And the things that made it successful in the last stage, may actually hold it back from succeeding in the next one. You have to throw out the rules, bring out a clean sheet of paper, and redesign the company. After working with many companies, I’ve found it useful to use the ones and threes to mark off the stages of growth: $1 million, $3 million, $10 million, and so on. For a SaaS company, these numbers represent annual recurring revenue (ARR). These are good places to pause and say, “Okay that was fun, but how do I tackle the next leg of the climb?” So what are the phases that define the climb to a $10 million run rate? What should you be working on in each phase? Let’s take a look. Prove the Idea ($0 to $1 Million) When you get started, the first thing you have to do is prove your idea. That’s the first stage. If you have the right idea, you can generally close a million dollars or an initial set of customers. These days, you can go raise a seed around to do that. Don’t bet the whole company in an A round just to prove the idea. At Zuora, our idea was that companies running on a subscription model, like Salesforce, are probably building their own billing systems. Telco billing systems were too expensive, and regular ERP systems just didn’t deliver. But companies shouldn’t have to build something from scratch, they should be able to buy it. That was our idea. So we said, let’s go out and find a bunch of companies, mostly ones that we already know, and let’s try to prove this idea. We built a prototype. We spoke with over 50 potential customers. We actually sold a few contracts before the product was complete (the contracts were contingent on the product being delivered, of course). Similarly, at Salesforce, we threw up some screenshots on a website and invited people to participate in the beta. And then we called everyone that was interested, showed them the demo, and asked what they thought. We had 200 customers lined up when we launched in February 2000. You can sell an idea before you have a real, fully formed product. And you should. But by the time you start closing in on $1 million ARR, the idea should be proven.