Building any business is hard

Judging from the number of Facebook likes and retweets, as well as comments on Twitter and elsewhere, my last post resonated with quite a lot of people. Some people thought it was provocative though, and some chimed in with good feedback:

@hunterwalk building ANY business is hard

— Jonathan Abrams (@abrams) March 5, 2016

Therefore I thought it would be worth following up on the topic to make sure that my message is clear.

The provocative sentence, I think, was this one:

“Building a SaaS business with $1-2 million in ARR is not that hard and not that valuable.”

It’s important to point out that I took it back in the next sentence …

“Let me rephrase that. Starting a new company is always hard and most SaaS startups never get to $1-2 million in ARR. Every founder who accomplishes this deserves a huge amount of respect.”

… and tried to explain the real point I was trying to make in the next one:

“The point is that getting to $1-2 million in ARR probably has less predictive value concerning a company’s ability to get to true scale than most people think – or at least thought some years ago.”

As you can see, I don’t disagree at all with Jonathan Abrams’ s comment that building any business is hard. The reason why I wrote the sentence above, only to rephrase it in the following sentence, was that it was a reference to Josh Hannah’s post about “nice little $40M eCommerce companies”, which my post was inspired by.
To be as clear as possible about the subject, let me sum up my view again:
1) Building any business is hard. It requires a much broader skill set, more hard work and much more persistence than most normal jobs. (Let me refine that to “normal office jobs” – I don’t want to get into an argument with heart surgeons or firefighters.) And since most businesses fail (at least when it comes to tech startups) it also requires a huge tolerance for risk.

2) Getting a SaaS company from 0 to $1-2M in ARR is hard. For the reasons mentioned in the original post, I think it has become significantly easier in the last 5-10 years but that doesn’t mean that it isn’t still very hard. Maybe a better way to put it would be “more likely” than “easier”.

3) As hard as it is to get to $1-2M in ARR, getting to that level doesn’t say much about a company’s ability to get to $100M in ARR. For most companies which didn’t raise venture capital this is completely irrelevant. If you’re a bootstrapped company or raised only a small amount of outside funding and eventually get to a few million dollars in ARR that’s an amazing outcome, and calling a company like this a “lifestyle business” is ignorant and stupid. If you’re a VC-funded company, the prospects of getting to $100M matter, though – at least to some of your shareholders. 🙂

In case it’s still not clear, maybe this funnel diagram helps to explain what I mean. 🙂

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