The Startup Playbook:

$1M to $10M ARR in 2 Years

Vishal Sunak
Founder/CEO @ LinkSquares
What does it mean to be the “best” in SaaS?

All SaaS companies

(2023 spend of $0.75T)

4% 0.4%
>$1M ARR >$10M ARR

ARR = Annual Recurring Revenue Source: VentureBeat

I think you’re here to learn.

Thank you for letting me teach you what

I know.
Be here in the moment.

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 Hi, I’m Vishal 󰗜

Location Education Work

Director of Ops

B.S. Computer Engineering

Director of Ops

M.S. Systems Engineering

Director of Revenue Ops

CEO/Founder
LinkSquares | Founded 2015
LinkSquares offers the leading Contract Management suite, driven by AI technology

HQ: Boston, MA Employees: 400+ Capital raised: $161.5M

The best of the 0.4%

$1 to $10M ARR

Good = 4 years

Better = 3 years

Best = 2 years

Annual Recurring Revenue = ARR

The best of the 0.4%

$1 to $10M ARR

Good = 4 years

Better = 3 years

Best = 2 years ✅

2.25 years

Annual Recurring Revenue = ARR

How to Grow Faster - The 4 Ps

People Product Predictability Philosophy on

Development in GTM VCs

Vishal Sunak | The Startup Playbook: $1M to $10M ARR Download slides
How to Grow Faster - The 4 Ps

People Product Predictability Philosophy on

Development in GTM VCs

Vishal Sunak | The Startup Playbook: $1M to $10M ARR Download slides
People

Day 0 < $1M ARR $1M to $10M ARR $10M ARR+

The Founders do Hire up a few Department leads Bravo. Build on the

everything. people who can are hired and foundation and
discover and do accountable, grow!
Split all roles down things, aka the building out the
the middle. “The OGs.” teams underneath. Create career
ladders, promotion
Start learning stuff. If right, a few It’s very real now. paths, top benefits,
management team best place to work,
hires. Get HR in. brand, etc.
People: The takeaways

I hired “top down”

It’s the CEO’s job to hire the best executive team.

Create the “Expert <→ Apprentice” model.

Doing this well enables everything.

People: The takeaways

Caution on handing out executive

titles too early

Demotions will happen with >50 employees.

Avoid massive future headaches and stress by not doing it.

Don’t get too specific on titles too soon.

Balance the egos.

People: The takeaways

I tell my executive team what is

important, but never how

I am solely responsible for the future. All of it.

This quarter is from an operating plan made last year.

Have a plan, run the plan - but be ready to adapt fast.

The best CEO days in your future are when you have
“nothing” to do.
People: The takeaways

You will only get the hardest to

solve problems going forward

All the low and medium critical problems will be solved by

experts that you hired (pretty cool, right?).

You will only be left with the hardest ones, trust me.
Use logic, ask others, remember your company values.
Test your way in, if that’s possible.

Use data to provide confidence and iterate if needed.

How to Grow Faster - The 4 Ps

People Product Predictability Philosophy on

Development in GTM VCs

Vishal Sunak | The Startup Playbook: $1M to $10M ARR Download slides
Guaranteed way to fail
Before you have ARR, you need to do your research.

Customer development is the #1 priority, don’t hurry to build something!

You have to know your buyer inside and out:

● What motivates them?
● How much budget do they have?
● How do they buy?
● What software do they use today? Are you going to introduce something new?
Rip & replace?
● Where are they on the “power line”?

There is a near 0% chance of getting to $1M or $10M ARR without confidence in

Ideal Customer.
The goal

100
Number of Ideal Customers you should talk to first
Solving the “right” problem
On the journey to $1M ARR, many people think this is the playbook:

Problem Solution Customer

☹
Validate that you are solving the right problem with customers first:

Problem Customer Solution

🤩🚀
Vitamins ❌
Painkiller ✅
The train cars philosophy to product development

The foundation for our philosophy on how our Build team

delivers value, and ultimately, revenue.

Infrastructure and Customer reported Roadmap /

Internal Tools Bugs and Features Vision Features

A mix of light and heavy cars can cause derailment!

Finding a balance

Health Innovation
Strengthen our existing teams, support our Build new products and teams, expand on
customers, optimize for scalability, burn down existing products, move fast on research and
technical debt. development.

Today The Future

Performance Enabling ARR

My philosophy on product maturation
High
Number of Features to reach
25% conversion rate

Existing 20+ year old market.

Many competitors.
Medium Buyers know the features they want.

Low
Category creator.
Lower bar to entry.

0 1 2 3 4 5

Time in Years from Release

Product: The takeaways

Product > selling ability

Your future ARR depends a lot more on getting the

product correct and iterate on it fast where there are
gaps.

Selling ability can only take you so far.

Product: The takeaways

Customers on the steering wheel,

company on the gas pedal

Your job is to get customers the software features they

need to solve their problems, buy the software, and use it.

The faster you build it, the faster the ARR is made.
Product: The takeaways

“It would be cool if __________”

The 5 most dangerous words inside your company,

if this didn’t get generated from direct customer feedback.

Avoid “cool” things and build the things your buyers want!
Product: The takeaways

Just-in-time engineering

Be super agile in the early days. Listen for patterns.

The roadmap is supposed to evolve rapidly, that’s the whole

point. Stay away release planning too far ahead.

Prioritize and re-prioritize it all the time for “yes”.

Focus on 1 big thing a quarter that can move the needle.

How to Grow Faster - The 4 Ps

People Product Predictability Philosophy on

Development in GTM VCs

Vishal Sunak | The Startup Playbook: $1M to $10M ARR Download slides
 Predictability in GTM
● GTM data tracking will enable the highest chance of success

● Build a culture of data collection early on the journey

● Capture it consistently for new business opportunities (use a CRM like HubSpot, it’s free)

● Choose picklists over free text fields

● Ultimately, you end up building and using a lot of reports like this →
 Using data for GTM
$0M $1M $10M

Capture the source of every opp Per Rep Productivity - Your sales reps closed/won ARR each
(Outbound via AE, Inbound, Partner, quarter x 4 (annualized)
PPC, etc) Conversion Rate % - typically demo to closed/won

Capture the tactic (Email, Phone, Pipeline Conversion % - Each stage of your funnel to
LinkedIn Message, Direct Mail, etc) closed/won (aka weighted pipeline)

Forecast the full funnel requirements # - quals, demos,

The date the initial qualification call POCs required
was held, and the date a demo
occurred Average Selling Price $ - trend it quarterly

Sales Cycle - days from first qualification to closed/won

 Building a simple ARR model
● Don’t start planning the year in January when it started on January 1st!

● I always start with building a simple ARR model for the year:

Starting ARR for 2023 $1,000,000 Goal is YoY growth of 200%

- Churn/Downsell ARR $100,000 1) Calculate this first. Create a forecast if you can
(10%) or use a benchmark like 5%-15% of your existing
ARR that will not renew next year.
+ Existing customer
Expansion ARR $200,000 2) At a minimum, equals the churn % (ex: 10%)
(110%) to get to net $0. Published benchmarks
for < $10M ARR Net Retention are 105%-145%,
could be higher too.

+ New Business ARR $1,900,000 3) New customers fill in the rest to the target.

= Year-Ending ARR $3,000,000

New Business ARR model
New Business ARR $1,900,000

Average Selling Price $30,000

Number of New Logos = ~63

EOQ 🔥 EOQ 🔥 Summer is EOQ 🔥 EOY 🔥🔥🔥

slow
New Business ARR - Ramping Sales Reps

100%

75%
Ramping Quota

50%

25%

0%

1 2 3 4 5 6 7+

Months since hired

 New Business ARR - Ramping Sales Reps
Remember to build in ramp time for AEs, and start it earlier (ramp this year, for next year).

Ramping Ramped

This is the quota for

$480k Year New Business ARR Quota 100% commission. But
estimate 75% actual
$40k ARR / Month attainment in your
model.
1.3 Logos / Month at $30k average selling price
(Per Rep Productivity)
Predictability: The takeaways

Data is the key to success in sales

The more data you have, the more you know and can see.

Build a culture of data input with your sales team.

Predictability: The takeaways

The first 30 days are like the

next 3,000

When hiring new Sales Reps, you will know in the first
30 days if they will succeed.

Ramping new sales reps is the key to your growth.

Prioritize making reusable training content early in the

journey, and invest in outside resources for sales
training also.
How to Grow Faster - The 4 Ps

People Product Predictability Philosophy on

Development in GTM VCs

Vishal Sunak | The Startup Playbook: $1M to $10M ARR Download slides
 Philosophy on Venture Capital
● The “correction” of the public markets resulted in private markets being heavily impacted

● Framework to think about raising capital by Stage:

○ Pre-Seed/Seed → Early stage VCs are basically operating the same way as before. Rounds
can be done at decent prices and there’s more capital available than ever before 🤩

○ Series A → Toughest round to raise under any market condition.

80% attrition rate in good times. Focus on retention, GTM efficiency, product vision.
Take as many at-bats with VCs as possible when raising and hang in there.
You just need 1 🧐.

○ Series B/C/D → Hardest hit in this macro economy. Durability of growth with burn rate
multiples (Cash Burned/New ARR). Efficient growth, expense structure controls, and find a
path to profitability 🥶
Navigating in this world

“A Framework for Navigating Down Markets”,

🔗https://future.com/framework-valuation-navigating-down-markets/

“Adapting to Endure”,
🔗https://www.sequoiacap.com/wp-content/uploads/sites/6/2022/06/Adapting-to-Endure_Sequoia-Capital-2022.pdf
 Philosophy on Venture Capital

If you need capital to grow (which alot of us do), it’s an essential element.

Water is water, the rest is marketing and “taste” preference.

Don’t put too much over emphasis on it.
Always choose better people over pre-money valuation!
Fundraising is not real life.
Philosophy on Venture Capital
● If raising capital is part of your strategy:
○ You will be asked for everything presented during diligence with any VC;
bet on it

○ This will now become part of the metrics you will always capture, report,
trend every single quarter as a VC-backed company, to continue to show
how you de-risk ARR goals
 SaaS metrics
● Play for the quarter, use the monthly performance as an indicator

● What I track quarterly (and why):

○ ARR: quarterly plan for all 3 parts (New Biz, Churn, Expansion) versus actuals

○ Gross Retention: shows me if we are delivering the value to get renewals or not. 100% max.

○ Net Retention: >100% is possible. If Gross is high, now you can see the effectiveness of
pricing/packaging with upsell

○ Gross Margin %: For non-complex SaaS, it should be >90% but your onboarding could be tricky (like
migrating data) so your Cost of Goods Sold needs to be optimized

○ CAC Payback: This is the ultimate efficiency metric. Because it uses your acquisition costs, number
of new logos closed, and gross margin → running at ~12 months means all the pieces are working.

○ Monthly Cash Burn Plan vs. Actuals, Months of Runway left

 SaaS metrics
● The formulas:

○ ARR for quarterly plan for all 3 parts (New Biz, Churn, Expansion) versus actuals

○ Gross Retention = {(Starting ARR - Churn) / Starting ARR} ^ 4

○ Net Retention = {(Starting ARR - Churn + Expansion) / Starting ARR} ^ 4

○ Gross Margin % = (GAAP Revenue – COGS)/(GAAP Revenue)

○ CAC Payback = ((Sales + Marketing Expenses/New Logos) / (Avg MRR * Gross Margin %))
 SaaS metrics
● Check out the Georgian Partners G7 Framework, we used it on the journey to $10M

Free XLS SaaS Metrics tracker

 SaaS metrics
● Use the free, annually published benchmark reports

State of Cloud presentation

$0 to $100M ARR presentation →

State of SaaS Survey →

Q&A time!
Ask me anything.

Download the slides:

 Closing thoughts
● Getting to $10M ARR is really really hard, but not impossible.

● Your company is what the SaaS metrics/financial spreadsheets say it is.

Learn to control them early in the journey.

● Remember the 4 Ps:

○ People
○ Product
○ Predictability in GTM
○ Philosophy on VC

● Keep a level head and a “fixer” attitude

● Celebrate everything as much as you possibly can

Thank you Download the slides:
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