Neeraj Agarwal of Battery Ventures a few years back simplified a lot of the journies top SaaS companies go on to TripleTripleDoubleDoubleDouble, T2D3. That the top SaaS companies triple in the early years, and then double after that to get to $100m+ in ARR. The best SaaS companies do indeed do this and it’s a great yardstick for VCs to measure potential unicorns and decacorns. And it’s a great post and paradigm for building a unicorn:
But for founders, it’s a bit too many moving pieces. Founders just want to know: What Do I Need to Achieve To “Make It”? To Build a Unicorn?
I’m going to suggest something simpler: 10-100-110+:
Triple Double Double is a good goal, but tough to skate to in practice
10-100-110 is enough
110%+ net revenue retention
Do that, you will build a unicorn
— Jason ✨😊✨ Lemkin 🦄 (@jasonlk) October 31, 2019
- Get to $10m ARR, however you can. However long it takes. If you can go from $1m to $10m ARR in 1 year like Slack, terrific. If it takes you years like Mailchimp, so be it. Both won and win.
- Grow 100% a year, or just close to it. Many Unicorns and Decacorns didn’t even grow at this rate after $10m ARR.
- And have 110%+ net retention. Then you’ll see it. Then you can do it. The math says so.
What matters is your momentum after $10m ARR, and not just the raw momentum (top line growth), but your momentum in retention.
If you can retain 110% of your net revenue at $10m in ARR, growing 80%, you will get there. To $100m+ in ARR. It’s just a question of when. 120% is even better, much better.
And now we know almost all the top SaaS leaders have 110%+ net revenue retention:
- PagerDuty, 139% net revenue retention. 5 Interesting Learnings From PagerDuty. And Congrats on the A+ IPO!! | SaaStr. And from SMBs!
- Slack, 143% net revenue retention. 5 Interesting Learnings From Slack. As It IPOs (er, Direct Lists). | SaaStr. And part SMBs!
- Zoom, 140% net revenue retention. 5 Interesting Learnings From Zoom. As It IPOs. | SaaStr. And mostly SMBs!
- Fastly, 130% net revenue retention. 5 Interesting Learnings from Fastly. As It IPOs. | SaaStr
- Twilio, 155% net revenue retention. Twilio Crossed $1b in ARR Growing 81%.
Happy customers that buy more from you beget more happy customers that buy more from you. It takes a few years for this to kick in. But once it does, it becomes unstoppable (unless you make them unhappy later).
$10m ARR + 110%-120%+ Net Revenue Retention + 80%-100%+ Year-over-Year growth gets you to $100m ARR. Almost always.
Yes, if you don’t innovate, your growth will decay. But usually, if you get that far ($10m+ ARR) with happy customers (110%+ net retention) you’ve found a way to continue to innovate enough.
So skate there. Make that the goal once you cross $1m ARR. 10-100-110+. And do whatever you can to make it so.
If I had 1 mentor, just 1,
If you are at $10m ARR,
With 150% net revenue retention,
With 80% viral and free lead acquisiton,
And 50+ NPS,
You have already build a unicorn-in-waiting.
If i'd had just 1.
— Jason ✨😊✨ Lemkin 🦄 (@jasonlk) November 8, 2019