The magic of recurring revenue software businesses is that your monthly recurring revenue will increase over time.
Yes, there are things like churn to worry about. And at some point you may reach the Plateau of Doom, but the basic principle is this:
The sooner you ship, the sooner you grow
Here are actual revenue numbers from Customer.io’s first 6 months post launch:
April: $50 May: $100 June: $168 July: $176 August: $381 September: $1,123 October: $1,486
We shipped on April 1st, 2012 after 3 months of working nights and weekends. During this time we mostly talked with prospective customers, and did research. We spent maybe 1/2 that time getting the product ready for launch.
Making $1100 a month after 6 months was an embarassing number to try to convince people we were on to something big. However, there’s something awesome going on here:
Revenue was doubling every 1 - 3 months
Your business might grow faster. You might be able to sustainably grow doubling every month. Or maybe you’ll be slower and it’ll take you 4 months to double MRR. But if you don’t launch you’ll never know.
Use numbers from your first 6 months to forecast
At the end of October 2012, I made a forecast about revenue growth and pulled a number out of a hat.
I took looked at our growth percentages
100%, 68%, 5%, 116%, 195%, 32%
100%+ looked absurd. 5% looked too low. 30% looked ambitious. I ran the numbers and it made a ridiculous growth curve that I slapped in to the first version of our pitch deck to investors.
I took it out pretty quickly. “An exponential growth curve probably makes us look dishonest or naive”, I thought.
But a couple of days ago, I found that chart, and decided it might be fun to plot our actual numbers.
We’re a bit ahead of my “convince investors” prediction from 10 months ago. This blew my mind.
I’m nervous to continue drawing that line because I don’t know when it should stop and level out. I have no idea if it’s next month, or in 2 years.
Other SaaS companies who have operated for longer say that growth hasn’t stopped for them.
Starting is the most important thing
When you launch, you’re hopping on the long slow saas ramp of death.
Had we launched 6 months later, maybe we would have been able to accelerate growth from $50 a month, or start with higher revenue in month 1, but in all likelihood, we’d just be 6 months behind in revenue.
There are many reasons to launch early. Planting your stake in the ground and beginning your climb on the slow SaaS ramp of death should be a big one.