What Changes at $50M ARR

by Drew Beechler - Director of Marketing

3 Levers for Late-Stage Growth

On SaaStr Annual 2017 Day 2, Scott Dorsey, Managing Partner at High Alpha, joined Zuora Founder and CEO Tien Tzuo, Veeva Systems CMO Nitsa Zuppas, and Pluralsight CEO Aaron Skonnard on stage to discuss the top changes in a SaaS business when you hit $50M in ARR.

As Tien kicked off the panel, he mentioned that after companies hit $50M, they are no longer a one-trick pony—they have to find new levers to sustain their growth. During the session, Scott dug into three specific growth levers they utilized at ExactTarget when they hit $50M in ARR to fuel their growth to $100M, IPO, and acquisition for $2.5B.

1. Segmentation and Pricing

As your company scales, it’s important to start to build out your market segmentation with intentionality. For ExactTarget, that meant moving up-market, serving enterprise customers, and landing the big logos that impact brand value down into your mid-market segment.

With the evolution of your sales segmentation, this can also leave a large impact on the structure of your salesforce and pricing. Nitsa noted that at Veeva Systems, they think about “market” owners, not just product owners. This lets leaders at the company take ownership over specific markets and segments. This also bleeds into your pricing and packaging structure.

Scott noted, “Pricing and packaging is enormously important at every stage of the company.” Pricing has nothing to do with the cost of building the product and everything to do with the vision and value you’re able to prescribe. A good pricing strategy can be the key to a business that’s not economically successful and one that is.

2. International Expansion

The second growth lever ExactTarget utilized was their international expansion. Only 2–3% of ExactTarget sales were international when they hit $50M in ARR, and they ramped up their international expansion heavily, opening offices (or acquiring international re-sellers) in the UK, Australia, and Brazil.

Scott also recommended companies to be careful of international expansion too early and to not become distracted with international markets in the early days.

3. Product Expansion

Whether through M&A or increased R&D investments, product expansion and moving to a multi-product company is a key lever for late-stage SaaS growth. ExactTarget expanded from email marketing into the leading interactive marketing hub for all your digital marketing channels through acquisitions and strategy product investment. Early-stage startups, though, should avoid the temptation of spreading your development team across too many products in the early days.

While these “levers” are much easier said than done, they are just three ways late-stage companies can continue to invest in growth from $50M-$100M+ in ARR.

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