annual recurring revenue

“At any company under a couple hundred million in ARR, your VP of sales should be someone you're very proud to fly in to meet with the CIO of Nestle to help close the deal. And if they don't want to do that, they're a bad fit.”

“Most companies, when they get to 1,000,002 1,000,003 million AR, they don't really have the machine yet. So what they, so they typically end up hitting a wall for a few months because they don't really know how, where the growth comes from.”

“Now, next, the next year, in 2017, we went from just over ten million of ARR to 30.”

“That took about a year, a little longer than a year, but we went from one to ten million of ARR, and the whole theme of that year for us was building our credibility network.”

“Like, I have an opinion. It should be between eight to 10 in ARR. If you want a really solid VP of sales, they're gonna want to come in. They don't want it to be too scrappy, and they don't want it to be too far ahead”

“We've found that it's not really as relevant for earlier stage companies. So, companies below thirty million of ARR We tend to find that a much better way of measuring efficiency is through looking at this, ah, score of net new ARR divided by cash burn.”

“Took us about a hundred to get to a hundred million took our company about 10 years, you know, and granted, there was a lot of adoption that needed to happen there, you know, a lot of early development of our technology. So it's not a perfect apples to apples …”

“It will drive on an ARR basis, epic net dollar retention, but on a revenue basis, ASC. So six will flatten it out. It will see right through this trick and you will just end up with a 120 K per year in gap revenue.”

“There's a semi-famous quote that but cash is a fact, profit is an opinion. I feel the same way about ARR and churn, that ARR is a fact churn, And churn rates are an opinion.”

“The average one had three hundred and thirty million in ARR, 49% revenue growth, and a 120% net dollar retention.”

“Even if the customer is just renewing for one extra month, as long as they're renewing at the full ARR value, there shouldn't be any churn.”

“Typically we would look at the ARR value coming in from that customer through that, that channel. So if that ARR goes down because the margin changes, then we would take some kind of churn on that.”

“If you've raised a million dollar in pre-seed, And five million dollar in, in seed as an example, then Series A investors will usually look for more than the million dollars in ARR, which previously we considered to be a rule of thumb. So as we saw when we loo…”

“Getting to the first million of revenue, I would say is about 80% hustle and maybe 20% machine and process in there. Getting from a, you know, let's say a million to ten million dollars of revenue will be part maybe, you know 60% hustle and 40% machine. When y…”

“If you have a 120% NRR, that 120% NRR carried a ten million dollar business to two hundred and fifty million, even with market share loss, right?”

“There's so much more value that gets created after the IPO. And it's, to Jen's point, it's always thought of as this end destination, this exit event, but gosh, once you start compounding revenue numbers North of a hundred million in ARR at 3040, 50% year ove…”

“Those companies that were pacing at 60% growth as they hit a hundred million in ARR, only 15% of them were able to maintain that growth as they punch through to a billion dollars.”

“Companies who are growing over 60% as they hit a hundred million ARR are eight times more likely to ever make it to a billion in ARR.”

“Companies who are growing at over 60% as they hit a hundred million in ARR are valued five times more than companies that are growing just a little less than that. Say at 20 to 60% as they hit a hundred million ARR.”

“The other two metrics that are just as critical, in fact, arguably more critical to know, are your revenue health. Specifically, your gross revenue retention, or GRR, and your net revenue retention, or NRR.”

“And so what we were able to do is get the referrals from zero to five percent of the new AR that we add after two years.”

“Outbound how effective is it it's about 10% of our AR today. So that, that gives you an idea and that's like pure pure outbound.”

“So by optimizing all the steps I just described, we increased the AR by six X over two years from a thousand to 10,000 customers.”

“So whether you are a ten million dollar company or if you get to a hundred million dollar company or, you know, even a billion dollars in ARR growth rates eventually stall and this whole cycle repeats itself where, you know, you have to then find new insights …”

“We now have two products that are over two hundred million dollars in ARR each, both growing well.”

“In the very first days of your sales organization or of your company, you probably teach the salespeople from your own experience, which might be enough that time, but that's not enough after five million dollars of ARR. That's not enough after ten million dol…”

“In terms of second product, I talked about Jason Lemkin's work before, but he's done a series of tweets and blogs, and from his research to me, for most companies, it's probably a hundred million plus in ARR, and maybe multiple, for the companies I work with, …”

“And I think one of the most interesting metrics to track with burn is just your net new ARR divided by your burn. And some people do it the other way around. They do your burn over your net new ARR. Generally speaking, around one is considered very good.”

“So from one year after launch to get to one million in ARR would be considered very, very good. Nine months is excellent. This is from launch, not after incorporation.”

“I don't think anymore that investors are so myopic That they're only valuing companies based off of ARR. You will get credit for those alternative streams of revenue as well, but it's important to clearly label it and not try to make it into ARR when it's not …”

“On the first, I'd say 80% plus would be a good benchmark. Anything below that there should be a really clear reason or a really clear understanding for why that is the case.”

“And then after that, triple, triple, double, double, double is considered best in class. But again, I want to emphasize that all of this should be taken in conjunction with the broader picture on metrics.”

“And then all in 2018, when we were around five million ARR, we started to build our go-to-market team.”

“Today, After ARR and ARR growth, the most important metric that's looked at is what your NRR rates, your net retained revenue metric is.”

“Henry Sane, he segmented his sales team at eighty million in ARR”

“There isn't a minimum market size. We often get asked, like, you know, what do you want to see? And the reality is different funds will Expect different market sizes based on their own fund size, their own strategies, but I, one exercise that's always good to …”

“For us we don't have a set expected ARR at each of these stages, and I think we see that it varies. Sometimes we see series A or series B companies that might be still pre-launch and so that's why we'll look at some of these other ways to validate things like …”

“By ten million or so in ARR, you have convergent evolution. These paths converge. By ten million ARR, you have, if you bootstrap to ten million ARR, you're generating enough cash to hire all the VPs you want, ok?”

“I usually say if you have hit five to ten million ARR, you cannot get killed. You should be default alive.”

“With that simple trick of making sure that you always keep a very close eye on net new ARR, you might be able to detect, or you will be able to detect significant deviations from that plan much earlier.”

“The average company in Bessemer's cloud portfolio Has been growing about three X between one and ten million AR and still round about two X or even more than two X above ten million AR.”

“Three million apps in the App Store before we got to two million in ARR.”

“Below 10, we're still looking for companies that are, they're maybe not tripling, but close. And the old saying is the reason that Neeraj came up with triple, triple, double, double is if you're not tripling at single digits, it's awfully hard to believe that …”

“The rule of 40 is a measurement for public company scale businesses. And if you're at orders of magnitude below that at 10 to 15 in ARR, it's a different rule. You know, you'll never get to scale and have that sort of profitability margin at scale unless you'r…”

“If a company had you know, a bit of a, sort of, was loss making, but was able to drive 70, 80% growth, then we could see a path to profitability. We would get more excited about that than a company that was growing kind of 20 or 30% you know, let's say it's su…”

“Hubspot is coming up on two billion dollars in ARR growing at an incredible rate.”

“Four months into Zenefits we were in 2014, our target was ten million in ARR. We started 20 14 about 500,000 of ARR.”

“We changed the revenue target to twenty million. Like two days later, Parker couldn't keep the secret and we hit it.”

“VCs unfortunately are looking for the trifecta. They're looking for top tier growth, but also some sort of top quartile capital efficiency. And even at, you know, even at a million in revenue, maybe not You know, 10 K in MRR, but even at a million in error, th…”

“I've got one that was a thousand X ARR.”

“Today, Modern Health is north of a hundred million dollars in ARR.”

“You need to get to a hundred or two hundred million in ARR in seven to 10 years for venture to work, and if you're not growing at a rate that can compound To a hundred million in that journey, you simply can't make VCs enough money for them to make money.”

“For every dollar in new revenue you bring in, I guess that really should be ARR spend 75%. Instead of spending two times what you bring in, spend 75% of it. You'll, you'll, you'll never fail if you spend most but not all of your new bookings.”

“B rounds start at five million ARR with a tendency towards more.”

“As companies have become more mature. Most of their S&M expense Is not spent on acquiring customers. Most of what they spend on is retaining their existing ARR.”

“The two worst investments I've made, I haven't made very many bad investments, but as time went on, I made more bad investments, not less because we kind of let, let the bar expanded the box. Those were folks that claim stuff was AR that wasn't.”

“My rule is if your ARR ever goes down, it's not ARR. ARR may grow slowly or more quickly, but when you see a startup where the ARR has gone up and down, I'm like, okay, I gotta dig in here, because whatever it is, it ain't an ARR, right?”

“After even a couple million in ARR, you can afford any higher if they're accretive.”

“At the seed stage, as you can see here, approximately half of them were pre-revenue, while the other half had some ARR, anything between just a couple of 100,000 dollars Up to about a million or even 1.5 million.”

“All the metrics that you're using you know, LTV to CAC CAC return rate, all of them don't take cash into account, okay? It's not cash. It's not cash. ARR is not cash. CAC is not cash. LTV, well, I don't know what it is, but yeah. It's a bogus metric, but, ah, …”

“So again, tying to our ARR, I think it was one to five to 16 to 30, and there's like 48. That was 61, right? And we didn't do anything wrong. It's just like they started having the same number of logos a year. So what that means is like your new bookings flatt…”

“Pretty much every company that is, that has gotten to a billion or more in, in annual recurring revenue has been able to do this successfully.”

“55% of those hires not only were successful, they made it all the way past a hundred million ARR. If you hire somebody who had less than 25 times your current ARR in terms of their quota responsibility, 44% didn't even make it out of the early stage. They didn…”

“You're looking for a sales leader that has at least 14 times of your ARR in quota-carrying background.”

“We looked at all the data of our companies over a decade. Even the successful ones hit this thing that we call the growth plateau. Around fifteen million ARR, you can see in the data, and again, these are the successful companies that made it through. They hit…”

“If the top two important numbers are not being achieved and you can't see why in all the other numbers, I can't diagnose what the problem is, but I can tell you have a problem and it does happen from time to time.”

“Our number one product by ARR was actually not our first product. It has overtaken our first product, and, you know, it's been incredibly impactful for customers.”

“You know, people often say that at a billion in ARR, you really need your second product. I would argue that you need to start a hundred X earlier, right? Have your second product in market and scaling at ten million, and boy does it pay off.”

“Rippling today is several hundred million dollars in AR.”

“Where she was able to scale the business from about two million in ARR is where Ashley joined and left it like three hundred million plus in ARR.”

“Back when I joined, we were about a six hundred million dollar company. We're four and a half billion right now in ARR.”

“Each BDR ranks out like over 80, over 60,000 dollars in close one ARR every single month.”

“We went from Three to six million in that sort of half year. We went six to 16 last year. We've strung together a bunch of 10% month over month growth months. So we're, we've just broken through twenty-one million in ARR in 22 months.”

“As a rough rule of thumb, a company that has a million or a couple of million in ERR, I think needs to grow at two or three X to really get a lot of investor interest. If you are at five to ten million ERR, I think it's usually still two X year over year growt…”

“Customer experience, for example, at Notion, which is the support organization, we track that month by month, right? And right now our goal is 3.9% of ARR, for example”

“And regardless of private market valuation, at least in today's interest rate environment, companies cannot expect to be worth more than 10 times ARR.”

“Okay, so I'm employee number three, five, four, three, 54. We were a series B company doing less than thirty million dollars in ARR”

“We did this at Slack. We put every single employee on a bonus plan, and we tied it to ARR and customer adoption.”

“Even if you grew a 50% this year, if your competitor grew a hundred percent and you know, you're at the same AR, sorry, got a normal idea. You lost this year.”

“Investors are expecting insane levels of growth. Insane levels of growth, right? They want, like, the idea that you can go from one to a hundred in a year is now seen as what you want to invest in.”

“We shared our figures at numbers in February that we've crossed over four hundred million dollars in ARR. And we're just shy of 200 people still, so we are operating as a very tiny team for a reason.”

“So like for us, we, like for us for three hundred million, we see the on-demand usage for specific lasts for weeks. We see, we take the monthly subscription revenue, annual subscription revenue divided by 12, sum it up all together, multiplied by 12, and that'…”

“I always used to tell the team all the time, I only need, you need to test a hundred things. I only need one of those 100 things to actually work to give me another hundred million dollars in ARR, right? I only need one. I don't need five. I don't need 20. I n…”