From $1M to $3M ARR: When 'Do More' Means Do Less

Once you cross $1M ARR, the fastest way to at least 3x - 5x revenue over the next 12 months is not what you may think!

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.

"Once you reach $1M ARR, what needs to change is counterintuitive. You don't need to expand your customer segment. You need to go REALLY REALLY narrow."

The playbook that got you to $1M ARR was simple: throw everything at the wall, see what sticks.

You sold to anyone who'd listen. It worked because you were everywhere. Now your instinct says do more of that.

That instinct is dead wrong.

You don't need to go from $1M to $100M immediately. Get to $3M to $5M as fast as possible first.

This step is about doing more - it's about doing dramatically less. You move way faster. Where you once cast a wide net, you now need laser focus.

Getting to $1M proved you have something. Now figure out exactly what that something is and who desperately needs it.

Look at your existing customers - just the ones who implemented fastest, who rave about your product, who haven't churned. What makes them alike?

Look for customers who move extremely fast from signing to getting value. Find more of them.

You're not looking for the biggest deals. You're looking for a very narrow segment that gets to value fastest.

Some would say too narrow.

But here's what happens often: these customers become your unpaid sales force. They tell their friends and when you mention them as customers, other similar companies lean in.

The TAM question always comes up. "But if we only focus on xyz companies, how will we ever build a billion-dollar business?"

Wrong question. You don't need a $B market to get from $1M to $3M+.

You need a segment big enough to 3-5x your revenue. Nail that first, then expand.

When you do this right, something magical happens around $3M. Leads match your ideal profile. Sales cycles compress from months to weeks. Implementation gets smooth. You've found your beachhead.

Lastly, when hiring your first sales reps at ~$1M, resist hiring generalists.

Hire "startup people" who thrive in chaos and can build from nothing. Skip domain experts unless your solution is extremely technical.

You don't need someone who's "sold to function X before." You need someone insanely good at learning fast.

Often, the best early sales hires often come from failed startups - they know how to sell something nobody's heard of.

Subscribe now

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

Recently started a company or thinking about it?

At focal, we’re technical, AI native builders’ first choice for their first check.

We lead their first round at the very start with up to $1M. Often before they even write their first line of code.

Reach out.