YOUR BUSINESS GROWTH CHECKLIST - HOW TO GET TO IPO
To recap Part 1 of our Building a Strategy for Business Hypergrowth blog series, the SaaS industry is growing at an exponential scale, with over 2,000 SaaS companies in the UK alone. New SaaS companies typically enjoy an initial phase of fast growth, but without a solid strategy for hyper growth they are competing in an extremely competitive market that may see this growth slow.
In this article we’ll look at how to build the sales process and model that is going to enable your business to sell the products and services that you offer.
WHAT IS HYPERGROWTH?
Traditional growth usually has a CAGR of up to 10%; whereas businesses that experience hypergrowth maintain a 40%+ average annual growth rate for more than one year. There are stages of growth that every breakthrough company, product, service or idea transitions through. For hypergrowth, these are often referred to as the ‘hypergrowth curve’ and consist of the following three stages:
1. The Edison stage
This is the very first stage of a market, named after Thomas Edison who went through this experience when inventing the lightbulb. This is the stage where you question everything and invest all of your time into questioning the realistic possibilities of designing a product or service and bringing it to fruition.
When Salesforce, for example, came into the market and started to build software as a service, they were going through The Edison stage. They were the first to take on-premises software and bring it into the cloud.
2. Model T stage
Every new product or service needs to figure out how to supply a larger audience in order to scale; much like Henry Ford did when he took something that had already been invented and supplied it en masse.
Generally at this stage there is low competition, but in order to advance to the next stage on the hypergrowth curve, where competition is far greater, you’ll need to adapt your approach whilst resisting the urge to use quick fixes.
3. The P&G stage
This is where your product or service goes global, and it gets there by differentiating itself entirely from its competition. By investing heavily in your brand, you’ll need to create desire, individuality and consumer preference – much like MailChimp did. One year after launching their freemium model in 2009, their userbase had grown five times and their profit (yes, profit) was up 650%. This can be largely attributed to the investment in their branding and is explained brilliantly in this case study.
MailChimp’s offering wasn’t the first of its kind, but they made themselves the more desirable option for email marketing.
BUSINESS GROWTH CHECKLIST
Businesses looking to achieve hypergrowth need to see beyond hitting the next revenue number. Use our business growth checklist to stay on track when scaling your organisation:
- Conduct secondary research to enable market analysis, competitive analysis and identify trends
- Conduct primary research, which will allow you to ask more specific questions around your product/service
- Analyse product/service scalability, ensuring hypergrowth is a realistic possibility
- Refine your processes to improve operational efficiency
- Identify and assess the likelihood of potential risks, as well as the impact they could have and how you’ll treat them
- Look at hiring as a top priority – hiring the right people is essential, as well as promoting within at the right time
- Consider creating a hiring team
- Ensure you can afford the build-up in working capital, equipment, hiring and capacity expansion that comes with hypergrowth; and secure investment or funding where needed
- Consider the need for proper finance processes and accounting functions
- Use this hypergrowth calculator to help plan your finances
- Invest in technology that can scale with your business
- Be agile – you’ll need the ability to adapt to internal and external challenges, at speed
- Maintain a customer-focused approach at all times – being customer-driven is essential to hypergrowth
EXAMPLES OF HYPERGROWTH COMPANIES AND HOW THEY GOT TO WHERE THEY ARE
It can be inspiring to see how a business grew from nothing to the world-renowned organisation you see today. Here’s a look at 5 SaaS businesses that achieved hypergrowth:
SEMRush is a Search Engine Marketing tool, founded in 2008 and currently $124.9million in revenue. They went public in March 2021, and revolutionised the market by providing transparent insights and solutions to SEO, keyword research, competitor analysis and more; helping their customers improve web visibility.
Not without their challenges, SEMRush has run its business without raising funds since its formation, except for the $40 Million raised in 2018. The company listed its IPO in NYSE on 24th March 2021 and managed to raise $140 Million on the first day. Their revenue for the 3rd quarter of 2021 was up 53% year on year.
Focusing largely on their marketing and brand, SEMRush identified a niche in the market and has made itself the first option for SEO help and advice. Like MailChimp, they offer a free version so that customers can ‘try before they buy’, and their customer-centric approach sees their brand being extremely active across all social networks.
Monzo is a digital bank that launched in 2016 which, by 2018, had welcomed its millionth customer and boosted its value to $1billion. The company has not yet gone public, but plans to by 2023.
Monzo entered the market at a time when mobile banking users had risen to 47%, and had clearly paid close attention to shifts and trends in the market. Another company with a customer-focused approach, Monzo encouraged its users to provide suggestions to improve its product, and utilised social media and public forums to build a community.
Zscaler has revolutionised cloud security for enterprise companies. Founded in 2008, the company uses the largest security cloud on the planet to provide secure, seamless access to cloud resources. ZScaler went public in 2018 and in July 2020 it was valued at $15billion.
By identifying a specific audience, and providing a service to meet their needs, Zscaler created the perfect conditions for exponential growth; and is in fact experiencing growing revenue at 63% per annum.
Snowflake is a fully managed SaaS that provides a single platform for data warehousing, data lakes, data engineering, data science, data application development, and secure sharing and consumption of real-time / shared data. The business went public in 2020.
In the year prior to their IPO, Snowflake experienced sky-high revenue growth of 173%. Like other SaaS companies to experience hypergrowth, Snowflake spotted a gap in the market and set out to revive the data warehousing industry. Their pricing is unique, based on utilisation; and they doubled-down on account-based marketing.
Sprinklr is a leading marketing technology company. It was founded in 2009 in New York and, today, is a worldwide SaaS company. Another story of a customer-centric brand that identified a gap in the market, Sprinklr offered a Unified Front Office as well as enterprise-class security, privacy and governance; securing customers like Dell, Cisco, Microsoft and Nike in the initial stages of their growth (all of whom are still Sprinklr’s clients).
Sprinklr experienced hypergrowth from $80million to $2.7billion and 100 to 1500 employees in just four years. The company went public in 2021.
GET IN TOUCH
Looking at our five examples, it is clear to see that the commonalities include researching the market enough to identify a fillable gap, consistently and continuously listening to their customers, and identifying changes and trends in their markets.
Here at Strive, we source top tier sales talent for hyper-growth tech companies. To learn more about how we can help your business scale, contact our team on 0203 983 0770 or email hello@scalewithstrive.com.
Adam Richardson
Co-Founder and Director
