Growth Time: $70M in ARR Left on the Table?
“Perfect go-to-market execution” gets said a lot about how a particular startup came to dominate a giant new software category. Often on the day its founders ring the opening bell on the NASDAQ.
I wanted to flip that around and show what (near) perfect go-to-market execution looks like from the vantage point of $1M in ARR. Because as you see below, the difference between perfect go-to-market execution and middle-of-the-road go-to-market execution is about $70M in ARR over just five years. We recently wrote about the first leg of that journey being the new 5x gold standard for growth.
A good way to visualize the gap between hypergrowth and median growth is using a 5-year projection chart based on $1M in ARR. Our tool calculates ARR levels for each of the next five years using benchmark data from Scale Studio. I like to remind people that “top decile” growth rates aren’t idealized projections – they’re based on the actual growth rates of the (rare) startups that nailed go-to-market right out of the gate then kept growing. Those are real numbers.
Here’s how it shakes out:
By just Year 2, top-performing startups are bearing down on $20M in ARR, about double the level of median performers. And median growth is still pretty impressive – you’re moving from $1M to nearly $8M in just two years. You can’t do it without technology that provides real value to customers, in a large addressable market, with a solid plan for getting in front of the right buyers and closing deals.
But the hypergrowth path is something different entirely. It’s driven by founders and senior executives constantly making critical decisions and getting almost all of them right. When you factor in the pace of product development and hiring, hypergrowth companies are a whirlwind of activity truly on another level from their peers.
My point isn’t to say “grow fast” because, well, of course. That’s the central purpose of a venture-backed startup. Instead, focus on the discipline it takes to ensure the things you choose to do (or not do) are additive to your growth rate. When you unpack “perfect execution” you find a lot of smart decisions along the way.
Originally published February 3, 2022.