The Internal Phases Companies Grow Through As They Hit $1M, $3M, $10M And $30M In Revenues

This week I talked to three practical founders of growing software businesses with $1M, $3M, and $7M annual revenues.

Each of them told me, “I don’t know what I don’t know about the next stage of growth inside our company and for me as the CEO.”

It wasn’t so much about growing their revenues to the next level. They are growing steadily and handling that.

It was about how they do everything internally in their businesses–and their changing role as founder and CEO.

This is more than a common problem for growing companies: it’s universal.

Here’s why:

  • A startup with no revenue and a scrappy team is very different internally than a…
  • $1M ARR software company with 10 employees, which is very different than a…
  • $3M SaaS company with 30 employees, which is managed totally differently than a…
  • $10M company with 90 employees, which is different than a…
  • $30M company with 250 employees and then a…
  • $100M company with 550 employees, and so on.

Anyone who has worked in a software business that has grown steadily in the long run through these phases knows what I’m talking about.

Did you see the trend there? The big changes happen on the “1’s and the 3’s.”

In the ranges of revenue, in millions of dollars or euros, of 1, 3, 10, 30, 100, etc.

It’s a law of nature that is almost impossible to defy, in the range of these 1’s and 3’s inflection points. It’s never not there.

With 10 employees, all team members can all report to the founder or co-founder.

But with 30 employees, you need a management team for most functions of your business. That’s VERY different from the scrappy ninja startup team. It’s the beginning of your “product and service delivery factory 1.0” at this phase.

With 100 employees, you now hire people who hire people. This is “internal factory 2.0.” $10M businesses have worked out how to deliver and manage things internally without the founders being involved in every detail.

The “1’s and the 3’s” ranges of internal inflection points happen about every 18 months if you are growing 100% a year.

These internal changes are not optional. You just can’t run a 150-person organization the way you ran a 10-person team.

Your internal world will need to change or your teams and customers will start screaming in frustration.

And your role as CEO changes too, whether you like it or not.

At some point, as you grow, you need to stop being the startup entrepreneur.

You need to be the CEO OF THE COMPANY YOU ARE GOING TO BE IN 12-24 MONTHS.

Stop being last year’s CEO or your company will get stuck.

Hurry up.

All the deliberate culture, tools, and systems can help you stretch these ranges a little, but not forever.

I have lived through this as a leader three separate times in my career, from crazy startups to $100M global companies.

It’s exciting, challenging, and often painful–and it’s absolutely necessary.

There’s a lot to know about what you don’t know. Isn’t that exciting?

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