$20M+: The Perpetual Reinvention Machine

At $20M ARR, you face one of the most dangerous moments in your company’s life.

What got you to here won't get you to $50M in under a year.

Most companies die in the $20M to $50M phase - not with a bang but a whimper.

This is part of a 4 part Series about how to get from $1M → $3M ARR, $3M → $10M ARR, $10M → $20M ARR, and $20M → $50M ARR.

To get to $20M, you've built a beautiful machine. You created systems, hired great people, made revenue predictable.

Once they cross $20M, too many companies keep executing along the same playbook but with diminishing returns because they start selling to the bottom 80% of their ICP that sort of need their solution but not urgently.

You work twice as hard but growth slows from 100% to 50% to 20%. They blame market conditions, competition, execution. They hire more reps, push harder, optimize.

To get out of this, you have to reinvent yourself once again.

At Box, where Russ Thau - whom I talked to about this - built the sales org, they got to $20M selling 80% to sub-100 employee companies. But the 20% from larger companies had 4x retention and 10x expansion potential.

What did they do?

Abandon SMB and go enterprise. New sales motion, new product requirements, new everything.

A very hard transition most startups face.

The hardest part about it?

You can't just flip a switch. You have to keep the current business running while building the next one.

Leaders now have to be able to both optimize what exists while creating what doesn't.

At this stage, it also finally makes sense to hire big company sales reps. Not for the core business but to build the enterprise segment they know well. They understand complex cycles.

Let them build while your current team keeps racing.

Importantly, you have to find the right balance between protecting what got you here while building what gets you there.

Create separate teams for new initiatives. Different metrics, comp, everything. It means building two engines that share a company.

This extends to product too. Your simple product that SMBs love? Enterprise will destroy it with requirements. User permissions, audit logs, compliance - all the stuff that makes current customers run.

Build it anyway, but separately.

In summary - what do companies that make it past $50M, past $100M, past IPO have in common?

They institutionalize reinvention.

Every time they get comfortable, they break something. Every time revenue gets predictable, they chase new segments. Every time the playbook gets perfect, they write a new one.

So celebrate $20M. Then break everything that got you there. Your future depends on it.

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Enjoyed reading this?

Then check out my conversation on the focal podcast with Russ Thau, a seasoned sales leader who helped scale Intercom, Box, and Envoy from single digit $M through IPO.

Youtube | Apple Podcast | Spotify

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