There are a few magical moments as you go upmarket in SaaS:
- The first time you close a $1m TCV (total contract value) deal. E.g., $250k a year for 4 years.
- The first time you close a $1m ACV deal. A $1,000,000 a year deal.
- The first time you close a $1m ACV deal — every month. 12 a year. This one takes a while to get to 🙂
But once you can close one $1m deal, you can close another, and eventually 10, and then, like ServiceNow, a stunning 600+ per quarter.
How is this possible? Well, if you haven’t worked in the Fortune 500 / Global 2000 before, it may seem confusing.
But some rough maths:
- The largest Global 2000 companies will pay 10-20+ SaaS vendors $20m+ or more per year. Their core ERP, CRM, etc. vendors. Workday, Salesforce, HCM, etc. Just be / displace one of those. Yes, it’s not easy. But yes, nothing is.
- The largest Global 2000 companies will pay 50-100+ SaaS vendors $1m or more per year. For Box, Okta, Cybersecurity, DocuSign/Adobe Sign, Coupa, etc. etc.
I’ve been there and seen it, not only selling those $1m deals but watching as we bought them as a VP in the F500. I’ve watched it as companies I’ve invested in like Talkdesk do it in old, existing categories like Contact Center software.
You can do it too IF you build one of these core applications that an entire department or functional area runs on.
If you want to go way upmarket, just get to a $1m TCV deal. That will teach you to get to a $1m ACV deal. Then, just make them happy.
After that, it’s off to the races.