The Fastest Growing Unicorns Have This In Common

What do all the unciorns which reached their $1B valuation fastest have in common?

In SaaS, they all have top-tier net revenue retention. Even, and even especially, if their customers are SMBs (which churn at a higher rate):

Companies like SurveyMonkey and Xero with lower dollar retention (100%) have done well, and become unicorns … but have grown more slowly: 5 Interesting Learnings from SurveyMonkey. As It Crosses $300m in ARR. | SaaStr and 5 Interesting Learnings from Xero. As It Crosses $650m in ARR. | SaaStr

Also, if you sell to tiny companies, 1 person shops, you can’t do that.   Shopify’s net retention overall is only 100%.  Most of its customers are still not just SMBs, but tiny.  1 person shops do go under, all the time.  140% may be tough there.  But for Shopify Plus, its bigger customers?  It’s 140%+ there, near as I can tell.

130%+ net retention, in any event, is doable for most of us, for all but the smallest SMBs.  And that’s the magic in compounding revenue. Get “just” to $10m ARR, with 120%+ net revenue retention, and then boy, it kicks in. It’s just a huge boost in the medium and long term.

And really, if you get to $10m/100%+ growth/120%+ net revenue retention … you just can’t be stopped. You will be a unicorn. It is just a question of when.

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Published on August 2, 2019

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