70. What must every entrepreneur working on a SaaS/ B2B startup know? I think the most important thing to learn, to truly understand, is that SaaS compounds. What does this mean, that SaaS compounds? • It means it’s really, really hard to get revenues going. You close a customer for $120 in annualized revenue, you only get to recognize $10 of that a month. A lot of work for ten bucks. Think of trying to get a train out of a station with a very small engine. Tons of work, tiny revenues to start. • It means you’ll really have to struggle to get to cash flow positive. Unless you get a lot of annual prepayments, cash will lag. This will be painful. • It means once you get to about $2m in ARR, your business is real and solid. Unless churn in massive, It isn’t going to evaporate... which it most likely isn’t once you get to this inflection point. Now is the time to invest, in team and product at least. • It means once you get to about $10m in ARR, some level of real success is almost inevitable. Next year, you will have a $14m, or an $18m, or maybe even a $20m+ business. I don’t know which. But I know it’s one of them. • It means once you get to about $25-$30m in ARR, you are unstoppable. The flip side of the struggle to get any revenues going. That train ain’t gonna be stopped by no one. Until someone disrupts travel and no one even needs a train anymore. SAASTR.COM 66