via WhatsApp, Phone, and Zoom with an extended and ever-growing circle of good people who simply care about you and your company. The obvious ones are the investors. And we struck gold on this front. Both the VCs and our Angel investors are amazing! But there’s also a second and third layer of people who just find what we do interesting and engaging enough and are always willing to help. And it has to be mutual, of course. I’m never too busy to help a fellow founder myself.
3. Transparency: Everyone on our team has full access to our company’s metrics. Why? Why not? I constantly hear about companies that take a different approach of obscuring and hiding core elements of the business, and I ask - why? What do you gain by hiding information from the group of people with the largest interest in helping you succeed? When times were hard, everyone knew how hard it was. If someone became afraid for their future and wanted to start searching for a new job, I offered to help. The obvious result was that no one left during the hard times, and everybody gave their 200%. And now, when things work great - we share the success, and we all feel its owners. I truly believe this is the best way to build a winning team and attract the best talent. And on this front, as well, we don’t limit transparency to the internal members of the company. We constantly update our investors too. When the news is good - great! Short updates and quick action items. When times are bad - even better - it’s a great opportunity to strengthen the relationship and get some help. I personally got company-saving tips in real-time from our investors because they were in full awareness of our situation and knew when it was time to pull me aside and have a tough conversation. When the relationship is built on trust and transparency, it’s natural and welcomed. And it saved our company more than once. It doesn't mean I always followed their advice. But I always listened and considered.
4. Build a Business: We are a VC-backed startup company, and we’re aiming for the stars, but we’re also building a business, and in the hay days of 2021, some founders tended to forget about that last part. When you’re aiming for hyper-growth and you’re leaning on this beautiful concept of venture capital allocation, it’s easy to forget that at the end of the day, your company needs to show signs of life long after the constant flow of external capital ceases. We took some hard product decisions to make sure we’re building a business that can turn a profit and not just show revenue and growth. It meant a few painful iterations of cost savings instead of feature building. It felt crazy to do it in real-time, but in retrospect, the growth boom we had could have killed us if we didn’t. We constantly monitor our operational expenditures. Not just for reporting and accounting. We’re doing it to make the right product decisions and make sure we’re building a product that is both valuable for its customers but also resilient. The result: our current revenue covers our AI cloud expenses, our COGS, and even our Marketing budget. The LTV/CAC ratio is 10:1, even with the current growth rate. So now we can make better decisions and use VC money for talent, team building, and long-term aspirations, and not for marketing and servicing our customers.
5. Listening (but really): Yeah, we all know we should listen to our customers. Make sure we’re taking their guidance when going to market. But are we really doing it right? I’d suggest that most of us don’t. I know that I suck at it. This is why I take second chair when it comes to deciding what’ll be the next set of features and capabilities we’re going to work on. A good product team will provide you with good insights about user behavior, a great roadmap, feature specs, etc. An excellent product team will be obsessed with the user and the problem. They will constantly look for every shred of evidence that supports our priorities but, more importantly, all of the signals that contradict them. And there is no such thing as "too much data." We collect everything we can in user behavior and then supplement that with hundreds of customer interviews. Long, exhausting, and tedious interviews.

If someone told Peter Naftaliev and me 12 months ago when we released this crappy MVP that this would happen, we'd probably dismiss them as delusional.

We still have so many challenges and probably some nasty bumpers down the road, but hey, we're a hungry bunch that always has some room in the belly for another market Munch !