Going from $1M to $20M in ARR in just two years isn’t for the faint of heart. Shrav Mehta, Founder and CEO of Secureframe, talks with Lisa Han, Partner at Lightspeed Venture Partners, about the lessons learned from this journey.
Metrics, Metrics, Metrics
The first thing Secureframe thinks about is metrics. If you don’t know your key company or North Star metrics, talk to your investors or other experts to figure out what they should be. Metrics core to Secureframe are:
- ARR – annual recurring revenue
- ACV – annual contract value
- NRR – net revenue retention
- GRR – gross revenue retention
- NPS – net promoter score
- CAC payback – Customer Acquisition Cost Payback
They like to think of their goals every month rather than quarterly to increase the pace a little more. The best SaaS companies Lightspeed has seen in their portfolio are maniacal about defining these key metrics and tracking them with specific targets in mind on a consistent basis.
Dedicated Slack Channel For Every Metric
From the early days at Secureframe, they have had a dedicated Slack channel for every metric: every net new sale, every expansion, every churn, and every expense. They can use this to calculate what CAC looks like in real time. Why do they do this?
So they can take action on the metrics in real time if they’re going in a direction they don’t like. Alongside metrics, another important thing to not lose sight of is talent.
Invest in People
You want to keep the bar high on talent, especially in hypergrowth, and not just in the early stages. Why? Because talent compounds in both directions. It can compound for better or for worse.
It’s essential to take a step back, slow down in terms of consecutive hiring, and ensure you’re working with third-party providers to find the right talent, especially on the GTM and technical side. These roles can be challenging to fill and even harder to refill if the talent doesn’t work out.
Invest Heavily in Onboarding
Your typical employee takes about three to six months to get ramped. They might even take a year to really hit their stride. That’s a lot of time in startup land and doesn’t work, so you want to think about how to compress these onboarding times so employees hit their stride much quicker.
Another thing Secureframe thinks about is making sure everyone understands the business equation. What does this mean? Let’s use net dollar or net revenue retention as an example. It’s a complex metric to calculate, and not everyone understands it. Secureframe has everyone on their customer success team calculate their book of business by hand to see their net revenue retention, so that they truly understand what goes into the calculation, what impacts it, and how they can better take action on it.
Work with Great Executive Recruiters
”The first time I saw an invoice for an executive search, I think I had a heart attack,” Shrav joked. “But the reality is, if you’re scaling from $1M to $20M in ARR, you’re going to need to become best friends with your executive recruiters.”
There are a lot of great firms out there, and they’re critical for bringing on great executive talent. A talented executive can be a game-changer for your business, and a not-so-good one can be detrimental. So, as you’re considering hiring your VP of Sales or Engineering, find a great executive recruiter to work with and eat the bill.
Aligning and Scaling the GTM Engine
One of the core functions when hiring talent is engineering, product, and design. When going through hyperscale, it’s important to ensure all teams are aligned, which means aligning engineering and product to GTM.
How do you do that? By keeping very similar revenue goals in mind. Hiring is another consideration. The types of people you want to hire at $1M to $20M will be consistent with the early days in the sense that, often, people want to hire generalists across functions.
At later stages, in terms of scale, you want to hire engineering folks, product managers, and product designers who all have a commercial bent to them. Even at later stages, you don’t want only deep, technical hires. They need to be able to flex on the revenue side.
When you’re hyperscaling, going from a one-product company to a multi-product company is incredibly hard, so you want technically talented, revenue-minded folks to step up and help you release all subsequent products.
Aligning Engineering and Product to Revenue Goals
Your VP of Marketing or Sales is already aligned to a revenue target. Otherwise, they’re probably not VPs of Sales or Marketing. At Secureframe, they take it further by aligning engineering and product with revenue goals.
When they launched a new product last year, they had three people working on it: an engineer, a product designer, and a product manager. Those three folks were responsible for closing the first ten customers. Why did they do this?
Because engineers and product people need to understand what it takes to sell a product, to get x amount of dollars out of a customer, and what features need to be built. Secureframe believes strongly in keeping engineers as close to the customers as possible so they can iterate quickly on feedback and get it to launch.
Invest Early in Your Marketing
When scaling the GTM engine, you want to invest early in marketing. On day one at Secureframe, they invested in content marketing. Content marketing typically takes over a year to get working, even if you’re doing everything right.
For Secureframe today, it probably represents about half of their organic traffic. It was an early investment that has paid a lot of dividends over the years.
Expand Internationally If You Can
Another thing to consider for GTM is expanding internationally if you don’t have any big constraints. Secureframe already had a lot of customers coming to them from Europe and Australia, so it was a justifiable investment given the demand they had over the years. While you might have to do some work around localization and data residency, depending on your business, it can help increase your growth rate substantially. If you’re a category-creating company, you can be first to market ahead of the competition.
Customer Love and Why It Matters
The first thing many investors look for in early-stage investments is customer advocacy. If you pick up the phone, call a customer, and ask if they would pay double or triple the price to stay with your company, it’s a strong signal for customer love.
Why does that matter? For hyperscale, people forget about word-of-mouth marketing and referrals from customers. It isn’t just for early-stage seed companies. It creates a flywheel effect that compounds, and it’s incredibly helpful when you’re thinking about selling multiple products.
Those customers and champions of your products can help you break into new segments and markets you might not have considered.
Secureframe believes customer happiness isn’t just the responsibility of customer success or customer support teams. It’s the responsibility of the entire company. Shrav encourages founders to implement a customer success automation platform early on to track the health and engagement of customers, as well as find opportunities to increase revenue from the existing customer base.
The Secret Sauce to Hit $20M in 2 Years
The secret sauce is a lot of hard work. There’s no secret about it. Startups require a lot of work; if it were easy, everyone would do it. There’s no substitute for hard work and relentless execution. The best startups always move faster and find a way to get it done.
Key Takeaways
- Define your metrics and align your company towards those one or two North Star goals. This is incredibly helpful to promote focus during a time of hypergrowth and chaos.
- Invest in people. A company is built from people like you, so be picky and keep the bar high to help you catalyze and move faster.
- Scale the GTM engine. Once you have pull from the market in terms of product market fit, it’s time to lay the foundation and invest in product and engineering and key hires on the GTM side.
- Execution is king. Relentless execution is incredibly important, especially in markets where SaaS products can be hard to differentiate from a technical perspective. Hard work goes a long way.
