Five years later: Five ways to build a $100 million SaaS business

Christoph Janz
Apr 6 · 5 min read

Based on my learnings in the last years, here is a slightly updated version of the chart:

Bye-bye, dear little fly!

In my original post, I spoke about five ways to build a $100 million Internet company. The post wasn’t specifically about B2B SaaS companies, which is why two of the five ways dealt with customers with an ARPA of $10 and $100, respectively. I will keep the $100 ARPA customers (AKA mice) for now, but today it’s time to say goodbye to the $10 ARPA flies. Bye-bye, dear fly, you’ll always have a special place in my heart. Thank you for adorning so many slides and posters — maybe someone will resurrect you for a consumer-focused version of this framework.

Hail the whale!

Five years ago, I thought it would make sense to use a $100,000 ARPA elephant as the largest animal on the chart. The main reason is that I grew up as a consumer software and consumer Internet founder, and even though I had already spent about five years as a SaaS investor when I wrote the post, my experience was heavily skewed towards SMB SaaS. I did include two larger animals in a followup post, but meanwhile, I think that the $1,000,000 ARPA whale deserves a place as one of the five prime SaaS animals. While there are only a few SaaS companies with an ARPA of around $500,000 (not quite a whale yet, but definitely much larger than an elephant) across the entire customer base (Veeva, Workday, Demandware, Opower,…), there are quite a few SaaS companies with a significant whale customer segment. Most public SaaS companies, unfortunately, don’t report any data broken down by different customer segments, but it’s pretty safe to assume that Salesforce, Box, Zuora, and a number of other companies derive a significant portion of their revenue from whale customers.

Why y is now x and x is now y

This is a smaller, somewhat technical change. The original chart showed the number of customers on the x-axis and the ARPA on the y-axis. Since it’s more customary to use the x-axis for the dependent variable (and as I think it makes more sense to think of ARPA as the dependent variable), I have switched the axes. I had made that change in the poster already and have now updated the chart here as well.

Some animals are more equal than others

One thing I’ve learned over time is that just because there are five ways to build a $100 million business, it doesn’t mean that those five ways aren’t equally promising. To quote the pigs in George Orwell’s “Animal Farm” (one of the very few books that we had to read at school that I liked): All animals are equal, but some animals are more equal than others.

Point Nine Land

Stories from the P9 team & portfolio companies

Christoph Janz

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Internet entrepreneur turned angel investor turned micro VC. Managing Partner at http://t.co/5WJ3Pepbcv.

Point Nine Land

Stories from the P9 team & portfolio companies