There are two kinds of revenue in a software business: Survival revenue and Scale revenue. They are like two different businesses inside your business.
- Survival revenue is the expensive, temporary, and imperfect revenue you need to get things going and stay alive.
- Scale revenue is the profitable, happy, and repeatable revenue you need to grow and build a valuable company.
It’s quantity and quality.
Spray and pray, then sort it out.
Survival revenue helps you get to the Scale revenue.
Natalie Barbu is the cofounder and CEO of Rella, a SaaS platform built to streamline collaboration and workflows for social media teams and agencies.
She began as a YouTube creator, grew a following of over 300,000, and then identified the fractured state of the creator tools market — which led her to build Rella 1.0.
With some small seed funding, they developed the first Rella version, focusing on content creators, and generated no revenue using a freemium model.
After that didn’t work, with $25K in the bank and no revenue, the four cofounders thought they would shut it down.
But a viral video focused on social media teams immediately created paid users and revenue for a new Rella product.
“Rella 2.0” now offers all-in-one content planning, scheduling, collaboration boards, billing & analytics, an AI content strategist, and a single workspace — just for social media teams.
In just 12 months, they went from having no revenue, no funding, and a hard pivot to a relaunch, to almost $3M in ARR run-rate revenue — with only four co-founder employees.
It took years of surviving to find their scalable business, as Natalie describes:
“It was about two years before we decided to pay ourselves. So I was still making money from my social media. So that’s how I supported myself. And then my co-founders had to find side projects, which I know many people say you have to be one hundred percent all in and invested in.
“But when you’re not making money, you need to find a way to support yourself. So yeah, they had some side gigs that they were working on while still working full-time on Rella.
“Once we started making more money with Rella 2.0, we all bumped ourselves up and got some raises since we could afford it, which has been such an accomplishment. It’s money that we’re actually making from our customers and our users and the income that we’re generating.”
You’ll never hear, “Don’t quit your day job,” from investors or Silicon Valley mentors. They expect you to bet it all.
Steve Blank says, “A startup is a temporary organization in search of a repeatable and scalable revenue model.” I agree.
So you need to stay alive long enough to find something that scales.
There are many practical ways to do this that don’t require big outside funding.
Check out this useful interview with Natalie Barbu on the Practical Founders Podcast.
