So I was trying to remember how at Adobe Sign / EchoSign we got to profitability at $5m in ARR, and still grew 100%
And then I looked back …
- We only had 25 employees (!) at $5m ARR. Everyone had to truly execute at a high level. This still happens today, but it’s rare.
- We spent almost $0 on marketing. We ran what today would be a 90% PLG playbook, with a 10% boost from self-serve.\
- We invested $0 in our self-serve business. Probably a mistake, but it let us put that money into sales comp.
- Our product was truly viral — and we did invest a lot there in ease-of-use and viral propagation at the product level. I didn’t fully understand it at the time, because viral coefficients are lower in B2B and our directly measured viral acquisition was maybe only 10%. But the number of high-quality leads it generated was outstanding.
This was too lean, however. After we got cash-flow positive, we ramped up hiring and spend, and doubled not too long thereafter.
- 25 employees simply wasn’t enough redundancy. Anywhere. Especially, we cut too many corners on QA and DevOps by making the engineering team do most of both.
- We didn’t have any excess capacity in the sales team at all. We had to more than double after that just to catch up.
- Spending (almost) $0 on marketing was a mistake — now I know. It meant we just could only show up where we were already #1 or very strong. We had so many leads from second-order revenue, viral, partners, etc. that we mostly just focused on making those work.
- We didn’t do outbound for a long time. This seemed to save money, by focusing on inbound. But it also meant we lost a chance to take down some bigger deals.
Still, it did work, and the business was always cash-flow positive thereafter. And this playbook got us to 100%+ growth at $10m ARR. So maybe, for this product, at that time, it wasn’t a bad strategy.
Just one way to do it. Not always the right way.
On our path from $0-$100m+ ARR at SportsEngine, we went back to profitability between all four rounds of venture funding. Headcount was always 1/2 or less of the ARR at the same stage. <25 at $5m, <100 at $20m, <500 at $100m+…that has always been about the right bar.
— Justin Kaufenberg (@jmkaufenberg) February 2, 2023