How to generate $100 million in revenue with this 8 ways ? A SaaS Founders guide
Wondering how to build a $100 million SaaS business?
Then This post is for you! I recently stumble upon this amazing infographic which is invaluable for a SaaS founder.
Christoph Janz (@chrija) in his two blog posts shares 8 different ways to build a $100 million business.
Note: (actual infographic shows only 6 ways, we’ll have another two below)
Source: Christoph Janz
Source: Christoph Janz
So as you have seen the images above you already have an idea in mind what I am talking about. For building a $100 million SaaS business you have to choose one or multiple customer categories from above. Here we are taking only one category per SaaS business to explain it better to you. Christoph has used a nice animal analogy to understand it better. So let’s dive in:
This is the first and lowest category having less than or equals to $1 ARPA (Average Revenue Per Account). So this is a category which I’ll not recommend because tough to reach $100 million mark with this strategy. If you are having a SaaS business where ARPA of your software/app or website is $1 then you need exactly $100 million users using your services. Not impossible but more challenging than other categories. Here Christoph said that WhatsApp is an example of this category.
Here to get $100 million in revenue, you need to get 10 million active users/subscribers which will be there when 100 million people signing up for your app or website. In this category, we have an example of Yelp and Brainly. You need to attract more customers to use your services, so your software/service must be solving burning problems of common people and used by most of the people out there.
In order to get 1 million active users who stay with you and pay you annually you need 10-20 million people who have tried your app/service and from that 1 million will pay you $100 per year. So you can do $100 million business. Examples of this categories are Evernote and MailChimp. Here while your ARAP increases, you’ll need fewer customers than previous categories.
Here the target customers are mostly small businesses who will pay you $1000 so your ARAP increases so you need fewer customers in this category. Here you need only 1,00,000 customers to make your business $100 million. Here you need 1-2 million signup/trials so that you can get qualified 1,00,000 customers from them. Here If your services are not viral and no paid ads are there then you have to focus on funnel optimization. You have to create a great product, make your website a marketing tool and fill the funnel while building a repeatable sales process.
In order to get these customers all the tactics from above category will work. Here to make $100 million revenue we need $100k ARPA. So we need 1,00,000 or more customers who will use our services. Most SaaS companies start with the fourth category and then expand into the fifth category.
This is the category where we will play on a bigger level. Most big SaaS companies revenue comes from selling expensive software solutions to Big corporation/enterprises. For them to build $100 million business they only need 1000 users paying them $100k annually. These big enterprises can easily pay you $100k/annum if you are solving a real problem for them and they’re benefiting from your services. On this level to close a deal with these big enterprises you need enterprise expert sales team.
In this category, we can earn $100 million in revenue and for that, we need $1 million ARPA. That means we need 100 customers who are using our service/software. To get this 100 customers we need 10k customers who sign up or use our services. This one is another category where we deal with enterprises, so closing them as a client your SaaS business needs a team of having experiences in enterprise software sales, a strong network in the industry. New SaaS startups can learn from founders, sales and marketing teams of these big SaaS giants who serves enterprise only. Newbies can start from lower categories and then expand.
Eight and Last one:
Hope you are as excited as I am to see the last category customers. These customers are not the easiest one as they are big corporations who can pay you $10 million per annum. So to build $100 million business you need only 10 persons who can pay you $10 million. That’s it, pretty easy in the calculation but hard to earn. You need an amazing software/service which will solve their burning problem and then they will pay you. But don’t directly go for this eighth category if you don’t have past experience in selling to them, first start with a lower category and then scale.
So which category you found appropriate for your SaaS business? In which category you want to expand? Do write in comments, and If you know any other way to earn $100 million do mention it in comments below.
Hope you like this post, don’t forget to share this with your fellow founders and to share on social media.
Hope one day you will hit the benchmark of $100 million.
Disclaimer: Nor Christoph nor we are giving you the exact numbers to earn $100 million revenue. We are giving you a reference and examples to get there. Results will depend on so many factors like your CAC, Conversion Rate, MRR, ARAP, Churn rate and etc.
Bhavesh is a SaaS marketing consultant who loves doing work with SaaS companies and helps them grow their user base using proven marketing techniques. While not doing marketing Bhavesh is eating, reading and travelling. Feel free to reach him for consultation.