There are a lot of “VC-isms”, and one you hear a bit is The Clear Path.
What’s that? It’s a way of summarizing the combination of current growth, TAM, and future prospects into where things are going. E.g.,
- “Yes, it’s early, but there’s a clear path to $10m-$20m ARR just doing what they are doing today.”
- ”There are challenges, but with that level of growth, there’s a clear path to a unicorn round”
- “They’ve done a great job getting here, but I just don’t see a clear path to $100m ARR”
- ”Without a second product, I don’t see a clear path to IPO”
One of the few you can see a clear path to $100B ARR for
— Jason ✨2022 SaaStr Annual Sep 13-15 ✨ Lemkin (@jasonlk) June 23, 2022
While it can be more than annoying to hear all your hard work as a founder reduced to how “clear your path” is to the next stage, it’s actually an incredibly useful heuristic for communicating. Not just to investors, but to your employees, partners, and team.
Because it doesn’t really matter where you are today for your team. It matters where you are going, and how you are going to get there.
Make sure everyone knows:
- What the next big milestone is
- Why you are realistically confident you’ll get there
- What it will take
- What the risks are, and where you need to level up.
Just share that, cleanly, in every team meeting, and in every VC discussion. Get really good at it.
And watch folks rally around that Clear Path. Once … you make it clear.
A few actionable thoughts here:
- Your investors can actually help here. This is one thing they are good at — knowing if your vision, goals, and plan show a clear path to Something Big. Ask them. And use them (and any investor pitches) to refine how you present the company. If you can inspire investors, you can probably inspire potential hires and your team as well. And if your investors don’t quite see it, others likely won’t either. Remember, your investors, like your best employees, want to believe. That’s why they invested and/or took the job.
- Don’t be crazy or unrealistic. No one ultimately will believe, even if they do at first, if your plan and methods to Going Big just make little sense or are unachievable. They’ll see through it. And you’ll lose them, at least eventually.
- The best folks will rally when you show them the Clear Path. Everyone knows there are bumps, and everyone knows doing something great takes time. They’ll rally if there’s a Clear Path to something great. And you’ll do better. You’ll close more, ship more great products, and hire better people.
- If times are tough, you don’t have to fix an exact date on the Clear Path. Just make sure everyone believes you’ll get there. For example, in the early days of Adobe Sign / EchoSign, things were a bit dark, but we were at $2m ARR and it was clear we’d get to $10m ARR … someday. I put up a big slide and wall graphic of the path, and moved a little mascot riding our current status up a curve as we got closer. I didn’t put an exact date on when we’d get to $10m ARR though. Everyone got it. We’d get there.
"Woe is me" is the absolute worst message to the team in tougher teams
"It's my fault" is OK but it doesn't even help much
"Here's the plan" is what people want to hear
— Jason ✨2022 SaaStr Annual Sep 13-15 ✨ Lemkin (@jasonlk) August 3, 2022
You’re the founders, you’re the leaders. You need to not just inspire the team, but show them. Show them the path to a future that is bigger, more impactful, and yes more lucrative than today. Make sure the path that is in your heart and mind is one everyone else can see, too.