There’s a magic number for early-stage technology startups: how quickly your company can achieve $1 million in annual recurring revenue (ARR). The importance of recurring revenue cannot be understated for startups, as having a subscription model for your business can make your company more valuable.
Now, it’s important for startups to celebrate every milestone such as the first deal you close, your first 10 customers, and how quickly you can scale to 100 customer accounts. This 10X growth is a sign that your company has found a product-market fit and extremely appealing to investors.
But what is most appealing to potential investors is how fast your company can achieve $1 million in ARR. For software-as-a-service (SaaS) companies, this $1M mark is typically associated with hitting 100 customers, depending on your monthly subscription rate for your product or service.
At my startup, Terminus, we were blessed to achieve the $1 million in ARR mark with 100 customers within nine months of launching our product. While Terminus is not my first startup, this was the earliest I had ever been at a company and seen one grow so quickly.
From 2012 to 2014, I was Head of Marketing at Pardot when ExactTarget and then Salesforce acquired our company. But a part of me always felt that I faked it at Pardot because I was not a co-founder or even one of the first few employees who braved through the amazing journey filled with ups and downs of a startup.
So when I had the chance to build a company from the ground up, I had to take it. To make a long story short, in late 2014 I met my co-founders of Terminus: Eric Spett (CEO) and Eric Vass (CTO). At the time, they were functioning more like an agency with this advertising automation solution for B2B marketers.
Upon meeting them, I knew instantly I could make a difference in every aspect of this startup. I recall saying that account-based marketing is the future of B2B marketing, and both co-founders looked at me like I was nuts. Their famous words were: “What is account-based marketing?”
I officially joined Terminus as a co-founder and CMO in March 2015 and we hit the ground running evangelizing the benefits of account-based marketing. We closed a few deals instantly, hitting our first 10 customers that quarter, and I proclaimed that we have a product-market fit. By the end of 2015, we hit 100 customers and $1 million in ARR.
Over the past two years, we have continued to scale our startup. It has been such an incredible ride and I wanted to share a few lessons I learned along the way to help your own company grow as fast as possible.
Start a Movement
When we first went to market with our account-based marketing (ABM) software, there was not really much demand for ABM. So in May 2015, I started writing about ABM a lot.
We had this idea for #FlipMyFunnel, flipping the old B2B lead-based marketing funnel on its head. The idea started gaining traction among innovative B2B marketing and sales leaders, so in 2015 we ended up doing three events in Atlanta, Boston, and Chicago. By talking about the problem, we started creating demand for our ABM solution.
Build a Community
In addition to the events for #FlipMyFunnel, we started building an online community across multiple channels. We, of course, had websites and social media channels for both Terminus and #FlipMyFunnel, but then we also created a Slack channel. We continued hosting events for folks to connect-in-person, and by continuing to talk about the problem, our community grew along with our customer base.
Hire for Passion
I am a firm believer in the idea of ‘getting the right people on the bus’. For our first 15 people we hired, we did it based on the business needs (like hiring a Customer Success Manager when we got 10 customers). But as co-founders, we knew to look for people who had a passion for the problem we were trying to solve, who were passionate about making a difference in the world, and passionate about showing up to get scrappy at a startup. Even as we have grown, we continue to hire for passion and culture fit, not just based on qualifications.
Your startup may have the coolest technology in the world, but without people who believe in your product and service, who are willing to work for you, to buy from you, to do business with you month-after-month and year-after-year then that $1 million number will only be a vanity metric. I hope to share how we grew that number by 10X very soon.