Early in the life of my latest startup, I had to take a wild-assed guess as to how much product we’d sell, over what timeframe.
One must do this. VC’s don’t give you a few million dollars so you can run along and see what comes of your idea. That’s called a Seed round.
On one hand, I have the founders. “Everyone needs a bigger computer.” “Look at the exponential growth in data.” “Every application that is directly responsible for creating revenue will experience at minimum a 4-fold increase in data annually for the foreseeable future.”
Our potential is unbounded. Our opportunities are limitless.
On the other hand, I have…
…the marketing team. Oh, that’s me.
…the sales organization. Let me introduce you. To me.
…a crack team of systems engineers. Me again.
Starting from step 0, which sometimes feels like step √-1, what rate can I expect to find and sign customers? Most importantly, how quickly can I reach those magic milestones. $1M in revenue? $10M? 100M?
Being a sales guy to my DNA, I start with the bottoms up:
- What resources do I have now? Industry knowledge, especially of pain-points, contacts in those industries. Proof-points that support the outcomes I will propose.
- What actions do the team and I need to take to make those contacts, at what rate. Including assumptions about rates of conversion to “interested.” In other words, when the lead starts to make it into a sales pipeline.
- A prediction for how many of those I can move through the sales process to close. ‘Cause I’m good, I’ll figure 1 out of 5, apply a sandbag factor and come up with 1 out of 8. Mhm.
Because I’m pragmatic, I’ll take a look at what others have done before. And, I’m humble, so I’ll figure we can do in the range of similar companies who have traveled this path. There is not an easy, one-stop-shop to find data on revenue growth for software companies from years zero up to S-1 filing, or acquisition.
I went out, across various sources, to try to find what other enterprise software focused companies have achieved in terms of sales growth from fresh start through their first few years of sales. Here’s what I found:
Here’s the raw data, collected from various sources including S-1’s, Wikibon, Gartner, and other analyst reports.
Generally speaking, the short list of businesses above are performers–success stories in the enterprise software space. I wasn’t so interested in trying to find average or typical performers.
Let’s aim higher than that.
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