Chapter 1 You may have heard that SaaS companies usually take longer than consumer Internet companies to get to $75–$100 million in revenue. But it’s not always clear how much longer. Let’s look at some basic math. Assume it takes you a couple of years to get going and nail a niche, and then you grow 100% a year through $50 million or so in revenue, which isn’t easy, mind you: • Y1 revenue: $0 • Y2 revenue: $1M • Y2 revenue: $3M • Y3 revenue: $6M • Y4 revenue: $12M • Y5 revenue: $24M • Y6 revenue: $48M • Y7 revenue: $80M Having done extremely well, hitting $80 million ARR in Year 7, it took you seven years, and you’re ready for your IPO in Year 8. If you do well, but not quite as well as this, it can take a decade. A friggin’ decade. What about mergers and acquisitions (M&A)? The challenge here is that in most SaaS M&A, unless it’s trivial stuff, the acquirer wants to wait for some scale — they want you to have $10 million to $20 million in recurring revenue, at least. With the math above, that can take five or six years to get to a healthy exit as well. It took David Ulevitch 10 years total — from founding, to clicking into hyper-growth, and then selling OpenDNS to Cisco. And he spent several years before that getting ready to found OpenDNS. Speaking as someone who’s done a lot of M&A deals (as buyer, seller, and advisor), I’d say never count on selling your company. Selling a company, especially a tech company, is risky and complicated. It’s like getting married, but 10 times more convoluted. And once it’s done, you can never go back. This math isn’t new. Everyone used to talk about it taking seven years to get to an IPO. The problem is that a lot of folks who are doing first- time startups, or coming out of the consumer Internet world, don’t get it. In consumer Internet companies, you can think in terms of 18- to 24-month time frames. With companies that sell to consumers, it’s a much faster business cycle: build, try to sell, pivot, find a niche. You