The benchmark for growth has changed radically for software companies:
Just look at the most successful companies (likely a questionable practice, but, in reality, it is what everyone does):
Then…in the era of installed software:
It took Microsoft three years from founding to achieve $1 million in annual revenues and eleven years from to go public, and Apple was eight years into operations before it even appeared on the the tech landscape with its launch of the Macintosh.
Now… with cloud-based platforms, the timeline has been compressed:
Salesforce achieved annual revenue of $100 million within five years of operation, while Tableau, Workday, Splunk, and others have reached the same milestone in only slightly longer time frames. And the growth doesn’t always slow from there — ServiceNow (a competitor to Salesforce) currently holds the crown as the fastest growing, large-scale software company in the world; registering $1.4 billion in annual sales in 2016, the company projects 200% top-line growth by 2020.
Leveraging SaaS-delivery models, cloud-based, scalable backends, and a receptive market, these trail-blazing companies have re-defined success and shifted investor expectations.
This cuts two ways. First and foremost, fast-growing cloud companies have showcased what is possible. This is positive as it can be used to set goals, counter excuses, and guide planning and execution.
Less helpful is when benchmarking against the most successful companies results in an ill-advised attempt to emulate certain types of behavior (with little realistic hope of achieving the same results).
For example, it has been demonstrated that startups can attain significant sales in a very short period of time, and this pursuit often makes great strategic sense. Achieved great product-market fit? By all means, a significant investment to win sales and support accounts is warranted.
The problem arises when the development schedule is dictated by sales goals, or when sales efforts (and expenses) scale before a true product-market fit.
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