In today’s episode of The Startup Chat, Steli and Hiten talk about what it takes to grow your company from one million to ten million in revenue.
Hitting the million dollar revenue mark is a great achievement and something to congratulate yourself on. However, once you do, the new challenge now becomes growing your revenue to newer heights and this can be quite a challenge.
Tune in to this week’s episode to hear Steli and Hiten thoughts on surpassing the one million revenue mark and much more.
Time Stamped Show Notes:
00:00 About today’s topic.
00:35 Why this topic was chosen.
01:50 How long it takes you to get to the ten million milestone.
02:31 Why the growth rate is really what’s important when you’re trying to scale to $10 million.
02:43 What happens when you try to scale pass one million.
03:15 Things that break as you try to scale.
03:47 What it takes to get you to one million.
04:08 The big difference between leadership and management.
05:25 Why your goal should be to hit ten million with 3 or 4 years.
06:50 How to find team members that can scale to ten million when you’re still growing.
3 Key Points:
- There’s a big difference between leadership and management
- As you try to go from one to ten, everything breaks.
- What got you to one doesn’t get you to ten.
Steli: Hey everybody, this is Steli Efti.
Hiten: And this is Hiten Shah.
Steli: And in today’s episode of the Startup Chat, we’re going to talk a little bit about what it takes to grow from one million in revenue to 10 million in revenue, right? So, we have a prior episode of the Startup Chat, where we talk about how to get to your first million in revenue. And, we talked a little bit on that episode about this concept that today, it seems easier and faster for many companies to get to that one million mark than ever before. Especially if we focus it on kind of the software space. And then particularly on the SAS space, getting to kind of a one million run rate, or a R rate, is easier than ever before, and many, many companies are breaking that milestone, they’re breaking it faster and faster. So, you know, what we thought would be cool is to take that next morsel and say, alright, so once a company surpasses the one million mark, the next kind of stepping stones and milestones that usually are on the five million market and surpassing the ten. And that’s also the areas where there’s like resistant lines, right, where companies have to, have usually a tough time breaking through, or where some company just like, getting stuck and they’re many years in the four or five million mark. Or many years close to the ten but can’t quite go through. So, I thought it’d be cool to just talk a little bit about our observations, our own experiences, what it takes for somebody to take a business that’s running around the one million mark and pushing it beyond the ten.
Hiten: Yeah, let’s do some math, so if you’re doubling every year at one million, it will take you about three and a half years, roughly speaking, it will take you three to get to eight. If you’re tripling every year, it’ll take you, what was it? Almost, just two to get to nine.
Hiten: And so, you know, I think my first piece of advice on anybody that’s like trying to go from one to ten, is what’s your growth rate? How fast can you get the business to grow, because it’s really about how fast can you get to ten? And the reason is, like, one to ten is, I mean, zero to one is obviously very difficult. One to ten is not necessarily much easier, it’s just different. And, the growth rate is really what’s important in terms of how fast are you growing every month, every year in your revenue, in order to go from one to ten? And, I would say that as you try to go from one to ten, everything breaks, and, you know, I mean these days, because I have new things that I work on, I know what breaks at one to ten. And so, I actually spend more time on the zero to one to take care of the things that break. And because I want a very high growth rate when I’m at one, to get to ten. That’s like my logic, if that makes any sense.
Steli: Yeah, so let’s talk about that. What are the things that are breaking usually between one to ten? That you’re now kind of aware of that you weren’t aware of the first time that you did that?
Hiten: Your team. What got you to one doesn’t get you to ten. What even got you to a product, period, that people love, which means you’re probably not at one yet, doesn’t necessarily scale. Like it doesn’t necessarily, those people, don’t necessarily get you to one, and then they definitely don’t necessarily get you to ten. Because the skill sets tend to be different a lot of the time. And, you know, I think that, for example, what it takes to start something and get to one, is usually a lot of what I would call, just brute force, and leadership. What I mean by leadership is you’re able to get people to do things, just get them to do things. Like, not, you’re not managing. So, to me, I think this brings up a big point that I have in my mind about team, which is, there’s a big different between leadership and management.
Hiten: Leadership is motivating. Management is managing, and running, right, and scaling. Leadership doesn’t necessarily scale alone, without management. So, what happens is, you might have, you know, a really strong founding team, with a few people who can just brute force build stuff. Right? And that can, and sell stuff let’s say. That can get you to one. But to get to ten, if you want to get there as fast as possible, you’re creating systems, you’re repeating things. Sometimes when you get to one you don’t even have things that are repeatable. So, you have to step back and say, “What do we have that’s repeatable that we can keep repeating, and keep doing over and over again? And what are the things that we just totally just need to fix, right? And need to make repeatable. And do we have the right people who can do that? Do we have the manager type people?” And that’s a big issue. I’d say that’s the number one issue in my mind when I think about companies trying to go from one to ten fast. And fast is what matters, it’s not about like one to ten in ten years. It’s about one to ten in as little time as possible considering your, you know, amount of cash you have, your market, and all kinds of wonderful things like that. Right? But like, you don’t want to get to ten in five years. Your goal should be to try to get to ten within three to four years. Maybe less. Because these are years now, right? And, you know, if you’re, if you set yourself up, you can get there in one or two. One to ten in one year means you’ve done, like, some ridiculous amount of work to do that up front. But one to ten in two years is about like, is doable, but very challenging. And, in three years, you know, that’s about, I would say roughly speaking probably closer to the norm.
Steli: But how do you do this? Because in the early days you need very kind of, you know, generalist entrepreneurial people that will do-
Steli: Scrappy, and then then, once you get to the ten million mark, you need, you know, more managers, more structures, more things, and many people cannot, most people cannot be both. Like most people can’t be amazing first team members when the team is five people, and then be incredible managers when the team is, you know, 50 or 100 or 150 people large. Most people can have that either flexibility to be both, or examine that growth to go from one to the next phase. Can you really prepare for that and know that up front? Because if you hire a bunch of manager types in the early days where you’re still figuring out what it is you do, they’re not gonna really be the right fit typically. So, how do you find the people that can scale like that?
Hiten: Look for people who are actually thinking about process, writing things down, and making things repeatable that already are in your company. At about one, you’ll have at least one or two people like that. They might be in marketing, they might be in sales, they might be in product. You know, usually they tend to be in either marketing or product. Right? Sales at that scale, your experience might be different, and I’d love to hear your opinion, sales at that scale at one, usually isn’t repeatable, not like pure play, like, you can add more team members and-
Hiten: Repeat it.
Steli: Yeah, yeah, yeah, that’s true.
Hiten: Right, it still requires a lot of like, you know, usually you might not even have like a manager type person in sales. You might have a founder. But not necessarily a manager. Marketing tends to be, if your marketing helped you get to one, then there’s some repeatability there. Because whatever you’re doing is getting you leads, you know? For example, or sign ups depending on your business, or users. So, to me, I just look at a company at one, and say, “Okay, what are you doing, and what are you doing really well?” And what I mean by well is, you can predict it. Like, you can tell what’s going to happen next month. It’s usually amount of leads. Or, amount of sign ups, right, if you’re not getting sign ups through marketing or something like that. And, some of that has some repeatability to it, or at least regularity. So, I think there’s not repeatable, there’s regular, which means it just happens, but maybe you don’t know why or you can’t repeat it, like, or make it grow. And then there’s repeatable, which means, you can make more of it happen. It will continue, you have processes in place to do it. Even like product development, sometimes, at one is not very repeatable. It’s not something where you can build more features easily. Right? Or scale. So like these days, what we do, you know, even pre one, is almost do things that you do at one million. And, that’s if we know this business is going to last. So, then what we do is we really think through, oh, what needs to be repeated? How do we make, how do we ship product? Like, very regularly, like at a very regular cadence, where the process is, what’s the pipeline for that? How do we do marketing? So, what I mean by that is, how do we have a system where we start earlier than at one, run experiments on multiple channels. Because to get to ten, you have to, you typically have to go beyond one or two marketing channels that are your core. It’s very rare to get to ten, and only have one marketing channel that you’re primarily utilizing.
Steli: Beautiful, I think that, you know, the summary, or what I’ll add to it, to kind of double click on what you said is that, you know, you hear this phrase oftentimes, what got you there won’t get you here, or something along those lines-
Hiten: One of my favorites, one of my favorites, yeah.
Steli: So, the thing is, when you get to a million. When you go from nothing to have something that kind of works, to have that something be a million dollar business, or surpass a million dollar business. There’s a certain, I think, success that creates attachment. And that attachment to what got you there, then hinders you to get to where you want to go next, right? So, the way that you get to the million was awesome, and you need to stay true to it to a certain kernel, but you need to be very flexible and very detached from both the marketing channels, the sales approach, but also from the customer you were going after, maybe the customers that got you to a million will get you to ten. But maybe you’ll have to grow out of that customer base into another one to get to ten. Maybe you’ll have to, you know, outgrow the kind of the direction of the product, and broaden it, or narrow it to get to ten. And, again, like we say so many times before in many other prior episodes. It’s not a destination, once you’ve got to one million, you don’t now have product market fit, and all you have to do is now, either just doing what you’re doing to get to ten really quickly, or, you know, raise a shit ton of money to scale it quickly. Because it’s not an end destination. You might have product market fit to one million, but if you want to get to ten, the world has now changed in the last year, and you have to completely rethink who you are and how you build product, and what you do to be able to grow into that size of a business. So, I think, attachment to what got you there is really what hinders most, and that goes to people, that goes to marketing and sales channels, those goes to product development, it goes to almost anything that you’ve done, it’s a tough balancing act between staying true to the core culture of the company and some of the things that make you unique, and made you worthwhile, made you get to one million. But then, outgrowing that and becoming a new kind of a company, a new kind of a product, a new kind of an organization, to get to the next phase of growth. That, once people have success, they get really attached to what got them success, and that attachment is really what slows things down or stops progress.
Hiten: Yeah, I couldn’t agree more. I think that attachment is such a good way to put it, you’re just used to whatever you’re doing. You’re stuck in it, sometimes, you know that attachment, sometimes attachment is to people.
Hiten: They started this company with us, they, you know, I mean, I’ve spent countless times, and I’m trying to do better on this. Spending too much effort on somebody who’s not scaling.
Steli: Yeah, that’s a tough one, and that’s why, what you said in the beginning, makes so much sense, that you’re now much more careful about the people, and you have also the experience to realize that just because somebody is an amazing rock star, you know, in that first phase of the company, does not ultimately make them a rock star for, you know, the entire journey up to, you know, a hundred million in revenue, right? Some people can grow from zero all the way up, but most people are just great at a certain portion of the journey. And I think when you don’t have that experience, you just assume once you work with somebody that is great, you just think they’re great forever. Right? And then when they are not, it poses a really big challenge in what to do about it, right? And a real dissonance and like, but this person’s really amazing, and you just try too hard and for too long to make something work that just isn’t working anymore, and it would be better for them to go somewhere else where they can be really a rock star, and for you to find somebody that’s right for that portion of the journey now for the company.
Hiten: Yup, exactly.
Steli: Alright, let’s wrap this episode up at this point for now. If you are listening to us, and you are running a company that’s above the one and below the ten million mark, and you’re trying to get to ten million as quickly or as successfully and happily as possible. And you want to share some of the challenges, some of your thoughts, we always love to hear from you, just always send us an email Steli@closer.io, firstname.lastname@example.org, until next time, we’ll hear you soon.